Henry Schein, Inc. (HSIC) Earnings Call Transcript & Summary

Hi, everybody. Thanks for joining us today. I'm Elizabeth Anderson. I'm the technology and distribution analyst here at Evercore. And I'm very pleased to be joined this morning by Stan Bergman, the Chairman and CEO of Henry Schein; as well as Steve Paladino, CFO. Steve, do you want to start with the forward-looking statements?

Sure, thank you, Elizabeth. So I just wanted to mention as we begin that I'd like to note that certain comments made during this call may include information that is forward-looking. And as people know, risks and uncertainties involved in the company's business may affect the matters referred to in forward-looking statements. Therefore, the company's performance may differ from those expressed in or indicated by such forward-looking statements and all of the forward-looking statements are qualified in their entirety by the cautionary statements contained in Henry Schein's SEC filings. So with that, I'd like to turn the call over to Stan Bergman.

Thank you, Steven, and thank you, Elizabeth for hosting us today. Very briefly, Henry Schein is the largest provider of health care products and related services to office-based dentists and physicians. We're active in most developed countries, some emerging markets as well. Our product offering includes practically everything a practitioner may need from consumables to pharmaceuticals to equipment to practice management and other kinds of software, value-added services. And essentially, if you go into a dental or medical office, you look around and primarily -- and the products that are primarily used in those practices will be available through Henry Schein. This is our 25th year as a public company. We've been a consistent grower over the past 25 years. Our methodology for growing the business is based on the notion that we help health care practitioners operate a more efficient practice so that the health care practitioners can focus on providing the best quality in clinical care. We have 4 major business units, our global dental distribution business, our medical distribution business, primarily focused in the U.S., our Henry Schein One joint venture, which is the largest provider also of practice management and related software. And then we have a specialty business that focuses on orthodontic products, endodontic products and implants and biologicals for oral surgeons and for GPs that are engaged in implant dentistry. Our most recent quarter, we showed approximately 13% sales growth. And if you exclude COVID-related products, that's PPE tests and other unique products that have been in high demand during this period, our sales were essentially flat compared to 2019. On the dental side, we had 6 -- just about 6% growth. Consumables in the U.S., about 8% internal growth. Equipment relatively flat. Internationally, we had about 11% consumable growth and slightly down on equipment sales. Our Medical business was up 28%, and our Technology business was just almost flat. We did provide some information in our recent call on October sales. And again, if you exclude all of the COVID-related products, PPE, the tests, et cetera, our Dental business was about flat with last year, and our Medical business up mid-single digits. Our backlog on equipment in dentistry in the U.S. was slightly down at the time of the call, but primarily related to the Dentsply Sirona annual meeting, which in last year was held in the third quarter, this year in the fourth quarter. And this year, virtual, by the way. And our backlog in Europe was on equipment internationally was slightly up. So we're ready to answer any questions, Elizabeth, that you may have.

Perfect. No, that was a great introduction. Thank you. So I guess you think you kind of touched on it briefly, giving a -- can you give us a sense for the volume trends you're seeing in the Medical and Dental businesses so far in 4Q? And potentially, with the uptick in recent COVID cases, how are you guys seeing that play out across the different businesses?

Yes, Elizabeth, I'll let Steven respond, so we have to be very careful. We're in the middle of our fourth quarter right now. We did provide quite clear information in our conference call at the end of October. And I could just -- I'll speak to the trends, and Steven can speak to the math. The trends are that it seems that people are still going to the dentist, the ADA provides information somewhere in the range of 75% to 80%. It was heading up to -- it was up 80%, then went down to 77%, then went to 76%, then went to 75%, up a little bit. So it's in that range. What we do know is the average billing per case has gone up because it seems to be less visits per case and also cases tend to be more acute. There was a lagging in hygiene visits, seems to have come back, can't tell what's happened in the last week or 2. And Medical is pretty stable. I realized that some hospitals have now closed down elective surgery. It does not, at this point, seem to have impacted at least not nationally. The ambulatory surgical center business, still pretty decent backlog. And if you look, there's a range. What I just described was the U.S. But if you look at Asia, our business in China, other parts of Asia, Australia and New Zealand is really up from last year. Things are back to normal. And then it goes all the way to the other side of the U.K., where it's pretty -- quite down muted from the previous year, essentially because of the way the national health system is reimbursing for dentistry. It's an odd way of doing this. And so people are -- dentists are not seeing a lot of patients. And then you see everything in between. So Steven, I don't know what we can provide relative to the math.

We're not giving specific updates past October for obvious reasons. But I would say that we feel good at where the market has been in Q3 and for October. I've said on previous investor calls that if you look back to April, and we were doing a number of projections in April, none of our projections had the market coming back as quickly and as robustly as it has. We talk about our sales growth with and without PPE. I think it's important to do that, but I think people should also recognize that PPE will probably stay at elevated levels. I don't think it's going to -- I think it will be the new norm for clinicians to use the PPE and as well as their administrative staff. We had a successful Q3, both on PPE as well as test kits in our Medical group. We went from selling virtually no test kits to in Q3 we sold over $90 million of test kits in our Medical group. And we did say in Q4 that we were on pace to exceed that. That's also something that I don't think will go away even with the vaccine coming out. I think people will even want to use test kits even more to check who should be vaccinated in that. And it's still going to be a while before the masses get vaccinated. So I think we're feeling good about the overall end markets. The end markets are cooperating. And I think we feel like there's still more room to grow because as Stanley said patient traffic according to the ADA is somewhere between the high 70s and 80%. And it still has room for growth on that. So overall, we feel again good about the prospects going into 2021 of the market continuing to improve. Last thing because you asked a part of the question on what's happening in areas where COVID cases have spiked a little bit. And we did say on our Q3 conference call that, at that point, we have not seen any material changes in patient traffic based on that. So that's also a positive indicator.

Yes. For sure. I think people will understand that there's -- dentists and medical professionals are taking appropriate precautions. So you aren't seeing the same types of reactions as in the spring when we had shutdowns there. Just to pick up on one thing that you mentioned in terms of PPE. Are you guys seeing any shifts in PPE supplies? Are most things sort of available now? Like how would you sort of frame the PPE availability?

I would say that PPE is generally adequately available at least for our own customers. There are some challenges with a few products, gloves, nitrile, in particular and some medical wipes. Plenty of wipes around, but the FDA-approved medical wipes are relatively short supply. But generally, we have adequate supply and availability for our own customers. People that have bought these products from us are continuing to receive new customers every now and again, we're not going to be able to supply everything. We can ration, but for our existing customers. We'll have the same thing, by the way, for flu vaccine. There is some shortages in the market, but customers that have traditionally bought their vaccine from us, many of them book their vaccines a year in advance. They've all gotten their products already and there should not be a problem with an existing customer. Tests, generally, there is a shortage. But for customers that have bought the units from us, generally, we do -- we can't supply the reagents so -- and the cartridges. So I think on balance, for Henry Schein customers, we're doing well in providing these products. For newer customers on many products, we are, of course, providing products where we can access them.

No, that makes sense. And have COVID brought about any changes in the competitive environment in terms of either share shifts in certain segments or broadly speaking, in your mind?

Yes. It's interesting. There was a lot more PPE sold by some of the smaller players during the shortage period. But also, we're hearing a lot of concerns. We, as a company, and I'm sure some of -- many of the others were very careful in shipping only FDA-approved product that went through our quality control, and there's a lot of challenges in the marketplace, a lot of dental schools bought product that had challenges, a lot of practices bought products that had challenges. So the degree to which there was product available that was not to the standard that we would ship is hard to tell. But I think as the dust settles, I don't think much has changed. But I think we've done okay with our existing customer base who are very much appreciative or investing in providing PPE. But on the other products, I'm not sure if there's any major shift.

Okay. Outside of -- outside of PPE. Okay. That makes sense.

I'm not sure if the PPE shift is a permanent one.

Okay.

Because there were periods of time when we were relatively restricted, several other players were restricted. And others had them, but I'm not sure if those had some of that product, but I'm not sure if that was compliant product. So the market is starting to learn.

Yes. No, for sure, on that front. We've obviously heard some of the stories around substandard products there. On the overall dental market, has there been any sort of share shifts either from -- within among competitors or anything in that sort of more like core products basis as a result of COVID or otherwise this year?

I -- it's very hard to draw conclusions. Maybe 1 or 2 months, there was a share shift. But generally, the market was pretty stable, I think -- and aside from maybe movement in one or 2 big accounts, one way or the other, I think the market is pretty stable.

That makes sense. And just I guess in terms of the dental market structure more broadly, have you seen as a result of 2020 any kind of push towards maybe more consolidation? I've heard that that's sort of a thesis and then everyone said, no, maybe there were PPP loans and then maybe it's not going to happen. Like how do you see things from your perspective there?

There's a lot being written and a lot of anecdotal information. First of all, dentists and physicians are financially stable. Our bad debts are really relatively stable. We did -- we were very concerned in the second quarter -- at the end of the second quarter and in the third -- really in the beginning of the third quarter. But -- and maybe we were overly cautious in that area. But basically, our bad debts are pretty stable. I think that's an indication of whether the practitioners are in trouble. There is some consolidation occurring amongst large players that are buying each other. There are some practitioners, I don't know the age, I haven't seen data, 65 or whatever, they would like to not go back. So some of them are perhaps induced to sell their practice. Having said that, to a DSO to buy a practice without having the practitioner is a challenge because essentially DSOs have capital, there's plenty of white space for them to open. The biggest challenge is to find the practitioners. And so to buy a practice when the practitioner wants to retire, doesn't really...

Doesn't help.

Having said that, I would say we have a transitions business. The business is okay, but it's not as if it's tripled. It's up some basis points, but I don't think there's any trends you can pick up -- pick dentists massively leaving or physicians not wanting to return to their practices. It's pretty stable, but there's tons and tons of anecdotal stuff going around.

Yes. No, for sure. But even if 50 basis points worth of dentists retire, that can be a ton of story -- it's ton of stories there. So...

Well, 50 basis points of dentists wanting to retire will be a significant number in our transitions business. I think we are now the biggest player -- the second biggest player in that field, so that would drive a lot of sales, but it's a very small business. And the macro impact is -- will not be read, it's not seismic at all.

Okay. That makes sense. And then maybe switching over to the dental equipment business. Where are you seeing the biggest interest areas for equipment sales recently? There's been a debate about the increased prevalence of sort of interest in digital dentistry as a result of COVID. So I'd just be curious, your thoughts there.

Yes. Before COVID, there was a tremendous interest in digital dentistry, particularly DI, scanners, [indiscernible]. I would say that trend has continued. It was good in the third quarter. I think we gave pretty good information on that, I think, up -- it's all public information. I suspect that, that trend then that went into October will likely -- don't want to provide this quarter information because it may impact our suppliers, numbers, et cetera, so I wouldn't want to do that, but generally, if you look forward, I expect that trend to continue. The traditional chairs, units, lights, although one manufacturer went out of business, generally, that business has been picked up by others, and the business is quite solid. There are some issues still in the imaging field. The prices came down, they have come down over the last period of time. But units are -- they're okay. I mean they're not tremendously bad. But that's not on fire. The air management systems are doing well, but they're very -- they're relatively inexpensive. 1,000, 2,000, we have a whole bunch of exclusives in that area. And it's okay. It all fits in with our infection control program. But I would say equipment is relatively stable. And practitioners are investing in their practice. They can obtain loans, no problem with that. They're not getting charged exorbitant rates. Generally dentists and physicians have good credit. So the rates of interest are low, they're benefiting from that. It's an incentive to invest in their practice, make the practice look good, make it look infectious control, sepsis control, compliance. And so I would say the whole equipment market is relatively stable.

Perfect. And how would you characterize any changes in pricing or promotions or financing in that market? I think you spoke to the fact that the interest rate [indiscernible] okay.

Elizabeth, anecdotally, there are all sorts of stories about deals, et cetera. How much of a deal can you give if the interest rates are so low anyway? So I mean it's -- between the interest rates, the tax deductions and all of that, there's not any major room. You can -- some of our competitors are phrasing this with all sorts of adds on -- at the end of the day, there's not much room. The interest rates are so low. So it's -- as I said, the equipment market is stable. I expect that it will continue to be stable. And with the exception of one manufacturer that went out of making chairs, that was picked up pretty quickly by somebody else, there's -- we have good products for selling, customers are buying.

Yes, no I...

I'd just add one thing on equipment. Given the new administration and the discussion that income tax rates may go up next year, typically, we have the opposite. People would buy equipment in order to take advantage of, it's called Section 179, which allows for immediate deduction of capital expenditures for qualified small businesses. They may elect to postpone that purchase from Q4 to Q1, just because if they're expecting tax rates to go up significantly, and no one knows whether that will happen or not or what the effective time will be of that, but there is a possibility that, that could happen. We don't really worry too much about that Elizabeth because it's just a short timing between Q4 and Q1. So that is a possibility that could occur this year.

Okay. Perfect. No, thanks for pointing that out. And Stan, thank you for helping us to wade through all of the anecdotes we hear about somebody's cousin, who's a dentist, et cetera, that we all -- that all happens to all of us.

Bottom line, Elizabeth, let me make a statement. There is a clear understanding by those that pay for health care that there's a direct correlation between good oral care and good health care. The studies are there, pulmonary, cardiac, cancer, diabetes, obstetrics and there even was a study that came out last year on Alzheimer's. So the bottom line is, it's a stable market. Yes. We had a challenging second quarter, nowhere near as bad as we thought it could be. But -- and we all planned for that, but it's recovered nicely and dentistry is pretty stable. And likewise, on the medical side, procedures are moving out of the acute care setting to the alternate care setting. ASCs are growing. Physician practices are doing okay. They are actually very busy right now. So the market is -- the 2 areas we're in, dental and physician, is pretty good. Stable, but good.

Yes. No that makes sense. No, I appreciate that. Maybe sort of talking a little bit on the margins for the distribution business. Can you talk about maybe some of the puts and takes as we think about the impact of PPE cost reramping, mix differences, just to sort of level set people?

So I don't want to practice margin without a license. So I would ask Steven to handle it.

Nice.

Yes. So Q3, we had, as you said, a number of puts and takes. We did have lower margins on some PPE with some inventory adjustments that negatively impacted our gross margin. We also had lower supplier rebates and just to -- so people recognize how that works, we typically have performance goals from suppliers at the beginning of the year. They could be either out the door sales or purchases. They tend to be more out the door sales related. And those goals were set pre-COVID. And obviously, we didn't meet much of them given Q2. We got much lower rebates and most of these suppliers because they were suffering from lower sales also did not give lower goals because of COVID. But we do expect that to return to normal come 2021. And the last piece was, if you look at our Q3 numbers, again, we had significant benefit on the operating expenses that mitigated that -- those gross margin items because of things that we did, things like furloughs, lower T&E, reducing capital expenditures, reducing consulting and other things. I would say besides the short-term issue that I just went through, so if you look out longer term, once we're out of the COVID period, which I don't know exactly when that will be, but...

Hopefully soon.

Right, hopefully soon, but I think we still feel like we can drive operating margin expansion. We're not giving guidance at this time, but we feel like that's still a goal. And we still feel that we can do it through on the core distribution business, leveraging expenses through incremental volume. And then a second way of doing it is driving higher-margin products and services to drive the overall company margin higher. And there's 2 or 3 areas that we would look to do that. One is on technology, software and services to expand that at a faster rate than the core distribution business. And the other key area is specialty products. Especially on the dental side, we have a nice sized specialty business, but we're still underpenetrated compared to our core dental business. And we feel like there's good opportunity for us organically to grow faster, which we saw in the last few quarters, supplemented by acquisitions. So we still think operating margin expansion is part of our financial model going forward. But we'll stay away from specifics until we get out of this COVID period, and then we'll probably give more details on that.

Okay. Perfect. No, that's helpful. And you touched upon it a little bit in terms of some of the -- maybe the M&A priorities. Can you talk about maybe on the technology business first, like where you see -- where you've been seeing the best traction in terms of your product offering and maybe where you guys see additional opportunities either on the organic front or maybe particular technology holes that you're interested in selling?

I think that's a good question, Elizabeth. And I think we need to provide a little clarity on the reporting, where we have a separate segment in our financials on technology and value-added services. So first of all -- and we do provide some guidance on this. You've got to take out the financial services part, which is unrelated to the technology. I mean there is some connectivity and that patient financing could be done from one of our computers and credit card processing. But take that out. Then we do some government work and work for large DSOs. So those -- that income recognition can be lumpy, got to take that out. Then you have the core business, and the core business is broken into 2 big categories: the one is the core practice management, electronic medical record systems; and the second is the areas we earn income on transactions, such as electronic claims -- electronic reimbursement claims, claims submissions. So on the first side, the sale of basic systems is relatively stable. But what is interesting is there's been a spike in demand for cloud-based systems. Our sense system, which sells to smaller practitioners but also is now being advanced for larger DSOs, there's a significant interest in that. We've entered into some agreements in that area. So that part of the business is doing well. This movement from traditional software to cloud-based systems has moved quite nicely. The challenge has been a little bit on the claims processing side, which tied in directly with claims submissions. And since the average ticket is higher, there are fewer claims for $1 million of claims. So none of this is material, but overall, the business is quite stable and actually doing quite well. As it relates to M&A, there's so much that could be added to this platform. We have a great platform, the joint venture between us and Internet brands, the largest installed base of practice management systems, electronic medical records and then revenue cycle management, demand generation, all that kind of stuff, plenty that can be added to the platform. We not only, of course, sell these products in the U.S. but globally, and we're interested in expanding our presence for all of these various segments in the Henry Schein One offering, expanding that around the world.

Okay. That makes sense. And I guess, from maybe a similar like M&A or opportunity question on the Dental side of the business, where do you see the biggest opportunities there? Is it specialty? Are there other geographies that you guys wished you were in or had a bigger presence? And how do you think about that on a longer-term basis?

All of the above. First of all, we want to expand our footprint. There's no market that we say, wow, we're fully penetrated. We want to expand our footprint on the distribution side, on the -- both Dental and Medical, by the way, on the practice management and value-added services side, and of course, on the specialty side lots of opportunity, ortho, endo, implants, bone regeneration. So we have enough opportunity. I think we expressed on our call that the pipeline has been quite full. No guarantees of closings. But we reinstated our M&A program about a month or 6 weeks ago, and we're working to close deals. Having said that, nothing is final until the ink is settled.

Yes. For sure. No, that makes sense. I always like it when you guys buy some distributor and some -- second largest distributor in submarket has never heard of, and then it's compounds and you do that over and over again, and that obviously is quite helpful over time.

We've been doing that for almost 50 years and on accelerated basis for 25 years. And the bottom line is it's been a consistent grower in terms of EPS, adding inorganic sales and particular expansion into geographies and additional products. A lot of this is filled in, and a lot of it is just simply new products and services that we can offer.

Yes, for sure. Maybe on a sort of related note, can you give us an update on sort of your newest -- like on TDSC, how sort of the early impact of that has been going so far? Where has it been resonating?

Yes, I'm glad you asked that question. And this is the value of these conferences because this is a time that we can clarify things. So TDSC, there is so much also being written. Here's the history. The California State Society Association, California District -- Dental Association, they reached out to us about 5, 6 years ago and said, look, we're very unhappy with the deals the large DSOs are getting, our smaller membership is not getting these deals. So we have a good relationship with you, but we have to develop our own program. So we said to them, we will be happy to set up a GPO for you, a buying group. We've always been totally open to setting up buying groups, GPOs in Dental and Medical going back decades. And they said to us, well, that's a good idea, but not good enough, we want to set up a distributor. We said okay. You want us to run it for you? No, we want to set it up ourselves. So we've been in contact with them throughout this past 4 or 5 years. And I don't know, in February, in March or April, April, May, they reached out to us and said, you know what, running a distributor is not that easy. We will...

[indiscernible] validating. Yes.

We will stick to dentistry. Please, can you take over our distributor, which is what we did. We invested in the distributor. I don't know the number, we bought a 80% interest. They still have a 20% interest. And we're the [indiscernible] is only through an e-commerce platform. So we've taken over that platform. It actually happens to be pretty good. It's a platform we know because we use it in some of the other markets we're in. And so customers that are members of the California Dental Association and a number of other dental associations will be able to buy from us using that platform. Our salespeople will get commission regardless of whether the sales come through the CDA platform, TDSC, or come through our traditional telesales, e-commerce, something like 65% or 70% of our sales that are e-commerce anyway or through sales map is to pick up the orders, we don't do that much anymore. But either way, the sales will get commissioned. Where the confusion lies is because they happen to have an e-commerce only platform many have written, wow, Schein is concerned about e-commerce companies coming into this space, this is defensive strategy. It's not. It's about helping a customer that we wanted to work with in any event. And it was a bit of an expensive trip for the CDA, trying to run a distributor. I think they had some challenges with PPE. We discussed that already, not all PPE is compliant. They had some challenges. It was all fixed and the bottom line is, it's a business, it's a nice business, but it's $20 million in sales. It's not going to move the needle. Having said that, it did result in quite a few headlines.

Yes. No, for sure. No, thank you for helping to clarify that. I guess as a follow-up to that, I mean, do you see that model being replicated elsewhere? Do you think that, that was a pretty unique scenario just because of the CDA and their sort of priorities?

I don't see dental associations or DSOs buying dental distributors. There are -- every now and again, there's a story, there's in one country or another. But it looks very easy. You just buy the stuff and you sell it. Well, if that easy, why are there not thousands of people doing this. It's hard to provide a real good value added service. And yes, there are stand-alone e-commerce platforms. But dentists need what we call full service, which, of course, matures and gets and provide -- and in these full-service models, we provide different forms of services each year. We refine it. But at the end of the day, dentists need to figure out how to operate a more efficient practice so that they could provide better clinical care and companies like us are helping each day. We haven't to think we do it better than anyone else, but I'm sure everyone thinks that. But the bottom line is there's a lot more to provide dentists with the products and services they need than simply opening up a website.

Yes. No, for sure. It sounds like maybe in terms of -- I know it's early on that business. Just maybe one last follow-up there. Are there any learnings that you have from that business that you think are probably more applicable that you could bring back to sort of Henry Schein One or some of your internal systems?

I don't want to sound arrogant, but it's possible that there's some products that they were selling that we didn't, I doubt it. Look, the platform is very good and have done some nice things with the platform. So maybe -- we happen to be working on a new website program, doing this for a while now. I'm sure the people that are working on that project will look at the TDSC system and see what features work there that we don't have that we want to add. But I don't know if it moves the needle.

Okay. No, that's helpful. Okay. So maybe switching gears a little bit. Obviously, one segment of the market that's been a big investor focus as we move through the pandemic is sort of the orthodontics market and the clear aligners specifically. Can you talk about how are your clear aligners? I know you have sort of a bifurcated GP and ortho strategy. Can you talk about sort of how that has fared and where your product has resonated?

Yes. So Henry Schein ortho is a relatively small business. We have traditional -- a unique line of traditional orthodontics that does quite well with its following. And then we entered into the aligner space a couple of years ago, very, very small, tested it. And we believe we actually have, from a product point of view, a pretty good aligner, the people that are behind that say we have the best, I don't know. I've never met an investor -- an inventor that doesn't believe their product is the best. Our team think we have the best aligner system. What we don't have perfect yet are the interface capabilities with the orthodontists, the GP and the patient. That is being worked on. Having said that, we have a pretty, I think, interesting opportunity to connect our aligner system with our Henry Schein One product offering. And so we believe that we will have a very good front end as well. We have decided to bring together under one common management team, the specialty aligners and the GP aligners. And if we expanded the number of people we have in the field, this was a program that we conceived in about February and in March, we can go live with that. We've postponed that, and we actually added a new headcount and the focus in August. The sales are pretty good. We have some DSOs that are buying. But if you look at the entire market, we don't move the needle yet. We're very small, but we're very optimistic, and we've gotten very, very good feedback from those that are using the system. It's relatively easy to use. And the outcomes are pretty good.

Okay. That's helpful. And then in terms of -- you talked about sort of continuing to improve the doctor and patient interfaces, how -- when do you see sort of is the time line for that?

It's -- every month, we're adding more to our system.

Okay. Just sort of continual work in progress.

Yes. It's not one big bang. And it's actually -- it's doing quite well, and it's well received, and it's a great alternative for specialists that feel they're looking for alternatives. And for the GPs who are not so happy about losing business to the direct-to-consumer companies, and they can offer a very, very good deal using our system, but under the direct management of a dentist. And there are many clinicians that believe that dentists should be involved in providing oversight over all cases, not just problematic cases. So this will work itself out over time. But I think we have a very good offering for GPs and for the specialists.

That makes sense. Perfect. And then in terms of the implant market, like how are you seeing that play out across the course of the pandemic and sort of, obviously, that's a more acute type case, but then sort of balancing that out with some of the employment and other situations going on?

Yes, well, we are very active everywhere in the world, but in particularly -- we're active everywhere in the world, particularly in 2 markets, one is in Germany and Austria with CAMLOG, and the other market is in North America with BioHorizons. Both of those businesses fared quite well during the COVID period. CAMLOG, I would say, was steady throughout and did very well in the third quarter. We've spoken about that. BioHorizons, obviously, had to taper down when the ADA -- during that period where ADA had recommended to members that they close their practices. But once the practice was open, they're both -- they bounced back and both had a pretty good third quarter. I think, Steven, we did disclose the particular growth rate for implants, did we? Or was it just specialties?

We said specialties, yes. But it was driven by implants, and it was in the high single digits.

Okay. That's helpful.

Particularly, the U.S. came back strong and Europe. We also do sell these implants and bone regeneration products around the world. But the 2 big markets are the ones I described. And I think you know that we invested in a discount implant business in Germany 6 months ago, and it's also doing okay.

Okay. Awesome. Well, I think we only have a couple more minutes left. So sort of as a parting thing I wanted to ask you, Stanley, where are you most excited about your business as we think about maybe not just the COVID exit, but sort of maybe the next sort of 2 to 5 years?

Yes, that's a very good question. I would say that each of our business units, Elizabeth, has great potential. I think our global dental distribution business, moving much more digitally, having our sales organization move much more towards consulting services and at the same time becoming more efficient in our infrastructure, all of that excites us, more intimacy with our customers, greater understanding by our customers of our entire spectrum of products, all of that coming together with driving efficiency and infrastructure. Those 3 planks or drives us very much. It makes me personally excited about our Dental business. Our Medical business, there's so many opportunities. The procedures are just moving from the hospital out into the alternate care site into the physician office. We're working with some large players in that area. And it's -- it was an interesting period, I would say, 3 or 4 years ago when some of the big hospital suppliers came into our space, and they were tried. And I think we earned our stripes during COVID, very much so. So there's a lot of exciting opportunities in that space. We have mentioned aspirationally that we like to be in home care in that areas of continuum, and I hope we'll be able to get that done soon as well. Then Henry Schein One has huge opportunity to drive efficiency in the practice and more important, go and get patients for the practitioner all the way from working with WebMD, they get millions of hits every month from dentists from the consumer looking for dental care to turn that into visits with the dentist to our dental plans business where we have a low-priced option for dentistry. These are all very interesting. And then, of course, our specialty areas, each one of them presents opportunity for us. And going to our customers with an offering, explaining that they can get integrated services from us, together with certain of our branded manufacturers that work with us, it's all very, very exciting.

Yes. That sounds great. Well, awesome. Unfortunately, we are out of time, but this was a great discussion, and I really appreciate your insights that you gave us today. So thank you very much, Stanley and Steven.

Thank you, Elizabeth.

Thank you.

Thanks. Have a nice day.