The following discussion and analysis of our financial condition and results of
operations should be read in conjunction with other information, including our
Condensed Consolidated and Combined Financial Statements and related notes
included in Part I, Item 1, Financial Information, of this Quarterly Report on
Form 10-Q, our consolidated and combined financial statements appearing in our
Annual Report on Form 10-K for the year ended December 31, 2019 (the "2019
10-K"), and Part II, Item 1A, Risk Factors, of this Quarterly Report on Form
10-Q. Unless the context otherwise requires, all references herein to the
"Company," "we," "us" or "our," or similar terms, refer to Envista Holdings
Corporation and its consolidated subsidiaries.

Certain statements included or incorporated by reference in this Quarterly
Report are "forward-looking statements" within the meaning of the U.S. federal
securities laws. All statements other than historical factual information are
forward-looking statements, including without limitation statements regarding:
the potential impacts of the COVID-19 pandemic on our business, financial
condition, and results of operations; projections of revenue, expenses, profit,
profit margins, tax rates, tax provisions, cash flows, pension and benefit
obligations and funding requirements, our liquidity position or other projected
financial measures; management's plans and strategies for future operations,
including statements relating to anticipated operating performance, cost
reductions, restructuring activities, new product and service developments,
competitive strengths or market position, acquisitions and the integration
thereof, divestitures, spin-offs, split-offs or other distributions, strategic
opportunities, securities offerings, stock repurchases, dividends and executive
compensation; growth, declines and other trends in markets we sell into; future
regulatory approvals and the timing thereof; outstanding claims, legal
proceedings, tax audits and assessments and other contingent liabilities; future
foreign currency exchange rates and fluctuations in those rates; the anticipated
timing of any of the foregoing; assumptions underlying any of the foregoing; and
any other statements that address events or developments that Envista intends or
believes will or may occur in the future. Terminology such as "believe,"
"anticipate," "should," "could," "intend," "will," "plan," "expect," "estimate,"
"project," "target," "may," "possible," "potential," "forecast" and "positioned"
and similar references to future periods are intended to identify
forward-looking statements, although not all forward-looking statements are
accompanied by such words. Forward-looking statements are based on assumptions
and assessments made by our management in light of their experience and
perceptions of historical trends, current conditions, expected future
developments and other factors they believe to be appropriate. These
forward-looking statements are subject to a number of risks and uncertainties,
including but not limited to, the following: the impact of the COVID-19
pandemic, the conditions in the U.S. and global economy, the markets served by
us and the financial markets, the impact of our debt obligations on our
operations and liquidity, developments and uncertainties in U.S. policy stemming
from the U.S. administration, such as changes in U.S. trade and tariff policies
and the reaction of other countries thereto, contractions or growth rates and
cyclicality of markets we serve, fluctuations in inventory of our distributors
and customers, loss of a key distributor, our relationships with and the
performance of our channel partners, competition, our ability to develop and
successfully market new products and services, the potential for improper
conduct by our employees, agents or business partners, our compliance with
applicable laws and regulations (including regulations relating to medical
devices and the health care industry), the results of our clinical trials and
perceptions thereof, penalties associated with any off-label marketing of our
products, modifications to our products that require new marketing clearances or
authorizations, our ability to effectively address cost reductions and other
changes in the health care industry, our ability to successfully identify and
consummate appropriate acquisitions and strategic investments, our ability to
integrate the businesses we acquire and achieve the anticipated benefits of such
acquisitions, contingent liabilities relating to acquisitions, investments and
divestitures, significant restrictions and/or potential liability based on tax
implications of transactions with Danaher, security breaches or other
disruptions of our information technology systems or violations of data privacy
laws, our ability to adequately protect our intellectual property, the impact of
our restructuring activities on our ability to grow, risks relating to potential
impairment of goodwill and other intangible assets, currency exchange rates, tax
audits and changes in our tax rate and income tax liabilities, changes in tax
laws applicable to multinational companies, litigation and other contingent
liabilities including intellectual property and environmental, health and safety
matters, our ability to implement and maintain effective internal control over
financial reporting, risks relating to product, service or software defects,
risks relating to product manufacturing, commodity costs and surcharges, our
ability to adjust purchases and manufacturing capacity to reflect market
conditions, reliance on sole or limited sources of supply, the impact of
regulation on demand for our products and services, labor matters, international
economic, political, legal, compliance and business factors (including the
impact of the United Kingdom's decision to leave the EU), disruptions relating
to war, terrorism, widespread protests and civil unrest, man-made and natural
disasters, public health issues and other events, pension plan costs, our
ability to attract, develop and retain talented executives and other key
employees, and other risks and uncertainties set forth under "Item 1A. Risk
Factors" in the 2019 10-K and this Quarterly Report on Form 10-Q.

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Forward-looking statements are not guarantees of future performance and actual
results may differ materially from the results, developments and business
decisions contemplated by our forward-looking statements. Accordingly, you
should not place undue reliance on any such forward-looking statements.
Forward-looking statements contained herein speak only as of the date of this
Quarterly Report. Except to the extent required by applicable law, we do not
assume any obligation to update or revise any forward-looking statement, whether
as a result of new information, future events and developments or otherwise.

BASIS OF PRESENTATION



The accompanying Condensed Consolidated and Combined Financial Statements
present our historical financial position, results of operations, changes in
equity and cash flows in accordance with accounting principles generally
accepted in the United States ("GAAP"). The Condensed Consolidated and Combined
Financial Statements for periods prior to the Separation were derived from
Danaher's consolidated financial statements and accounting records and prepared
in accordance with GAAP for the preparation of carved-out combined financial
statements. Through the date of the Separation, all revenues and costs as well
as assets and liabilities directly associated with our business have been
included in the Condensed Consolidated and Combined Financial Statements. Prior
to the Separation, our Condensed Consolidated and Combined Financial Statements
also included allocations of certain general, administrative, sales and
marketing expenses and cost of sales from Danaher's corporate office and from
other Danaher businesses to us and allocations of related assets, liabilities,
and Danaher's investment, as applicable. The allocations were determined on a
reasonable basis; however, the amounts are not necessarily representative of the
amounts that would have been reflected in the financial statements had we been
an entity that operated independently of Danaher during the applicable periods.
Related party allocations prior to the Separation, including the method for such
allocation, are discussed further in Note 21 to our Condensed Consolidated and
Combined Financial Statements. Following the Separation, our Condensed
Consolidated Financial Statements include our accounts and our wholly owned
subsidiaries and no longer include any allocations of expenses from Danaher to
us.

Our Condensed Consolidated and Combined Financial Statements may not be
indicative of our results had we been a separate stand-alone entity throughout
the periods presented, nor are the results stated herein indicative of what our
financial position, results of operations and cash flows may be in the future.

We have incurred and will continue to incur additional costs as a separate
public company. As a separate public company, our total costs related to such
support functions may differ from the costs that were historically allocated to
us from Danaher. These additional costs are primarily for the following:

•additional personnel costs, including salaries, benefits and potential bonuses
and/or stock-based compensation awards for staff additions to replace support
provided by Danaher that is not covered by the Transition Services Agreement;
and
•corporate governance costs, including board of director compensation and
expenses, audit and other professional services fees, annual report and proxy
statement costs, SEC filing fees, transfer agent fees, consulting and legal fees
and stock exchange listing fees.
Certain factors could impact the nature and amount of these separate public
company costs, including the finalization of our staffing and infrastructure
needs.

OVERVIEW
General

We provide products that are used to diagnose, treat and prevent disease and
ailments of the teeth, gums and supporting bone, as well as to improve the
aesthetics of the human smile. With leading brand names, innovative technology
and significant market positions, we are a leading worldwide provider of a broad
range of dental implants, orthodontic appliances, general dental consumables,
equipment and services, and are dedicated to driving technological innovations
that help dental professionals improve clinical outcomes and enhance
productivity. Our research and development, manufacturing, sales, distribution,
service and administrative facilities are located in more than 30 countries
across North America, Asia, Europe, the Middle East and Latin America.

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During the three and nine months ended October 2, 2020 and year ended December
31, 2019, sales derived from customers outside of the United States were 53.7%,
54.9% and 56.0%, respectively. As a global provider of dental consumables,
equipment and services, our operations are affected by worldwide, regional and
industry-specific economic and political factors. Given the broad range of
dental products, software and services provided and geographies served, we do
not use any indices other than general economic trends to predict our overall
outlook. Our individual businesses monitor key competitors and customers,
including to the extent possible their sales, to gauge relative performance and
the outlook for the future.

As a result of our geographic and product line diversity, we face a variety of
opportunities and challenges, including rapid technological development in most
of our served markets, the expansion and evolution of opportunities in emerging
markets, trends and costs associated with a global labor force, consolidation of
our competitors and increasing regulation. We operate in a highly competitive
business environment in most markets, and our long-term growth and profitability
will depend in particular on our ability to expand our business in emerging
geographies and emerging market segments, identify, consummate and integrate
appropriate acquisitions, develop innovative and differentiated new products and
services, expand and improve the effectiveness of our sales force, continue to
reduce costs and improve operating efficiency and quality and effectively
address the demands of an increasingly regulated global environment. We are
making investments to address the rapid pace of technological change in our
served markets and to globalize our manufacturing, research and development and
customer-facing resources (particularly in emerging markets and our dental
implant business) in order to be responsive to our customers throughout the
world and improve the efficiency of our operations.

We operate in two business segments: Specialty Products & Technologies and
Equipment & Consumables. Our Specialty Products & Technologies segment develops,
manufactures and markets dental implant systems, dental prosthetics and
associated treatment software and technologies, as well as orthodontic bracket
systems, aligners and lab products. Our Equipment & Consumables segment
develops, manufactures and markets dental equipment and supplies used in dental
offices, including digital imaging systems, software and other
visualization/magnification systems; handpieces and associated consumables;
treatment units and other dental practice equipment; endodontic systems and
related consumables; and restorative materials and instruments, rotary burs,
impression materials, bonding agents and cements and infection prevention
products.

Key Trends and Conditions Affecting Our Results of Operations



There have been no material changes to the key trends and conditions affecting
our results of operations that were disclosed in our 2019 10-K, other than the
impact of COVID-19.

The continuing global spread of COVID-19 has led to unprecedented restrictions
on, and disruptions in, business and personal activities, including as a result
of preventive and precautionary measures that we, our dental customers, other
businesses, our communities and governments are taking to mitigate the spread of
the virus. The impact of COVID-19 and measures to prevent its spread are
affecting our businesses in several ways as follows:

Employees and Customers



We value the safety of our employees and customers and have leveraged our
technological resources to institute work-from-home arrangements for most of our
employees and to continue interacting with our customers on a remote basis where
possible. We have implemented social distancing guidelines, staggered shifts and
more frequent disinfection processes for employees that need to be in
manufacturing locations, offices or interact with customers to help ensure their
safety. We have expanded the availability of our virtual training and education
for our customers. Our employees have donated thousands of masks and other
personal protective equipment to their local communities worldwide. In China, we
were one of the first to donate infection prevention products to the Wuhan
government and our Orascoptic business has donated eye protection to hundreds of
healthcare professionals in the United States. Metrex, our infection control and
prevention business, has been providing products to help our customers maintain
proper disinfection protocols.

Prioritization of Business Activities

In response to the COVID-19 pandemic, we have increased our investment in our infection control and prevention business by increasing shipments of disinfectant products and have further increased our investment to expand capacity.


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We continue transforming our portfolio by investing in our implant and clear
aligner products and also making investments in emerging markets. The cost
reduction initiatives we have taken and will continue to undertake in the
future, allow us to further invest in this growth strategy, which in turn we
believe should improve our margins.

Our continued investment in Spark, our clear aligner system, has led to increased manufacturing capacity and continues to gain market adoption as orthodontists and their patients see the benefits of the clear, stain resistant and comfortable design.



We obtained regulatory approval of our N1 implant system and made our first
sales in June. N1 is now available in eight countries in Europe and we will
continue to roll out N1 to customers in the remainder of the year. Our Nobel
Biocare business has obtained the EU Medical Device Regulation ("MDR") Quality
Management System certification and is one of the first in the dental industry
to do so. This is an important milestone for Nobel Biocare, and we believe that
we are on track in our efforts to achieve MDR certification for our full
portfolio of products.

Results of Operations



In response to COVID-19, many dental associations globally recommended that
dental practices delay elective procedures and only perform emergency
procedures. As a result, there were widespread temporary closures of dental
practices around the world due to the pandemic, except to perform emergency
procedures. The majority of dental practices have reopened, however, overall
patient volume remains below pre-COVID-19 levels. As dental practices reopened,
dental associations have recommended enhanced safety, disinfection and social
distancing protocols. These measures may remain in place for a significant
period of time in certain regions and are likely to continue to adversely affect
our business, results of operations and financial condition. As a result, our
sales have been significantly negatively impacted for the nine months ended
October 2, 2020, which led to a temporary reduction in our manufacturing
capacity as we have idled certain manufacturing facilities and furloughed the
employees that work at the idled facilities in response, primarily in the second
quarter. In addition, we have implemented various temporary cost reduction
initiatives, which have included employee furloughs throughout the Company,
implementing pay reductions, reducing discretionary spending, delaying capital
expenditures and eliminating all non-essential business travel. We have also
accelerated and increased our planned structural spending reduction programs
that we believe will be substantially completed by the end of 2020.

We expect the ultimate significance of the impact of these disruptions,
including the extent of their adverse impact on our financial and operational
results, to be dependent on the length of time that such disruptions continue
which will, in turn, depend on the currently unknowable duration of the COVID-19
pandemic and the impact of governmental regulations that are imposed in response
to the pandemic. Moreover, efforts to slow or prevent a recurrence of the spread
of the virus are likely to continue to curtail the operations of our customers
and their patients for an indeterminate period of time, impacting our operations
as purchasing decisions are delayed or lost, increasing logistical complexities
as a result of closed customer offices, sales and marketing efforts are
postponed, and manufacturing operations are curtailed to adjust to declining
sales.
Our businesses could also be impacted should the disruptions from COVID-19 lead
to changes in consumer behavior and spending, and our business may be
particularly susceptible to these changes as a material portion of our products
may be viewed as discretionary purchases and therefore more susceptible to any
global or regional recession that may result from efforts to prevent or delay
the spread of the virus. Additionally, the COVID-19 impact on the capital
markets could affect our cost of borrowing and our ability to raise additional
capital. There are certain limitations on our ability to mitigate the adverse
financial impact of these items, including the fixed costs of our manufacturing
facilities. COVID-19 also makes it more challenging for management to estimate
future performance of our businesses, particularly over the near to medium term.

Our future results of operations and liquidity could be adversely impacted by
delays in payments of outstanding receivable amounts beyond normal payment
terms, supply chain disruptions and uncertain demand, and the impact of any
initiatives or programs that we may undertake to address financial and
operational challenges faced by our customers. The extent to which the COVID-19
pandemic may materially impact our financial condition, liquidity, or results of
operations is uncertain. Because of the dynamic nature of the crisis, we cannot
accurately predict the extent or duration of the impacts of the COVID-19
pandemic.

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Liquidity



In May of 2020, we entered into the Amendment that, among other changes as
described in Note 13 to our Condensed Consolidated and Combined Financial
Statements, waives the quarterly-tested leverage covenant and reduces the
interest coverage ratio through and including the first quarter of 2021. Also in
May, we issued the Notes with gross and net proceeds of $517.5 million and
$502.6 million, respectively. We believe the Amendment, and the full borrowing
capacity of $250.0 million available under the Revolving Credit Facility and the
proceeds from the Notes, currently provide us with the appropriate level of
flexibility to manage our operations. In future periods, the COVID-19 pandemic
and its impact on the capital markets could impact our ability to obtain future
financing.

As noted above, we are aligning our cost structure to the realities of the current operating environment. We continue to focus on actions to preserve liquidity by actively managing all discretionary spending. We are also taking additional actions to improve the long-term financial structure of the business.



Furthermore, we plan to continue utilizing certain provisions of the CARES Act
enacted by the U.S. Government to provide additional short-term liquidity,
including relief from employer payroll tax remittance and employee retention
credits. We are evaluating other potential income tax impacts of the CARES Act.
We are also evaluating provisions of similar legislation in other countries.

Acquisitions



Our growth strategy contemplates future acquisitions. Our operations and results
can be affected by the rate and extent to which appropriate acquisition
opportunities are available, acquired businesses are effectively integrated and
anticipated synergies or cost savings are achieved.

On January 21, 2020, we acquired all of the shares of Matricel for cash
consideration of approximately $43.7 million. Matricel, a German company, is a
provider of biomaterials used in dental applications and is part of our
Specialty Products and Technologies segment. For the three and nine months ended
October 2, 2020, Matricel's revenue and earnings were not material to our
Condensed Consolidated and Combined Statements of Operations.

Currency Exchange Rates



On a period-over-period basis, currency exchange rates positively impacted
reported sales by approximately 0.8% for the three months ended October 2, 2020
and negatively impacted reported sales by approximately 0.9% for the nine months
ended October 2, 2020, compared to the comparable periods of 2019, primarily due
to the weakening of the U.S. dollar against most major currencies for the three
months ended October 2, 2020 and the strengthening of the U.S. dollar against
most major currencies for the nine months ended October 2, 2020. Any future
strengthening of the U.S. dollar against major currencies would adversely impact
our sales and results of operations for the remainder of the year, and any
weakening of the U.S. dollar against major currencies would positively impact
our sales and results of operations for the remainder of the year.

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UK's Referendum Decision to Exit the EU



In a referendum on June 23, 2016, voters approved for the United Kingdom ("UK")
to exit the European Union ("EU"). A withdrawal agreement negotiated by and
between the UK prime minister and the EU was ratified by the UK parliament in
December 2019. The UK exited the EU on January 31, 2020.  A transition period
began and business will remain as usual while the UK remains in the EU customs
union until December 31, 2020.  Since the UK and EU are still negotiating the
nature of their relationship after the transition period, we expect a hard exit
as the most likely scenario as of January 1, 2021. We continue to monitor the
new guidelines and regulations issued by the EU and UK regarding Brexit and we
will continue to plan for potential impacts. To mitigate the potential impact of
Brexit on the import of goods to the UK, we have adapted our supply chain and
financial flows accordingly, and will temporarily increase our level of
inventory within the UK if required. The ultimate impact of Brexit on our
financial results is uncertain. For additional information, refer to "Item 1A.
Risk Factors-General Risks" in our 2019 10-K.

Public Company Expenses



As a result of the Separation, we are subject to the Sarbanes-Oxley Act and
reporting requirements of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"). We are now required to have additional procedures and practices
as a separate public company. As a result, we have incurred and will continue to
incur additional personnel and corporate governance costs, including internal
audit, investor relations, stock administration and regulatory compliance costs.

Envista Business Systems



Throughout this discussion, references to sales volume refer to the impact of
both price and unit sales and references to productivity improvements generally
refer to improved cost-efficiencies resulting from the ongoing application of
Envista Business Systems ("EBS"). We believe our deep-rooted commitment to EBS
helps drive our market leadership and differentiates us in the dental products
industry. EBS encompasses not only lean tools and processes, but also methods
for driving growth, innovation and leadership. Within the EBS framework, we
pursue a number of ongoing strategic initiatives relating to customer insight
generation, product development and commercialization, efficient sourcing, and
improvement in manufacturing and back-office support, all with a focus on
continually improving quality, delivery, cost, growth and innovation.

Non-GAAP Measures



In this report, references to the non-GAAP measure of core sales (also referred
to as core revenues or sales/revenues from existing businesses) refer to sales
calculated according to U.S. GAAP, but excluding:

•sales from acquired businesses;
•sales from discontinued products; and
•the impact of currency translation.
References to sales or operating profit attributable to acquisitions or acquired
businesses refer to sales or operating profit, as applicable, from acquired
businesses recorded prior to the first anniversary of the acquisition.

Sales from discontinued products includes major brands or products that we have
made the decision to discontinue as part of a portfolio restructuring.
Discontinued brands or products consist of those which we (1) are no longer
manufacturing, (2) are no longer investing in the research or development of,
and (3) expect to discontinue all significant sales of within one year from the
decision date to discontinue. The portion of sales attributable to discontinued
brands or products is calculated as the net decline of the applicable
discontinued brand or product from period-to-period.

The portion of sales attributable to currency translation is calculated as the difference between:



•the period-to-period change in sales; and
•the period-to-period change in sales after applying current period foreign
exchange rates to the prior year period.
                                       41
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Core sales growth should be considered in addition to, and not as a replacement
for or superior to, sales, and may not be comparable to similarly titled
measures reported by other companies. We believe that reporting the non-GAAP
financial measure of core sales growth provides useful information to investors
by helping identify underlying growth trends in our on-going business and
facilitating comparisons of our sales performance with our performance in prior
and future periods and to our peers. We also use core sales growth to measure
our operating and financial performance. We exclude the effect of acquisitions
because the timing, size, number and nature of such transactions can vary
significantly from period-to-period and between us and our peers, which we
believe may obscure underlying business trends and make comparisons of long-term
performance difficult. We exclude sales from discontinued products because
discontinued products do not have a continuing contribution to operations and
management believes that excluding such items provides investors with a means of
evaluating our on-going operations and facilitates comparisons to our peers. We
exclude the effect of currency translation from core sales because currency
translation is not under our control, is subject to volatility and can obscure
underlying business trends.

RESULTS OF OPERATIONS

As discussed above, the COVID-19 pandemic has adversely impacted our overall results of operations for the three and nine months ended October 2, 2020.



                                                             Three Months Ended
($ in millions)                                October 2, 2020                September 27, 2019            $ Variance       % Change
Sales                                    $      640.5        100.0  %       $  659.3       100.0  %           (18.8)              (2.9) %
Cost of sales                                   299.8         46.8  %          292.3        44.3  %             7.5                2.6  %
Gross profit                                    340.7         53.2  %          367.0        55.7  %           (26.3)              (7.2) %
Operating costs:
SG&A expenses                                   248.8         38.8  %       $  252.0        38.2  %            (3.2)              (1.3) %
R&D expenses                                     22.5          3.5  %           36.3         5.5  %           (13.8)             (38.0) %
Operating profit                                 69.4         10.8  %           78.7        11.9  %            (9.3)             (11.8) %
Nonoperating income (expense), net
Other income                                      0.2            -  %       $    0.2           -  %               -                    NM
Interest expense, net                           (23.4)        (3.7) %           (0.2)          -  %           (23.2)                   NM
Earnings before income taxes                     46.2          7.2  %           78.7        11.9  %           (32.5)             (41.3) %
Income tax expense                               10.6          1.7  %           16.6         2.5  %            (6.0)             (36.1) %
Net income                               $       35.6          5.6  %       $   62.1         9.4  %           (26.5)             (42.7) %

Effective tax rate                               22.9   %                       21.1   %



                                                              Nine Months Ended
($ in millions)                                October 2, 2020                 September 27, 2019            $ Variance       % Change
Sales                                    $     1,549.7       100.0  %       $  2,031.1      100.0  %          (481.4)             (23.7) %
Cost of sales                                    780.1        50.3  %            907.4       44.7  %          (127.3)             (14.0) %
Gross profit                                     769.6        49.7  %          1,123.7       55.3  %          (354.1)             (31.5) %
Operating costs:
SG&A expenses                                    759.4        49.0  %            804.9       39.6  %           (45.5)              (5.7) %
R&D expenses                                      73.7         4.8  %            119.3        5.9  %           (45.6)             (38.2) %
Operating (loss) profit                          (63.5)       (4.1) %            199.5        9.8  %          (263.0)            (131.8) %
Nonoperating income (expense), net
Other income                                       0.4           -  %              1.6        0.1  %            (1.2)                   NM
Interest expense, net                            (41.2)       (2.7) %             (0.2)         -  %           (41.0)                   NM
(Loss) earnings before income taxes             (104.3)       (6.7) %            200.9        9.9  %          (305.2)            (151.9) %
Income tax (benefit) expense                     (29.2)       (1.9) %             39.4        1.9  %           (68.6)            (174.1) %
Net (loss) income                        $       (75.1)       (4.8) %       $    161.5        8.0  %          (236.6)            (146.5) %

Effective tax rate                                28.0  %                         19.6  %


                                       42

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SALES

GAAP Reconciliation
                                                                     % Change Three Month         % Change Nine Month
                                                                     Period Ended October         Period Ended October
                                                                    2, 2020 vs. Comparable       2, 2020 vs. Comparable
                                                                         2019 Period                  2019 Period
Total sales growth (GAAP)                                                          (2.9) %                     (23.7) %
Less the impact of:
Acquisitions                                                                       (0.1) %                      (0.2) %
Discontinued products                                                               2.6  %                       1.7  %
Currency exchange rates                                                            (0.8) %                       0.9  %
Core sales growth (non-GAAP)                                                       (1.2) %                     (21.3) %



In response to COVID-19, many dental associations globally recommended that
dental practices delay elective procedures and only perform emergency
procedures. As a result, there were widespread temporary closures of dental
practices around the world due to the pandemic, except to perform emergency
procedures. During the three months ended July 3, 2020, dental practices in the
markets in which we operate started to reopen and as of October 2, 2020, the
majority of dental practices were open, however, overall patient volume remains
below pre-COVID-19 levels.

Core sales growth for the three months ended October 2, 2020, decreased 1.2%,
compared to the comparable period of 2019. Core sales in developed markets
increased during the three months ended October 2, 2020, as compared to the
comparable period of 2019, primarily due to an increase in North America and
Western Europe. Core sales in emerging markets decreased during the three months
ended October 2, 2020, as compared to the comparable period of 2019, primarily
due to declines in most major regions, partially offset with an increase in core
sales in China.

Core sales growth for the nine months ended October 2, 2020, decreased 21.3%,
compared to the comparable period of 2019. Core sales in developed markets
decreased during the nine months ended October 2, 2020, as compared to the
comparable period of 2019, primarily due to a decline in North America and
Western Europe. Core sales in emerging markets decreased during the nine months
ended October 2, 2020, as compared to the comparable period of 2019, with core
sales declining in most major regions.

COST OF SALES AND GROSS PROFIT



The increase in cost of sales during the three months ended October 2, 2020, as
compared to the comparable period in 2019, was primarily due to restructuring
costs, an unfavorable sales mix and the impact of foreign currency exchange
rates.

The decrease in cost of sales during the nine months ended October 2, 2020, as
compared to the comparable period in 2019, was primarily due to lower sales as a
result of the COVID-19 pandemic, partially offset by an unfavorable sales mix,
restructuring costs, excess capacity costs and the impact of foreign currency
exchange rates.

The decrease in gross profit margin during the three and nine months ended
October 2, 2020, as compared to the comparable period in 2019, was due primarily
to lower sales as a result of the COVID-19 pandemic, an unfavorable sales mix,
restructuring costs and the impact of foreign currency exchange rates. Gross
profit margin for the nine months ended October 2, 2020, was also impacted by
higher excess capacity costs as compared to the comparable period in 2019.

OPERATING EXPENSES

The increase in SG&A expenses as a percentage of sales for the three months ended October 2, 2020, as compared to the comparable period of 2019, was primarily due to lower sales, restructuring and productivity improvement expenses, and incremental public company costs, partially offset by cost reduction initiatives including pay cuts, reduced discretionary spend including sales, marketing and travel and incremental period-over-period savings associated with restructuring and productivity improvement actions taken in prior periods.


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The increase in SG&A expenses as a percentage of sales for the nine months ended
October 2, 2020, as compared to the comparable period of 2019, was primarily due
to lower sales, restructuring and productivity improvement expenses, costs for
legal matters and incremental public company costs, partially offset by cost
reduction initiatives including employee furloughs, pay cuts, reduced
discretionary spend including sales, marketing and travel and incremental
period-over-period savings associated with restructuring and productivity
improvement actions taken in prior periods.

The decrease in R&D expenses as a percentage of sales for the three and nine
months ended October 2, 2020, as compared to the comparable periods of 2019, was
primarily due to a decrease in spending on product development initiatives in
the Equipment & Consumables segment, partially offset by lower sales.

OPERATING PROFIT (LOSS)



Operating profit margin was 10.8% for the three months ended October 2, 2020, as
compared to an operating profit margin of 11.9% for the comparable period of
2019. The decrease in operating profit margin was due to lower sales primarily
due to the impact of the COVID-19 pandemic, an unfavorable sales mix, higher
restructuring and productivity improvement expenses, incremental public company
costs and the impact of foreign currency exchange rates, partially offset by
cost reduction initiatives including pay cuts, reduced discretionary spend
including sales, marketing and travel, research and development and incremental
period-over-period savings associated with restructuring and productivity
improvement actions taken in prior periods.

Operating profit margin was (4.1)% for the nine months ended October 2, 2020, as
compared to an operating profit margin of 9.8% for the comparable period of
2019. The decrease in operating profit margin was due to lower sales primarily
due to the impact of the COVID-19 pandemic, an unfavorable sales mix, higher
restructuring and productivity improvement expenses, incremental public company
costs, costs for legal matters and the impact of foreign currency exchange
rates, partially offset by cost reduction initiatives including employee
furloughs, pay cuts, reduced discretionary spend including sales, marketing and
travel, research and development and incremental period-over-period savings
associated with restructuring and productivity improvement actions taken in
prior periods.

NONOPERATING INCOME (EXPENSE), NET



The Company disaggregates the service cost component of net periodic benefit
costs from the other components of net periodic benefit costs and presents the
other components of net periodic benefit costs in nonoperating income (expense),
net. The other components of net periodic benefit costs included in nonoperating
income (expense), were $0.2 million for both the three months ended October 2,
2020 and September 27, 2019, and $0.4 million and $1.6 million for the nine
months ended October 2, 2020 and September 27, 2019, respectively.

INTEREST EXPENSE, NET



The increase in interest expense for the three and nine months ended October 2,
2020, as compared to the comparable periods in 2019, is due to our outstanding
debt balance of $1.8 billion. In addition, since May 2020, we have incurred
higher interest rates on our Term Loans and Revolving Credit Facility as a
result of the amended Credit Agreement. In conjunction with the Separation, we
entered into the Credit Agreement, the proceeds of which were used to pay
Danaher consideration for the transfer of the Dental business to us. In March of
2020, we drew down $250.0 million from our revolving line of credit and repaid
it in September of 2020. In May of 2020, we issued the Notes with a principal
value of $517.5 million to provide additional liquidity in response to the
COVID-19 pandemic. For a discussion of our outstanding indebtedness, refer to
Note 13 to our Condensed Consolidated and Combined Financial Statements in this
Quarterly Report on Form 10-Q.

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INCOME TAXES



Our effective tax rate of 22.9% and 21.1% for the three months ended October 2,
2020 and September 27, 2019, respectively and 28.0% and 19.6% for the nine
months ended October 2, 2020 and September 27, 2019, respectively, differ from
the U.S. federal statutory rate of 21.0%, primarily due to our geographical mix
of taxable earnings, including the impact of COVID-19 in the three and nine
months ended October 2, 2020.

Our effective tax rate of 22.9% for the three months ended October 2, 2020, was
higher compared to the comparable period in 2019 due to a change in our
geographical mix of earnings and a reduction in certain discrete tax benefits.
Our effective tax rate of 28.0% for the nine months ended October 2, 2020, was
higher compared to the comparable period in 2019 due to a change in our
geographical mix of earnings primarily due to the impact of the pretax loss as a
result of COVID-19 and a reduction in certain discrete tax benefits.

COMPREHENSIVE INCOME (LOSS)



For the three months ended October 2, 2020, comprehensive income was $55.9
million as compared to comprehensive income of $6.6 million for the comparable
period of 2019. The increase was primarily due to foreign currency translation
gains, partially offset by lower net income. For the nine months ended October
2, 2020, comprehensive loss was $67.1 million as compared to comprehensive
income of $98.8 million for the comparable period of 2019. The decrease was
primarily due to lower net income, partially offset by foreign currency
translation gains.

RESULTS OF OPERATIONS - BUSINESS SEGMENTS

Sales by business segment were as follows ($ in millions):



                                                  Three Months Ended                             Nine Months Ended
                                                                 September 27,                                  September 27,
                                        October 2, 2020              2019               October 2, 2020              2019
Specialty Products & Technologies      $      316.9             $      

317.8 $ 774.1 $ 1,013.9 Equipment & Consumables

                       323.6                    341.5                     775.6              1,017.2
Total                                  $      640.5             $      659.3          $        1,549.7          $   2,031.1

SPECIALTY PRODUCTS & TECHNOLOGIES



Our Specialty Products & Technologies segment develops, manufactures and markets
dental implant systems, dental prosthetics and associated treatment software and
technologies, as well as orthodontic bracket systems, aligners and lab products.

Specialty Products & Technologies Selected Financial Data



                                                  Three Months Ended                              Nine Months Ended
                                                                                                                September 27,
($ in millions)                       October 2, 2020         September 27, 2019         October 2, 2020             2019
Sales                                $        316.9          $           317.8          $        774.1          $   1,013.9
Operating profit                     $         43.2          $            54.6          $         31.8          $     175.2
Operating profit as a % of sales               13.6  %                    17.2  %                  4.1  %              17.3  %


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Core Sales Growth


                                                                   % Change Three Month         % Change Nine Month
                                                                   Period Ended October         Period Ended October
                                                                  2, 2020 vs. Comparable       2, 2020 vs. Comparable
                                                                       2019 Period                  2019 Period

Total sales growth (GAAP)                                                        (0.3) %                     (23.7) %
Less the impact of:
Acquisitions                                                                     (0.2) %                      (0.4) %
Discontinued products                                                             0.2  %                       0.7  %
Currency exchange rates                                                          (1.0) %                       0.7  %
Core sales growth (non-GAAP)                                                     (1.3) %                     (22.7) %



Core sales growth for the three months ended October 2, 2020 decreased 1.3%,
compared to the comparable period of 2019. Geographically, the decrease in core
sales growth was primarily due to lower core sales in North America, the Middle
East and Latin America, partially offset by China and Western Europe. Core sales
decreased for implant systems and in most of the markets we serve primarily as a
result of the COVID-19 pandemic. Core sales for orthodontics increased primarily
due to demand for our clear aligner systems and self-ligating brackets.

Core sales growth for the nine months ended October 2, 2020 decreased 22.7%,
compared to the comparable period of 2019. Geographically, the decrease in core
sales growth was primarily due to lower core sales in North America, Western
Europe and Asia. Core sales decreased for implant systems and orthodontic
products in most of the markets we serve primarily as a result of the COVID-19
pandemic.

Operating profit margin was 13.6% for the three months ended October 2, 2020, as
compared to an operating profit margin of 17.2% for the comparable period of
2019. The decrease in operating profit margin was primarily due to lower sales
due to the impact of the COVID-19 pandemic, an unfavorable sales mix, higher
restructuring and productivity improvement expenses and the impact of foreign
currency exchange rates, partially offset by cost reduction initiatives
including employee pay cuts, reduced discretionary spend including sales,
marketing and travel and incremental period-over-period savings associated with
restructuring and productivity improvement actions taken in prior periods.

Operating profit margin was 4.1% for the nine months ended October 2, 2020, as
compared to an operating profit margin of 17.3% for the comparable period of
2019. The decrease in operating profit margin was primarily due to lower sales
primarily due to the impact of the COVID-19 pandemic, an unfavorable sales mix,
higher restructuring and productivity improvement expenses, excess capacity
costs and the impact of foreign currency exchange rates, partially offset by
cost reduction initiatives including employee furloughs, pay cuts, reduced
discretionary spend including sales, marketing and travel and incremental
period-over-period savings associated with restructuring and productivity
improvement actions taken in prior periods.

EQUIPMENT & CONSUMABLES



Our Equipment & Consumables segment develops, manufactures and markets dental
equipment and supplies used in dental offices, including digital imaging
systems, software and other visualization/magnification systems; handpieces and
associated consumables; treatment units and other dental practice equipment;
endodontic systems and related consumables; and restorative materials and
instruments, rotary burs, impression materials, bonding agents and cements and
infection prevention products.

Equipment & Consumables Selected Financial Data



                                                  Three Months Ended                              Nine Months Ended
                                                                                                                September 27,
($ in millions)                       October 2, 2020         September 27, 2019         October 2, 2020             2019
Sales                                $        323.6          $           

341.5 $ 775.6 $ 1,017.2 Operating profit (loss)

              $         45.0          $            31.1          $        (28.1)         $      48.1
Operating profit (loss) as a % of
sales                                          13.9  %                     9.1  %                 (3.6) %               4.7  %



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Core Sales Growth
                                                                      % Change Three Month         % Change Nine Month
                                                                      Period Ended October        Period Ended October
                                                                           2, 2020 vs.                 2, 2020 vs.
                                                                         Comparable 2019             Comparable 2019
                                                                             Period                      Period
Total sales growth (GAAP)                                                           (5.2) %                    (23.8) %
Less the impact of:
Discontinued products                                                                4.7  %                      2.6  %
Currency exchange rates                                                             (0.1) %                      1.4  %
Core sales growth (non-GAAP)                                                        (0.6) %                    (19.8) %



Core sales growth for the three months ended October 2, 2020 decreased 0.6%,
compared to the comparable period of 2019. Geographically, the decrease in core
sales growth was primarily due to lower core sales in Western Europe, Asia and
Latin America, partially offset by an increase in North America. Core sales of
equipment decreased in most of the markets we serve primarily as a result of the
COVID-19 pandemic, partially offset by an increase in core sales of traditional
consumables and increased demand for our disinfecting products.

Core sales growth for the nine months ended October 2, 2020 decreased 19.8%,
compared to the comparable period of 2019. Geographically, the decrease in core
sales growth was primarily due to lower core sales in North America, Western
Europe and Asia. Core sales of equipment and traditional consumables decreased
in most of the markets we serve primarily as a result of the COVID-19 pandemic,
partially offset by increased demand for our disinfecting products.

Operating profit margin was 13.9% for the three months ended October 2, 2020, as
compared to an operating profit margin of 9.1% for the comparable period of
2019. The increase in operating profit margin was primarily due to cost
reduction initiatives including pay cuts, reduced discretionary spend including
sales, marketing and travel, research and development and incremental
period-over-period savings associated with restructuring and productivity
improvement actions taken in prior periods partially offset by higher
restructuring and productivity improvement expenses, an unfavorable sales mix
and the impact of foreign currency exchange rates.

Operating profit margin was (3.6)% for the nine months ended October 2, 2020, as
compared to an operating profit margin of 4.7% for the comparable period of
2019. The decrease in operating profit margin was primarily due to lower sales
due to the impact of the COVID-19 pandemic, an unfavorable sales mix, higher
restructuring and productivity improvement expenses, excess capacity costs and
the impact of foreign currency exchange rates, partially offset by cost
reduction initiatives including employee furloughs, pay cuts, reduced
discretionary spend including sales, marketing and travel, research and
development and incremental period-over-period savings associated with
restructuring and productivity improvement actions taken in prior periods.

INFLATION

The effect of inflation on our sales and net income (loss) was not significant for the three and nine months ended October 2, 2020 and September 27, 2019.

LIQUIDITY AND CAPITAL RESOURCES



Before the Separation, we were dependent upon Danaher for all of our working
capital and financing requirements under Danaher's centralized approach to cash
management and financing of its operations. Our financial transactions were
accounted for through our former parent investment, net account. Accordingly,
none of Danaher's cash, cash equivalents or debt has been assigned to us for the
periods prior to the Separation.

As a result of the Separation, we no longer participate in Danaher's cash management and financing operations. We assess our liquidity in terms of our ability to generate cash to fund our operating and investing activities.


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We depend on cash flow from operations, cash on hand and funds available under
our Revolving Credit Facility. As of October 2, 2020, there were no borrowings
outstanding under the Revolving Credit Facility. In May 2020, we received net
proceeds of $502.6 million in connection with the Notes that we issued. In the
future, we may depend on other debt financings and equity financings to finance
our acquisition strategy, working capital needs and capital expenditures. While
we expect to experience reduced cash flow from operations as a result of
decreased revenues during the current operating environment resulting from the
COVID-19 pandemic, we believe that these sources of funds will be adequate to
fund debt service requirements and provide cash, as required, to support our
strategy, ongoing operations, capital expenditures, lease obligations and
working capital for at least the next 12 months.

If our cash flows and capital resources are insufficient to fund our debt
service obligations, we may be forced to reduce or delay additional
acquisitions, future investments and capital expenditures, seek additional
capital, restructure or refinance our indebtedness, or sell assets. However, we
cannot ensure that we will be able to obtain future debt or equity financings
adequate for our future cash requirements on commercially reasonable terms or at
all, which may be exacerbated due to the impact of the COVID-19 pandemic on the
debt and equity markets. Significant delays in our ability to finance
acquisitions or capital expenditures may materially and adversely affect our
future sales prospects. In addition, we cannot ensure that we will be able to
refinance any of our indebtedness on commercially reasonable terms or at all.
Our ability to restructure or refinance our debt will depend on the condition of
the capital markets and our financial condition at such time. The Credit
Agreement also restricts our ability to enter into certain asset sales
transactions. We may not be able to consummate those asset sales to raise
capital or sell assets at prices that we believe are fair, and proceeds that we
do receive may not be adequate to meet any debt service obligations then due.

Following is an overview of our cash flows and liquidity:

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