Envista Holdings Corp Q2 FY2021 Earnings Call

Good day, everyone. My name is Ryland, and I will be your conference facilitator this afternoon. At this time, I would like to welcome everyone to Envista Holdings Corporation's Second Quarter 2021 Earnings Results Conference Call. All lines have been placed on mute to prevent any background noise. And after the speakers’ remarks, there will be a question-and-answer session. I will now turn the call over to Mr. John Moten. Mr. Moten, you may begin your conference.

Hello, and thank you for joining us on our call. With us today are Amir Aghdaei, our President and Chief Executive Officer; and Howard Yu, our Chief Financial Officer. I want to point out that our earnings release, the slide presentation supplementing today's call and the reconciliations and other information required by SEC Regulation G relating to any non-GAAP financial measures provided during the call are all available on the Investors section of our website, at envistaco.com. The audio portion of this call will be archived on the Investors Relation section of our website later today under the heading Events and Presentations and will remain archived until our next quarterly call. During the presentation, we will describe some of the more significant factors that impacted year-over-year performance. The supplemental materials describe additional factors that impacted year-over-year performance. Unless otherwise noted, all references in these remarks and supplemental materials to company’s specific financial metrics relate to the second quarter of 2021 and all references to period-to-period increases or decreases in financial metrics year-over-year. We may also describe certain products and devices, which have applications submitted and pending for certain regulatory approvals are available only in certain markets. During the call, we will make forward-looking statements within the meaning of the federal securities laws, including statements regarding events or developments that we believe or anticipate will or may occur in the future. These forward-looking statements are subject to a number of risks and uncertainties, including those set forth in our SEC filings and actual results might differ materially from any forward-looking statements that we make today. These forward-looking statements speak only as of the date they are made and we do not assume any obligation to update any forward-looking statements except as required by law. With that, I'll turn the call over to Amir.

Thanks, John and welcome everyone to Envista's second quarter 2021 earnings call. I want to begin by thanking our employees for an outstanding quarter. The dedication and passion our employees show for our customers inspires confidence and drives continued innovation in all our products and services. After a strong start in the first quarter, we delivered another record quarter, driven by continued recovery in the dental market and solid execution across our portfolio. For the second quarter, core revenue growth was 102% compared to the COVID-impacted second quarter of 2020. More importantly, our second quarter 2021 core growth was above pre-pandemic levels increasing 5.6% compared to the same period in 2019. The focus on our three long-term strategic priorities of accelerating organic growth, expanding our operating margins and building a stronger portfolio continues to have an impact and drive both our short-term and long-term performance. Before I turn it over to Howard to provide more detail on our second quarter financial results and our segment performance, I wanted to take this opportunity to discuss our progress in these areas. Our focus on the Envista business system and continuous improvement are helping us to drive long-term sustainable performance. Our smart business continues to accelerate as we focus on supporting our orthodontic customers. This quarter, we enhanced the onboarding of new customers and improved service and turnaround times. Our smart capacity increased by over 30% this year, and we continue to invest for future growth. The adoption of Spark continues to expand with sequential revenue growth of over 40% compared to the first quarter of 2021. Our core bracket and wire business performed exceptionally well, outgrowing the market. The Ormco team is focused on driving a strong commercial execution, while leveraging new innovations, including the Damon Ultima system. Case starts continue to be above double-digits for our bracket and wire customers. A differentiating and strategic approach of providing an orthodontic portfolio that offers both clear aligners and bracket and wires resonates with our core orthodontic customers, ensuring they can provide the best option for their patients' needs. Our premium implant business has achieved four consecutive quarters of improved performance with over 90% core sales growth in the second quarter over the prior period and mid-single-digit core sales growth from the second quarter of 2019. We continue to see improved performance as we focus on commercial execution and drive wide adoption of Nobel Biocare's TiUltra and XEAL surface products. Progress on the N1 rollout continues to gain momentum in the market with adoption in Europe, up 38% versus last quarter. Furthermore, we continue to ramp up our investments for our future launch of N1 in North America. We see solid demand for our infection prevention solutions as enhanced disinfection protocols remain in place and will be the new normal. We're excited about the opportunities for a new CaviWipes 2.0 product. It features a two-minute universal contact time, shows efficacy against a broad range of pathogens, including the COVID-19 virus and increases our opportunity to penetrate the medical market further while enhancing our dental position. Our China business had another strong quarter, delivering double-digit growth, primarily driven by demand for our premium implant and bracket and wire product lines. Our China team was honored to receive the China health care T+ most variable employer award this year. This prestigious award recognizes our commitment to be the employer of choice in China. Our EBS mindset grounded in continuous improvement was critical to our profitability in the second quarter. Our adjusted EBITDA margin for the second quarter was 19%, an increase of more than 1,800 basis points compared to the prior year and over 350 basis points from the second quarter of 2019. Additionally, we continue to target 50 to 75 basis points of annual improvement. As our profitability improves, we are investing in Spark, N-1, bracket and wire products and integrated workflow solutions to drive long-term growth and profitability. Our focus on innovating and growing in the most attractive segments of the dental market is key to the continued transformation of our portfolio. By investing in our specialty consumerable businesses as well as our digital workflow solutions, we are transforming Envista to be a faster growing, more profitable and differentiated company. In addition to our growth initiatives, we see opportunities to accelerate our transformation through inorganic growth and are taking an active but disciplined approach to long-term capital deployment. We remain interested in investing in attractive segments, such as orthodontics, aligners, implant, regenerative materials and digital workflow solutions, including software and AI. We are building a sustainable growth-oriented company, designed to last the test of time, driven by innovation, a focus on our customers and where employees feel valued and encouraged to grow. We were happy to launch Envista's inaugural Environmental, Social and Governance report this past quarter. This report shares our blueprint for corporate sustainability, which aligns with our strategic business initiatives. Operational excellence is a foundational element of our approach to sustainability and a key driver for our success. Our sustainability efforts are enhanced by our EBS mindset and we are dedicated to improving in each area of our business. At Envista, we embrace diversity and inclusion to drive our business success. We believe that innovation is accelerated when we have diverse thoughts brought to the table. To support these initiatives, we launched employee resource groups and created employee development programs to enhance the visibility and capabilities of our talent. As a result of our diversity and inclusion efforts, I'm proud to share that we have achieved 99% gender pay equity in the US. This is a significant milestone in our journey and embodiment of our cycle value of respect. Finally, in our ESG report, we shared our vision to promote increased access to quality dental care. This quarter, we were proud to announce the Envista Smile project, a new nonprofit oral health foundation currently in the process of applying for Section 501(c)(3) status. We created this initiative to improve the smiles and oral health of disadvantaged communities by supporting increased access to oral care and oral health education. The project collaborates with dental professionals and Envista employee volunteers to donate products, treatment and oral health education to communities in need around the world. I will now turn it over to Howard to go through our financials and segment performance in more detail.

Thanks, Amir. Second quarter sales increased by 104.4% to $740 million. Sales were positively impacted by 4% due to foreign exchange rates and negatively impacted by 1.9% from discontinued products. Core sales growth was 102.3% compared to the second quarter of 2020 and up 5.6% over the same period in 2019. As Amir discussed, our year-over-year growth reflects a strong recovery in demand across the dental market and solid execution across our portfolio. Geographically, North America and Western Europe sales grew more than 100% as business conditions rebounded from the pandemic lows in Q2 of 2020. While patient volumes have improved to pre-pandemic levels in our major markets, we continue to see inconsistent rollouts of vaccines and spikes in COVID-19 variant infections in several geographic areas, including Western Europe and parts of the United States. Overall, we are mindful of the pandemic-related risks but remain optimistic for a continued recovery throughout the balance of 2021. In the emerging markets, China grew by double-digits with strength from our Specialty Products & Technologies segment. We continue to see durable growth in our premium implant business in China and are pleased with the progress we are making in orthodontics. However, the return to pre-pandemic demand levels in the public sector is slower due to fiscal budget restrictions and the pace of vaccine rollouts. Outside of China, other emerging markets rebounded from pandemic lows but we remain cautious due to low vaccination rates and the continued spread of COVID-19 variants. Our second quarter gross margin of 56% increased by 1,400 basis points from the pandemic low point due to higher volume, favorable product mix and productivity initiatives. Our adjusted EBITDA margin was 19%, primarily driven by a better product mix, structural cost savings and temporarily reduced spending. Profitability increased significantly compared to the prior year, with adjusted EBITDA of $140.4 million. Our second quarter adjusted diluted EPS was $0.53 compared to a loss of $0.10 in the prior year. Turning now to our two business segments. Our Specialty Products & Technologies core revenue increased 104.8%, driven by strong growth in premium implants, our core bracket and wire business and rapid growth from Spark. Compared to Q2 of 2019, our Specialty Products & Technologies segment core growth was up 8.6%. Growth in our premium implant business accelerated, as our focus on improving commercial execution is delivering results in North America, Europe and China. In Q2, we grew more than 93% from the pandemic low of 2020 and had 4% growth over 2019. Specialty Products & Technologies' adjusted operating profit margin at 24.6% was significantly higher than our Q2 2020 results. Our strong growth, favorable product mix and structural cost savings drove increased profitability. Through the balance of 2021, we expect to ramp up our investments in Spark, N1 and premium implants to accelerate adoption and drive long-term growth. Our equipment and consumables segment core growth sales increased 99.9% year-over-year. Discontinued products adversely impacted sales by 4% and we had a 3.6% favorable currency impact. Our traditional consumables business saw continued improvement from developed markets and a rebound in emerging markets. The demand for our infection prevention solutions remained solid, delivering 15.9% growth year-over-year and we expect continued growth for the full year 2021. As previously discussed, we expect our year-over-year growth rates in infection prevention will start to slow from the significant increase in demand that we saw at the start of the pandemic. However, we expect enhanced safety protocols will remain and that will drive mid-single-digit growth for the business over the long term. Our equipment business continued to perform well in the second quarter, delivering over 90% growth compared to the prior year and 3.4% growth compared to 2019. The recovery in the dental market, combined with increased optimism from clinicians, targeted government support and lower interest rates enabled us to unlock significant demand. We expect continued growth in 2021, as we drive share gains and optimize the business for higher growth and profitability. Equipment and consumables adjusted operating profit margin was 18.9% in the second quarter of 2021, versus a loss in 2020. We expect our margins to remain at current levels, as we sustain our structural cost improvements, while realizing the benefit of an improved mix driven by the 2020 exit of lower-margin equipment business. For the second quarter, we generated free cash flows of $101 million, delivering $104 million more than Q2 of 2020. We ended the quarter with $554 million in cash and have continued to improve our leverage ratio, providing us more flexibility to pursue inorganic growth opportunities as they become available. I'll now turn it over to Amir for some final thoughts.

Thanks, Howard. We are pleased with our performance in the second quarter and remain optimistic about the future of the dental industry and its recovery from the pandemic. While vaccination rates are increasing every day, we are mindful of the risk related to COVID-19 variants, continue to monitor reopening of economies and acknowledge that vaccination rollout worldwide is at different stages. However, we believe that patient demand will sustain at pre-pandemic levels due to the industry's enhanced sanitation measures. We have continued to focus on our three strategic priorities of accelerating organic growth, expanding operating margins and optimizing our business portfolio. We're building a better Envista, for our customers, our employees and our shareholders. Our culture based on our circle values of customer centricity, innovation, respect, continuous improvement, and leadership makes us more competitive and enables us to shape the future of the dental industry. We're designing products and solutions that allow our customers to be more productive and create more predictable outcomes for their patients. We will accomplish this through personalization, digitization, and democratization of those dental solutions. A role in the future of dentistry has helped our customers move their practice focus from pain management to preventative care and ultimately, to predictive care through a digitally-enabled workflow-oriented practice. Digitally integrated diagnostic treatment planning and more efficient execution will allow more access to oral care for more patients around the world. We expect to deliver core sales growth in the mid-20% range. And expect adjusted EBITDA margins to be in the high-teens for 2021. We are well-positioned to meet the evolving needs of the dental industry for the future. We have a complete portfolio of brands designed to meet our customers' needs a winning culture and a team grounded in EBS and continuous improvement with a focus to drive our portfolio to higher growth and profitability. We're proud of our progress in the quarter and look forward to our continued growth journey in 2021 and beyond.

Operator, we're now ready for questions.

We will take our first question from Nathan Rich at Goldman Sachs. Please go ahead. Your line is open.

Thanks so much, Amir and Howard. Good afternoon and thanks for the question. Howard, maybe starting with the guidance, if I think about the back half of the year guidance seems to imply a pretty wide range for margins. I think you guys just did about 20% in the first half of the year. I think there's still around $30 million of investment that's going to be made in the back half and some of the temporary cost savings need to be back. But could you maybe just help us think about the cadence of margins that you're expecting over the balance of the year?

Sure, thanks for the question. As a reminder, we previously discussed targeting high-teens EBITDA as guidance, which we believe serves as a solid baseline for assessing our improved profitability. This suggests an EBITDA growth of over 25% and an expansion of margins by about 300 to 400 basis points from our 2019 levels. We expect to achieve this while continuing to fund our growth initiatives. As previously mentioned, we anticipate higher operating expenses in the second half as we invest in these initiatives. This includes approximately $30 million, primarily directed towards our specialty and technology sectors that support Spark and N1 premium implants. Additionally, we foresee a return of some operating expenses that were reduced during the pandemic, particularly in areas related to customer engagement, such as travel and postponed marketing expenses. Overall, we believe that aiming for mid to high-teens EBITDA positions us well in line with our expectations.

Okay, great. And then, I apologize if I missed it earlier on the call, but did you give what Spark and N1 contributed to revenue growth in the quarter? And Amir, I think you had mentioned the adoption of N1 accelerating in Europe. Could you maybe just go into a little bit more detail on where you're seeing the uptake and what you see as the opportunity for that product?

Of course. Thanks, Nate. The N1 ramp continues. However, as we've discussed before, this is a completely new procedure that necessitates hands-on, face-to-face training and implementation. It's an entirely different process. Not only do the doctors need to adapt, but they must also fundamentally alter their workflow. Nevertheless, we've observed that those who have received training are getting up to speed very quickly. You may recall that during the Spark ramp-up, we employed a similar strategy. We started with a small group, trained them, and helped them reach a point where they could repeat the steps, then we expanded the cohort moving forward. We've noted repeat orders from existing customers and we continue to educate and train more dentists as we progress. We believe this will play a significant role in our growth trajectory in 2022 and beyond. Our current commercial efforts should help us achieve mid-single-digit growth in the premium implant segment, and new innovations may lead us towards high single-digit growth over time.

I think it's in the 200 to 300 basis point range, Nate.

Hi, thanks very much. Amir, I think I heard you mention that the premium implant growth was picking up in the quarter, which sounds great. Could you take a moment to give us your perspective on the implant market? What type of growth is occurring there? Are you still noticing a shift from premium to value in the market, or has that trend stabilized? What I'm really trying to understand is whether you feel like you are keeping pace with the market growth or if you are still losing some share. Thanks.

Thank you, John. We are very encouraged by our sequential and year-over-year performance, as well as our results compared to 2019. We've implemented significant changes in our go-to-market strategy across different regions. We feel confident that our performance is exceeding the market in China and Europe, and we've seen acceleration in North America as well, demonstrating positive trends each quarter. Various indicators suggest that the performance of premium players is improving, and we've noticed our own performance enhancing each quarter, thanks to our commercial execution, investments in different areas, our customer intimacy model, and the innovations we've rolled out in various regions. Regarding the transition from premium to value, we aren't observing a drastic shift in this direction. The value market seems to be outperforming the premium segment. We've monitored the premium business closely over the years and haven't detected any significant changes compared to what was anticipated many years ago. As for the final part of your question, we recognize that we have work to do. While we're monitoring the premium segment, the value side, which is a smaller part of our portfolio, still requires attention. We have exited some markets and reduced our scale in others. In our core US market, we are gaining traction, but we also see additional opportunities through disciplined commercial execution and potentially inorganic growth to ensure our overall implant business meets market performance standards and aims to surpass them in the upcoming quarters and years.

Very helpful. Thanks. And maybe just one quick follow-up. I think you said wire and brackets is growing double digits way above what we think the market is growing. Can you just dig into that a little bit more? Is that more of a developed or developing market driver behind it? Thanks.

Yes. Happy to do it, John. So, let's just take a step back and take a look at our overall orthodontic business. In Q2, compared to 2019, that business grew 30%. So, the combination of bracket and wire as well as the clear aligner. Our bracket and wire is differentiated. The combination of a solution that we have puts us in a really good position. We focus on the same customers. We're going to market with the same team and they are dealing with the company that has been focused on that segment of the market for decades. Now, let me answer the bracket and wire question. That market has been growing mid-single digits for many, many years, I'm sorry, low-single-digit for many, many years and we have proven and shown that our business continues to take share. We used to perform pre-pandemic mid-single-digit. In the last quarter, that business has been growing double-digits. And the driver behind that performance is three areas: One is innovation. We continue to innovate in this space. The Ultima system that we introduced at the end of Q4 in the past six months has taken significant momentum as people see the finish, touches and the capabilities that they offer, they continue to use that system. Education training as well as the network that we have, people follow their coach and mentors and they follow what is the best practices in this market. Orthodontists, who are well known in the industry, demonstrate better finish, better performance and they teach it to others, not only in the United States but across the world. We are fortunate to have a network of capable orthodontists that are really committed to patients, taking care of the patient giving them the best possible solution. And last but not least, the diversified business that we have. Seventy percent of our business is outside the United States. In the past quarter, our developed market performed a lot better than emerging markets. But the fact that we have a diversified business in different geographies really helps us continue to see momentum in that business. Now add clear aligner on top of it, I think we've got a differentiated product and capabilities in here that makes sustainable growth a reality for us to come for years in a double-digit format.

Thank you. Good afternoon, everyone. I have a clarifying question regarding guidance and then one about equipment. Howard, you have achieved $288 million in adjusted EBITDA for the first half of the year. If I look back to 2018 and 2019, which is a limited timeframe, the first half typically contributes about 45% of EBITDA. Therefore, if I project that $288 million, I estimate it to be well over $600 million. I understand you are discussing an additional $40 million to $30 million in investments, along with travel and increased marketing expenses. Can you truly reduce that down to the $500 million in EBITDA you mentioned last quarter, or is there some flexibility in that $500 million guidance? Thank you.

Yes, we continue to outperform, as we saw in the second quarter. We anticipate that our EBITDA margins will be in the high-teens. You rightly pointed out that we are considering significant growth investments in the second half to ensure sustainable long-term growth. We plan to enhance customer-facing activities, including training and education sessions as well as broader marketing initiatives. We do expect some seasonality in the third quarter, particularly as Europe and certain parts of the US go on holiday, which may lead to softer revenues and related EBITDA. However, we expect a rebound in the fourth quarter, where we usually see strong sales and one of the highest EBITDA margins. We are optimistic about our positioning. As a reminder, we aim to increase EBITDA by over 300 basis points from our 2019 levels, and we are pleased with the progress we are making. As Amir mentioned, we will continue to drive efficiencies and improve profitability, targeting consistent annual increases of 50 to 75 basis points.

Yes. Thanks Jeff. Simple answer we haven't seen the shortages that people have referred to. Our supply chain is fairly solid. Our delivery continues to be exactly as what we promised. In fact, we have made significant progress again using EBS, specifically around lean going to our cell modification and taking waste solid to our system. Our procurement team has done an outstanding job diversifying our supply chain. We haven't seen it. We are committed to delivering and customers want those products and we continue to work with our distributors to make sure that they have proper inventory in the channel. Inventories you mentioned that Jeff are in the best possible position that we have seen and we have talked about it for a long period of time. And in the past several quarters, the sell-in and sell-out matches, we have real good visibility of what's going on in the inventory, and we have been able to manage through that and get ourselves in a far better place going forward. So, that's from a distribution as well as a supply chain perspective. Our equipment has performed far better honestly as we had expected. Only 12 months ago, we thought that this is going to be a challenging business, but that has not been the case as Howard described by each segment we have seen good growth in here. And we are optimistic that we can maintain that as we go through the second half.

Great. Good afternoon guys. The first one maybe just on N1, I don't know if I heard specifically but is the late 2021 timeline for US approval still intact? And then when you guys talk about a hands-on environment needed to ramp with this product I'm just curious does the current selling environment allow for that in the US? In other words, if the product were to come and get approved, is this an environment that would allow you to ramp considering that hands-on component that you guys alluded to? And then I just got a follow-up.

Yes, of course. Thank you, Jon. So, we're in the midst of discussion with the FDA going through that process and answering questions as they come our way. This is a completely different procedure and protocol as I mentioned. We have gotten a lot of approvals in various products in the past six months or so. But since we are going through a completely different set of product categories, the expectation is that this is going to take longer and we have assumed that end of 2021 or beginning of 2022, this product would be available to us going forward. We remain optimistic that we may get that sooner. But now the answer to the question of training. When we talk about training and we have done that now enough in Europe that we have a good track record. We have a small group of people about 30 of them that they were part of the development process and these individuals they're really familiar with the product, they can teach it, they can coach it, and all we need is a group of 10, in some places five people. They come to the training and we walk through that, and somebody places it. And the coach and the mentor oversees it and teach them and make sure that they are going about the protocol correctly. And then we stay informed our team as well as that small group of people who have been part of the process continue to teach them going forward. We did a very similar process with - again, I'll remind you all for Spark, we started with a group of five and then we extended. At some point, the cohort became up to about 30 people. So as soon as we get that approval, we are now geared up to be able to do that. We have people signed up, and Howard talked about investment. We have chip-building capacity and investment not only on the CapEx side, but also on commercial activities training opportunities for us to be able to do this in a very rapid format. And get the five, 10 people up to speed and continue to add that every week another five or 10 people. We think that approach with the volume of those oral surgeon placement would be sufficient enough to expand our position in the market very quickly. As we have said all along, we are not really counting on N1 to have an impact in 2021 in North America. We think that approach will put us in a very good position to get to mid-single-digit performance and eventually to high single-digit performance on our premium implant over time.

Okay. Great. That was great color. Thanks. And maybe shifting Howard maybe more for you on the capital deployment side. Obviously, the balance sheet is in a very different place for you guys than 12 months ago. So just help us with what the environment or the ask is like out there? And our checks keep on identifying the scanner as by far the most desired product among dentists, you had huge iTero sales in Q2, Schein this morning called out the standalone scanner. You talk to us if you're pleased with the current structure that you have with partnerships, or more broadly speaking could this be an area that could be bulked up with some M&A activity? Thanks guys.

Yes, Jon. Maybe I'll start with regards to our balance sheet and the strength of our balance sheet and then turn it over to Amir to talk a little bit about targeting and the like potential M&A activity. You're right. We clearly are in a really strong position here. Our net debt is below $900 million and our leverage ratio is at two times. And certainly, even with regard to some of the financing changes that we've done, we are positioned well with the equipped revolver as well. And so that being said, we'll be prudent about the process as it relates to making sure that we make acquisitions that make sense for us. And we'll continue to look at things like attractiveness of the market segment, strategic fit and then making sure that the valuation hurdles that we have are met as well as it relates to any of the M&A activity. And what that means for us is really a path to get to cash-on-cash returns in the double-digits in the near term and beyond that in the longer term. And so we remain focused there as well.

Jon, I want to respond by focusing on three specific areas. A few years ago, we acknowledged the need to protect our core business, which includes imaging, equipment, instruments, consumables, implants, and the Ormco ortho sector. This core business, valued between $2.5 billion and $3 billion, had to perform well and stay competitive on a product-by-product basis. Therefore, we invested nearly $500 million over three years to ensure our product categories were up to standard. During this process, we realized that if our core wasn’t strong, it wouldn’t be wise to explore adjacent markets and categories. Once we stabilized the core, we looked for ways to enter the market swiftly. We formed agreements with several suppliers and began offering products in various regions. Currently, we have partnerships with 3Shape and Medit, providing a dual approach that supports our operations in the implant and ortho segments. These products are available, and we are integrating them with DTX while ensuring our sales team can promote them in every market. Our third approach involves developing our own products with a roadmap that we control, eventually integrating them into our portfolio. We are exploring all options, including early investments, partnerships, collaborations, and other inorganic methods to incorporate these products, as they are crucial to the diagnostics workflow. We want to ensure we offer our customers differentiated products and solutions.

Hi guys. Thanks so much for the question. How are you thinking about the growth in infection control in the back half of the year? We've heard a variety of things from different players, but you guys also have a slightly different offering in that category and a slightly different client mix. So, if you could talk about what you see and what you think about in terms of the back half of the year that would be helpful?

Thank you, Elizabeth. It's important to highlight what we provide compared to what you might be hearing from others in a different part of the market. We are not focused on consumables; we are a professional med-tech company offering products geared toward infection prevention for professionals in the dental and medical fields, as well as point-of-care settings. Our business has never included consumables, which tend to show significant volatility for valid reasons. We have previously discussed three key differentiators for our product categories. First, we hold over 50% market share in dental, with substantial opportunities for expansion, especially since 80% of that market is in North America. We are pursuing initiatives in Europe and other regions to broaden our standard product range. In the medical sector, we have less than 10% market share in a significantly larger market than dental. Our CaviWipes product gives us an opportunity to enter this segment effectively, showcasing our products' efficacy and our unique go-to-market strategy for professional med-tech solutions. Lastly, we are committed to continuous innovation, working to get our products through approval processes in various locations. We expect our growth to persist, although as Howard mentioned, we anticipate a gradual shift to more mid-single-digit growth over time. We are pleased with our performance in the first half of the year. Our capacity is set up, and demand is returning. We remain optimistic, having once generated approximately $170 million in this segment in 2019, with a goal to add $100 million over the next couple of years by replacing low-margin products, and we are on track to achieve that in the coming year or two.

Yes. Sure Elizabeth. This is Howard. So yes, I think our expectations going into the second half is that we're obviously monitoring all these new variants with regard to the delta and the impact that it's having. We get updates regularly from all of our geographies to let us know exactly how things are working their way out. That said, we're still generally optimistic about the environment. We think that volumes in terms of patient volumes have improved to pre-pandemic levels, particularly in the developed markets and in China. And while we see pockets in emerging markets probably coming online a bit slower, we have seen some pickup and rebound from the pandemic lows of Q2. And so we anticipate that trajectory to continue to improve here in the second half. And that is some of the reason why we do provide a broader range even in terms of our revenue, between $2.8 billion and $2.9 billion for the full year.

Thanks Amir and thank you for joining us on the call today. This concludes our formal comments and we look forward to speaking to you soon.

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