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What Dragged Down Technology Business Sales in 1Q17?

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Dentsply Sirona’s Technology segment sales

Dentsply Sirona (XRAY) reported ~$900 million of revenues worldwide in 1Q17. Of that, ~$389 million was generated through Dentsply Sirona’s Technology segment, which contributed ~43.2% to Dentsply Sirona’s total revenues.

On a constant currency basis, the Technology segment’s sales declined by approximately 8.1%. The segment’s sales were flat in Europe. The segment witnessed strong sales growth in 4Q16 and double-digit growth in 2016.

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What dragged down the 1Q17 performance?

The primary driver of the decline in the technology segment sales was the change in equipment inventory levels with distributors due to the transition in North America distribution strategy. Products such as Celtra Press and Cercon xt in the technologies business are driving market momentum. The company has launched around 50 new products at the recent IDS (international dental show), of which low-dose mode for the Orthophos SL and Omnicam are two of the new launches in the technology side. Dentsply’s MIS acquisition continues to strengthen its position in the implants market. For the acquisition details, please read Latest News on the Dentsply Sirona-MIS Acquisition.

Additionally, a new distribution agreement with Patterson and Henry Schein will be a major driving factor in the segment growth in the coming quarters. We will discuss this in more detail in the next article.

Some of the major players in the US medical device industry include Abbott Laboratories (ABT), Zimmer Biomet Holdings (ZBH), and Boston Scientific (BSX), which reported 1Q17 YoY sales growth of 29.7%, 3.8%, and 10%, respectively.

Investors can invest in the iShares Russell Mid-Cap Value ETF (IWS), which has about a 0.41% exposure to Dentsply Sirona.

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