The New York Times recently reported on the significant rise of surgical dental work in toddlers. In fact, the article begins with a story of a 2 1/2 year old boy with cavities in 11 of his 20 baby teeth. "His pediatric dentist extracted two incisors, performed a root canal on a molar, and gave the rest fillings and crowns."
Let's all hope his parents had dental insurance.
But this little boy is not alone in his situation. Not by a long shot. This may come as a surprise to readers, but it shouldn't.
The same triggers that are furthering America's childhood obesity problems, sugary food and drinks, certainly play a role in this trend. There are also plenty of parents unwilling to put their darling child through the relative torture of a nightly teeth cleaning ritual. Lack of awareness also plays its role: Parents choosing bottled water over tap are depriving their toddlers of an excellent source of fluoride.
Scale of the trend
Here are some segments from the article to help readers understand the scale of this trend:
The Centers for Disease Control and Prevention noted an increase, the first in 40 years, in the number of preschoolers with cavities in a study five years ago. But dentists nationwide say they are seeing more preschoolers at all income levels with 6 to 10 cavities or more.
The Center for Pediatric Dentistry, a joint venture since 2010 between the University of Washington and Seattle Children's Hospital, built a surgical wing because of the demand for oral surgery for preschoolers.
The dental surgery center at Nationwide Children's Hospital in Columbus, Ohio, has three operating rooms, which staff members and local dentists used to treat roughly 2,525 children in 2011, 6% more than in 2010. The average age of patients is 4, and most have decay in six to eight teeth.
Dr. Megann Smiley, a dentist-anesthesiologist at Nationwide says, "the most severe cases have 12 or 16 [cavities], which is seen several times a week."
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Several dentists interviews said the cost to parents for dental restoration under general anesthesia for a child ranges from $2,000 to $5,000 or more, depending on insurance coverage and the amount of work.
With the trend on the rise (and, let's face it, unlikely to disappear anytime soon), the best we can do is brush twice a day and look for ways to trade the trend.
For ideas on how this trend in expensive childhood dental surgery might make an appearance in a portfolio, we create a list of 8 companies heavily exposed to the dental industry (market caps over $50 million).
Do you think these companies will benefit from this unfortunate trend? (Click here to access free, interactive tools to analyze these ideas.)
1. Align Technology (NAS: ALGN) : Designs, manufactures, and markets the invisalign system for treating malocclusion or the misalignment of teeth. Market cap of $2.01B
2. Danaher (NYS: DHR) : Designs, manufactures, and markets professional, medical, industrial, and commercial products and services primarily in North America, Europe, and Asia/Australia. Market cap of $35.98B
3. Henry Schein: Distributes health care products and services primarily to office-based health care practitioners. Market cap of $6.47B
4. 3M (NYS: MMM) : Operates as a diversified technology company worldwide. Its Health Care segment provides medical and surgical supplies, skin health and infection prevention products, inhalation and transdermal drug delivery systems, dental and orthodontic products, health information systems, and food safety products. Market cap of $59.0B.
5. Patterson Companies (NAS: PDCO) : Operates as a distributor serving the dental, companion-pet veterinarian, and rehabilitation supply markets in North America. Market cap of $3.39B.
6. Sirona Dental Systems: Develops, manufactures, and markets dental equipment for dentists worldwide. Market cap of $2.67B.
7. DENTSPLY International: Designs, develops, manufactures, and markets dental consumable products, dental laboratory products, and dental specialty products worldwide. Market cap of $5.41B
8. Young Innovations (NAS: YDNT) : Engages in the development, manufacture, and marketing of supplies and equipment used by dentists, dental hygienists, dental assistants, and consumers primarily in the United States, as well as in Canada, Europe, South America, Central America, and the Pacific Rim. Market cap of $226.75M.
Interactive Chart: Press Play to compare changes in analyst ratings over the last two years for the stocks mentioned above. Analyst ratings sourced from Zacks Investment Research.
Kapitall's Rebecca Lipman does not own any of the shares mentioned above.
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