Financial Profile: Danaher’s Dental segment
Danaher’s (DHR) Dental segment remained virtually unchanged when the company split off its industrial (XLI) businesses into the independent public company Fortive (FTV). The revenues in the dental segment increased from $2 billion in 2011 to $2.7 billion in 2015, for a compound annual growth rate of 6.3%. However, not all of this growth was organic, as company revenues were boosted by the acquisition of Nobel Biocare in 2014. The average core organic growth between 2011 and 2015 was 2.8%.
The operating margins of the dental unit are among the lowest within Danaher. The average operating margin between 2011 and 2105 was 13.6% for Danaher’s Dental segment. Operating margins in 2015 and 1H16 were 13.5% and 14.9% respectively. In comparison, competitor Dentsply Sirona (XRAY) had operating margins of 19.5%, 19.3%, and 14.6% in 2015, 2014, and 2013, respectively. Although 3M (MMM) earns an operating margin of 32% on its healthcare business, only 22% of its healthcare unit is related to oral care, so 3M and Danaher cannot be compared
Things that are attractive in Danaher’s dental business
The company’s recent acquisition of Nobel Biocare has filled the gap of new and innovative offerings within Danaher’s Dental segment. Nobel has launched 20 new products since its acquisition by Danaher and clearly differentiates itself from more commoditized products in other businesses.