Kevin Caliendo : Okay. That’s helpful. I just wanted to understand the bend Venn diagram here, who we were talking about.
Ron South : Yeah. A lot of those others were able to, through their rep or otherwise, we’re able to place orders through our telesales channel, or their rep was able to make sure that their order got put in accurately and completely.
Kevin Caliendo : And I appreciate the commentary around the lower end. That even sounds better than many of your peers have spoken publicly on the trends that they’re seeing in October and November for the fourth quarter. What — I sort of want to ask Stanley this question, just big picture. What do you think is actually driving the slowdown in demand in dental, even if you guys aren’t seeing it as acutely as maybe some of the others probably because of mix, probably because of your own positioning? But how often have you seen this kind of macro environment, how long do you think it lasts? What do you think is causing at this time? Just love to hear your take on that and how long do you think it lasts for.
Stanley Bergman : Yeah. Certainly good questions here today. The third quarter, September in the U.S., we saw sales of consumables going down. There’s patient data from the ADA, but it’s very hard to pinpoint this exactly, how much of that amount going down was because of a switch to maybe some generics a little bit, how much was the result of price resistance because prices have gone up. There’s a little bit of that in there, too. How much was because of flu and COVID. We’re not talking about many hundreds of basis points. We’re at the margin, yeah. And to conclude anything from September and the first two weeks of October is very hard for us to pinpoint a clear direction. What we’ve seen in the past is the sales of consumables may go down for quarters, but doesn’t last much longer than that.
And it’s a strange recession. It seems like, on the one hand, the consumer is resisting. On the other hand, retail sales don’t seem like a disaster. I mean, they’ve not been great. But I think we’re talking about at the margin. In Europe, there is government support. So it’s not going to be as elastic. But there is a little bit of concern with the geopolitical environment. Although when we look at Germany, it’s not terrible. I would say there’s been on the equipment side some resistant to the resistance to more expensive equipment and there’s been a switch to less expensive equipment. It doesn’t really impact that much — have such a huge impact on us. The gross profit may be a little bit less. But generally, there are so many other variables on the equipment side that I can’t say for sure that the trends in Europe on equipment are going to significantly impact our profitability of our equipment business.
In fact, there’s more — much more money to be made on the efficiency of our service network. So we’re talking about at the margin here in terms of consumables. Equipment in North America is the one area I didn’t cover. Traditional equipment is pretty stable. Digital, there is, of course, switching to some newer devices at lower price. So there’s some volatility there, but there’s also good demand for the digital equipment. I’m talking about the IO devices. On the mills, it’s not 100% switch between mills and 3D printing, although 3D printing is doing very well. Expect that at some point, we will see 3D printing be adopted by more DSOs. Won’t be necessarily a sequential increase, but there could be lumpiness in that. So I’m just giving you a number of factors to draw a conclusive summation of all of that or a conclusive one consolidated number is very difficult to give you.
But in my experience, been around a long time, these consumable trends on the negative side don’t last long, and I’m talking about dental. On the medical, the demand is still pretty good in the ultimate care setting, many more procedures moving from the hospital. I wouldn’t read anything into our specific growth for the quarter other than to take into account last year, we had almost, I think, 9.5% or almost 10% growth. So you average it out maybe 4% to 5%, 5% to 6%. So the business is relatively stable, which is a good place to conclude the call. Is that correct? So thanks for that question. Operator, let me just say a few things before we end. The business, in general, we have good branding. We have a good strategic plan. Our IT people and the team came through in a remarkable way.
At some point, we’re going to have to deal with cyber threats as a country, as a world. It’s one of the top concerns on CEO’s list, and we’re going to have to put much more money into law enforcement in this area. Law enforcement has been extremely collaborative cooperative. But this is a new area — and it’s not brand new, but the number of attacks is increasing significantly each month. And I think the way our team handled it, brought down the systems, the backups are working, built it up application by application, verified that the data that was being put live, activated live was good and was safe. Just unfortunately takes time. But I think we’ve dealt with it in a pretty expeditious way, and I believe, from a high quality point of view.
Great advisers, the board that is quite experienced in this arena. Two board members that have direct experience in this area that, of course, have been advising us for several years. And our BOLD+1 plans are still in place. The Henry Schein One continues to do very well. Expect the clinical workflow area to do very nicely. Artificial intelligence is, I think, will gain acceptance within the DSO movement in the not-too-distant future. I think we have a winning product offering in that regard. The equipment is stable. I’ve given you our thoughts on consumables. And we now just need to complete, bring up all of our systems and then ensuring that our recovery from a customer point of view is executed well. Our sales force is ready to go into the field and to advance recovery.
