Envista Holdings Corp. is emerging as a leaner, more profitable machine as the dental industry recovers from the pandemic.
The Brea-based dental consumables, equipment and services provider, whose operating companies serve over 1 million dentists in 150 countries, posted first-quarter revenue and earnings well above consensus estimates last month.
The company posted $709.2 million in sales for the quarter, up 30% from a year ago and exceeding analyst projections of $637 million.
It was the third consecutive quarter Envista delivered adjusted EBITDA margins of over 20%, company officials said.
Adjusted EBITDA for the first quarter was $148 million, compared to $19.4 million for the same period in 2020.
“We are off to a great start in 2021. A robust recovery in the dental market combined with strong execution and our continuous improvement culture drove broad-based strength across our portfolio,” Chief Executive Amir Aghdaei said last month.
Stock in the $7 billion-valued firm recovered from its pandemic-low of $12.06 a share and had settled around $43.30 a share at press time.
Consolidation
Envista was originally formed as a subsidiary of Danaher Corp. in 2018, and has maintained its Brea headquarters in the same office complex as Danaher’s operating company Beckman Coulter Diagnostics.
Envista was built through the acquisition of over 25 dental businesses over the course of 15 years.
Core leadership joined in 2016 and took various steps to consolidate the business, such as reducing over 10 operating companies into three. Ormco and Nobel Biocare Systems make up the company’s specialty products and technologies unit, while its equipment and consumables division is comprised of KaVo Kerr.
Envista raised $643.4 million in an initial public offering in September 2019, when Danaher spun off the business into a stand-alone public company.
More changes took place in 2020, when Envista completed a $100 million cost reduction plan including job cuts as part of efforts to improve margins amid the pandemic.
Additional changes are possible; the company was said to be considering a sale of its KaVo business, according to a Bloomberg report last week.
Growth Drivers
Envista said it plans to reinvest $30 million in new implant and aligner technologies, as well as medical grade infection prevention products this year.
Premium implant revenue was up more than 30% in the first quarter, aided by the international launch of the N1 implant. The product is expected to receive FDA clearance in late 2021.
On the equipment and consumables side, revenue in the period grew 28.5% led by infection prevention products used in “disinfection procedures that are becoming a standard globally,” Aghdaei told analysts.
In 2020, the company shipped more than 30 million units of wipes and liquids to assist in this effort. It also increased capacity by more than 70% over the past year and added a medical sales force in the U.S.
Envista expects overall 2021 sales growth in the mid to low 20% range. Analysts on average expect 2021 revenue of $2.84 billion, up from $2.3 billion in 2020.
