Specialist
Former executive at Zest Dental Solutions
Agenda
- Trends and developments within the dental implant manufacturing market, focusing on Zest Dental Solutions
- Competitive landscape and profile differentiation, highlighting the Zest Locator implant franchise
- Pros and cons of going direct to DSOs (dental service organisations), including margin expansion vs friction with OEM manufacturing partners
- Attractive tuck-in M&A opportunities for current management or potential new ownership
- Potential sale, likely strategic buyers and business scenario analysis
Questions
1.
What are some of the most important trends and developments you’ve been following in the broader dental implant market over the past year or so?
2.
How would you size Zest Dental Solutions’ TAM opportunity in dental implants? A report from Precedence Research suggests global dental implants will be a USD 6.3 billion market by 2030, representing a 6% CAGR. How realistic do you believe that metric is and how should investors be thinking about the company’s market opportunity? I appreciate that could probably be comprised of different segments.
3.
We’ve seen a rise in consolidation of DSOs [dental service organisations], particularly in the US market. How well has Zest fared in maintaining market share with DSOs? What strategies have worked, whether pricing, product customisation, or otherwise, to hold onto key accounts?
4.
Commercially it’s clearly easier to sell when you have a differentiated product. Could you break out the Zest Locator franchise of abutment systems, including the Zest Locator implant systems? What’s the patent moat, relative product innovation and clinical advantages of these offerings compared to market alternatives?
5.
What are your updated thoughts on the Locator Fixed full-arch solution, which was launched in late 2022? How seamless was the move to this, given that no abutment is required compared to traditional screw-retained restorations?
6.
I read in an Axios article published in autumn 2022 that close to 40% of Zest’s sales are generated from its faster-growing e-commerce and direct-to-dentist or direct-to-DSO strategy as of 2022. Could you discuss the main commercial considerations of going direct, including any relative pricing power and margin expansion that the company can realise in the direct channel?
7.
Has the direct strategy that you alluded to caused any friction with the OEM implant partners? How has Zest managed those relationships vs the margin-accretive direct considerations?
8.
Could you discuss the opportunity for Zest in emerging markets as more patients are able to afford implants and an adequate supply of clinicians are realised? What does the overall expansion and penetration strategy look like in some of the emerging markets and what might be some key ones of interest?
9.
How do you asses the growth prospects in the Danvile Materials consumable business as clear aligners become more widespread on the market? What does Zest need to do to invest in this segment and capitalise on some of the long-term tailwinds in aligners, cosmetics and consumables?
10.
Where is Zest headed in terms of a strategic exit? Its private investor ownership has been exploring a sale as of September 2022. What do you think is a likely sale timeline for the company and why?
11.
Zest has been fairly passive on M&A under the current private investor ownership. What potential for inorganic growth do you see under a new sponsor? What attractive purchases could be made to strengthen the portfolio or even expand its purview into new end markets?
12.
What are the most attractive areas that you think could be unlocked for Zest via strategic M&A?
13.
Do you think USD 1bn would be a fair evaluation for Zest, perhaps in light of similar deals we’ve seen in the market? How might a strategic buyer go about putting a price on the company?
14.
Is there anything that we haven’t mentioned that you think might be especially important to highlight when thinking about Zest Dental Solutions?
Gain access to Premium Content
Submit your details to access up to 5 Forum Transcripts or to request a complimentary one week trial.
The information, material and content contained in this transcript (“Content”) is for information purposes only and does not constitute advice of any type or a trade recommendation and should not form the basis of any investment decision.This transcript has been edited by Third Bridge for ease of reading. Third Bridge Group Limited and its affiliates (together “Third Bridge”) make no representation and accept no liability for the Contentor for any errors, omissions or inaccuracies in respect of it. The views of the specialist expressed in the Content are those of the specialist and they are not endorsed by, nor do they represent the opinion of, Third Bridge. Third Bridge reserves all copyright, intellectual and other property rights in the Content. Any modification, reformatting, copying, displaying, distributing, transmitting, publishing, licensing, creating derivative works from, transferring or selling any Content is strictly prohibited
