My name is Catherine and I will be your conference call facilitator this afternoon. At this time, I would like to welcome everyone to Envista Holdings Corporation's third quarter 2021 earnings results conference call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. I will now turn the call over to Mr. Stephen Keller, Vice President of Investor Relations of Envista Holdings. Mr. Keller, you may begin your conference call.

Hello and thanks for joining us on the 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, www.envistaco.com. The audio portion of this call will be archived on the Investors section of our website later today under the heading Events and Presentations. It will remain archived until our next quarterly call. As announced on September 7, 2021, we reached an agreement to sell our KaVo Treatment Unit and Instrument business. For the current quarter, the results of this business are reflected as discontinued operations in our financial statements, as required by Generally Accepted Accounting Principles. Additionally, the financial statements included in our third quarter 10-Q and to be included in our 10-K for the fiscal year 2021 will reflect the KaVo Treatment Unit and Instrument business as discontinued operations as required by GAAP. All references in these remarks and accompanying presentation to earnings, revenues, and other company-specific financial metrics relate only to the continuing operation of Envista's business except for cash flow measures. 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-specific financial metrics relate to the third quarter of 2021, and all references to period-to-period increases or decreases in financial metrics are year-over-year. We may also describe certain products and devices that have applications submitted and pending certain regulatory approvals or 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, anticipate, 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 may differ materially from any forward-looking statements that we make today. These forward-looking statements speak only as of the date that they are made, and we do not assume any obligation to update any forward-looking statements, except as required by law. With that, I would like to turn the call over to Amir.

Thank you, Stephen, and welcome everyone to Envista's third quarter 2021 earnings call. I want to begin by thanking our employees for delivering another outstanding quarter. Every day, our employees partner with dental professionals to improve lives and expand access to oral care. The dedication and passion of our employees is what will drive our long-term success. In the third quarter, our continuing operations delivered core revenue growth of 10.2% compared to the third quarter of 2020. We grew significantly above pre-pandemic levels and continue to benefit from the repositioning of our portfolio, our improved commercial execution, and our long-term investments in innovation. Our Q3 adjusted EBITDA margin was 19.6%. Taking a longer view, our year-to-date adjusted EBITDA margin is 20%, reflecting the underlying profitability of our business. Before I turn it over to Howard to discuss our third quarter results in more detail, I want to provide more color on our progress towards our long-term priorities of accelerating growth, expanding our operating margin, and transforming our portfolio. Since our September 2019 IPO, we have focused on accelerating our growth through organic investment in innovation and commercial execution. We continue to make meaningful progress across our businesses. With a uniquely differentiated portfolio, our orthodontic business continues to deliver strong results. We are the only company that offers clinicians a full range of orthodontic treatment options enabling them to provide better, more personalized treatment plans to more patients. Our clear aligner business continues to grow rapidly with sales expanding over 130% versus the third quarter of 2020. We are expanding our geographic footprint, increasing our active user base, and further penetrating DSOs. The Envista business system provides the tools and processes to deliver this rapid growth while ensuring an unparalleled customer experience. So far in 2021, we have reduced the time from initial scan to case shipment by 40% and continue to improve our customer onboarding experience. Since launching Spark in 2018, we are on track to start a total of 100,000 new cases by the end of the year, and further, we are well on our way to achieving a $100 million run rate in early 2022. Our premium implant business continues to accelerate, delivering double-digit core growth versus the third quarter of 2020. Our innovative TiUltra and Xeal surfaces continue to perform well and are driving our growth, with 30% of our implants sold globally now featuring our new best-in-class surfaces. Our commercial execution is further driving share gain in the global premium implant segment. We are focused on supporting our customers in Q3, providing over 300 training and education opportunities reaching over 7,000 clinicians globally. Our imaging business performed exceptionally well in the quarter, delivering core growth of over 20%. Dental professionals remain confident in the outlook for their practices and remain focused on investing for the long term. Our imaging offerings combined with our DTX Studio clinic software solution provide our customers with a seamless imaging workflow and integrated digital experience. This September, we were honored to win Cellerant's best-class award for our DTX solution. This is an example of how we are transforming the dental industry into the next phase of technology, expanding access for patients and delivering a seamless and productive workflow for clinicians. The Envista Business System and our focus on continuous improvement are foundations that deliver both our short- and long-term profitability. Our team leverages our EBS toolkit to reduce structural costs, consolidate our footprint, improve productivity, and drive operational improvements. Across our businesses, gross margins improved 230 basis points in the third quarter versus Q3 2020. This is despite some of the inflationary headwinds we have seen in shipping costs as well as in petroleum-based supplies and chemicals. To date, our daily management and focus on execution allowed us to mitigate many of the significant supply chain disruptions that the world is increasingly experiencing. Since the start of the pandemic, we have taken aggressive actions to transform our business. We took over $100 million in structural costs by delayering our organization and consolidating our operating footprint. We invested significantly in our long-term growth by utilizing our EBS tools across our portfolio to drive commercial execution, and we continue to build sustainable competitive advantage through innovation. With the announced sale of our KaVo Treatment Unit and Instrument businesses, we also made material progress toward our long-term goal of reorienting our portfolio to higher growth and higher margin segments. The divestiture shifts our portfolio from a 50-50 split between our two segments to a 60-40 mix in favor of the faster growth and higher-margin specialty products and technologies segment. As a business, we are now more focused on high-value and higher-margin consumables, imaging, and digital workflow solutions, with over 60% of our business now sold directly to clinicians. By exiting the treatment unit and instrument business, we expect to increase our core growth trajectory by 50 to 100 basis points, while expanding our long-term operating margins by 30 to 50 basis points. We plan to use the net proceeds from the sale to accelerate our portfolio transformation through an aggressive but disciplined approach to capital deployment. We utilized our EBS driven standard M&A and market work to manage a robust pipeline of inorganic partnerships and investment opportunities, and we are actively cultivating new opportunities. I will now turn the call over to Howard to go through our third quarter financials and segment performance in more detail.

Thanks, Amir. Before we begin, I would like to remind you that our third quarter results are based on continuing operations, reflecting the pending sale of our KaVo Treatment Unit and Instrument business. Accordingly, the quarterly results of the KaVo Treatment Unit and Instrument Business are now reported as discontinued operations. Given this complexity, before diving into the results of our continuing operations, I would like to take a moment to level set and just confirm that our businesses are performing very well. Results for both continuing operations and discontinuing operations exceeded our expectations in the quarter. We are ahead of our guidance, and based on our performance, we have the confidence to raise our full-year guidance while continuing to invest for the long term. Now moving to the results in the quarter. Third quarter sales increased 11% to $607.3 million. Reported sales were positively impacted 1.1% due to foreign currency exchange rates and negatively impacted 0.3% related to other discontinued products. Our core sales growth was 10.2% compared to the third quarter of 2020. As Amir discussed, our year-over-year growth reflects solid demand across the dental market and consistent execution across our portfolio. Geographically, North America and Western Europe's core sales growth was 8.2% and 9.1%, respectively, as business conditions continued to improve compared to the third quarter of 2020. Our emerging markets, including China, grew over 15% in the quarter. In China, we continue to see solid growth in both our strategically important implant business as well as our orthodontic solutions. Outside of China, our other emerging markets are clearly rebounding from pandemic lows. We expect to see the continued strengthening of demand in these markets as vaccinations continue to roll out and economies continue to reopen. Overall, we remain optimistic about demand for the balance of 2021. Barring any major pandemic-related disruptions to either patient volume or the overall supply chain, we believe that volumes will remain above pre-pandemic levels for the balance of 2021 and into 2022. Our third quarter gross margins from continuing operations were 58.7%, increasing by 230 basis points compared to the prior year due to higher volume, favorable product mix, and productivity initiatives across our portfolio. The adjusted EBITDA margin of 19.6%, which was 80 basis points lower than Q3 of 2020. As expected, in Q3 we continued to invest in our long-term innovation while increasing spending on travel and in-person customer-facing activities with the continued easing of pandemic-related lockdowns. Our adjusted EBITDA was negatively impacted by approximately $3 million in stranded costs related to the expected sale of the KaVo Treatment Unit and Instrument business. We expect to begin addressing our approximately $10 million of annualized stranded costs in Q4. Our third quarter adjusted EPS was $0.45 from continuing operations compared to $0.40 from the prior year. Our specialty products and technologies segment core revenue increased by 13.3% compared to the third quarter of 2020, driven by strong growth in premium implants and continued growth from Spark. Compared to the third quarter of 2019, our specialty products and technologies segment core growth was 11.7%. Our improving business execution in premium implant led to double-digit core growth versus 2020. We saw solid growth across most geographies and believe we are gaining share in the premium segment. Our specialty products and technologies segment adjusted operating profit margin at 23.3% was 180 basis points higher than our third quarter 2020 results. Our improved profitability was primarily driven by solid growth, favorable product mix, and structural cost savings, offset by increased spending on travel and customer-facing activities as well as long-term investments in innovation. Our third quarter equipment and consumables segment core sales from continuing operations increased 6% compared to 2020. Strong demand and solid execution in our imaging business drove the results in this segment with core growth of over 20% compared to the third quarter of 2020. As expected, sales of our infection prevention solutions declined from peak pandemic demand. Despite the lower Q3 sales, inventory sellout trends reported by our distributors indicate that we are gaining market share in our core dental and medical markets. Additionally, CaviWipes 2.0 has been well received in the market and should help us capture additional share. Overall, we continue to see enhanced safety protocols driving higher demand long term and expect this business to grow mid-single digits in the future. Equipment and consumables adjusted operating profit margin was 20.8% from continuing operations in the third quarter of 2021 versus 20.8% in 2020. Solid margin improvement in imaging and restorative solutions was offset by the slowdown in infection prevention. Further, we experienced some inflation related to chemical commodities that impacted our infection prevention business. As Amir noted, with the pending sale of KaVo Treatment Unit and Instrument Business, our equipment and consumables business will be faster growth and higher margin business over the long term. For the third quarter, we generated free cash flow of $82.3 million and ended the quarter with over $600 million in cash, excluding the expected proceeds from the KaVo Treatment Unit and Instrument Business sale. Our balance sheet is very strong and we have ample liquidity to pursue inorganic growth opportunities as they become available. Looking forward to full year 2021, we are raising our guidance and are now expecting to deliver revenue from continuing operations between $2.475 billion and $2.5 billion. We further expect to deliver adjusted EBITDA between $480 million and $495 million. This includes a negative impact of approximately $10 million of full year stranded costs associated with the sale of KaVo Treatment Unit and Instrument Business. As mentioned, we expect to begin addressing these costs in Q4 and work to reduce the impact as we move through 2022. While it is too early to provide guidance for 2022, we remain committed to our long-term target of delivering mid-single digit growth, increasing our operating margins by 50 to 75 basis points annually while funding our long-term growth initiatives. I will turn the call over to Amir for some closing comments.

Thanks, Howard. We are very pleased with our third quarter results and remain optimistic about the future of the dental industry. Since our IPO, we have focused on accelerating our organic growth, improving our operating margins, and transforming our business. We moved decisively to reshape our portfolio by exiting and divesting lower growth, lower-margin businesses where we were less differentiated. We invested in innovation across our portfolio including the Spark, TiUltra, Damon Ultima, and CaviWipes 2.0 and improved our commercial execution. Finally, we significantly improved our operating margins by reducing structural costs and improving productivity. As a result, we transformed our portfolio from a broad mix of equipment, consumable, and specialty products to a focused dental company, providing highly differentiated consumables and specialty dental products underpinned by strong digital workflow solutions. We are now focused on the fastest growing, most attractive segments of the dental industry and continue to work with our clinical partners to streamline their operations and improve patient care. We are actively partnering with dental service organizations as they improve access to oral care. We are positioned as a partner of choice for this fast-growing customer segment. Moving forward, our goal is to be a leader in orthodontics, providing a differentiated and integrated suite of treatment options, including bracket and wires, and clear aligners. We will further accelerate our growth in implants by leveraging our premium implant franchise to provide full solutions across the implant workflow, including regenerative and prosthetic offerings. We will continue to grow and broaden access to our highly profitable and differentiated consumables business. Finally, we will leverage our strength in imaging and diagnostics to build digitally integrated workflows from diagnostics to treatment planning to execution for our clinical partners. We see significant opportunities to invest organically and inorganically, and we have the financial flexibility and management focus to further accelerate our growth trajectory via portfolio transformation. The progress we made this quarter is a direct reflection of our continuous improvement culture and our commitment to our customers in the dental industry. Our purpose is to partner with dental professionals and improve patients' lives by personalizing, digitizing, and democratizing dental care. We look forward to our continued growth journey in 2021 and beyond.

Thanks, Amir. That concludes our formal comments. We are now ready for questions.

We will take our first question from Elizabeth Anderson with Evercore. Please go ahead.

Hi guys. Congrats on the nice quarter. Thanks for the question. Despite the much tougher comps in the quarter, you saw obviously very nice growth in both specialty and on equipment and consumables. Can you go into more detail about what you were seeing maybe from a patient volume perspective in some of the sub-segments, notably maybe like ortho and implants on the specialty side? Thanks.

Yes. Thank you Elizabeth. Broadly speaking, patient volume has improved and is above pre-pandemic levels in the developed markets in China. If you look at our business, almost 90% of our business is in Western Europe, North America, and in China. While there remain pockets of weakness based on localized outbreaks and shutdowns, overall, things are trending positively. Our emerging markets outside China are starting to see an uptick from pandemic lows. We remain very optimistic but are mindful that there remains some risk about new variants as well as a slow vaccination rollout in certain areas. Answering your question about what we see on premium implant as well as clear aligners. Both of these segments are so underpenetrated, and we think there is significant runway. What we saw in the third quarter was continued double-digit sequential growth for Spark, driven by active doctors' usage as well as new case submission growth. We continue to show and demonstrate to Spark. People see the value of it. They understand the differentiation between what we offer versus competitors, and they really acknowledge the level of support as well as the technical capabilities that we are offering in this space. Our premium implant business continued to make progress. As we mentioned, double-digit growth in Q3. We are optimistic about the work that we have done in the past couple of years to see that trend continue worldwide.

That's super helpful. And sorry, just to clarify, you said double-digit sequential growth in Spark. Did I hear you correctly?

Yes. Absolutely.

Okay. Perfect. And then as far as Q4, I know there are obviously some puts and takes with taking the numbers out, the KaVo numbers out of the results. Can you talk about what your core underlying assumptions are for the Q4 revenue guidance in terms of visits, any other types of things, embed anything about N1 or anything like that that you would call out?

Yes. I would say, Elizabeth, this is Howard. Thanks for the question. I think that we feel quite good about where we are at, performance-wise year-to-date. And I think that we anticipate things to continue here in the fourth quarter as it relates to pre-pandemic demand and the like as it relates to customers and dental office visits. There are a couple of, I would say, uncertainties regarding Q4. I think given some of the disruptions from COVID, we are seeing slightly different seasonal patterns, particularly in our imaging business. In Q3, our imaging business grew nearly 25%, and while we think that we will have some strong growth here in the fourth quarter, that over-performance is likely to moderate a little bit there. That's one thing to keep in mind. I also think that as it relates to the number of days, we have a bunch of clinicians that have had a really good year, and I think they are looking forward to taking some time off. We are hearing from the field that there is some pent-up vacation demand. We need to be just thoughtful about that. As it relates to maybe the margin side, we expect continued ramp-up for us on the customer-facing commercial activities, and we are mindful of the inflation and some of those things that might come into play. I mean whether they're transitory or longer term, we are certainly seeing a little bit of impact of that as well. That speaks to some of the margins we anticipate for Q4.

That's very helpful. Thank you.

Sure.

Thank you. Good afternoon, guys. How are you? Howard, I was hoping on the guidance. Unless I am missing it somewhere, I don't see a crosswalk from what your guidance would have been excluding the divestiture prior to this update tonight. It would just be helpful, I think, to level set us all. You say you are raising the guidance. If we could just see what your guidance would have been last quarter without the divested products in there?

Yes. Maybe the easiest way, Jeff, to think about this is, we provided guidance historically that we would say our topline revenue, we anticipated somewhere between $2.8 billion and $2.9 billion. That was all up. If we think about continuing operations and the discontinuing operations, in light of our Q3 performance, we would be taking up that entire number to the very high end of that guide. Instead of the $2.8 billion to $2.9 billion, we would be closer to the $2.9 billion because of the overage and the better performance that we see in both continuing ops and the discontinuing ops coming in a bit stronger. As it relates to the bottom line or the adjusted EBITDA guidance, we have historically provided high teens is what we said. In light of the performance we have had year-to-date and particularly in the third quarter, we would take that up to the very high teens. That may be helpful as it relates to being able to see apples and apples comparison from what we have historically provided.

Yes. No, that's exactly what I was looking for. Thank you. And then, Amir, I am trying to piece together comments you have made over the last couple of few quarters on the implant business, especially the premium implant business. With the double-digit growth in premium this quarter, it seems to me as if that Nobel Biocare business has kind of strengthened each quarter on a year-over-year basis, even on a two-year basis. Just talk about your Nobel Biocare premium business if you would? And kind of what you have been seeing those trends over the last few quarters? Have they been strengthening each and every quarter? That would be helpful. Thank you.

Yes. Thanks, Jeff. In the third quarter, premium implant grew double digits versus 2020, Q3 2020. 12.1% was the exact number. We grew high single digits when you compare it to 2019. So compared to 2019 Q3, we grew 8.4%. If you look at it, almost every quarter, we have seen an uptick on the premium implant performing a lot better than what we did pre-pandemic and the recovery we have seen post-pandemic has continued. What have we done differently in here, and why do we feel comfortable moving forward? Primarily, it has been because of the strong commercial execution. We talked about some changes that we made in Europe. We did that in 2018 and beginning of 2019. We started seeing that transition take place. We did the same thing in the U.S. In the past three quarters, we continue to see better performance in North America than what we had before. Just to add to that, in October, we have seen that trend continue. We are optimistic about the core and existing portfolio and some of the new innovations we have put in place. The new surfaces are doing extremely well. With the upcoming N1, we think the commercial execution plus innovation will really put this business in high single-digit and over time get us to a double-digit growth, which is what we aim to do in the coming quarters and coming years. Commercial execution is the foundation of what we have seen in here, and that trend continues. Customers are beginning to respond to it and see the customer experience they expected from Nobel coming back. We are really pleased with what the team has been able to accomplish.

Thank you.

Hi guys. Good evening. I know you didn't give official 2022 guidance, but I think you did talk about 50 to 75 basis points of OM expansion. Is that inclusive, the 50 to 75 basis points, is that inclusive of the $10 million in stranded costs that I think you called out that you will try to start working through in Q4, but I'm guessing there's going to be a stub in 2022? So does it reflect that? And maybe just as a tack on from overall acquisitions and divestitures. Just broadly speaking, do you feel the portfolio is where you want it to be in terms of pruning? You have discussed your desire to flex M&A. But are there any other product lines that you guys feel are non-core to the entity that might still be out there? Thanks, and then I will ask a follow-up.

Sure. No problem. Jon, thanks for the questions. Yes, I mean, as it relates to expectations on 2022, we are not providing formal guidance, but I think we do feel comfortable with that 50 to 75 basis point improvement overall. We have a team that has done well in terms of being able to reduce structural costs. As part of these stranded costs, we are going to start addressing those here in the fourth quarter. We believe we will see progress throughout 2022. That does get us up to a 20% adjusted EBITDA margin in 2022. We feel good about that. Let me hand it to Amir for the second piece there.

Yes. That 50 to 75 basis points is assuming we are going to deal with that $10 million stranded cost, and this is on top of that. As far as what the portfolio looks like, Jon, last year we exited about 5% of our portfolio because we recognized that it wasn't differentiated and was not meeting expectations, which had no impact on the margin. With the exit of the KaVo Treatment Unit and Instrument, we now have created a portfolio focused on three segments: orthopedics, implant, and consumables. Our orthodontic segment is growing rapidly, combining brackets and wire as well as clear aligners to give us a competitive advantage. We feel good about our portfolio, our execution, and our operational capabilities. We think we have plenty of runway in performing double digits and continue to be a major player on the high end of that, which is in the professional segment of orthodontics. Our implant business has come together nicely, and we have made significant investments. We are adding to the portfolio organically and inorganically. We think that segment of the business is in a good place and continues to operate. Our traditional consumable is high-margin and differentiated. Broadening access to that segment provides an opportunity to capture share, and we have been taking share. We have a good view of sellouts in various geographies. We have been taking share, particularly on restorative and endo business. We are really proud of what the imaging team has done in the past several quarters. Looking at the portfolio, it's well positioned in these segments and is differentiated. We will continue optimizing our portfolio to be even further differentiated. Our goal is to achieve mid-single digit growth and about a 20% EBITDA, and we want to further improve our growth trajectory to mid-single digit plus high single digits over time.

Fair enough. And maybe just a tighter follow-up. It seems there is some debate among some of the dental companies that have already reported on current trends. You talked about growth above pre-pandemic in most areas. Did that persist into October? I understand being a little narrow-focused. When we think about that dental market, September into October, did the strength you seem to be calling out continue throughout October? Thanks, guys.

Yes. Absolutely, Jon. We haven't seen anything that causes us to be concerned about the trend. October, now that it's behind us, continued the momentum we saw in Q3, and we feel fairly confident about Howard's guidance. We believe we can execute and deliver results as we go forward. We talk to our DSO partners continuously. They are not seeing anything that suggests a change on the horizon.

You line is open.

Hi guys, this is Casey, on for Tycho. Just wondering around, you called it out in the prepared remarks, there are supply chain headwinds from the equipment business. Can you quantify any kind of headwinds baked into the margin guidance and anything you are seeing on that side?

Yes. Casey, I think that up to year-to-date, we have seen very modest impact associated with it. I mean as we talked about, it's around petroleum-based products and chemicals and some chips. The team has done an incredible job to-date being able to countermeasure those types of risks. That said, we realize that as we go into Q4 that there continues to be more shortages and more concerns broadly. We have put in a little bit of a buffer in that as well. To be clear, we have made some investments as it relates to our inventory balances to have enough buffer stock so that we can meet customer demands and not extend lead times to our customers. We have been doing what we can to ensure that we mitigate those risks. The reality is, as we go into Q4, like everyone else in the world, we are experiencing some of these pressures. We contemplated that a little bit here in the guide as well.

Got you. And then just following up on the premium implant question from earlier. A couple of your competitors have launched products in this space recently. I wanted to get your take on your updated thoughts around the competitive environment, especially as you prepare to launch N1 in the U.S.? Any kind of incremental thoughts there?

Yes. Happy to answer that. We have done tremendous work to look at the strong growth we are seeing on premium implant to launch idea. As I answered before, the strong growth mainly is because of commercial execution. But also, we have launched incredible products, specifically around the surfaces. We were lagging to some degree, but have been able to close that gap quickly. Those products are receiving positive feedback; currently, 30% of the implants use these new surfaces. We feel really good about the portfolio. N1 has continued to make progress in Europe. We are working with the FDA, going through the approval process. We expect to hear by the end of the year the response regarding N1. We anticipate that N1, along with surface innovation and commercial execution, will set us up to achieve higher than market growth in 2022. Our intention is to perform better than the market, and we are seeing that trend continue, as we mentioned, into October.

Good afternoon. I want to go back to an earlier question, just to make sure I heard everything correctly and get all the moving pieces regarding the implied 4Q guidance. I get some of the comments you made, Howard, about the imaging comp and some other pieces. That being said, I am still surprised in terms of the midpoint of your implied guidance - that's roughly flat with your new recast Q2 number. I don't recall in any normal year that being the case. So when you think through that dynamic and how do you risk-weight that pressure in the dynamics that have your numbers basically at parity again at the midpoint of your implied guidance?

Yes. So Michael, we feel good about where we are year-to-date. I think that effectively, we are raising things to the very high end of our guidance, including both the continuing and discontinued operations. Bear in mind that we do put in a little consideration. We have three fewer days in the quarter. That is something to be mindful of. We know that there is going to be significant amounts of pent-up vacation demand at year-end, particularly in Europe, we are hearing that from our commercial teams. We factored that in a little.

Got it. And then turning back to Spark and nice sequential performance again. What are the biggest opportunities in terms of continuing to penetrate the market and take share? Is it more about product quality, more about orthodontic relationships, or marketing spend? How should we think now that you are getting toward that critical mass at a $100 million run rate?

Yes. Happy to answer that. If we look back to when we launched Spark in 2018 in Australia and New Zealand, and then in the U.S., we are well on our way to do 100,000 cases by the end of this year. Breaking it into pieces: Step one was core customers. These are Damon customers who have great relationships, using clear aligners, and looking for alternatives with the same company, same level of service they had in the past. We started there in North America, outside Australia and New Zealand. We have expanded significantly from that starting point. Product quality and price performance is paramount, and when they compare Spark to market alternatives, they feel good about making the switch. The second factor is customer service and relationship support, which we provide at the level customers expect. Lastly, we continuously improve Spark by adding innovations. What they are seeing now builds confidence. The trajectory of growth is not unique to North America; we are expanding into additional geographies and engaging DSOs. A lot of general practitioners are also becoming competent in orthodontics, and we are supporting them. The potential is enormous. We have set a target but have also established the capacity, the team, and the resources to evolve our position as a significant player in orthodontics while achieving our $100 million milestone.

Thank you.

Hi. Thanks very much. Amir, just to follow on Michael's question. The global rollout for Spark sounds interesting. Is that a 2022 project, or is that something we should think about over the next three or four years?

It has already started, John. We are in China, Australia, and New Zealand. We are in Europe with registrations taking place step by step, depending on local requirements. Some places, registration is faster than others, but we are actively rolling this out. We anticipate results from this expansion in 2022, and moving into 2023, we aim to provide the best support and capability everywhere we are present with our Ormco business. The process began in early 2021, and we are expanding as we progress.

Sounds good. Thank you. A quick follow-up on the implant business and N1. Are you at the point where you have unfettered access to clinicians in Europe to conduct demonstrations and teaching, or is that still somewhat constrained by the pandemic?

It's still a little constrained but significantly better than in Q1 and Q2 of this year. We will engage small cohorts of five to ten clinicians for training over a few days. They will then place an N1 implant, and we will stay with them to ensure they and their staff are in a good place to use it. We ramp them up in a phased approach and move on to the next cohort afterward. Learning from Spark's strategy, this phased approach allows the trained cohorts to serve as hubs to expand through their networks readily. Our recent European event attracted hundreds of participants, showcasing teaching and training from key opinion leaders. We expect N1 to follow a similar process, and once approved, we will scale attendance for training and demonstrations.

Hi. Good afternoon. Thanks for the questions. Amir, it sounds like the company has a pretty broad lens with respect to looking at opportunities for M&A. It would be great to get your perspective on just how you are thinking about bolstering the key pillars in the specialty segment like implants and orthodontics versus building out product categories or geographies where you may not have as large of a presence today but see an opportunity to grow?

Thank you, Nathan. One thing we carry from Danaher capabilities is a cadence of cultivation and market work. This isn't a one-time approach; it's a consistent review process. Howard, myself, and the team conduct monthly reviews of our entire funnel, which I have been doing for nearly seven years in dental. We have a robust pipeline of cultivation, working closely with potential targets for cultural fit. We look to invest in specialty consumables and integrated workflows, which involve enhancing diagnostics and increasing acceptance rates through digital imaging capabilities. This strategic focus delivers better patient care and staff productivity, so we are exploring areas like value implants and regenerative solutions where we can achieve meaningful growth, and we will also look at geographies where partnerships or acquisitions can bolster our presence. We are optimistic about our pipeline and aim to actively execute throughout the remainder of 2021 and into 2022, creating growth pillars for our organization and prioritizing mid-single-digit organic growth while leveraging M&A for improved performance.

Yes. We are experiencing inflationary pressures, with significant impacts primarily from shipping costs. We have instituted surcharges for freight and captured significant pricing in Q3. We are seeing price increases that have contributed 35 to 37 basis points this year. The KaVo business was approximately $110 million in Q4 of the last year.

We will now move on to the next question from Jason Bednar with Piper Sandler.