Status Quo H1‘22
Earlier this year, we covered Envista Holdings’ (NYSE: NVST) Spark™ clear aligner as the promising new insightsZ superbrand that’s on the course of becoming the brand with the third largest global market share by FY 2023. Here is the link to the article published on the day of Feb 21.
Just like the global carbonated drinks market battlefield wherein a niche brand Dr Pepper has continued to capture a sizeable share of the market; Spark™ clear aligner’s brand performance is beating – both the global clear aligner category, as well as the category’s flagship Invisalign brand’s performance – by a significant margin.
In FY 2021, Dr Pepper brand's U.S. market share reached almost 8 percent – far lagging behind Pepsi’s, but nevertheless translating into a significant revenue figure. Likewise, Spark™ clear aligner’s market share is expected to be the third largest by FY 2023 as it overtakes China - based Angelalign Technology Inc. (HKG:6699) sooner than expected.
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Can Spark™ clear aligner upend the global clear aligner category?
H1’22 brand performance of direct-to-consumer (DTC) brands incl. category leader SmileDirectClub (NASDAQ: SDC) continued to perform dismally. It’s clear that none of the top clear aligner brands came anywhere close to Spark™ brand’s growth – both in terms of sequential basis as well as versus H1’21.
SDC market cap has declined by 90 percent LTM after its stock significantly underperformed not only the broader index, but also the company’s peer group. Any past attempts at downsizing the company’s employee base, shutting down SDC’s operations in Western Europe, or reducing the SDC’s retail footprint by closing down Smileshops - haven’t yet managed to please either the company’s shareholders or the markets. Therefore, our outlook for the company’s H2’22 performance remains highly critical.
If the global clear aligner market were to represent a microcosm of the global beverage industry, then SmileDirectClub (SDC) is in no position to claim the second rank (let’s call it Pepsi spot) in the global clear aligner space – either in terms of future market share, or in terms of estimated revenue for FY 25 (or may be even sooner).
In Feb 22, insightsZ was considering the possibility about which brand among Byte, ClearCorrect, DrSmile, Candid and Spark was the best candidate to capture the third spot in terms of the category’s global market share for the upcoming years. Based on the brand’s performance in H1’22, insightsZ predicts that Spark™ clear aligner is definitely the brand that would lead the global category among the above players.
Global Deals and Partnerships in FY 2022
Jan 2022: Spark™ clear aligners entered into a strategic agreement with Pacific Dental Services (PDS), which is among the largest DSOs in North America. Under the terms of the agreement, Envista Holdings announced the extension of its implant and imaging commercial relationship for an additional five years, and the expansion of this relationship to include Spark™ clear aligners. This deal enabled PDS to offer Spark™ clear aligners at +850 dental offices across US (with the potential to contribute up to 10 percent of Spark™ clear aligners global share of wallet).
Feb 2022: Envista Holdings Corporation (NYSE: NVST) announced that it has renewed its partnership agreement with the Vitaldent Group, a leading Spanish Dental Service Organization (DSO). Vitaldent is dedicated to providing quality, accessible odontology to patients using the most advanced technology, best treatment, and professional care. This agreement positions Envista as the preferred supplier of implants (Nobel Biocare) and clear aligners (Spark). Vitaldent operates approximately 300 owned and franchised clinics in Spain, making it one of the largest dental chain networks in Europe.
Jun 2022: Spark™ clear aligner announced its partnership with Prague-based dental office Svêt Rovnátek, the largest orthodontic clinic in the world that treats misaligned teeth only with aligners. Based on the deal agreement, Svêt Rovnátek will work exclusively with Spark™ clear aligners to treat upwards of 4,200 patients in FY 2022 alone. While the clinic had been working with Ormco’s brand of traditional wires and brances in the initial years, they transformed their treatment offering exclusively to clear aligners in FY 2018 before inking the deal with Spark™ clear aligner in Q2’22.
Outlook for H2’22
Based on insightsZ estimates, more than 50 K patients have been treated with Spark™ clear aligners in H1’22 alone. For the remaining Q3 and Q4, it is estimated that another 50 - 60 K patients will start Spark™ clear aligner treatment – bringing the total number of patients treated to be 100 - 110 K range in FY22 alone.
In FY 2021, Spark brand’s revenue grew 122 percent versus FY 2020. Demonstrating no signs of slowing down growth, in FY 2022, the brand is expected to grow upwards of 100 percent on YoY basis again. In other words, Spark™ clear aligner is expected to outperform the category by high double-digits growth.
In Q2’22, Spark™ clear aligner witnessed a revenue growth of +27.8 percent on sequential basis (versus Q1 2022). It’s clear that the broader economic factors incl. FX risks, inflationary pressure, COVID-19 lockdowns and the unpredictable geo-political situation in EU had no negative impact on the brand’s performance YTD, if any.
We will conclude this article by highlighting that not all clear aligner brands are born equal. In other words, there are only few clear aligner brands available in the market that offer a treatment spectrum that doesn’t only limit itself to the needs of General Dentists, but also expands to Specialized Orthodontists. Sharing its pedigree with Ormco, Spark™ clear aligner brand really looks like it’s at an unstoppable path for growth for the foreseeable future.