Dental supply stock surges on RFK’s anti-fluoride stance, activist involvement

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Robert F. Kennedy Jr. attends a campaign rally for Republican presidential candidate and former U.S. President Donald Trump in Milwaukee, Wisconsin, USA on November 1, 2024.

Joel Angel Juarez | Reuters

Dental care product provider Heinrich Schein rose in Monday trading as investors bet that Robert F. Kennedy Jr., President-elect Donald Trump's pick as Health and Human Services secretary, could recommend removing fluoride from the U.S. water system, a move that could lead to a boom would lead to dental visits.

Shares of Henry Schein rose about 7.5%, posting their best day since 2022. Co-makers of dental products Dentsply Sirona And Envista also rose in the meeting.

Monday's moves come as investors brace for public health changes under a second Trump administration. Kennedy posted ahead of this month's presidential election

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Fluoride has long been proven to be an effective way to combat tooth decay. But the mineral is at the center of a nationwide battle that has led some local communities to end programs that focused on discharges into public waters.

While Kennedy must seek Senate approval to take the job, market participants have already targeted a group of stocks that make dental hygiene products as potential beneficiaries of his policies. That's because removing fluoride from water would actually increase demand from the teeth-cleaning industry as consumers look elsewhere to combat tooth decay, according to company Gordon Haskett.

A general view of the structure of Henry Schein Inc., a healthcare products and services distributor with a presence in 32 countries, photographed in Melville, New York.

Bruce Bennett | Getty Images

“The idea here is that RFK will give HHS a voice in favor of reducing or eliminating the amount of fluoridation added to drinking water,” Don Bilson, Gordon Haskett's head of event-driven research, told clients in a Monday note. “This, in turn, will lead to an acceleration in tooth decay and more visits to the dentist.”

Shares of Henry Schein rose in afternoon trading after Reuters reported that activist investor Ananym Capital was calling for changes at the company. The newly formed company, led by Charlie Penner and Alex Silver, believes, among other things, that the board should be restructured and costs reduced.

Henry Schein and other stocks in this space offer a bright spot in a sector that has largely struggled since the election. The Health Care Select Sector SPDR Fund (XLV) fell more than 3% in November, on track for its first three-month losing streak since last year. In comparison, the width S&P 500 is up more than 3% for the month.

Gordon Haskett's Bilson also pointed out that dental stocks were among the few “spared” health-focused stocks as investors reacted to the announcement of Kennedy's nomination last week. Pharmaceutical companies were under pressure as Kennedy is seen as a vaccine skeptic, while processed food stocks slumped as traders prepared for increased scrutiny of so-called junk foods.

“It has led to widespread sales across the health care industry,” Bilson said of the decision to choose Kennedy. “Drug manufacturers, contract research organizations and health insurers all felt the quake. Instead of stopping, the damage spread to packaged foods. And on the advertising.”

While the market appears to be moving in light of Kennedy's nomination, Bilson said regulatory changes would likely take years to take effect. He also noted that drinking water should be under the jurisdiction of the Environmental Protection Agency rather than Health and Human Services.