The Motley Fool was founded by brothers Tom and David Gardner in 1993. Through our website, podcasts, books, newspaper columns, radio programs and quality investment services, we help millions of people achieve financial freedom.
Image source: Motley Fool.
3D Systems Corporation (NYSE:DDD) 2021 Third Quarter Earnings Conference Call, November 9, 2021, 8:30 AM EST
Hello, and welcome to the 3D Systems conference call and audio webcast to discuss the results of the third quarter of 2021. My name is Kevin and I will be responsible for the audio part of today's interactive broadcast. 【Instructions】
Now, I am happy to transfer the call to John Nypaver, Vice President, Treasurer, and Investor Relations of 3D Systems. Please go on, John.
John Nypaver - Vice President, Treasurer and Investor Relations
Thank you, Kevin. Good morning and welcome to the 3D Systems conference call. I spoke to Dr. Jeffrey Graves, our President and CEO; Jagtar Narula, Executive Vice President and Chief Financial Officer; and Andrew Johnson, Executive Vice President and Chief Legal Officer.
The webcast part of this conference call contains slide presentations that we will refer to during the conference call. Those who wish to access the slides of this presentation over the phone can do so in the Investor Relations section of our website. For those who have visited the streaming part of the webcast, please be aware that there may be a delay of a few seconds and you will not be able to post questions over the web.
The following discussion and answers to your questions only reflect management’s views as of today and will include the forward-looking statements described in this slide. Actual results may differ materially. Additional information about factors that may affect our financial performance is contained in last night’s press release and our filings with the SEC, including our most recent annual report on Form 10-K and quarterly report on Form 10-Q.
During this conference call, we will discuss certain non-GAAP financial measures. In our press release and the slides accompanying this webcast (both available on our investor relations website), you will find additional disclosures about these non-GAAP measures, including how these measures compare with comparable GAAP measures. Account. Finally, unless otherwise stated, all comparisons in this conference call will be compared with our results for the 2020 comparable period.
Now I am happy to transfer the call to our CEO Jeff Graves. Jeff?
Jeffrey A. Graves - CEO and President
Thanks, John, good morning everyone. I will start today’s conference call with one sentence, and I believe many of you will also say this to yourself this morning, wow, what’s different in a year. At this time last year, we only saw the beginning of a sustained recovery from the worst COVID pandemic. At the same time, at 3D Systems, we are implementing our four-stage transformation journey. We reorganized the company into two departments, the healthcare department and the industrial solutions department. We reorganized our organization to improve efficiency. We have announced our first divestiture of non-core assets.
As we told you today, one year later, the first three stages have been completed. We are now a company focused on additive manufacturing, with a lean and flexible operating structure, global metals, polymers and biotechnology, unparalleled in the industry. These attributes are combined through a high focus on the most demanding applications of customers and have proven to be powerful drivers of value creation. This is clearly reflected in our organic growth rate, profitability and operating cash performance. We will Review all these for you in a moment.
Although we are satisfied with this performance, what is even more exciting is that we are now in the fourth and final stage of transformation, namely investment growth. Since the last quarter, we have completed the last divestiture, paid off debts and stored more than $500 million in cash on the balance sheet. We subsequently announced two acquisitions, reflecting our strategic focus on growth, which is to invest in businesses that drive the adoption of additive manufacturing, address customers’ most complex application needs, and generate high-profit recurring that is critical to maintaining value creation. Income stream.
The first acquisition was Oqton, a unique software company that has become a recognized leader in creating new intelligent, cloud-based manufacturing operating systems. The driver of this acquisition is very simple; our customers in the industrial and healthcare sectors are now eager to accelerate the adoption of additive manufacturing in full-scale production environments. But in doing so, they face major challenges and how to integrate these technologies into their existing enterprise systems. So far, they have relied heavily on spreadsheets and highly skilled engineers to run production applications. As production increases, this is clearly too slow, too inefficient, and too costly to scale.
Although we and others have made great strides in optimizing the performance of a single printer or even a collection of similar printers working in parallel, automation has been achieved to some extent, but the challenges facing our customers go far beyond that. What they need is a manufacturing system that can easily and intelligently integrate a group of hybrid printing presses usually from different manufacturers. In addition, they also need a manufacturing system that integrates all peripheral digital production systems into the workshop, such as post-press heat and machinery. Processing, robot motion system and automatic inspection system.
Oqton not only provides this connection, but also further applies cloud-based AI to optimize the entire workflow, and then links this workflow to the customer's existing enterprise software, such as those provided by Salesforce, Oracle, Microsoft, or SAP. The end result is that Oqton not only links, optimizes and tracks customers’ unique operating processes at the various component levels from raw materials to finished products, but also establishes future flexibility to replace new printing, finishing and automation technologies. Will be launched in the next few years.
These attributes unique to the Oqton platform will remove major barriers to mass adoption of additive manufacturing and production environments. For this reason, we have opened up the system to the entire industry, and we hope this will accelerate market growth for everyone. In addition, this is the first time in our history, we will now provide all other companies in the industry with a complete complement of our market-leading metal and polymer printing software platform, and we hope this will accelerate the introduction of the new world of printing technology to surrounding customers .
It is important that, like all software platforms across the industry, we are committed to Oqton to continue to operate in this independent mode and to make the highest commitment to customer data protection and confidentiality. I am happy to tell you that we completed the acquisition of Oqton on November 1, and our customers and partners have responded very positively to us.
Before I embark on our last incredibly exciting acquisition, let me step back and explain how we look at our company as a whole, which I think is very different from other companies in the industry. In the ten years since the invention of 3D printing, we and our competitors have generally defined ourselves as hardware and material developers, and our products have been widely sold to customers all over the world. Although this is very young in any industry and products are mainly consumed in small quantities by laboratories or prototype facilities, as the industry now matures and the production environment is targeted, successful companies need to adjust their entire operating model to reflect its deepening Integration with specific markets and customers. If you don't do this, you will still be just a supplier, not a true partner of your customers, which will ultimately be reflected in your organic growth rate and profit margin.
So, with this in mind, starting at 3D Systems a year ago, we changed the way we define ourselves by reorganizing the entire company around key markets in which we believe that the key verticals that will bring the most value through their adoption Additive manufacturing for market segments. We first created two business units, namely healthcare and industrial solutions. The two companies focus on strong applications and integrate our printers, materials and software technologies in a unique combination to meet customer product needs.
After completion, our customers can ask us to extend their processes to a certain level of production. Then as demand increases, they can choose to let us help the manufacturer of their choice continue to expand. This shift in workflow involves providing printing systems, materials and software, and process definitions. It can seamlessly transfer capabilities to the selected manufacturer, whether it is the OEM itself or the contract manufacturer of their choice.
So fast forward to this year, through the acquisition of Oqton, we have extended the software functions to what we call generalized digital manufacturing software, as we described before, can quickly and effectively adopt additive manufacturing in a mass production environment. Our customer base is very accepting of this operating model, and we expect it to drive exciting organic growth in the next few years.
Recently, we have increased the focus of a strong biotechnology organization and made a lot of investment to introduce our emerging biotechnology into laboratories and human applications. We will introduce the details later. In short, you will hear us talking about the five core market segments moving forward. Although each of these five companies will adapt to the needs of its customers, each company will also use our core technologies of hardware, software and materials in a unique way to meet the application needs of its customers.
Let me use our healthcare business as an example to illustrate this approach. In the mid-1990s, 3D Systems pioneered medical modeling, which is to print highly detailed anatomical models from digital images. These models have been shown to help support complex surgical procedures. Dr. Sanjay Gupta of CNN has exquisitely documented the highly publicized application of our modeling technology. We have created many medical models to help isolate the conjoined twins Jadon and Anias McDonald who were born with extremely rare skull deformities. The heads are connected together, not only sharing the skull and vasculature, but also part of the brain itself. The model used for the surgical planning was critical to the success of Dr. James Goodrich and his team in separating the twins, who are still alive and independent today many years later. So far, our medical modeling technology has supported dozens of similarly complex surgeries and hundreds of other surgeries around the world, and it continues to expand every year.
Building on this and investing in the bedside infrastructure that accompanies this growth, we deepened our surgical support over the next decade. By 2005, we worked with surgeons to design and manufacture customized patient-specific surgical guides and instruments using 3D printing. With the growth of this part of the business, we have once again expanded our scope, this time to include actual patient-specific implants, which provides greater market opportunities.
Fast forward today and we provide the widest range of FDA-approved features for modeling surgical plans and patient-specific medical implants, which inspires our customers to continue to expand their partnership with us year after year. Although we are now redefining ourselves in this example as a healthcare company and leveraging our critical infrastructure and channel partnerships, we are very proud of our progress, but we can more aggressively expand our scope to now include the human body Other parts of the skeletal structure, and it is important to advance these applications in parallel, rather than serially as in the past.
This gives us the opportunity to benefit more patient groups at a much higher rate than ever before. This is to redefine our power as a healthcare company, not just to provide printing technology to healthcare customers in the market. It is worth noting that our healthcare business has grown by more than 28% in the most recent quarter, and has grown by more than 44% on an organic basis. This is where we overlooked the business we divested. This remarkable growth rate is a testament to our growing momentum in this exciting market.
Therefore, on the basis of the discussion of our healthcare business, I would like to conclude my comment on the extraordinary bioprinting emerging market with our announcement last week that we announced the acquisition of Volumetric Biotechnologies. Under the inspiring leadership of Dr. Jordan Miller, this company has brought specific expertise, biomaterials and regenerative medicine. It combines synthetic chemistry, 3D printing, microfabrication and molecular imaging to directly cultivate human cells and form more Organized complex living blood vessels and tissues. Since 2017, 3D Systems has been a pioneer in our industry, and we focus our resources on regenerative medicine. We started a joint development program with United Therapeutics Corporation to develop the ability to print human lung stents using what we call a printer rich process. Once developed, this bioprinting technology can be applied to other major organs of the human body and other extensive human and laboratory applications.
We have made significant progress in this unique technology. Therefore, we recently announced the expansion of the development plan with United Therapeutics, including additional funding and expansion of two additional organs. This project expansion reflects the progress our joint team has made in this pioneering effort. Through the acquisition of Volumetric, we have added key skills to our 3D Systems team. We think this is a perfect complement to our team, bringing strong biological expertise and cell engineering skills as well as creative biology to our development team. Printing system.
I realize that this is a completely new field for many people who have followed our company for a while. Let me quickly review our regenerative medicine strategy and the market opportunities that we have solved through our unique bioprinting technology. The first opportunity is to print human organs, starting with the lungs and then expanding to the other two organs. We are working on a joint project with our partner United Therapeutics. The ambitious goals we set for this plan are driving quantum advancements in our technology and laying the foundation for our other regenerative medicine work.
In our second regenerative medicine market opportunity, we will use the core unique disruptive technology developed for bioprinting of human organs and apply it to other parts of the human body. The number of these applications is huge, ranging from human skin printing of burn patients to soft tissues for breast reconstruction and repair, to key blood vessel and bone replacement, and so on. We are now establishing partnerships that focus on each application area. We can combine our bioprinting expertise with appropriate application experts to provide unique and highly influential solutions for those in need. We refer to the second vertical market in regenerative medicine as human non-organ bioprinting.
Our last but not least market opportunity is to extend our bioprinting technology to research laboratories, for researchers studying the basic sciences of regenerative medicine and for printing high-precision, three-dimensional vascularized cell structures that can be used to develop new and more advanced Effective drug therapy. Our acquisition of Volumetric and its unique capabilities combined with our own capabilities will allow us to expand our efforts in all three regenerative medicine markets.
I am surprised to think of these revolutionary applications enabled by our 3D printing technology; with our long history in advanced 3D printing technology, our material expertise, our application development expertise, our knowledge of the FDA and others With an in-depth understanding of the regulatory process and our current biological and cellular engineering capabilities, we have a unique advantage to provide these applications. We believe that in the next few years, bioprinting will become a very important business for our company, bringing significant relief to patients who need life-saving procedures, and bringing great value to our company's employees and shareholders.
From our strategic growth investments to the most recent quarterly results, I am happy to say that our core business continues to perform well. As demand continues to be strong, our operational challenges are mainly focused on global supply chain and logistics issues. Unfortunately, these issues continue to plague most companies around the world. In the face of these challenges, our steady execution in the third quarter resulted in strong double-digit growth, with revenue increasing by 15%, and then the divestiture adjustment. After these adjustments, revenue increased by more than 36% from 2020 and by more than 20% from the third quarter of 2019 before the pandemic. This is a benchmark that we believe is very important.
From the perspective of our main business sectors, our industrial solutions sector is continuing to rebound, especially in jewellery, automotive and transportation, and general manufacturing. In healthcare, we see continued strong demand for personalized medical services and steady performance in dentistry.
As Jagtar will discuss soon, in addition to strong revenue performance, our EBITDA has climbed by more than 125%. We have generated positive cash flow from operations for the fourth consecutive quarter, the first time in four years. With our cash generation and the proceeds from divestitures, we established a substantial cash balance at the end of the third quarter. Part of these funds will be used to fund the strategic growth plan I mentioned earlier, but we will still have a lot of liquidity to seek more opportunities. I believe everyone is well aware that I am not only very excited about what we achieved last year, but even more so for the future, because our focus on growth in the final stage of the transformation has just begun.
With this, let me forward the call to Jagtar, who will now describe our third quarter results in more detail. Jaguar?
Jagtar Narula-Executive Vice President and Chief Financial Officer
Thanks, Jeff. Good morning everybody. In the third quarter, we reported revenue of $156.1 million, an increase of 14.6% from the third quarter of 2020. Our organic revenue growth (excluding divestitures completed in 2020 and 2021) increased by 35.9% in the third quarter of 2021 compared to the third quarter of 2020. The third quarter of 2020 is the beginning of the economic reopening from the COVID-related work stoppage, and we think it is valuable to compare our results with the third quarter of 2019, which was not affected by the pandemic. Similarly, excluding the divested business, we make comparisons on a case-by-case basis. Our revenue in the third quarter of 2021 was 21.2% higher than the third quarter of 2019 before the pandemic.
As we discussed earlier, as we complete the Simbionix and on-demand manufacturing divestiture in the third quarter of 2021, we have completed our planned divestiture and are now focusing on the performance, growth and investment of our core additive manufacturing business. What I want to point out is that after the divestiture, we continue to generate nearly two-thirds of the income from the current income stream. These high-profit business lines highlight the strength and diversity of our core businesses. We are capable of responding to various economic cycles, and we will continue to make strategic investments around these businesses.
Turn to revenue. We reported a GAAP net income of $2.34 per share for the third quarter of 2021, and a GAAP loss of $0.61 for the third quarter of 2020. The year-on-year improvement was due to the proceeds from the divestiture of the business and the impairment charges for goodwill, which we calculated in the third quarter of 2020. For our non-GAAP performance, we reported a non-GAAP earnings per share of $0.08 for the third quarter of 2021, and a non-GAAP loss of $0.03 per share for the third quarter of 2020. The year-on-year growth reflects the increase in revenue and the decrease in non-GAAP operating expenses due to the cost measures we took last year.
Now I will discuss income by market. Medical care increased by 28.3% year-on-year and decreased by 7.8% compared to the previous quarter. The main reason for the decrease was the divestiture of Simbionix's medical simulation business during the quarter. After adjustments for divestitures, due to the strong demand for printers and materials for dental applications, healthcare revenue increased by 44.5% year-on-year. In fact, compared with the previous four quarters, dental material sales in the past four quarters have reached the highest level ever.
Revenue from our industrial division increased by 4% compared to the same period last year to $79.7 million, which was the same as the previous quarter, reflecting the divestiture of the on-demand manufacturing parts business this quarter. After adjusting for divestiture, industrial revenue increased by 28.1% year-on-year and 2.1% month-on-month. This growth is due to increased demand for printers and materials in various sub-sectors, most notably jewelry, automobiles and transportation, and general manufacturing.
Now we turn to gross margin. We reported a gross margin of 41.2% in the third quarter of 2021, and 43.1% in the third quarter of 2020. Non-GAAP gross profit margin was 41.5%, compared with 43.2% in the same period last year. The decrease in gross profit margin was mainly due to the business divested in 2020 and 2021. If we exclude the impact of these divestitures, gross profit-gross profit margin increased by 80 basis points in the third quarter of 2021 compared to the same period last year, driving cost action and higher revenue to 2020, which leads to better capacity utilization Rate.
As evidenced by our strong performance this year, the demand for our products in our two business units remains strong. The biggest challenge we face is not unique to 3D Systems. We all know the supply chain issues that affect everyone, from multinational companies to small businesses to individuals on the street. In fact, although our third-quarter revenue was strong, it was affected by certain product supply restrictions. As in the previous quarter, we continue to see the cost and availability of certain components in our products tighten. Our team has performed well in dealing with these challenges. The supply chain, rather than end customer demand, is still the main obstacle to our business and our focus at the end of the year.
We have taken measures to mitigate the economic impact, such as adding alternative sources for key components where possible. We have seen some of the impact of supply chain restrictions on costs, especially the increase in shipping costs, and have imposed temporary surcharges on certain types of purchases by our customers, effective from the fourth quarter. Year-to-date, our non-GAAP gross profit margin was 42.6%, and we expect the full-year gross profit margin to be between 41% and 43%.
According to GAAP calculations, operating expenses for the quarter were US$81.5 million, a decrease of 35.4% compared with the third quarter of 2020. This year-on-year decrease reflects the impairment of goodwill in the third quarter of 2020. We were $54.1 million in the third quarter, a decrease of 8% from the third quarter of last year. Compared with the second quarter of 2021, non-GAAP operating expenses fell by 2%, mainly due to lower research and development expenditures.
Adjusted EBITDA (defined as non-GAAP operating profit plus depreciation) was $16.3 million or 10.5% of revenue, compared to $7.2 million or 5.3% of revenue in the third quarter of 2020. Our rigorous approach to growth, cost management and focus on our core business has led to continued strong adjusted EBITDA.
Turn to cash flow statement and balance sheet. We are pleased to show US$502.8 million in cash on the balance sheet, an increase of US$418.4 million from the beginning of the year. This growth was mainly driven by the proceeds from the divestiture of the on-demand parts business and our medical simulation business, but to a large extent benefited from the support of our extremely strong operating cash generation. During the quarter, we generated $20.7 million in cash from operations, which is the fourth consecutive quarter of positive cash flow in operations. This is the first time in four years that the company has achieved positive operating cash flow for four consecutive quarters, reflecting the strong transformation of our business.
Now that we have demonstrated sustained profitability and cash generation, as well as $500 million in cash on hand after the divestiture, we are in a good position to continue to grow by adopting a rigorous approach to investing in organic and inorganic solutions to address the complex needs of our customers Companies that drive the adoption of additive manufacturing and generate high-margin recurring revenue streams.
We have previously announced some of these growth opportunities, namely our acquisition of Oqton and Volumetric Biotechnologies, which ended on November 1, and is expected to end in the fourth quarter. The total cash consideration for these projects is approximately US$130 million, and the remaining cash is approximately US$370 million. These acquisitions will enable the company to achieve strong growth and are the core of our strategy in high-profit software to achieve additive manufacturing and the use of advanced 3D printing technology in the field of regenerative medicine. We believe that we will become a leader in this field. in the market.
At the end of my speech, I want to look back at the past year. I joined the company at the beginning of the third quarter of 2020, when the company was just beginning to transform. We just announced the results for the second quarter of 2020, including negative operating cash flow of US$21 million in the first half of the year, only US$64 million in cash and cash equivalents on the balance sheet, and US$22 million in debt. Now fast forward to this year and the transformation we have experienced. We generated more than US$60 million in operating cash in the third quarter of this year, and had more than US$500 million in cash and cash equivalents at the end of the quarter, with no debt.
We are 100% focused on additive manufacturing and have strong growth in our core market. We are able to make smart strategic investments to support our core business, and are rapidly advancing our key technologies to new areas such as regenerative medicine. I still believe that we are in a unique position in our industry, with strong balance sheet growth, cash generation and a range of technologies continue to be demanded by customers.
Finally, we would like to provide an update in our investor day event. As you may remember, we have scheduled an event in the Denver, Colorado area on September 9. Out of a high degree of caution for the safety of our investors, analysts, and employees, we postponed the original Investor Day due to the increase in the COVID infection rate due to the Delta variant last summer. We are now seeing promising signs of progress, the infection rate has fallen again, and the launch of enhanced injections and newly announced pills seem to be expected to drastically reduce the hospitalization rate for this infection. Therefore, we are in the early stages of the planned renewal of the Investor Day, with the goal of the first half of 2022. We will provide updates as soon as possible and look forward to sharing our long-term growth strategy investment community with us in more detail.
With this, I will turn the call back to Jeff. Jeff?
Jeffrey A. Graves - CEO and President
Thanks, Jagta. Well, Jagtar and I have introduced the remarkable progress we have made in the last year. We have created value for our investors, our customers and our employees by reshaping our business. Our growth and profitability make us stand out in the industry and make us an important partner for more and more organizations considering additive manufacturing. At the same time, our transformation also makes us a better workplace to promote the future of additive manufacturing, so every day more talented people become part of the new 3D Systems.
However, despite our many achievements last year, it is more about the future. We will continue to be a valuable solution partner for our customers and deeply integrate with them as they adopt our solutions and technologies. We will also invest in our business and improve our solution capabilities in the five key areas I mentioned earlier. I am very excited about the depth and breadth of technology we bring to market and application expertise.
Therefore, I will now open it for questions. Kevin?
Thank you. [Operator Instructions] Our first question today comes from Troy Jensen of Lake Street Capital. Your line is now live.
Troy Jensen - Lake Street Capital Markets - Analyst
Hey gentlemen, congratulations on the good results here.
Jeffrey A. Graves - CEO and President
Troy Jensen - Lake Street Capital Markets - Analyst
I think, for you, Jeff. I want to ask a few questions. I did miss Volumetric's call. I think, can you talk about it-we received an email from John about this, and you talked about the three aspects of the space you see, organ printing, non-organ printing, and then laboratory and research work. I mean, I don’t want you to adjust their size, but can you prioritize which one is bigger here-I think, when I think of creatures, I really think that the material is really the key secret, maybe the creature players are better few. But please help me, what are the most important aspects we will prioritize?
Jeffrey A. Graves - CEO and President
Yes. These are two interesting questions, Troy. Let me talk about both of them. I will start with the second one, which is actually the printing technology itself. Troy, I have to tell you, this is amazing. We started this work in 2017 and, frankly, thought it was impossible to achieve the resolution required to print long scaffolds. I mean, we are talking about the micron-level details in the extremely complex structure that builds the scaffold, which is a large scaffold, think about the size of a human lung. So the intricacies, complexity and fine details are really very difficult. Remember, you are made with biological materials. The materials you use are the basic components of your body-the materials of the human body. These materials have indeed been printed before. So with all these technologies, it took us several years to truly develop this technology to today's extraordinary level. This is why we and United Therapeutics are confident that we can now extend it to other human organs.
So I will not underestimate printer technology. To be honest, we not only invented it for bioprinting, but also took advantage of some of our work in photo polymer printing technology in the process, which is really helpful. This is synergy-we see future technological synergy, which is really beneficial. But from a material point of view, these are unique materials, and we will continue to involve unique biological materials.
Therefore, part of the driving factor for the acquisition of Volumetric was that they had the biological expertise we really needed. They also have excellent printer expertise, but they do research from a biological point of view. So they have expertise in cell engineering and biology. If we really want to develop in this field, we need to introduce it internally. We can now use it not only for organ printing, but also for non-organ parts of the human body, and then for laboratory applications. Excellent technology, Troy.
When these organs and non-organ items are built for your body, most of them are ultimately built by the patient's own cells. Therefore, they are completely biocompatible, and they are designed to survive in your body for a lifetime without the use of immunosuppressive drugs, which has been an ongoing problem facing transplant patients today. So we are very excited. Organ printing work has promoted the development of many core technologies, and we are using these technologies for non-organ printing and other markets in the laboratory.
In terms of market size, Troy is—they are emerging markets. It is very difficult to get your arms around its size and proportions. If we only look at the number of organ transplants strictly, such as how many organ transplants are done today, this list is deliberately kept small because there are too few organs that can be removed. Therefore, you can make dollar estimates for many organs, but the market itself will expand to millions of patients. Obviously, this is a very valuable article, which avoids spending a lot of money on traditional transplants and drugs. Therefore, we believe that this is a high-value, highly differentiated product that you provide to a multi-billion dollar market.
Then when you do non-organ applications, I would say equivalent. It's hard to estimate, but if you think about the skin, arteries, and soft tissue implants around your body, its market size will once again reach billions of dollars. Then I will say the same in the lab, maybe a little bit smaller. What we are talking about is the laboratory application market of more than $1 billion. We are very excited about the research laboratory, which is a great undertaking. We acquired Allevi earlier this year, and Allevi has a very good footprint in the research laboratory. They are distributed in more than 300 research laboratories around the world. This is how you really develop a lot of regenerative medicine science. So you want to be with people who sell printers and consumable materials to them. However, from the perspective of the dollar alone, we are excited about the real market, and the benefits it brings are medications, and therefore medications.
As a result, 3D cell structures with blood vessels can be printed and blood can flow through them, allowing pharmaceutical companies to test drugs faster. So they no longer need to jump from an animal to a complete person. They can test it in the laboratory, but use real human biological cells and blood to flow through them in a structured or reproducible way.
So we see that the benefits there are huge. It will provide printers and materials, and it may actually end up with some tests. But I believe this will be a great business for us. But again, due to the lack of better numbers, I will now raise $1 billion. But obviously there is a considerable market. I believe that Troy is transformative for our company. With our FDA knowledge and our process discipline, this is a reasonable extension of our healthcare business today, but this is a brand new market, and I really want to make sure we are in a good position. We are leading today. We are adding great technical resources. We hope to continue to really promote technology in this field.
Troy Jensen - Lake Street Capital Markets - Analyst
Thanks, Jeff. Here, you have become a very good healthcare professional in a very short period of time. But a quick follow-up to Jagtar. It's just that the gross profit margin has been hit a little bit. If we reach the midpoint of the 2021 range you are calling for here, 40% to 40.5% will apply in the fourth quarter. But we just want to move forward. I mean, this is the basic level here. Did we develop from here? I know you may not want to give a lot of guidance on 2022, but maybe as we are working on the model now, I think...
Jagtar Narula-Executive Vice President and Chief Financial Officer
Yes, Troy. I mean, we released the guidelines, and what I want to say is that our plan definitely developed from there. We-as you heard in my prepared review, we are investing in types of businesses that will increase gross margins, right? We talked about recurring revenue streams, software, materials, etc., which we believe will drive gross profit margins in the future. At the same time, we continue to implement good cost discipline and cost management on existing products to manage costs, which I think we are experiencing. As you heard me say, some recent headwinds of supply chain constraints and their impact on pricing and proper management. But I think in the medium term, you will start to see gross margins pick up.
Troy Jensen - Lake Street Capital Markets - Analyst
Okay, perfect. Good luck everyone. Keep up the good work.
Jeffrey A. Graves - CEO and President
Hey Troy, thank you for your report on the company. I know you are all skinny, all of you. I-you are a respected person in the industry, thank you very much for following the company and accepting reports.
Troy Jensen - Lake Street Capital Markets - Analyst
Looking forward to working with you.
Jeffrey A. Graves - CEO and President
Thank you. Our next question today comes from Greg Palm of Craig-Hallum Capital Group. Your line is now live.
Greg Palm - Craig-Hallum Capital Group - Analyst
thanks. Good morning, thanks for some comments on everything that happened last year. This is a very amazing change or transformation of the company. Tribute to you and the team there.
Jeffrey A. Graves - CEO and President
Jagtar Narula-Executive Vice President and Chief Financial Officer
Greg Palm - Craig-Hallum Capital Group - Analyst
So maybe let's start with the supply chain, and you say this is headwind, which is not surprising. What is your income impact? I’m curious, maybe if you look forward, I mean, you think this might be a tailwind or driving factor for additive manufacturing, at least for those companies that are looking for, I don’t know that it might increase localization, press Need to be produced or at least a secondary source of supply?
Jagtar Narula-Executive Vice President and Chief Financial Officer
Of course, Greg. I will start with quantification and let Jeff talk about the impact on our customers. In terms of quantification, in the third quarter, we may have about 3 million U.S. dollars in revenue. If there are no supply chain problems, we will get about 3 million to 4 million U.S. dollars in revenue. If you exclude divestitures, our third quarter revenue has increased compared to the second quarter. Generally, Q3 is lighter than Q2. So if I consider the increase in revenue and the fact that we are leaving revenue on the table due to the supply chain, this is actually a very powerful indicator of customer demand. I do think we will see some impact in the fourth quarter, but as I said in the prepared comments, we continue to work as a homesteader to deal with the problems there.
Jeffrey A. Graves - CEO and President
Yes, Greg. I have gone through several cycles especially before the electronics industry, and when demand really rises and people try to expand capacity, these cycles are always painful. They will always be resolved, and they are usually resolved faster than you think. When you experience them, they feel bad. I mean, it's hard. We now have very special needs for our products, but for the reasons you pointed out, especially for our application knowledge.
The silver lining of these supply chain shortages is actually that all our major customers are saying that they must change the nature of the supply chain. They can't survive, especially when you see the impact of the pandemic and the most important thing now is the supply chain shortage. They must have a more flexible, more flexible, but more cost-effective supply chain, and possibly a little closer to home, so that they do not increase all logistics costs due to all other setbacks.
Therefore, although it is painful for us to experience and meet customer needs now, this is one-I believe that this is a very good tailwind for us and our entire industry, and this is added as a solution to many problems now Become a real production process, which will allow them to simplify their supply chain and bring it closer to home in a very cost-effective manner. What we did with the Oqton acquisition was that we wanted to remove a major obstacle to achieving this goal, because when customers really tried to set production capacity for printers, they really stumbled on how to do it. They cannot afford to hire PC-level engineers to run the production line and operate on the spreadsheet.
Therefore, they need a software tool that enables them to bring the printer and all supporting equipment into the factory and set it up in a plug-and-play manner-plug-and-play, and now apply machine intelligence and artificial intelligence to work Process, this is what Oqton does. So we tried-we are working hard to remove any obstacles, because I believe we have-as an industry, as large companies re-examine their supply chain, we have a good tailwind.
Greg Palm - Craig-Hallum Capital Group - Analyst
Yes, it makes sense. Where do you think this demand comes from? I don't know if this is the end market or technology? Just outside of dentistry, I think, where do you see the biggest demand, and where does some of the huge demand come from?
Jeffrey A. Graves - CEO and President
Yes. Greg, this is really interesting, and it varies from market to market. This is why, frankly, back to that theme, we have now restructured the company around the market, because the dynamics of each market segment are different. In general, for healthcare, growth-even in dentistry, whether it is dentistry or other medical equipment, growth is driven by this drive to provide people with personalized solutions. So if you have a bone fracture, or you need tissue implants or specialized surgery, they hope-they have-it must be cost-effective, but they want a personalized medical approach to drive better results This is a big demand, it reduces the infection rate, it provides a higher throughput and operating room. This is the real driving force in the healthcare sector.
In the industrial aspect of the business, it is more what you just said. This is an idea to look at their expanded supply chain and actually transform it. So when you think about it, in terms of industry, it is a big consumer, a big OEM product assembler. So it is a car, it is aerospace, it is all related technologies or companies; buses, trucks, cars, airplanes. All those who are designing and building these, they all want their supply chain to be closer to home, more flexible, and more cost-effective.
So in industry, this is exactly what you imagine. And because each has its own trend, just like today's cars are turning to electric vehicle technology, this is a very good tailwind for additive manufacturing. So I like to engage in our business today. I like the vertical focus on healthcare and industry that we are adopting today, because each industry has its own pace and unique needs. So anyway, this is my view of driving space, Greg.
Greg Palm - Craig-Hallum Capital Group - Analyst
Yes, that's great. If I could secretly follow up when the largest customer you disclosed accounted for 20% of this year's revenue. Compared with the previous year, this is a considerable improvement. How sustainable is this level?
Jeffrey A. Graves - CEO and President
Well, as you know, this is mainly the result of our divestiture of other businesses, Greg. We have divested the business they did not participate in. I like the dental space. I love the customers we have. The big customers we have are huge. Their penetration rate in the market is still low. So I think based on our technology, they have a bright future. So I think we have a good runway with them and never have a better relationship. Despite the logistics problems and things, with the reopening of the economy, we can take care of them and support their growth and market, and people are very interested in their products. So I am excited for them. I am excited for us. This is a great customer. At the same time, Greg, we showed that if I am wrong, please correct me, Jagtar, medical equipment has increased by 15%. So 15%...
Jagtar Narula-Executive Vice President and Chief Financial Officer
Medical equipment, yes. Does not include peeling.
Jeffrey A. Graves - CEO and President
Yes. So, if you take away our divestiture and what we get from it, we have grown by 15% in the field of medical equipment other than dentistry. If you can get dental, 15% growth, we are very happy. I mean, this is a special number, and I see that this number continues and gets bigger and bigger. Therefore, I think the entire healthcare business will become bigger. I like the fact that we have a very successful customer and continue to grow based on our technology. I think we have a bright future with them and many others in the dental industry and medical device industry.
Greg Palm - Craig-Hallum Capital Group - Analyst
Astonishing. OK. I admire this color, good luck to you.
Jeffrey A. Graves - CEO and President
Thank you. Your next question comes from Noelle Dilts of Stifel. Your line is now live.
Noelle Dilts - Stifel - Analyst
Hi, everybody. Congratulations again for all the progress you have made in the past year.
Jeffrey A. Graves - CEO and President
Noelle Dilts - Stifel - Analyst
Of course, something. Just one question for me. Given that you are now entering this stage of investment, I hope you can-in a larger way, I hope you can comment on the pipeline of the company you are talking to? What is your conversation like? Then, maybe you can re-examine whether you have to sort the priorities according to your interests. If you can talk about medical and industrial, then software and applications. Just let us know how you consider the progress of the next stage? thanks.
Jeffrey A. Graves - CEO and President
Very happy, Noel. Again, if I missed one of them, please feel free to ask me again. But in terms of priority, it's simple. We-under our market focus are our three core technologies; printers, materials and software. We want to make sure that those stay highly differentiated. So it boils down to sometimes component-level investment and-disruptive technology. So a new way to print parts. An important priority for Noelle in this area is materials, and we have a great photopolymer team inside. We continue to pay attention to photopolymer experts outside. However, individuals, small groups, or larger groups can participate in the development of materials that can advance additive manufacturing. These are always on our priority list. We are always looking for them because value-added materials bring incredible value to our customers, which is very beneficial to our recurring income. So we really like it.
Software is clearly the top priority. We have developed some platforms well internally, and now we are making these platforms available to others. We invested in the Oqton platform to help our customers. Therefore, software will remain the top priority. I'm not sure how many other resources in the software actually exist, but it always tops the list of available things. So I would say materials-if you delve into the underlying technology, materials are a high priority, and disruptive printer technology is always important.
When you look at market priority or application priority, healthcare is certainly a great business. We have a huge foundation. We have now extended it to the field of biotechnology. We should really grow in that field. But in our traditional healthcare equipment business, what is really expanding now is the number of applications. I think we have a chart to show human bones. Our past, Noelle, was almost from beginning to end. We have been very concerned about the head and the bone structure of the head, and have done related work together with the surgeon. What we are doing now is trying to attack other parts of the skeletal system in parallel, and then proceed. Therefore, you are looking for applied expertise and other things besides biotechnology that will advance the most advanced technology and healthcare applications around the skeletal system. So I like those.
In the industrial sector, we are more cautious-more critical in areas where we truly believe that there will be differentiation in the future. Therefore, it has returned to the steam of differentiated technology. Aerospace technology, general rockets, satellites, propulsion, they have always attached great importance to technical performance reasons and weight, obviously in many cases. So additives can provide a lot of things there. Therefore, it will always be our top priority.
Ground vehicles, mainly cars, used to have mixed blessings because you have-a price-driven, high-volume business car, which is traditionally difficult for additives-and even more difficult for additives. Now there are electric cars, which is really interesting because they borrow a lot of technology from aircraft materials and applications. Therefore, the factors that make you successful in the aerospace industry can also help you develop electric vehicles. They benefit from some more peculiar part designs, and you can use additives to achieve basic lightweighting-creating a lightweight, strong vehicle structure that allows battery power to go further.
Therefore, electric vehicles are a very interesting area in popular applications in cars and under the hood. We now have some new special materials coming out. They are ideal for thermal applications under the hood and other demanding automotive applications. So I may have covered every area there, but hope this gives you an idea of our priorities. We have now developed a good work shift to pursue it, and we are generating good cash flow to further support this.
Noelle Dilts - Stifel - Analyst
Jeffrey A. Graves - CEO and President
Thank you. Your next question is from Sarkis Sherbetchyan of B. Riley Securities. Your line is now live.
Sarkis Sherbetchyan - B. Riley Securities - Analyst
Hi. Good morning, thank you for asking my question here.
Jeffrey A. Graves - CEO and President
Sarkis Sherbetchyan - B. Riley Securities - Analyst
During the past 12 months, excluding divestitures, your sales have just exceeded $520 million. Just want to know what is your opinion on the top-line organic growth that is moving forward on this basis?
Jeffrey A. Graves - CEO and President
In terms of organic growth, it is—everyone is trying to set a number for this industry. I would say so. Our organic growth rate should be equal to or better than the industry standard. I-people put it in the range of a good unit to two digits. We have no reason not to meet or exceed the industry growth rate. In some of these emerging areas where we will try to really continue to redouble our efforts, I think you will see higher growth rates.
Therefore, I am very satisfied with meeting and gaining some share in the market over time. In our method, we know that this is not a way to get a large share through pricing, it is more about technological differentiation. So I think you will give an industry growth number, which is our exciting number, a good double-digit number and a little bit higher than this for us. This is how I view our business.
Sarkis Sherbetchyan - B. Riley Securities - Analyst
This is really helpful. Then there are [technical issues] SG&A and R&D operating expenses. I think, when considering adding Oqton and Volumetric once they are closed, will these dilute profitability? Essentially, when we consider integrating these businesses, what are the operating costs?
Jagtar Narula-Executive Vice President and Chief Financial Officer
Okay, of course. So—hey, Sarkis, this is Jagtar. I talked about this in our conference call announcing these acquisitions. So I will reiterate my comments there. So on Oqton, what I am talking about is recent, which means that for the rest of this year, we will close on November 1st. It is expected that there will not be much revenue contribution this year, although I expect it will increase next year. Currently, their operating expenditure operating rate is approximately $3 million per quarter. Therefore, it will be diluted in the short term. But with their rapid growth, we expect the dilution to decrease in the next year or two.
In terms of capacity, in the short term, I do not expect any type of net operating expenditure impact until we make a decision to further invest in the non-organ aspects of the business. In their core business, we announced the expansion of the contract with United Therapeutics, which will help support the costs associated with Volumetric. But when we make a decision to further advance the non-organ aspects, we may have additional investment, which we will discuss in the future.
Sarkis Sherbetchyan - B. Riley Securities - Analyst
great. Thank you. This is all I have.
Jeffrey A. Graves - CEO and President
Thank you. Our next question today comes from Wamsi Mohan from Bank of America. Your line is now live.
Wamsi Mohan - Bank of America Securities - Analyst
Yes. Thank you. Jeff, I’m trying to reconcile some of your comments about the changes the company has implemented in the supply chain, and how they consider manufacturing in different places and completing the entire manufacturing process in different ways, rather than comparing it to you two years ago. The current industrial income is just like the overall growth you mentioned. However, the industry itself has not shown much growth. In some other industries where digital transformation has become a priority, you have already seen, for example, as these companies are implementing digital transformation, improvements in materials and revenue growth, etc. Software aspect. So I just want to know, do you see any tea about industry? As the industry enters 2022, how should we view it? Should we see a more substantial change in the growth rate? If you have any comments, please provide any helpful comments? I have a follow-up.
Jeffrey A. Graves - CEO and President
Yes. I would like to comment more broadly, Wamsi. I would say that industry is a very large market, and it will vary depending on the vertical direction. I think this is why you see each company, because each company has a different exposure in the industrial customer base, and some companies are growing faster than others. I think that on average, if you look at the next few years, the industry will generally grow because I think COVID is extremely destructive for them, for example, their Asian supply chain is closed, and the most important thing now is you Encountered shortages and logistics problems. So I do think that in the next few years, industry will become a strong growth for everyone.
The personal interest rate for each quarter may vary depending on the market you really care about. So I don’t worry too much about quarterly changes. But if you look at the year-on-year changes in the future, I think most people involved in this field will improve. Obviously, we tend to target those who are most driven by technology. Some of them will grow faster than others, but I think they should all be impressive growth rates. This is my guess, if it helps you.
Wamsi Mohan - Bank of America Securities - Analyst
Yes, this is very helpful. Then just follow up. When we consider gross margins, I know that when you look at the fourth quarter, there are currently some supply chain headwinds. But as you can see, I know that you talked about the long-term goal of 50% gross profit in the last call, and you mentioned in this call that this is to a large extent a way to improve the software level and improve the level. Function. Materials, but you also commented that your listing is more based on solutions than on the product itself, for example, not on fragmentary thinking about printers, materials, and software.
So when I put these two things together, are you actually saying that you are making major changes to your sales activities to support solution-based sales? Secondly, when you consider the gross margin reaching the turning point, what time frame are we talking about? I know your long-term goal is 50%, but if we are close to 40% today and we still have supply chain issues, then this combination may not swing so fast. So, please help us understand the trajectory of those large contributors joining?
Jeffrey A. Graves - CEO and President
Yes. So big driver-I will let Jagtar add this and comment on the short term. But I can tell you that our main driver in reaching our gross margin target is 50% or higher. From a macro perspective, it is clear that healthcare will be an important driving factor. The gross profit margin of healthcare is higher. Obviously, the growth of healthcare is a good thing in a broad sense. So we will continue to work hard. With the expansion now to biotechnology, I think it’s really exciting from the perspective of gross margin impact, not only in terms of revenue, but also in terms of gross margin. So this is really good.
From a hybrid perspective, we have invested a lot of money in value-added materials. Therefore, if you look at the continuously used consumables after installing the printer, you will find that the materials are great, and then the software. However, in the early stage of the software platform and continuous software upgrades, we are now more of a subscription model. This is a good source of recurring income. Therefore, if you look at the product portfolio that we actually sell in the transaction, you should see a richer portfolio in the future. From a macro perspective, you should see faster growth rates in overall healthcare, which leads to higher gross profit margins.
So these are the macro trends that will be driven. We will continue to focus on differentiated technologies, so we set prices every day. If you package it as a solution and it is a differentiated technology, I hope you can also get the highest gross profit in advance. Therefore, these are individual leverage and macro trends that will push the gross margin to reach the goal of 50%.
In the short term, Jagtar, I will let you wear your crystal ball. It's hard...
Jagtar Narula-Executive Vice President and Chief Financial Officer
Yes. Let me talk about time, Wamsi. Therefore, according to our modeling method, our gross profit margin during the strategic planning period is close to 50%, and we have modeled for four to five years. My opinion is that in the short term, we have encountered supply chain problems. Therefore, our supply chain personnel told us that they expected these problems in the market in the first half of next year, and then the market began to ease. Therefore, we are paying attention to the continuous improvement of gross profit margin during the four to five-year plan period, excluding recent supply chain issues.
Wamsi Mohan - Bank of America Securities - Analyst
OK. thank you very much.
Thank you. Our next question comes from Brian Drab from William Blair. Your line is now live.
Jeffrey A. Graves - CEO and President
Brian Drab-William Blair-Analyst
Hi. Thank you for answering the question. Hi, good morning. Can you-did you say how much dental and non-dental revenues are in the healthcare business this quarter?
Jagtar Narula-Executive Vice President and Chief Financial Officer
We have not resolved this issue. What we are talking about is that after adjusting the divestiture, our non-dental business has grown organically by 15%.
Brian Drab-William Blair-Analyst
Okay, great. So that 15%-when you talk about medical equipment, is that non-dental?
Jagtar Narula-Executive Vice President and Chief Financial Officer
Brian Drab-William Blair-Analyst
Yes Yes. OK. understood. Then just some other cleanup work, such as modeling things. You provided divested income, but how many product segmentation accounts can you help us handle? How much is the income from the divestiture of products and services?
Jagtar Narula-Executive Vice President and Chief Financial Officer
Yes, I don't have that kind of breakthrough, Brian, but I can take you offline.
Brian Drab-William Blair-Analyst
OK. Then, Jagtar, thanks for the comment on Oqton’s $3 million operating expense, but I just want to know, considering the operating expense run rate of your exit, can you make a bigger comment-such as a higher level of operating expense What are your comments and what this quarter, what are our expectations for the fourth quarter and the future?
Jagtar Narula-Executive Vice President and Chief Financial Officer
Okay, of course. Therefore, our non-GAAP operating expenses for the third quarter were $54.1 million. You will be affected by the divestiture. So now, the assets we divested in the third quarter contributed approximately US$4 million to US$5 million in operating expenses. So this will appear in the fourth quarter. R&D in the third quarter was easy. We have obtained some R&D credits in some countries/regions and some attritions we have, the result of some backfilling work we are doing. So I expect the R&D in the fourth quarter will increase slightly, but not too much. Therefore, if you weigh these trade-offs, after adjusting the divestiture, you will maintain a steady or slight increase in operating expenses, and then add capacity, which will be worth about two months.
Brian Drab-William Blair-Analyst
Jagtar Narula-Executive Vice President and Chief Financial Officer
Sorry, I mean Oakton. I'm talking about volume, I'm talking about Oqton, sorry.
Brian Drab-William Blair-Analyst
right. Volumetric doesn't have any operating expenses, right?
Jagtar Narula-Executive Vice President and Chief Financial Officer
Brian Drab-William Blair-Analyst
OK. Then look to the future, just like in 2022, you mentioned that you will obviously invest in a faster-growing business, but is this a big investment or is the increase in operating expenses in line with revenue?
Jagtar Narula-Executive Vice President and Chief Financial Officer
Yes. I think operating expenses will grow as revenue grows.
Brian Drab-William Blair-Analyst
understood. OK. thank you very much.
Jagtar Narula-Executive Vice President and Chief Financial Officer
Thank you. Our next question today comes from Paul Chung of JPMorgan Chase. Your line is now live.
Paul Chung - JPMorgan Chase - Analyst
Hi. Thank you for answering my question. You usually see some seasonal strength in the fourth quarter. Should we expect to see some kind of core business divestiture within the $137 million range in the third quarter? Regarding the recent acquisitions, how do we see the time spent on hierarchical contributions? Will there be more materials in the second half of 22?
Jagtar Narula-Executive Vice President and Chief Financial Officer
Yes. I will answer these two questions, Paul. Therefore, at the timing of the acquisition, we expect that the second half of 22 years is where we expect to see Oqton start to grow, which is a cloud software business. So we are working hard to book. In fact, we now see a great pipeline, but as you start to see revenue growth, there will be more in the second half of the year.
Regarding the fourth quarter revenue forecast, I will say-I will focus on our normal third quarter to fourth quarter seasonality. Now, we see-I will exclude last year, due to the COVID dynamics, there has been a considerable increase from the third quarter to the fourth quarter last year. But if you look at the normal fluctuations from the third quarter to the fourth quarter in previous years, we see typical seasonality. Obviously, the supply chain is a major fluctuation this year. But now, as I said, we have-we are doing our best to manage the supply chain, and we are seeing a normal third quarter to fourth quarter.
Paul Chung - JPMorgan Chase - Analyst
Get you. Then in terms of free cash flow, you did a great job there. But is standardized free cash flow a kind of ex-dividend? When we are also acquiring middle-tier stacks, how do we view the quarterly run rate of free cash flow? They have done a good job in working capital.
Jagtar Narula-Executive Vice President and Chief Financial Officer
Yes. Therefore, if I go back to what I said in the last call, the divestiture has contributed to what we did. This year it contributed approximately $25 million in revenue every quarter, and then contributed approximately $5 million in marginal income every quarter, and these assets have almost no depreciation. So this is roughly a cash flow figure, which may be slightly higher, so it is called $5 million to $6 million per quarter.
Paul Chung - JPMorgan Chase - Analyst
understood. In the end, just a quick modeling. Can you confirm the cash outflow in Q4 and the stock issuance in Q4? What is the expected number of stocks after the acquisition in the fourth quarter and in the future?
Jagtar Narula-Executive Vice President and Chief Financial Officer
Paul Chung - JPMorgan Chase - Analyst
Cash equity split and you must...
Jagtar Narula-Executive Vice President and Chief Financial Officer
Yes. So we released a Q today with an updated share count on the first page. It is included in the stock we issued for Volumetric, which is approximately 2.5 million shares. Sorry, I made a mistake. I have been wrong about acquiring Oqton. The Oqton acquisition, about 2.5 million shares. For Volumetric, it will be half the purchase price, so the stock is worth $22.5 million. This will be based on the past 20-day average. Therefore, once the acquisition is completed, the earnings per share there will be approximately $30. This will be the main stock offering in the fourth quarter.
We split cash and stocks, mainly to manage cash. We now have a substantial balance sheet, but we do want to invest, and we want to reserve cash for investment. With some acquired assets, we hope to add some founder skins to the game, so we have already balanced...
Paul Chung - JPMorgan Chase - Analyst
make sense. Okay, great. thanks.
Jeffrey A. Graves - CEO and President
Thank you. Our last question today comes from Ashley Ellis of Cross Research. Your line is now live.
Ashley Ellis-Cross Research-Analyst
Hi. Thank you for answering my question. In the past few months, on this conference call today, it seems that you are really concerned about healthcare and are becoming more and more like a healthcare company. So I want to know, how is the dialogue with your large industrial customers going? When they make hundreds of thousands of dollars in investments, how do you assure them that you will support them in the coming years? At the same time, how do you consider the number of sales and R&D investment in the industrial business, because you are more selective, but you want to ensure that you will not fall behind the crowd? thanks.
Jeffrey A. Graves - CEO and President
Yes, two good questions. So I want to tell you that although many of my examples today are examples of healthcare, we are very excited about the industry. As I mentioned, we carefully select our markets in the industrial sector to ensure that they target the people who can get the most benefit from additive manufacturing. So this is our goal, but we are very excited about the industry.
There are many-if you go deep into the technical level of printing, if we-I will only pick one example, Ashley. You are talking about powder bed printing with laser. So you have metal and polymer powder bed printing, which can be well developed in both directions in industrial and healthcare applications. There are many synergies and overlaps. Therefore, by investing in basic technology, we basically get a double benefit. We can take them away.
The difference between these two businesses lies in application expertise. Therefore, help a rocket company to manufacture a large titanium part, rather than a very small titanium part, which will be implanted in the human body in the healthcare business. The basic technology can be very similar, but the application expertise is quite different. This is why I talked about the need to restructure the company into a healthcare and industrial business unit, because the application knowledge is very specific to this customer group.
They don't want to come in-people who work in orthopedic implants don't want to come in and talk about rocket components, right? They want to know how to help surgeons repair bones with titanium implants. Etc., etc. So applied knowledge is where it starts to split between vertical markets, which is part of the sales process to some extent.
We are building more direct sales teams in certain market verticals, especially in the healthcare sector, which are very professional customers and require unique application knowledge. We still have a very strong sales team distributed all over the world, covering small emerging customers or wider industrial customers, and we plan to keep these two methods. This is a balance. We must pay attention to cost. But it certainly deserves to be treated correctly. This is one of the things we have done a lot of reconfiguration in the past 18 months.
Ashley Ellis-Cross Research-Analyst
OK. Thank you. Then my last question, this may be a bit creepy. But I know that in the conference call you mentioned that you completed the divestiture, but at the beginning of the call, Jeff, you mentioned that you have completed the first divestiture of non-core assets. Does this mean you can do more divestitures, or am I just reading the language too carefully?
Jeffrey A. Graves - CEO and President
No, Ashley. If I did not express it clearly, I apologize. One year ago, I sat here thinking about things a year ago, and we did one. Now, one year later, we have completed all of this. So we are done. We own things that we are very happy to own and feel that we are legal owners. We have stripped away the best things other people have. So we completed the divestiture. I think you can never say that it is a blanket risk, but we are basically done. We focus on additives as an independent core business, and this is how we want to run our business.
Ashley Ellis-Cross Research-Analyst
OK. thank you very much.
Jeffrey A. Graves - CEO and President
You're welcome. Since this is the last question, I will make a comment. As our general approach in the future, we will do what we have done in the last two acquisitions. When they are truly important to us strategically, not all acquisitions are strategically important. But when they are truly groundbreaking, needle-moving, and potential as acquisitions, we will try to hold a separate investor conference call on the next day and describe why we are excited about it and what it plays in addition to economics What role is the transaction. But I will give you some more strategic perspectives.
If you go back to the Oqton and Volumetric acquisitions, both investor calls are under the "Investor Relations" tab on the website. If you want to learn more about the diagrams, you are welcome to view the diagrams and listen to them in your free time. These quarterly calls are inherently shorter and may not be so deep strategically. This concludes the question and answer session, Kevin.
perfect. Sir, do you have any further closing comments?
Jeffrey A. Graves - CEO and President
John, do you want to end?
John Nypaver - Vice President, Treasurer and Investor Relations
Thank you for joining us today, and thank you for your continued support of 3D Systems. A replay of this webcast will be provided after the conference call in the investor relations section of our website. Have a nice day.
Jeffrey A. Graves - CEO and President
John Nypaver - Vice President, Treasurer and Investor Relations
Jeffrey A. Graves - CEO and President
Jagtar Narula-Executive Vice President and Chief Financial Officer
Troy Jensen - Lake Street Capital Markets - Analyst
Greg Palm - Craig-Hallum Capital Group - Analyst
Noelle Dilts - Stifel - Analyst
Sarkis Sherbetchyan - B. Riley Securities - Analyst
Wamsi Mohan - Bank of America Securities - Analyst
Brian Drab-William Blair-Analyst
Paul Chung - JPMorgan Chase - Analyst
Ashley Ellis-Cross Research-Analyst
The discount offer is only applicable to new members. The stock adviser will renew the subscription at the then quoted price. The price of the stock advisor is $199 per year.
Stock Advisor was launched in February 2002. Return as of November 18, 2021.
The average return of all referrals since its inception. The cost basis and return are based on the closing price of the previous market day.
Make the world smarter, happier, and richer.
Market data powered by Xignite.