Dental Update Survey Says: 4Q Demand Moderates, But 1Q, NTM Outlook Illustrates Expectations of a Continued, Albeit Slow, Recovery Life Science Tools and Diagnostics | Channel Check 4Q Dental Practice Volume, Revenue Retrenches, but NTM Outlook Improves : According to our proprietary survey of 75 US dental practitioners, almost two-thirds (62%) of practices experienced greater than 5% declines in revenue in 4Q, suggesting tempered Dental demand relative to the 3Q experience ( 51%), potentially due to an uptick in COVID - 19 cases throughout the winte r months, as well as a falloff of pent -up demand experienced in 3Q . In 4Q, practice revenue is estimated to have fallen 20.2% y/y on a weighted average basis, also a sequential deceleration relative to 3Q (-13.6%), albeit still meaningfully better than 2Q lows ( -56.5%) with preventative ( -19.4%) representing the most meaningful driver, followed by cosmetic ( -19.2%), routine visits ( -18.6%), and existing patient traffic ( -17.5%) . Respondents remain cautious ly optimistic going forward, with expectations of a steady, but slow recovery, with practitioners expecting a n 8.5% decline in 1Q, which would still represent a notable sequential improvement, as well as a 4.4% rise over the NTM , reflect ing the expectation of broader vaccine distribution throughout the year following recent EUAs , easy comps, as well as some potential medium -term increase in acute care cases following practice visit deferrals throughout 2020. All in , the pandemic has driven a meaningful deterioration in dental demand, with likely a measured recovery going forward, consistent with historical experiences following macroeconomic pullbacks as well as survey commentary. Clear Aligners - ALGN Dominates; Paradigm Shift to Aligners Underway ? The NTM clear aligner outlook moderated sequentially, with respondents who currently utilize clear aligners expecting -2.1% weighted average growth over the NTM (vs. +0.5 % in 3Q, +2.2% in 4Q19), albeit including three respondents who expect a 100% reduction in utilization, a dynamic we ha ve not seen in past surve y (+2.8% weighted avg. ex. these practitioners). Several practitioners have also indicated they are seeing a higher relative level of interest in clear aligners (vs. brackets & wires) due to continued focus on aesthetics and consumer -oriented advertising, along with pandemic -related benefits where aligner treatment requires fewer office visits, less practitioner interaction, and lower risk of disruption with subsequent pandemic waves, dynamic s that could potentially accelerate the shift to clear aligners lo nger term . Align Technology's (ALGN, OP) Invisalign remains the clear market leader (67% of our cohort, 88% of clear aligner users), while traction for Dentsply Sirona’s SureSmile and Envista Holding’s Spark remain in early days, with only 4% of respondent s utilizing each product in 3Q . Separately, we were surprised that 12% of respondents (~in-line with TTM average) indicated their potential willingness to work with SmileDirectClub (SDC, OP), with several more undecided due to a lack of information around the model and pricing, differing from our initial theory that practitioners would be broadly un willing to work with the DTC provider . 22 January 2021 Equity Research Americas | United States DISCLOSURE APPENDIX AT THE BACK OF THIS REPORT CONTAINS IMPORTANT DISCLOSURES, ANALYST CERTIFICATIONS, LEGAL ENTITY DISCLOSURE AND THE STATUS OF NON -US ANALYSTS. US Disclosure: Credit Suisse does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the Firm may have a conflict of i nterest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision. Research Analysts Erin Wilson Wright 212 538 4080 erin.wright@credit