Henry Schein and KKR & Co.’s Internet Brands Joint Venture Potential 3D Printing Impact

Henry Schein is one of the world’s largest distributors of healthcare products and services. In 2017 alone, the healthcare giant made $12.5 billion in revenue. As of July 2018, Henry Schein has partnered with KKR & Co.’s Internet Brands to create Henry Schein ONE, a management system that ties practice management, marketing, and patient communications into one neat package. Specifically, Henry Schein Practice Solutions products–such as Dentrix and Easy Dental–are being combined with Internet Brands’ solutions–such as DemandForce, Officite, and DentalPlans.com. Its creators believe that Henry Schein ONE will have a tremendous impact on dental practices’ patient care quality, experience, organization, and efficiency.

There are hundreds of dental technology platforms that have allowed practices to transition from paper to digital devices. These platforms have digitized dental practice aspects such as patient charting, appointment scheduling, examinations, and more. Consequently, dental offices have become more efficient and more sustainable. One dental office may have as many as five different platforms in use including a scheduling system, an examination system, and a billing system. However, many of these platforms are highly individualized, and as a result it is difficult to have them communicate with one another. When the number of systems in one office becomes too much, it may even slow down the workflow. We believe that this new joint venture will help accelerate the already predicted increase in dental 3D printing. Moreover, this dental 3D printing technology growth will be augmented by R&D tax credits.

The Research & Development Tax Credit

Enacted in 1981, the now permanent Federal Research and Development (R&D) Tax Credit allows a credit that typically ranges from 4%-7% of eligible spending for new and improved products and processes. Qualified research must meet the following four criteria:

• Must be technological in nature
• Must be a component of the taxpayer’s business
• Must represent R&D in the experimental sense and generally includes all such costs related to the development or improvement of a product or process
• Must eliminate uncertainty through a process of experimentation that considers one or more alternatives

Eligible costs include US employee wages, cost of supplies consumed in the R&D process, cost of pre-production testing, US contract research expenses, and certain costs associated with developing a patent.

On December 18, 2015, President Obama signed the PATH Act, making the R&D Tax Credit permanent. Beginning in 2016, the R&D credit can be used to offset Alternative Minimum tax for companies with revenue below $50MM and for the first time, startup businesses can obtain up to $250,000 per year in payroll taxes and cash rebates.

The Joint Venture Dental Components

James Harding, Chief Executive Officer of Henry Schein ONE and former Chief Technology Officer of Henry Schein, stated that the company’s goal was to deliver technology innovation to automate more tasks and simplify the digital workflow under one integrated system. By having one system in which the various platforms can effectively communicate with one another, the administrative work is lessened and dental practitioners can lend more time to patient care and dental technology.

Potential 3D Printing Impact

We believe that this powerhouse joint venture could help accelerate 3D printing integration in dental offices by eliminating time consuming administration tasks. Dentists and dental lab technicians will be able to focus more on dental technology. The technology for 3D printing in the dental industry has already proven to be ground-breaking and is continuously improving. Being partnered with leading Internet dental brands is going to really enable companies to get the message out about new dental technologies.

In SmarTech Publishing’s analysis report on 3D printing in the dental industry, it is predicted that by 2027 dental 3D printing revenue will reach $9.5 billion. The majority of that revenue was credited to 3D printing services in the dental industry. With the rise of 3D printed clear aligners, SmarTech Publishing also predicted that an estimated $22.8 million in market value would be credited to clear aligner forming tools alone. Clear aligners are especially benefiting from 3D printing as one of the first highly customized products to be made en masse. What used to be a very slow and gradual process of straightening teeth is drastically improving with 3D printing and better technology.

Conclusion

With the joint venture of two major companies and contributors to the dental industry, practices nationwide are sure to be transformed. Dental offices will have better administration and overall workflow. Consequently, dental offices and labs can dedicate more time and money to advancing their technology such as dental 3D printing.

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Charles Goulding and Rafaella July discuss the Henry Schein and KKR & Co. joint venture.