DENTSPLY SIRONA (NASDAQ:XRAY) lowered its full-year earnings outlook after third-quarter sales fell across its dental businesses, as pressure from European distributor inventory reductions, the Middle East conflict and higher freight costs offset progress in parts of its U.S. operations.
The dental products company now expects 2026 net sales of approximately $3.5 billion, compared with its prior range of $3.5 billion to $3.6 billion. It forecast adjusted earnings per share of $1.20 to $1.30, down from $1.40 to $1.50, excluding a $0.17 one-time gain from tariff refunds.
“Our priority is now turning early gains into broader sustained improvement through stronger execution,” Scavilla said.
Quarterly results include accounting benefit
Third-quarter revenue fell 7.6% to $836 million, or 7% in constant currency. The decline included the absence of Byte revenue and planned dealer inventory reductions. Excluding Byte, approximately $10 million in planned dealer inventory reductions and other discrete one-time events, revenue declined 3.8% in constant currency, Executive Vice President and CFO John Fortson said.
Adjusted earnings per share were $0.29, down from $0.42 a year earlier. Adjusted gross margin improved by 190 basis points, although adjusted gross profit declined by approximately $20 million.
Results included a $39 million pretax benefit from a change in an accounting estimate related to profit included in inventory transfers between businesses. Fortson said the benefit reflected a multiyear period rather than third-quarter operating performance and was not expected to recur in future periods.
Fortson confirmed that the benefit, approximately $30 million after tax, was included in the company’s updated earnings guidance. Scavilla said other one-time items offset much of the benefit and that the operational net effect could be one or two cents per share.
Operating cash flow declined to $32 million from $79 million a year earlier, primarily because of unfavorable working capital. The company ended the quarter with $195 million in cash and cash equivalents and a net debt-to-EBITDA ratio of 3.4. It repurchased 1.2 million shares during the quarter and said debt reduction remains a capital-allocation priority.
Wellspect grows as dental segments contract
Wellspect Healthcare revenue rose 10% to a record $92 million, supported by higher volumes and new products, particularly its Surity products in the U.S. Scavilla said he expects Wellspect’s strength to continue through the rest of 2026 and into next year, while emphasizing that the company was not providing 2027 guidance.
Sales in the CTS segment fell 11% to $230 million. Lower Americas CAD/CAM volumes reflected a planned inventory shift with distributors, while lower-cost competition and softer capital demand weighed on results in Europe, the Middle East and Africa.
EDS sales declined 4% to $343 million, primarily because of lower endodontic volumes and pricing in that region. U.S. endodontic sales returned to growth for the first time since the second quarter of 2025, rising 4% in the latest quarter, Scavilla said.
OAS revenue fell 17% to $171 million, including a 6% negative impact from Byte. Premium implant volumes declined globally, although U.S. sales of the MIS value implant brand grew by double digits. SureSmile revenue fell to $39 million, primarily because of the absence of Byte sales and lower U.S. volumes.
Management continues turnaround investments
Scavilla said the company plans to nearly double its MIS sales force by year-end and has largely completed its North American dealer expansion after signing seven distribution agreements this year. Quota-carrying field vacancies have fallen to the mid-single digits from more than 20% in prior years, he said.
The CEO also said DENTSPLY SIRONA is targeting approximately $120 million in savings in 2026 while increasing investment in areas it considers essential to growth. Research and development spending rose approximately 20% through September from a year earlier, and second-half North American clinical education investment is six times last year’s level.
Fortson said EMEA underperformance and the Middle East conflict accounted for roughly three-fourths of the reduction in earnings guidance, with an unfavorable tax rate and strategic investments making up the balance. Cost initiatives and the inventory accounting benefit provided partial offsets.
Scavilla said achieving U.S. growth in the fourth quarter remained an aspiration but would be a stretch. Fortson said the full-year earnings range was achievable with improvement in certain markets and a favorable product mix, including stabilization in equipment.
The company also disclosed a memorandum of understanding for a proposed settlement of 2024 Byte securities litigation. Scavilla said the proposed settlement amount would be covered by liability insurance policies.
About DENTSPLY SIRONA (NASDAQ:XRAY)
DENTSPLY SIRONA is a global manufacturer of professional dental products and technologies. The company serves dentists, dental specialists, dental laboratories and other oral health professionals with solutions used in preventive, restorative, prosthetic, endodontic and implant dentistry.
Its portfolio includes dental equipment, imaging and treatment systems, CAD/CAM technology, consumable dental materials, orthodontic products, endodontic instruments and solutions, dental implants, prosthetic components and laboratory products.
