Hi, everybody. Welcome. I am Elizabeth Anderson. I'm the dental and Healthcare Services Analyst here at Evercore. I'm very excited to be sitting here with CEO Paul Keel, who many of you know of Envista. He started earlier this year and has been wasting no time in getting everything up and running. So thanks for joining, and for those of you who don't know, we also have a new IR person, Jim Gustafson, so if you don't know him, he is here with us as well, so maybe just start with some of the shorter term things, and we'll go sort of from there. If we're looking at your core business, have you started to see any changes in patient traffic and procedures as we've sort of moved through the quarter? Because I know that's one of the things that we've been thinking about is, like, is dental bottoming?
Like, where are we going from here as we look forward?
Yeah, I mean, it's the right place to start. I guess I'd say three things by way of market. So first, as you know, the walk-around phrase everyone is using is slow but stable. And I think that accurately describes it. I was out with doctors yesterday here in Miami, and that's consistent with their report. They say the underlying patient traffic is about the same, not going up or not going down, which brings me to the second point, which is there are differences procedure by procedure. And the doctors note that early in your conversations with them, they say the basic sort of fundamental general dental procedures are no change. People are coming in for their cleanings. They're coming in for minor restorations, et cetera.
It's the higher ticket items on the implant or maybe the more advanced orthodontic categories that have seen a little bit of a slowing. In terms of do we see any sign of improvement, you know, I think the industry looks at the macro indicators and has room for optimism. Interest rates coming down, consumer confidence going up. Both those generally predict subsequent improvement in the dental market, both the traffic flows and the revenue side. But we don't yet see it in our P&L.
Got it. No, that makes sense. I mean, maybe sort of thinking about that set of rate cuts, how do you do sort of how should we think about that sort of series of rate cuts? Is there sort of like a tipping point once it's been cut, I don't know, 100, 150 basis points? Or is it just kind of like it has to sort of filter in, the visits have to be steadier, plus the rate? Like, how do we think about that sort of change in purchasing behaviors potentially on the equipment side?
Yeah, well, most of us have never seen interest rates go up in our career, so we're still trying to digest that. I certainly have never been there for a rate increase and then a normalization, so I don't think there's good reliable data on how the dental market will respond, you know. Is a 100 basis points cut equal to X points of market growth? That said, you certainly can convince yourself that the underlying dynamics of lower interest rate are going to help the market. We know that is how site expansions get financed, so that's good for individual clinicians. It's good for the DSOs. We certainly know, because we have an equipment business, that most of those purchases get financed.
And we hear it in every customer interaction where interest rates come up, and they ask us or our distribution partner to buy down that rate on the financing. And then you do hear it from individual patients on some procedures. If you're getting a full arch restoration, you know, if it's a $30,000 procedure, you're probably going to ask about financing. So all that ought to help.
Okay. If we think about some of the other headwinds that Envista has faced this year so far, I mean, one of the things that's been impacting the business are the dealer inventory levels, right? I think you guys have talked about a year-to-date headwind of about $25 million. How do you sort of think about where we are in that process, like maybe even for fourth quarter? And then, you know, how should we think about that looking forward into 2025?
Yeah, so let me give two thoughts specific to North American consumable inventory, which is what we've talked about on the earnings call, and then maybe a couple comments more broadly outside of the U.S. and different channels. So specific to North American consumables inventory, our posture is to work with Schein, Patterson, Benco, Darby, et cetera, and set an inventory level that they need to provide excellent service to their customers, you know, on-time delivery in the high 90s. Typically, Envista can deliver high 90s service to our customers independent of what their inventory levels are. It's the exogenous things that would be going on in the dental market that would cause a distributor to want more inventory. So the easy example of that, which everyone knows, is COVID, when it was hard to get raw materials. It was hard to get semiconductors.
All of that made it more difficult for us to make dental consumables or diagnostic equipment. So we expanded our buffer inventory. It was harder for the distributors to get product from us. They expanded their inventory. So coming out of COVID, it was not unusual to see inventory levels in the North American channel of 12, 13, 14 weeks, you know, up to sort of four months. You don't need that to serve dental clinicians over time. You need about half that much. And that is where our inventory level with those distribution partners I mentioned is currently at.
Okay.
So that shows up in the P&L in two ways. The first is when you go from 12 weeks to six weeks, they order less, you know, as they draw down the inventory.
Yep.
That's what you saw in Q2 for us. The second way you see it then is even if Q2 to Q3 is stable, you'll see the year-over-year effect because they were ordering product in Q3 of 2023 that they didn't order in Q4. So that's what you saw in our Q3. We expect Q4 inventory levels to be just about the same as they were in 2Q and 3Q. So that talks a little bit about North America. Now, more broadly, country by country, there is a similar dynamic, and it can play out differently. One country people are paying a lot of attention to right now is China, which tends to have higher inventory levels as a rule. It's a much more expansive, fragmented distribution channel, and it's a more volatile market.
So right now, there are some categories where we think excess inventory in China. In the same way that we work to draw down inventory in North America, we're working with our channel partners in China saying, you know, do you really need X months of implant inventory? Implants is a direct category in North America, but it goes through distribution in China.
Got it. And so if we think about that, like, is that something that you sort of think Chinese inventory numbers stabilize as we go through 2025? Is that like a two-month process, a 12-month process? How do we think about that going forward?
Yeah, there's more moving pieces in China because in addition to the macroeconomic volatility, which, you know, higher volatility, you need more buffer, you also have the VBP effects in China. And so we've gone through that now with implant VBP. Everyone understands that pretty well. And people are expecting now that it will happen for fixed appliances and ortho for brackets and wires. And so the channel and the suppliers and the clinicians are trying to learn from the implant experience and manage inventories correctly. You know, a distributor doesn't want to have several months of orthodontic inventory right before VBP because all that will need to get repriced. And that's now some sort of negotiation between supplier and distributor and customer to manage that.
Got it. And maybe just switching and talking about that ortho VBP a little bit more. You know, we've talked about it. It's rolled out in some provinces and has been for some time, but not the big provinces, at least population-wise. So what's the most recent update on sort of when that might happen?
Yeah, there's no formal central government communication yet on fixed appliance ortho VBP. But there are some leading indicators. So the first is, as you say, a number of provinces have tested it. And they've also done tests on the clear aligner side. So you have some information from that. The second piece of kind of leading indicator is that it looks like the same team that did implant VBP managed it on behalf of the government will manage the ortho piece.
Okay.
The third piece is they have been telling us that it is coming now for, you know, call it 12 months. It was a successful VBP on the implant side was a successful move for the Chinese dental community. It was good for patients. About twice the number of patients got treated. They got treated at half the price. I think that was good for access to dental care. I would say it was good for suppliers. Our volume roughly doubled. Yes, the price came down 40%-45%, but net-net, it was a benefit. I think it was good for clinicians, a lot more volume going through their practices. All of that put together leads us to believe that an ortho VBP is likely in 2025.
Okay, that makes sense. What I guess, coming out of, I think you talked about some of the implant learnings, like, what was the biggest implant learning from going through VBP on that side of the business that you think will make how you approach the ortho VBP differently?
Yeah, so I'd give you a couple. The first is on the structure of the VBP. So the government has to make two decisions. The first is they almost, well, the purpose of VBP is to reduce the price of the procedure. They then decide, do they also force a reduced price on the supplies that go into it? In some instances, they've reduced procedure, but not supply. And that creates some dislocation in the market. We suspect they will do both on the ortho VBP. So that's a learning. The second we touched on earlier, you want to avoid having a lot of inventory, higher-priced inventory sitting in the channel right before the VBP. That's complicated for everyone to work through.
Yep.
So, you know, we're leaning into trying to draw down inventory more in anticipation of that. And then the third is, you know, you got to think about which categories you really want to participate in. Because in general, there seems to be a slight preference when the government can for locally manufactured product. So you have to think about how you want to architect your supply chain and whether you want to do local manufacturing of that category, you know, if you're going to participate in VBP. So these are all sorts of things you have to think through as we get ready for it.
Got it. And the implants that you sell in China, what percent are manufactured in China now?
Currently, zero. Right now, we make our premium implants in the U.S. and in Europe, and we make our challenger implants in the U.S. and in Israel. We don't have any local manufacturing of implants right now, but we have a big implant business in China, and so we're thinking, do we want to localize part of our implant manufacturing there?
Got it. No, that's helpful. Maybe switching over to Spark. I know there's been a lot of noise this year on the revenue deferrals and the changing deferral rates and things like that. Maybe putting that part of it aside, can we talk about the business on a volume basis, number of cases? Can you talk to us about, like, you know, where we, how did we do this year sort of from a case perspective? Because I still think that's something that investors are, you know, have some degree of confusion about, and sort of like how it's progressed as we go through 2024.
Yeah, so it's been about four, a little better than four years since we introduced Spark. And the business has outgrown the market each of the four years and almost every quarter. That is also true in 2024. The first three quarters, we outgrew the market. The second thing that's true, though, is that the market has slowed.
Yep.
That our outgrowth relative to the market has reduced as it gets to be a bigger and bigger business.
Sure.
Those would be two things I would say. Right now, the underlying case volume, the underlying shipments of total aligners going out are high single-digit kind of rate. That's down from strong double digits the preceding year. Apropos to our earlier question about indicators of future market growth, if consumer confidence continues to strengthen, that's clear aligners is typically a category more tightly correlated with consumer confidence. That would be good for market growth. And then assuming we continue to outgrow the market, that'd be good for Envista.
Yep. No, that makes sense. When we talk about it, traditionally, I've thought of Spark as really sort of an ortho-focused product of people who maybe also buy other products from Ormco. Can you talk about, is that still sort of the case and that's where a lot of the new growth is coming from, or is it some other sort of segment of that provider population?
Yes. So, you know, it used to be until very recently that there were three clear aligner categories. There was professional ortho, meaning an orthodontist works with the patient. There was general dental ortho, meaning you go to your GP dentist and they can order clear aligners. And then there was direct-to-consumer. Now, the DTC part of it has essentially all gone away. And you just have the two categories. While Envista serves both general dentists, we sell them dental consumables, we sell them imaging supplies, we sell them value implants, we do not actively promote our Spark business to general dentists.
Yep.
And we do that for two reasons. The first is that we have such a strong base in traditional ortho. You know, we're by far the largest supplier of wires and brackets. We feel we have a market access advantage that's stronger there. The second reason is, you know, if you go far enough back, there was a ripple in the force when Align started selling, started with orthodontists, and then when they expanded to GPs, that was viewed as a, you know, a bit offsides by the orthodontic community. And so we're sensitive to, you know, to supporting that part of our customer base.
That makes sense. Okay, so if we think about pricing, now that we've been sort of talking more on the volume side, how do you kind of think that's about how Spark pricing has trended on a unit basis in 2024? And sort of if we think about early thoughts for 2025, how are you sort of thinking about Spark pricing as we move into next year?
Yeah, so three thoughts on this. Dental pricing, we always start with procedure pricing. So we always start with what are our customers doing in terms of the procedure cost to their patient. That tends to go up a couple of percent a year, whether it's a private pay situation or the reimbursement from private dental insurance or in the rare cases that you would have Medicare for orthodontics. You know, that goes up 2%-3% a year. Second step then is the supply to the orthodontist typically goes up, you know, 1%, 2%, 3% a year. And we see the same thing for us on both the fixed appliance side and on the clear aligners side right now. The third piece of the puzzle is, you know, when folks talk about price, they often talk about it as average selling price.
That's the blend of all cases. Right now, there is a shift between the more expensive, complicated orthodontic procedures and the more simpler. Particularly in the case of Invisalign, as they do simpler cases, it impacts their average selling price, even though they may be getting more year over year for the same SKU. You know, there's a little bit of noise in how the data gets reported.
Got it. No, that makes sense. And, you know, one area we don't talk about it as much usually is on the brackets and wires business. Can you talk about sort of what, you know, that business has continued to outgrow the market, even though we think of aligners as outgrowing brackets and wires? Generally, like, what is driving that outsized market growth within the brackets and wires more broadly?
Yeah, so today about 4% of people who would benefit from orthodontic care in a given year end up getting treatment. It's highly, highly underpenetrated. And about three quarters of all cases that get treated around the world get treated with brackets and wires. About a quarter get treated with clear aligners. While the percent of cases treated with clear aligners has increased over the last 20 years, almost by definition, since before Align, 100% was brackets and wires, the primary driver of the shift is not doctors treating patients they otherwise would treat with brackets and wires with a clear aligner. It's been new patients coming into the category. And so both segments of the orthodontic market are growing. They're both very attractive. Our posture, because we serve orthodontists globally, we don't pretend to tell them how to treat a case.
If they want to treat with brackets and wires, that's great. We hope they select an Envista Solution. If they want to treat with clear aligners, you know, they're the ones who went to dental school and orthodontic residency. And we hope they select Spark.
Okay, that makes sense. So maybe switching over to implants a bit. You know, I think in the third quarter, you talked about the North American implant portfolio starting to see signs of improvement and then mid-single digit growth in value. How do we think about that continued transition to sort of a market growth rate in North America in particular?
Yeah, so both of our businesses, both the value implant business in North America and the premium business in North America had been undergrowing the market. So in fact, both had had negative growth in periods. So step number one is to get those businesses growing. We now have, as we talked about on the Q3 call, three straight quarters of growth globally for our value implant business. And now we're almost at flat growth for Nobel. As the market now accelerates, the overall implant market, of course, we hope to accelerate with it. And eventually, if we get to market growth for implants and implant market growth returns to the mid-single digits that it has been for, you know, for many years now, that, of course, would be very, very helpful for us.
Yeah, no, that makes sense. And if we think about sort of your investment strategy in premium versus in the challenger brand, how do we think about, like, the differentiation of those products within the market and how to think about, like, okay, we're going out to market with both these sets and making sure that there's no sort of channel conflict between them?
Yeah, I mean, think of the implant market as a hasty generalization in three tiers. Think of the highest tier, most complicated cases. These are typically treated by, you know, facial maxillary surgeons, oftentimes have both a dental degree and a medical degree. Those are almost exclusively treated with a premium implant. At the other end of the spectrum would be a general dentist who may place a couple of implants a year, an infrequent user. Those are frequently treated with a value implant. So those are maybe the two goalposts. And then in the middle is the kind of complicated grayer area. You'll have DSOs who place a lot of implants, and they usually use a blend of value and premium. You have some general dentists who do a lot of implants, but they may choose to work with a value system rather than a premium system.
Almost in all cases, in the top tier, the implantologist, the oral surgeon, will use both of the main premium systems. They'll use both Nobel and Straumann. And a lot of their business comes from a general dental referral. And what dictates the implant they use is what implant system the general dentist wants to place a crown on. And the oral surgeon's happy to do both.
Okay, no, that makes sense. And in terms of the investments, where are we sort of in the investment life cycle in terms of the sales forces? I know that started sort of prior to your arrival, but it's accelerated under you. So can you talk to us about sort of where we are in that process and how you're seeing sort of the dividends come through from that?
Yeah. So, you know, the very nice thing about med tech in general and dental in specific is some of these are very high gross margin categories. So if you can get them to grow, they more than pay for the investment it requires to get them to grow. Now, when you're at a transition point like we are, where you're moving from negative growth to neutral to positive growth, you do have to make an investment that's dilutive to margins to prime that pump. And that's what's happening in 2024. We've been, you know, pretty transparent that we've been investing $5-$6 million per quarter, big numbers, let's call it $25 million for the year, or about a point of margin at the Envista level in restarting that growth. And we've seen positive signs from that, as we just talked about on the previous question.
You know, the easy math, let's go back to our implant market question you had. You know, if Nobel grows at 4% or 5% along with the market, it's an $800 million business with 65% gross margins. That more than pays for a $25 million investment per year. And now you're in this virtuous cycle that we all like so much about med tech. Keeps growing, has great margins, can support additional investment in R&D, sales and marketing, et cetera. Doctors get better solutions, patients get better care, providers get, you know, better economics.
So that sounds like what you're saying. So if we think about that kind of margin trajectory, we've made the investments, they're now built in. It sounds like you're happy sort of generally with the investment level might increase, but certainly not in 2025, but certainly not to the extent that we saw those initial investments. And then we should start to see as the market picks up, you know, those margins kind of move. Is that a fair characterization over that? So it's really a question of that, the efforts in terms of the share, plus a little bit of macro perhaps in terms of pulling that through as we go forward. Is that a fair sort of way to think about it?
I think you captured it exactly right. You want to, you know, we're feathering the clutch across our five years as a public company. You know, the first three years of our life, the company did a very nice job of expanding margins.
Yep.
But that came at the cost of investment and growth, and that's what we saw the last two years. Now, we don't want to do a sudden left and, you know, have a dramatic permanent change in our margins. That's not interesting to investors either. So we're trying to find that right balance between growth and margin that sustains, and you get that positive upward momentum, you know, the virtuous cycle as people talk about.
Sure. And how do we think about R&D and implants in terms of new product cadence coming forth? I know we've had some big fanfare on certain implant products, but then there's also been a lot of, like, smaller products that I think on the investor front we hear less about but have been part of the transition. Where do we think about that going forward? Like, what's on the horizon in terms of that sort of R&D investment and new product launches in the category?
Yeah, so let's take that: first, take the $25 million. That breaks into about three categories, one of which is R&D, and then I'll talk about the three categories of R&D, but the $25 million, you know, big numbers, about a third of it goes into very near-term, fast returning investment on the commercial front end, filling open territories, you know, running promotional events, et cetera. There's a middle cluster that goes into kind of medium-term return, and that's around clinical education, you know, doing seminars, symposia, et cetera, KOLs teaching a certain procedure, hands-on demos, et cetera, and then there's a third that goes into the longest returning activity, which is R&D. Our R&D efforts focus on three categories of products: implants, call it digital, and then biologics, so implants, you know, there are as many SKUs as you would like to support in the implant market.
There's so many different diameters. There's so many different procedures. There's so many different places in the lower and upper jaw where you can place an implant. And there are SKUs for all those. So you need to be, you need to have a balanced perspective of what your customers need and then what makes sense from a supply chain perspective. The middle category right now is a very fast-growing segment, biologics, where we have a good position. It's a totally different kind of R&D. You know, one is more of mechanical engineering. The other is biologics. And then what ties the two together is the digital piece, the treatment planning. And for us, that's an exciting segment because, of course, we also have an imaging business. So we're at the front end where you capture the 2D and 3D X-ray image.
We have an intraoral scanning business, which captures the 3D topographical image, and we have a software business that you do the treatment planning in, and then we have the appliances on the back end, the therapeutics used to treat the case, so it's a good mix across our portfolio, and it's that digital piece that ties it together.
Got it. No, that makes sense. Maybe, thought, thinking about some of the equipment and consumable portfolio more broadly, and obviously that business has had some margin pressure this year. Sort of how do we think about segment margins in that business as we look forward? And sort of what are the, you know, maybe qualitative inputs and takes that we should be thinking about as we think about that business for 2025 and beyond?
So for us, consumables is a high-margin business. It's highly accretive to Envista in total. There is a longer-term compression of margins in consumables, principally related to the R&D investment that the industry makes. I mean, the last new products that are coming out in consumables, it makes the segment more vulnerable to lower-cost, you know, Asian imports or private label products. So that's a longer-term effect. For us, in the short term, the biggest impact on consumables margin has been the inventory normalization that you asked about at the outset. For 2024, that overrides everything else in our consumables portfolio in terms of margins.
Okay. That makes sense. And where do you see sort of the equipment sort of growth coming? I know equipment's been choppy, and we've talked about rates, but, you know, I think we've heard there's certain things about, like, competitive pressures in certain segments of the imaging market. We've heard about, you know, things like, how do you sort of see the position of that product suite as we sort of go forward from here?
Yeah, so with diagnostics and equipment, you have to start with the market. The overall dental market, which across time, you know, typically grows 3% - 5%, right now is, pick your number, 0% - 2%. By far, the category most impacted has been diagnostic equipment. You know, it's contracting mid-single digits right now. We believe that nothing has structurally changed in the market with respect to the need for diagnostic imaging. And so that would lead you to conclude it'll eventually correct and then have a bounce back. There's a lot of clinics right now that did not buy equipment in 2024 who need equipment and are eventually going to do that. That typically gets pointed to the interest rate question that we had earlier. As rates come down, will that cause the equipment market to start?
So start with that as a baseline and then go to our business in particular. In North America, the business is growing and continues to capture share. So despite the hand-wringing about equipment in North America, it's been a pretty good market for us. Europe, I would say, is kind of neutral to slightly down. And for us, where we've had the most challenge has been in developing markets. Part of that is our go-to-market strength is greater in developed markets than developing. But second, we're less well-positioned from a price point to compete in China and Southeast Asia. And so most of our pressure this year has come from exiting these developing markets where we're not well-positioned to compete.
Got it. And is that now sort of done then, sort of as we think going forward roughly? Is that sort of more to, I mean, always TBD, I'm sure situations change, you know, change the plan a little bit, but is that process sort of like, where are we in that process, I guess?
Yeah, I would say I'm cautiously optimistic on equipment and diagnostics. I think it will return to growth in 2025. When in 2025, you know, I would be careful not to let you pin me down on that.
Okay. Got it. No, that's very fair. You know, one of the things I think people have in mind when they think about Envista is, you know, given that it was, you know, a Danaher spin, they sort of have that Danaher, like, capital deployment mentality sort of attached to Envista. You know, as you and Eric have come on board and sort of looked through everything and, you know, gotten your hand, you know, gone through everything thoroughly, like, how do you think about cap deployment now under sort of your leadership?
Yeah, so we'll do, we'll hold the capital markets events sometime in 2025 where we'll give a formal articulation of our capital allocation priorities. I think the centerpiece of your question is correct. Historically, Danaher was focused on, some would argue, first, accretive M&A, second, organic growth, and then nothing after that. You know, growing up in GE and 3M, my training has always been to start with organic growth, that the highest risk-adjusted return on any marginal dollar in a good category like dental with high gross margins like our portfolio is going to be from organic growth. So I think that will remain a top priority for us. Accretive M&A is good. You know, what does accretive mean? Hopefully, the things you're buying grow faster than the overall business. Hopefully, it has better margins.
And hopefully, if you can, it trades, you can buy it for a lower multiple than you trade at. So I think accretive M&A will be a second priority for us. And then across my career, I've always returned excess surplus capital to shareholders. If you're, you know, leading a good business, a highly financeable business with strong cash flow characteristics like ours, I don't think we'll have a problem financing the business. We don't need to have cash build up on the balance sheet. So again, we'll give formal capital allocation guidance at capital markets. But I think those three categories are directionally correct: organic growth, accretive M&A, and then return to shareholders.
Got it. And I know we've heard mixed commentary from different dental companies over the last year or two, and obviously dental's been through a lot in the last half-decade. But where are we on sort of valuations and asset availability? Have people kind of come through COVID and been like, "I'm done"? I mean, I'm sure the answer is D, all of the above. But in sort of an overarching perspective, like, how would you characterize sort of the availability of assets at the moment?
Oh, from an M&A perspective?
Yeah.
It's a dynamic market. I've been in and out of dental for 20 years, and there's always innovation. There's always lots of startups, and there's always opportunities to invest in these companies, a minority position, or through acquisition. Every bit as strong today as it was, you know, 10 years ago, I think.
Okay. That makes sense. And, you know, I've given us, you know, 40 minutes before we get to tariffs. So. But the topical question of the day that I think is on many people's minds as they're trying to parse through the new situation. Can you talk about sort of potential? I know the regulations have not been written and are still, you know, being discussed more broadly, but can you talk about, like, what a potential sort of tariff situation in China or in Mexico would sort of mean for the business in terms of, you know, impacts you're sort of seeing, how much you can pass through, and sort of any flexibility you have on the sort of moving around of manufacturing?
Yeah, so Envista and our predecessor companies have been around for 130 years. Our Kerr business is 130 years old. So we have seen every combination and permutation of tariffs, government types, you know, currency trading zones, you name it. That, plus the good operating discipline of having grown up in Danaher, has caused us to architect our supply chains independent of any near-term currency supply or tariff trend. That's a long way of saying our supply chains are architected with a local-for-local mentality. Try to source your raw materials where your factories are and try to sell your product where you made it. So for the most part, we're not, you know, famous last words. We shouldn't be materially impacted by various tariff regimes. For example, our four biggest businesses, our implants business, we make premium implants in Europe and the U.S. We make value implants in the U.S.
and Israel. Our imaging business, we make large diagnostic equipment in Europe and the U.S. Dental consumables, U.S. and Europe. Clear aligners, Mexico, Europe, and China. So you can't completely avoid the tariff topic. You know, depending upon what comes up, there'll be different levels of impact to us. But as a general rule, I think we're fairly well balanced in our supply chain.
Okay. That makes sense. As you sort of sit here now, you know, coming up on your first anniversary almost, what are the things that you feel like, A, people don't understand as well as they should about the business? And two, like, what are, I guess, are you most excited about over sort of the near term and then as a more distant?
Yeah, I mean, as I mentioned, I've been around the industry for a long time. So I believe in my core that it is a secularly attractive category. The persistent unmet needs, the number of patients who need dental care who don't get it, and then the persistent undersupply of clinicians to service that just make for a structurally attractive industry. You add to that all the demographics that make med tech such an interesting investment category, and you start with a pretty good market with dental. Second is, you know, I know the Envista portfolio from multiple angles. I know it from my 3M days when we often would bid on the same target that Danaher eventually bought. So I know these businesses from a financial perspective. And then having run parts of 3M's dental business before, I know it from a competitive perspective.
So all this is leading up to, of course, I voted with my feet. I came back to dental because I believe it's such an attractive business. And with, as you said, the last couple of years being so odd in the dental market, both in terms of the underlying demand characteristics post-COVID, but then the capital market response to it, I thought it was a very good time to reengage. And you saw that with both Eric and I. Not only did we leave our prior jobs, we were gainfully employed. Eric and I both went out very soon and bought shares on the public market. So we're all in on this. We're true believers.
Nice. Well, thank you very much for joining us today.
Thank you.
It was a pleasure, Paul.
It's a pleasure.