Ladies and gentlemen, welcome to the Straumann Group Q1 2022 Results Conference Call and Live Webcast. I'm Andre, the Chorus Call operator. I would like to remind you that all participants will be in listen-only mode and the conference is being recorded. The presentation will be followed by a Q&A session. You can register for questions at any time by pressing star and one on your telephone. For operator assistance, please press star and zero. The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Guillaume Daniellot, CEO. Please go ahead, sir.
Thank you, and good morning, everyone. I am happy to welcome you, and thank you for joining this conference call about Straumann first quarter results for 2022. I hope you, your families, and colleagues are doing well. We are living in challenging times. It is really distressing to see the terrible stories from Ukraine and the uncertainties as a consequence of that. To make our contribution to the huge humanitarian relief effort that is needed, we made a donation of CHF 100,000 to the International Committee of the Red Cross, and donated implants with a market value of more than EUR 1 million to clinicians in Ukraine. Measures around the COVID-19 pandemic have been lifted in many countries in the first quarter, which gave us the opportunity to hold meetings face-to-face and meet some of you in person after a long time.
However, local lockdowns came back in China, impacting business activities, adding further to the uncertainty created by the current geopolitical situation. During this conference, we'll be referring to the presentation slides that were published on our website this morning. As usual, you can see our disclaimer on slide two. This morning's presentation and discussion will include some forward-looking statements. The conference will follow the usual format, as shown on the agenda on slide three. I will give you an overview on where we stand. Then our CFO, Peter Hackel, will share details about our business performance across our regions. After that, I'll provide you with an update on the strategic initiatives as well as our outlook for the future. As always, we'll be available to take your questions at the end of the presentation. Let's start with our highlights and move directly to the slide number five.
Group revenue reached CHF 589 million, which is a very strong first quarter result. Overall, patient flow remained high in most countries during the quarter, except for China, where on the one hand, COVID-19 lockdowns came back in some large cities, and on the other hand, some patients postponed treatments as they expect prices to lower due to the announced volume-based procurement initiative. Organic growth was 27.2% compared to the previous year, which was already largely recovered from the pandemic. These strong results were slightly impacted by negative currency development and a marginal acquisition effect. As you can see, leading innovations continue to be one of the key reasons for growth. The results were driven by strong market share gains, supported by the recently launched immediate implant solutions, which drove customer conversion in many cases.
The teams everywhere really did an excellent job executing on the recent launches in all the different geographies. On top of that, we expanded our offering of our challenger implant brands. In March, we launched the two-piece ceramic implant Neodent Zi as well as Anthogyr Axiom X3, which I will tell you more about later. These launches will help clinicians to cover different price points and offer more innovative solutions to their patients. Another highlight was Latin America, which grew almost 49% organically. Although this region is the group's smallest revenue contributor, this is a really remarkable performance. This quarter, Digital Solutions revenue was impressive mainly due to our intraoral scanner sales. Please keep in mind, traditionally, the first quarter is not a peak period for the intraoral scanner business.
Building on the strong first quarter, we are happy to reaffirm our full-year guidance despite the current uncertainties around potential geopolitical impact and COVID-19 resurgence. Moving on to slide six, you can see the regional organic revenue growth rates for the first quarter as well as the average organic growth rate of the past year. EMEA remained the largest market for Straumann Group, accounting for 45% of group revenues over the quarter and therefore contributed the most in absolute terms. North America performed well with almost 21% organic growth, and APAC showed the slowest growth, having been impacted by COVID-19 lockdowns and treatment postponements in China. As mentioned before, Latin America was our fastest growing region over the quarter, though it remains the smallest. The comparative quarter in 2021, when the region grew by 20% organically, already showed very good results.
The strong first quarter 2022 results has been achieved thanks to the excellent execution by the team in LATAM, which has been taking market share notably on both the premium and value implant segments. Important factors that boosted sales were the clear aligner business there and the direct local presence in several countries in the region. With this, I hand over to Peter who will provide additional details.
Thank you, Guillaume, and good morning, everyone. Let's move to slide eight, where we can see the breakdown of the revenue development. There is no doubt that this was a strong quarter and an exceptional result. As Guillaume mentioned, in the first quarter of 2022, our top line increased by 27.2% organically, reaching CHF 589 million. This strong result was slightly impacted by a negative currency development, mainly due to the euro, and the marginal acquisition effect comes from the recently acquired company, Nihon. The EMEA region, as well as LATAM, are further gaining share of the group's organic growth. On slide nine, you can see the quarterly revenue results for EMEA and North America. The group's largest region, Europe, Middle East and Africa, had a strong first quarter despite a negative currency effect.
EMEA grew organically by 33% compared to the first quarter of 2021, accounting for CHF 236 million. This growth was driven by all segments with particularly strong contributions from orthodontics and implants. The dental service organization business enjoyed very strong growth too, as did digital solutions. Iberia showed highly impressive growth driven by intraoral scanner sales, premium and challenger implants. Germany, being the largest country, drove revenue in absolute terms with Turkey and Romania showing very strong growth. Our doctor-led direct-to-consumer orthodontic brand, DrSmile, continued its healthy growth in Europe. In the first quarter of 2022, North America grew organically by 20.7%, while revenue came to CHF 170 million. Both Canada and the U.S. delivered double-digit growth driven by strong demand across all major franchises.
Within premium implants, the BLT, BLX, and TLX lines all grew very strongly, reflecting the focus on immediacy. In the challenger segment, Neodent performed well over the quarter, lifted by a strong DSO performance and the region's focus on competitive conversions. This strong performance for implants overall also drove our restorative business in abutments and guided surgery. In digital solutions, intraoral scanners were a key driver for growth with a strong first quarter. Let's look at APAC and LATAM in more detail on slide ten. Asia-Pacific enjoyed organic growth of 18.4% and accounted for revenue of CHF 112 million. China remained a growth market in the first quarter. Also, the growth dynamic was impacted by lockdowns and treatment postponements. This was partially compensated by other markets in the region, such as Japan and Australia, which have seen strong growth.
The recently established subsidiary in Malaysia performed well and introduced ClearCorrect in the first quarter. The group also expanded further within India, opening an office near Delhi. Across the region, premium implants and orthodontics contributed strongly to the overall performance. Nihon Implant, the Japanese dental concierge service which the group recently acquired, started strongly. As highlighted by Guillaume, LATAM was our fastest growing region. In Latin America, Neodent drove revenue while the premium segment also grew strongly. The region grew 48.8% with the biggest market, Brazil, growing robustly and other markets in the region, notably Mexico and Argentina, growing even faster. The region accounted for CHF 39 million in revenue. All segments performed strongly, and particularly in digital solutions, the Virtuo Vivo intraoral scanner was driving revenue. Orthodontics grew rapidly over the first quarter throughout the region.
In both the premium and value implant segments, the group gained market share, thanks to the direct local footprint. Neodent continued to grow very strongly in the region, and a new educational resource, Neodent Campus, was rolled out during the quarter. In the premium implant segment, BLT implants grew strongly, in turn, driving solid performances for abutments and restorative materials. On slide 11, I would like to give you some flavor regarding the different business areas. The group's largest franchise, tooth replacement and restoration, contributed double-digit growth in both the premium and value segments, while premium implants remained the largest part of our business. The axially tapered BLT implant and the fully tapered BLX implant line remained the key contributors. The group's challenger implant brands grew strongly. MEDENTiKA impressed with a strong performance in Germany and in Turkey.
The digital solutions business is maintaining the growth momentum and was driven by intraoral scanner sales, especially in the EMEA region. The orthodontics business is doing well, and the investments made to strengthen the value proposition are starting to gain momentum. With that, I will hand back to Guillaume.
Thank you, Peter. Let's move on to slide 13 directly. You may be familiar with this slide on which you can see our group strategy, which is the North Star for every decision we take. I would like to talk about recent achievements and our strategic progress on the next few slides. With this, let's move to slide 14. As the worldwide population is aging, the numbers of edentulous health consumer is rising and making these indications the fastest growing segment in implantology. Full restorations are complex cases that require advanced skills and a treatment offering for different clinical and financial situations. This is why we have very significantly developed a comprehensive expert portfolio in the past couple of years.
We are now covering a wide range of indications and price points to allow clinicians to give patients their teeth back with the functionality and aesthetic that they are requesting to build up their self-confidence. Our portfolio offers many different possibilities to give patients teeth again, be it with removable or fixed tooth replacement. Implants designed for immediate treatment protocols are a crucial part of this portfolio, as especially edentulous patients are looking for a short time to teeth and a cost-efficient solution. Our launch of the fully tapered BLX and TLX, as well as the launch of the zygomatic implant, which allows to treat patients with severe bone loss without complicated augmentation procedures, have complemented our portfolio ideally to unlock this untapped segment for the Straumann Group.
This high quality of the launch execution allowed us to gain market share in the immediate segment in a consistent manner and enabled cross-selling of Straumann Group's wider portfolio. The affordability and versatility of our solutions drive health consumer decisions to go for implant-based solution rather than the denture alternative, which is increasing our addressable market. On slide 15, I would like to speak about the two very exciting challenger brand launches we accomplished in the first quarter, which will help to accelerate the internationalization of these brands. Anthogyr Axiom X3 is a fully tapered implant designed to offer universal anchorage in all bone densities. It offers a holistic solution, including immediate treatments with adapted protocols while respecting and preserving the bone.
The global launch event in March was attended by around 1,000 participants from 70 different countries, underlying the international potential of this addition to the Anthogyr offering. Right at the end of Q1, we also officially launched the Neodent Zirconia implant, the Neodent Zi. This apically tapered ceramic implant is designed to broaden access to ceramic implants. It offers clinicians an innovative and unique injection molded ceramic implant, which is also suitable for immediate Zi protocol. The Zi features a screw-retained connections between implant and abutment and a comprehensive ceramic prosthetics portfolio, meaning that there is no contact between metal and the patient tissue, which fulfills the desire for a fast, aesthetic and affordable solution. These features make the Zi a valuable tool for clinicians seeking to differentiate their practice. So far, more than 1,500 dentists have been trained to place this implant in several countries.
Let's move on to slide 16 and talk about our Orthodontics business. During the first quarter, we made further progress in strengthening our value proposition by introducing new software features that improve customer experience and support the treatment of more complex malocclusion cases. The ClearPilot 3.0 and 3.1 software versions empowers customers to move teeth directly in the 360 model and enhance treatment experience with the ability to visualize overcorrection. It also allows to rate and send feedback on the quality of the setup. Since the launch, we have collected almost 10,000 ratings, including comments that will help us further develop the next generation of aligner and software features. We also started supporting the treatment of more complex cases with the introduction of cutouts for elastics to cover additional indications.
This new clinical feature will enable clinician with more control in the treatment of teams, Class II or Class III malocclusions and the ability to perform more complex teeth movements. The integration of the intraoral scanners proved to be a key success factor in delivering simplicity for the clinician. Based on constant significant investments, more development are also expected to be released in the next month. Features like diagnosis tools, surgical simulation, smart tooth movement are currently planned for ClearPilot. New aligner features to support the treatment of deep and crossbite cases will be launched also later this year. Let's move on to slide 17. The impressive performance of the digital solution portfolio was driven by intraoral scanners, the biggest part of this business. The relaunch of Straumann's Virtuo Vivo intraoral scanner has been welcomed by practitioners who find the increased usability and connectivity help improve their workflows.
Also in the first quarter, the RapidShape P50 3D printer, a high-volume, high-intensity device, had a limited market release and will get a full market release later in 2022. Moving on to slide 18, we acquired a strategic minority stake in the cloud-based practice management software, CareStack. This partnership will support dental practices in simplifying treatment planning, scheduling, and payment options, thereby helping Straumann Group clinicians to provide high-quality care in a more efficient way to their patients. Combining our clinical excellence with CareStack's advanced business intelligence and comprehensive practice operations will offer clinicians a seamless end-to-end experience. CareStack practice management software is suitable for individual practices, groups, and DSOs. Together with CareStack, we will drive internationalization of this software, which will help increase penetration in different geographies. This brings me to slide 19, which summarizes the recent changes to our executive management board.
Sébastien Roche became Straumann Group's Chief Operating Officer on April 1st. He will oversee the group's production sites for implants and biomaterials. In addition, Jason Forbes has been appointed as our new Chief Consumer Officer and will drive the build consumer presence part of the group's strategy. Jason took up the role on April 19th and is responsible for leading DrSmile, Smilink, Nihon Implant, and other strategic direct-to-consumer initiatives. This is a newly created role to make sure this priority is reflected at the highest levels of the group. On slide 20, we would like to give you an update on the progress we have made on sustainability. As communicated previously, we introduced a Straumann Group sustainability framework this year and set clear goals for each commitment. In the meantime, we have established a team of sustainability ambassadors through to the organization to cover all regions and business units.
To empower our people, we have rolled out a cultural workshop program in line with our sharpened purpose and beliefs introduced in Q4 2021. In Q1, those workshops could take place face-to-face again and had more than 1,200 participants, many of whom reported feeling energized and having learned valuable lessons for their personal development. In our framework, we committed to care for the planet and to safeguard the environment. In order to put together an environmental strategy to minimize our emissions, manage our waste, and reduce our use of materials, energy and water, we ran an internal environment idea crowdsourcing campaign in the first quarter. It allowed employees to contribute to improving the group's environmental footprint. Over six weeks, employees submitted more than 230 ideas, which will now be taken forward and assessed by 28 environmental ambassadors.
Furthermore, we made great progress in refining our data collection and reporting process in order to more clearly identify our status quo. This will form the baseline to set a target date for getting to net zero carbon emissions. Within our renewable electricity program, we are working with the sites to achieve 100% renewable electricity by 2024. As a reminder, 69% of our electricity was already renewable by the end of 2021. Let's move directly to slide 22 and the outlook for the group. As mentioned earlier, we maintain our guidance for the year despite the uncertainties and challenges in front of us. We will continue to seek to anticipate and mitigate supply chain disruption, inflationary and geopolitical developments, and their potential indirect impact on consumer behavior.
Organic revenue growth is expected to be in the low double-digit percentage range, with profitability around 26%, including major growth investments. With our strategy and high-performing team in place, we believe we are well positioned to succeed in this uncertain environment. Now, I'm going to open the question-and-answer session. If you have a question, please press star and one on your phone to join the queue. As usual, we kindly ask you to limit the number of questions to two questions per person. Operator, can we have the first question, please?
The first question comes from the line of Patrick Wood from Bank of America. Please go ahead.
Perfect, thank you very much for taking my two questions. I guess the first one, just curious, you know, the one comment that I guess you guys haven't sort of touched on in the presentation in a meaningful way was really the consumer. Obviously we've seen some mixed signals from other dental companies, but very strong numbers from yourself. You know, what do you think about the outlook for the consumer and implications for whether orthodontic work or single tooth restoration or whatever? How are you thinking about that business going forward? Have you seen any initial hesitancy from consumers, anything like that? Very curious. I guess the second one is around immediacy. Could you remind us? I mean, I still thought the majority of loading was still delayed today.
Like, I don't know, 2/3 delayed and then 1/3 immediate, but curious how you feel about that. If that shift is accelerating in terms of prioritizing immediacy, has that had any impact on the parallel-walled business? 'Cause obviously tapered is, somewhat, as far as I understand, more useful on the immediacy side. Awesome. Thank you.
Yeah. Thank you, Patrick. Looking at consumer, we have seen in different geographies some consumer I would say different behaviors than 2021. It's very different from geographies to geographies. If you look at Latin America and Europe, I would say we have seen a very healthy trend in Q1 despite obviously the consumer confidence going down as everyone has seen in the report.
Honestly, even for the beginning of April, we have not seen anything major, even though we see patients wanting to discuss a little bit more, potentially the price or some maybe taking a little bit more time than before to take the decision to go on the treatment side. I would say, more on the clear aligner side also than on the implant side, so far. When it comes to North America, we have seen a little bit more, I would say a convincing power needed, to have the patient undergoing treatment. We have seen that with some of our DSO partners sharing some of this perspective, especially March and April.
I would say we have seen a little bit of this of this lack of consumer confidence about the future, which is a little bit changing their behavior, but nothing, I would say, too dramatic for the time being. In Asia Pacific, we have seen a very strong change because of what's happening obviously in China. We have, on the one side, the lockdown, which is preventing people to go to the dentist anyway, then stopping completely the treatment. But also that VBP, again, that volume-based procurement project from the Chinese government, which is a little bit of pushing patients to reschedule treatment and waiting when the price will be lower.
That's where we see a significant impact on consumer behavior, not so much because of the inflation, but because of COVID and VBP in Asia Pacific like China. I would say maybe North America, a little bit of colder feet to go under treatments and the rest of the regions was more positive, I would say, consumer behavior. When it comes to immediacy, yes, I said we see immediacy is the fastest growing trend. We see that a clinician are really using more apically tapered or fully tapered implants. I would say we don't see the parallel wall implant declining faster than before. It's more a question of generation.
The clinicians that have been used to place parallel wall implant, they still continue to place parallel wall implant for a lot of them. As this generation is then step-by-step stopping the activity, then we have a steady decrease of the parallel wall segment, which is obviously replaced very significantly by apically tapered and fully tapered. That I would say that's the dynamic we are seeing from an implant design standpoint.
Thanks for such specific answers. Thank you so much.
The next question comes from the line of Daniel Jelovcan from Mirabaud. Please go ahead.
Yeah, good morning as well. The first one is to the Neodent Zirconia. You mentioned it's apically tapered, and the apically tapered market in general is far bigger than the fully tapered. Is that also the case for zirconia or are there different dynamics here? I guess the upside for zirconia is quite big for this implant. The second one is in China as well, the VBP, or in general, the regulations. I think you are a bit delayed with ClearCorrect off the top of my head because the Chinese authorities have no time, I guess. How is the status there? The deadline for VBP in dental was end of March. How does that look like now at the end of April?
What I don't understand really in VBP, how can that have an impact that patients delay it because of VBP? I mean, I guess when I go to a premium implant dentist, that the consumer doesn't really know that they're that's about VBP. Don't really understand the reason there. Thanks.
Thank you, Daniel. Good questions. Neodent Zi on the ceramic side. You know, it's apically tapered because, as you rightly said, the largest part of the market is apically tapered implants, and most also of the ceramic implants are apically tapered from a design standpoint. What is very different here on the Neodent Zi implant is that it's a very unique one on the marketplace, because it has a small diameter implant, 3.75, in a two-piece screw-retained version. That means you still have the versatility when you are doing the prosthetic side.
I don't want to enter too much in detail, but very often, because ceramic is a brittle material, more difficult to work with, competition has either no smaller diameter, or the smaller diameter are either a one-piece, then you have very limited flexibility from a prosthetic standpoint, and they are not very used, or they are not really reliable when they have a two-piece screw-retained. Thanks to that specific manufacturing side, we have a very robust ceramic implant despite being 3.75 millimeter and having that capability to have a very flexible way to restore the implant. This is a very unique combination of feature that should open up the ceramic implant as much as the clinicians are going to test it.
We are doing a careful launch. We are doing what we call an education-based launch to make sure that practitioners are learning to place the implant properly, that they are learning the benefits of the implant. We have so far a lot of very satisfied clinicians with the use of the Neodent Zi, which is a much higher acceptance in general than other ceramic implants. We want to do that properly and again in a very structured manner as we are always doing product launches. We are very excited by this opportunity. When it comes to China, VBP, I think the timing has shifted from the Chinese government. They were first planning to include 15 provinces.
They want to include all the different provinces in China. They decided to delay the project up to Q3. That's the reason why it has not been implemented yet, and we still don't have the details yet also on what kind of the implant category are going to be created to ensure that VBP. That's the reason why there is no implementation yet. Yes, the Chinese government has communicated about the VBP to the population. They are also getting informed when they are getting to national hospitals about that project, and that will decrease the overall cost of the procedures. It's not going only to let's say drive ASP of implant down in national Chinese hospitals, but it will also drive the cost of the procedure down for the patients.
That's why I think sometimes potentially guided by some information at the national hospitals, sometimes with the information they got directly by the government, they are knowing that the price of the implant procedure will go down. Finally, with regard to the question on the regulatory for ClearCorrect, you're right. The COVID-19 impact and the fact that government officials on the regulatory side, some of them were not able to then come to the office and do the regulatory work. We have a delay in our planned ClearCorrect green light for China that was planned for the end of our Q1 quarter and should be done in the coming months. We still expect that during the first half we are going to get that agreement, hoping that things are going to do better in China.
Okay, thanks so much.
The next question comes from the line of David Adlington from JPMorgan. Please go ahead.
Hey, guys. Thanks for the questions. Firstly, I just wondered if there was any stocking impacts in any of the regions we should be thinking about or taking into account. I suppose notably in possibly Russia in Europe. Gonna be just in terms of the COVID impact in the U.S., because of COVID this February and March, and just wondering what you're seeing continuing to April.
I think there is no significant destocking implant effect in our Q1 number. They have been at some point some additional order in Russia before we had that significant conflict starting, especially because we had also acquired a distributor in Q4 2021. If you remember, we have been stocking actually the distributor to get started, the Straumann distribution instead of the Dentsply implant distribution, which was also helping us to gain market share in the Russian market. If you look overall of our total number, there is no stock impact that could be seen here.
On the COVID impact in North America, we had some impact in January. We have seen the COVID impact was a lot in between the end of December 2021 and the beginning of January 2022. I would say that this COVID impact has flattened out and we don't see at the moment any major disruption or slowdown on the U.S. market due to the specific COVID virus.
Great. Thank you.
The next question comes from the line of Maja Pataki from Kepler Cheuvreux. Please go ahead.
Good morning. I have also two questions. The first one on the clear aligner business. Looking at the numbers that have come out of the U.S. last night with Align Technology, your orthodontic business seems to be quite significantly in a better shape. I was wondering if you could share a bit more details. More specifically, has your orthodontics business been growing above group or below group? And can you tell us maybe some differences in how the B2B business has been performing versus the B2C2B business? And then my second question, is it fair to assume that based on your statements, what you're seeing about the consumer sentiment, that we have not seen business momentum in April deteriorating significantly?
I mean, of course, you know, growth is probably off from where you were in Q1, but it would be very helpful to get a bit of an understanding whether you're still seeing healthy double-digit growth in April. Thank you very much.
When it comes to clear aligner, I think this is very different from region to region, and as you said on the channel to market as well. What we can say is that the orthodontic business is growing very well in Latin America, in Europe, and to a very small extent, I would say in Asia Pacific, because it's still a very small business, taking into consideration that China with ClearCorrect has not been started. This is a very strong growth, starting from also a significantly low base. That's why we are very happy with the results here.
For North America, we have seen the B2B business being, while slower than what we had at the end of 2021, because we think that the consumer confidence has impacted more the clear aligner side than the implant side, which did not come or which is not coming as a surprise for us, because we believe that a part of the clear aligner business is still something that one could call a cosmetic decision to take from an aesthetic standpoint, whereas an implant is still a very functional need.
When you have this kind of consumer confidence, if you take care of your health, you have more the propensity to go for the treatment than potentially an aesthetic treatment that you think you can maybe postpone for when you will have more confidence in the future. That's where, as an example, as our base in North America is the biggest, we have seen more this effect happening in North America. When it come to the direct to consumer, which is only in Europe, we have seen actually direct to consumer still healthy. It's a strong growth based on quite some already strong growth before for DrSmile.
We keep supporting the development of that channel because we see that it's really answering to a specific target group which is obviously not going to a dental practice first to initiate the treatment. When it comes to the consumer side, it's the same here. We have seen a consumer sentiment, and I would say I would call it more patient flow being still positive in regions like Europe, LATAM, and some countries in Asia Pacific. The only one that has been significantly once again impacted is China for the two reasons that I explained being COVID and the VBP effect.
North America has been positive, but to a lower trend than what we have seen at the beginning of the quarter.
Perfect. The momentum on sales growth in April, is there anything you can share?
While we are not sharing monthly results, but I would say that we are still in line with our guidance when it comes to that April numbers. We think that we are still on a low double-digit growth perspective that is our goal to achieve looking at the uncertainties that are around us.
Thank you.
The next question comes from the line of Julien Dormois from BNP Paribas. Please go ahead.
Yeah. Hi, good morning, Guillaume. Good morning, Peter. Thanks for taking my questions. The first one relates to the growth that you experienced in Europe. Obviously you had good growth across all geographies, but Europe clearly stood out. Just curious whether that is coming from all the stars being aligned with all the business line growing nicely at the same time, or whether you would also point out maybe some share gains or mixed contribution or anything that could explain the superior growth that you've experienced in Europe. That would be the first question. And the second question relates to the digital business and specifically to intraoral scanners, which seems to be on the road for you guys. Two questions here.
The first one is just could you remind us, a very rough estimate of how much that contributes to group sales, as a percentage? Second, just also elaborate a little bit on the rationale for having free scanners available, and how your strategy around this offering could evolve in the coming years.
Yes. Hello, Julien. When it comes to Europe, I would say that there are two major reasons for the European excellent results. The first one is that on our B2B side, we have very strong implant results because on the premium side, our immediacy segment is really growing significantly based on the innovation. Now our challenger strategy is kicking in much better than in the past. We have been adding activities and strategies on go-to-market for the challenger brands that have been a lot focusing on or being successful in North America, in Asia Pacific, in Eastern Europe. We see now our team in Europe have embraced this strategy of premium and challenger to be grown together.
With the change of some of our leadership, from a sales standpoint there, we see a significant momentum on implant helping us to grow than all our product portfolio. This is really promising for us also moving forward and gaining share on not only a premium as it has been the case in the past, but also on challenger in this specific region. Ortho is growing significantly because, as said, starting from a low base, we are doing significant investment in a go-to-market standpoint. We still have a lot of work to be done here, but this is delivering some significant growth for us, at least from a relative standpoint. Well, the digital business has been helping.
When it comes to the digital side, one of the specificity that we have, at least, on our IOS portfolio, if you remember, is that we are really covering all price points, which is also an excellent position to be in when we look at the current macroeconomic environment. We are adding the high-end with Rapid Shape and the best technology out there. We are also adding the middle market with Medit, which is allowing us more flexibility in pricing.
The very good news is that our Virtuo Vivo, which is designed, manufactured, and distributed by the Straumann Group entirely, is really starting to make its inroads in the market, and especially in terms of having an entry market price for IOS in these current circumstances, is a really interesting asset. The overall digital business is a low double-digit number within our total sales.
Okay, thank you very much.
The next question comes from the line of Oliver Metzger from ODDO. Please go ahead.
Good morning. First question is similar to a previous one. If I look on the quarterly performance of Europe compared to North America, it clearly shows that over some quarters we see a quite nice outperformance in Europe. Given also the comments you said before, but also the overall dynamics, my assumption is that for dental implants isolated, North America is still showing an outperformance, and it's just the DrSmile contribution which make the growth difference in favor of Europe. Could you comment on that, please? Second question. You mentioned at orthodontics that you're now able to treat more complex treatments. Would you describe this step as the last one, which fills gap in the technological offering compared to the market leader?
Do you still see some further steps needed really to fill the gap with regards to this offering?
Yeah, I think good question, Oliver. When it comes to our growth rate from the implant side between Europe and North America, we have had, you know, numbers that have, let's say, I would say are comparable. I would say where you are right is that the performance in Europe has been significantly also supported by the DrSmile direct activity that I forgot actually to mention to Julien before, which is the second explanation of the European very good results. When it comes to then the second question, again, what was the second question? Sorry.
It's about your technological offering, and you said you're able-
Oh, yes.
to treat more complex treatments.
Yeah, got it. Sorry. Yes, on the orthodontic side, yeah, we said we are investing significantly in software development and we are very pleased with the results of our software engineering teams, which is really working very strongly in order to close the gap of indication coverage. Would our 3.1 ClearPilot software is closing entirely the gap? The answer is no. Is it, let's say, closing a part of the gap, a significant part of the gap? The answer is yes. We have the capability to do much more than what we have done before.
We believe that, again, within the next two versions, we should have almost the gap completed. We think in our development plan by early 2023, we should have the capability to enter the specialist orthodontist segment with our ClearCorrect offering and our complete software feature for the ClearCorrect software on the clinician side.
Okay, that sounds well. Thank you very much.
The next question comes from the line of Falko Friedrichs from Deutsche Bank. Please go ahead.
Thank you. Hello, everyone. I have two questions, please. The first one, we obviously know you don't provide specific earnings figures with your Q1 update, but given that you started this year quite clearly above your sales growth guidance, is it at least fair for us to assume that you also started the year a good amount above your EBITDA margin guidance for this year? My second question is on clear aligners. Do you plan to make any adjustments to your strategy now in terms of the rollout of this business in light of this more uncertain market environment at the moment? Or do you just plan to go ahead with your initial plans, assuming that all these market headwinds are more of a temporary nature? Thank you.
I can take the first question, Falko. Thank you very much for that. Obviously, as we are not providing any details on our earnings figures in the first quarter, I cannot also not go really into the details. However, I mean, what are the earnings? The earnings are always a combination of revenue development and the OpEx spend that we have. We can manage the OpEx spend. Obviously, if revenue is above expectation, then it's fair to assume that also on the EBITDA, we perform above certain expectation in the first quarter. However, I also want to stress that we stick to the guidance for the full year on the revenue side as well as on the profitability side.
When it comes to the clear aligner strategy, we are sticking to our strategy. We said that we wanted to invest significantly in this area, of course, on the technology side, and we discussed that a little bit with our new software version that has been just released now once again, but also on our go-to-market approach. We are continuing to develop go-to-market, investing in developing teams on the ground in the major markets in order to make sure that we are going to gain also customers in the short and midterm future.
From an investment standpoint, we are not changing anything versus what we have planned to do at the beginning of the year.
Okay. Thank you.
The next question comes from the line of Veronika Dubajova from Goldman Sachs. Please go ahead.
Hi, good morning, and thank you for taking my questions. I have two, please. Just one, I wanna circle back to the guidance for the full year. I appreciate that the world is really uncertain, but if I just assume you guys deliver 14% sales growth, I think what it implies is basically 10% growth in the remainder of the year. So just trying to kinda understand, is that something that you're seeing already in April? Or is this, you know, something that you anticipate will happen as you transition through the rest of the year, given where the consumer is? Just really wanna understand the motivation for, you know, going from 27%-10% growth. Like, what actually drives that? What's the bridge from one to the other? So that's my first question.
I don't know if Peter, you're able to clarify, did you say that growth in April was low double digits or that growth in April is consistent with the guidance? That's my first question. My second question is just kinda more broadly on the China dynamic. If you can give us an update on where you are with the clear aligner launch and approval there, that'd be great. Thanks.
Yes. Thank you, Veronika. Coming back to the guidance side, I think the way we are seeing right now is that we have been achieving a very strong Q1, and we are very excited with this because obviously this is giving us the opportunity to continue to invest in line with our plan and making sure that we can continue investment we have planned also during the whole 2022 . For us, this is positioning us in a great way in order to be able to build up our competitive situation or position in all the different segments we are in. When it comes now to what will happen in the next nine months, you know, it's very difficult to predict.
We are not planning exactly how much growth we are going to do as an example in the second half, because I think it's very difficult to evaluate. You have on the one side the inflation, which is just starting to kick in at the consumer side. We all know that, you know, food price and energy pricing are going to make some significant impact on households' available income. What will be the priority that they are going to do in their spending with regard to health, with regard to other kind of spending, I think no one knows.
That's why we prefer to be cautious here and make sure that we keep monitoring what will happen in the coming months to make sure that we are ready to adapt our strategy if needed to what the consumer sentiment and consumer behavior will be. The second thing for us is that in the major markets like China, like Russia, that were a strong growth contributor, we have quite a very challenging situation right now, and nobody can predict what's going to happen with COVID in China, looking at the very strong stance that the government is taking with regard to their response to the outbreak.
If they continue to do a very strict lockdown and blocking, you know, Shanghai, blocking Beijing and all those major cities are doing a big part of our business, then we would have also some very challenging situation in China. We are still, you know, very positive for most of the geographies, but those would be significant clouds hanging over our heads that we need to take into consideration from a guidance standpoint. We will be able to monitor that very clearly, and I'm sure that after the second quarter, we will be able to have a clearer view and see if a guidance needs to be reviewed.
At the moment, we are pleased that we're able to stick to our guidance and to reaffirm that we are going to be able to grow double-digit growth. When it comes to China, yeah, the China approval process has been running for quite some time ago for ClearCorrect. We have everything ready. We have a specific Chinese treatment planning, and the treatment planning team is ready to go and already doing some test cases to make sure that they are sharpening their skills while we are getting approval. We have our manufacturing plant, which is ready. They are also performing some cases in order to make sure that we keep increasing efficiency in the plant while we are finalizing the approval process.
We have done all the different paperwork and all the necessary evaluation and toxicity test and so on for all the different materials. We are just waiting for the approval process within the Chinese regulatory authorities if this is taking more time than we have planned, also due to some of the local circumstances within China at the moment. We hope that the regulatory authorities will be able to resume their activity and come back to us within the coming weeks.
Understood, and thank you for that, Guillaume. Just quickly in the April comment, because I think, for instance, you know, Align said last night that their April sales were flat versus March. Are you seeing a similar slowdown in your business? Is April growing double digit? Is it growing similarly to Q1?
No, again, as I said, I think, April is not growing similar to Q1 because we see while the Chinese impact as an example, and some of the confidence, consumer confidence, has been impacting some of the trend, but we are still on the double-digit side for us, in April, from what we have seen so far.
Okay. Understood. Thanks so much for that.
The next question comes from the line of Daniel Buchta from ZKB. Please go ahead.
Yes, thank you very much for taking my two questions. The first one would be on your organic growth. Maybe is it possible for you to break it down a little bit more into price and volumes? I mean, just to get an indication on how successful you were on price increases already. In general, I mean, how do you see the feedback from your customers on that side? In the past, you indicated that you at least expect to pass on basically all inflationary pressures. The second question, in addition to your comments on the aligner business, I mean, you stated when you expect to be able to do the complex cases. How is the picture on the teens market? I mean, when do you expect to have all regulatory approvals on that side?
When do you think you can be ready for that, as it would be the second bigger gap still left for you in the aligner space? Thank you very much, gentlemen.
On the organic growth price versus volume, I think we have put some price increase. You know, the price increase are still at a reasonable level. It's low single digits that we are doing. There is a lot of the organic growth which is coming from volume. Looking at the inflationary pressure, we have the capability to pass part of the inflation. But if inflation, like in the Eurozone or North America, is around 8%, we have not yet translated all the inflation in our pricing strategy.
Now, we are, you know, allowing ourselves that we can do several price increase during the year. This is still something which is on our radar and based on the development of our growth margin, that's what we would be evaluating. For the time being, we have not either translated inflation in our personnel costs, meaning that our costs did not grow as well following the inflation. When it comes to the aligner side, on the teens market, then you need to do a difference between the mixed dentition or the final dentition.
We are already active a little on the teens market. For all the teens that are above 13 years old and are having their final dentition. We got this FDA approval in North America that we are going to leverage much more because we did not market that yet. We are planning a significant campaign on this one, and we need to do some additional clinical evaluation work for going to the mixed dentition, meaning below 13 years old.
Okay. Thank you very much. Very helpful.
The last question for today comes from the line of James Vane-Tempest from Jefferies. Please go ahead.
Hi. Thanks for taking my questions. Just have two, please. I think you mentioned that Russia and Ukraine is up to 4% of revenues. I'm just wondering what inventory levels you've got and how you're able to resupply, what disruption has been to procedures and how durable that current business is. The second question is, there's been a number of questions so far on the call at least talking about April. I think previously you've mentioned you had 60 days visibility into the business. Just wondering if you're also seeing double-digit growth in terms of what you're expecting to see coming into May. Thank you.
Thank you, James. Yeah, when it comes to Russia, we have, as we said, during our full year results, we have had the opportunity to generate some stock in a Russian subsidiary to make sure we can, as a medical device company, ensuring a continuity of care for the patients that have been under treatment, especially all the prosthetic parts and the appointments that were planned that have been ensured in order to support patients in need. We had six-seven months of stock, as we said, planning to go until September, October. This is still the case.
We are evaluating the situation in the hope that this terrible and unacceptable conflict will see a quick end in order that we can afterwards potentially support our team in Russia over there and helping them out also to resume fully their activity. When it comes to April, as I said, I think in April we are then happy to see still double-digit growth, even though it's really significantly lower than what we have been able to achieve in Q1.
Thank you. Were you able to give any commentary on May? I gather that you did have around 60 days visibility into the business before. Can you give us in terms of what you're expecting to see?
In May?
Yes.
Well, May we cannot give a visibility globally, I think, because what we know is that, again, we have some visibility when it comes to customer appointments, then the customer appointments in the major geographies, except China, have been still positive, then when we look at the booking in the dentist side. But if patients start to call in and are starting to reschedule, then this is something that we will not be able to see. Looking at the current uncertainties, I would not comment on the May potential numbers.
Thanks very much.
Okay. Thank you all for all your questions. With this then we conclude our conference. We look forward to meeting you at one of the upcoming financial conferences or during our virtual roadshow meetings, which are outlined on slide 24. Thank you once again for joining us today, and have a great day.
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