Bret W. Wise, Chairman of the Board
Jeffrey T. Slovin, CEO
Rainer Berthan, Exec. VP, Manufacturing and Supply Chain
Christopher T. Clark, President and COO, Technologies
Jonathan Friedman, Sr. VP, Secretary, and General Counsel
Maureen MacInnis, Sr. VP and Chief Human Resources Officer
Ulrich Michel, Exec. VP and CFO
James G. Mosch, President and COO,
Dental and Healthcare Consumables
NUMBER OF EMPLOYEES: 15,700
GLOBAL HEADQUARTERS: York, Pa.
The 2016 fiscal year was one of substantial transition for the company formerly known only as Dentsply. By the close of that year, it emerged as a larger entity with a broader product offering. The merger with Sirona Dental Systems, announced in 2015, was finalized on Feb. 29, 2016, with the resulting Dentsply Sirona now billing itself as The Dental Solutions Company.
While both previously independent companies supported the dental health industry, each maintained a focus on different product areas. Following the completion of the merger, the result was a company with offerings that provided a unique compliment to the other’s innovations. Dentsply had been primarily focused on dental consumables while Sirona had products in the dental technology and equipment space. Together, the company claims to now be the largest and most diversified manufacturer of professional dental products and technologies.
“With our merger complete, Dentsply Sirona can now focus its efforts on empowering dental professionals to provide better, safer, and faster dental care. As The Dental Solutions Company, we will drive long-term growth by being uniquely positioned to deliver innovative solutions and support our customers with the broadest product portfolio and the largest sales and service infrastructure in the industry. Dentsply Sirona will continue to be at the forefront of the digitization of dentistry, single-visit dentistry, and improving clinical outcomes for patients around the world,” Jeffrey T. Slovin, CEO of Dentsply Sirona, stated in a release announcing the completion of the merger.
That commitment was exhibited in the results the newly formed company posted in its first year as a unified entity. While Dentsply’s revenues had been relatively flat in 2012 ($2.93 billion net sales) through 2014 ($2.92 billion net sales; $2.95 billion net sales in 2013), and even saw a drop in 2015 ($2.67 billion net sales), that changed in 2016 with a significant bump. The company posted $3.75 billion net sales for the year, rapidly making good on promises made during the merger transaction to capitalize on existing synergies that would allow for cost savings. Undoubtedly, an increased sales force and enhanced product line also contributed to the growth observed in 2016. Specifically, the company reported that Sirona contributed net sales of $1 billion to the company’s Consolidated Statements of Operations during the period from Feb. 29, 2016, to Dec. 31, 2016.
More specifically, the breakdown of those sales was split among the company’s main segments of dental consumable products, dental technology products, and healthcare consumable products. The product leader for the company remains as dental consumables, even post-merger. That segment accounted for $1.77 billion in 2016, up just a bit over 2015 but still not as high as 2014’s $1.81 billion sales total. The dental technologies sector saw the most significant increase, undoubtedly due to the merger and could potentially pass by dental consumables as the company’s lead product line in terms of sales in the coming years. In 2016, the dental technologies portion posted $1.66 billion in sales, up substantially from 2015 when the company only reported sales of $688 million. The $1 billion contribution from Sirona following the close of the merger mentioned previously is reflected in this increase. Rounding out the company’s offerings, the healthcare consumables portion offered a modest $374 million toward the overall total of $3.75 billion for the year. This remained flat with 2015’s total, while it was down from 2014’s $361 million sales figure.
ANALYST INSIGHTS: Combining just a year ago, Dentsply Sirona is turning in strong financial performances in its core Dental and Technologies businesses. As they continue the momentum, it will be interesting to see how they find “tuck-in” acquisitions to continue to stimulate revenue, utilizing the company’s ever-increasing cash power.
—Dave Sheppard, Co-Founder and Principal, MedWorld Advisors
Not satisfied with the increases it saw in 2016, the unified company looked to continue the growth it enjoyed in its debut year following the close of the merger. Significant investments were made to its research and development (R&D) efforts, posting costs for R&D of $128.5 million in 2016. In comparison, Dentsply noted costs for R&D in 2015 and 2014 as $74.9 million and $80.8 million, respectively.
While a majority of the expenses for R&D originate from the company’s internal needs, Dentsply Sirona does provide funding for external research as well, through institutions, as well as dental and medical schools. For example, the company provided a $50,000 research innovation award in endodontics to the West Virginia University School of Dentistry in January 2016. The grant was intended to help equip a 4,000-square-foot research laboratory with the required technology for students and faculty to be able to prepare experimental samples and specimens.
“The generous support of the AAE Foundation and Dentsply will greatly enhance our endodontics research program here at West Virginia University,” said Anthony Borgia, D.D.S., dean of the WVU School of Dentistry. “With this gift, residents and faculty will have new tools to advance our mission to address the present and future oral health needs of the citizens of West Virginia and beyond.”
While an investment in the future through R&D expenditures is critical to ensuring the success of every company’s business health, Dentsply Sirona also sought to further enhance its product offering through a strategic acquisition. In June 2016, it was announced that the company had agreed to acquire all outstanding shares of the privately held MIS Implants Technologies Ltd., headquartered in northern Israel, which resulted in an approximate purchase price of $400 million. MIS (which stands for “Make It Simple,” not “Minimally Invasive Surgery,” which is more commonly associated with the abreviation) Implants has a focus on the value sector for dental products. It has distribution in more than 65 companies and offers a wide range of dental implants and prosthetic solutions. MIS also provides grafting materials and guided surgery services.
“MIS is uniquely positioned to address the value segment of the implant market in both its home region and around the globe. It is strategically important to be able to address the implant market with distinct organizations, portfolios, and brands targeting both the premium and value segments. MIS has a broad portfolio of implants and related products under a well-established brand, making it a great complement to our company,” Slovin stated in a news release announcing the mid-year transaction.
MIS Implants’ value product line should provide yet another choice for dental professionals and their patients in addition to the complete offering Dentsply Sirona provides.
Speaking of the company’s product line, there were a number of additions made to the offerings throughout 2016. Since the company notes its market share at less than 20 percent of the global marketplace, it sees significant growth opportunities in the years ahead. The merger, acquisition of MIS Implants, and investment in R&D are all obvious efforts to enhance that share percentage. Further, the new products announced could have a more immediate impact on that mission.
One such announcement was for the company’s Aquasil Ultra+ Smart Wetting Impression Material. The product offers intraoral hydrophilicity and tear strength for enhanced results. In addition, the material was offered in a newly announced introductory kit that also provided a Targeted Delivery System that, according to the company, gets the clinician up to 34 percent closer to the prepared tooth than more traditional methods.
In August 2016, the company also offered new, high-speed air-driven handpieces and electric attachments to U.S. dentists that were manufactured in Germany. The instrument line was a direct result of the merger, leveraging the company’s Midwest brand as the distribution channel for the devices.
“We are proud to be part of Dentsply Sirona which gives us the opportunity to widen our portfolio of high-end products,” said Dave Hancin, vice president and general manager of Midwest. “We are convinced that the combined know-how of Dentsply and Sirona will provide even better services for our customers. We look forward to leveraging the strengths of our manufacturing teams.”
Getting into the digital healthcare space, Dentsply Sirona announced a new app in March that enabled easier ordering for dental laboratories. The Lab Smarter app offers customers the ability to scan Dentsply denture teeth barcodes, eliminating the need for the traditional paper-based ordering processes that are still common. Once the barcode is scanned, the app electronically transmits a replenishment order to the lab’s distributor of choice. That app is used in conjunction with the company’s smart cabinet technology.
Given the opportunities to gain additional market share and the continually emerging advantages realized from the merger, Dentsply Sirona stands to become an even bigger player in the dental technologies space and potentially move up further on the Top Companies list next year.