DENTSPLY SIRONA NASDAQ: XRAY reported first-quarter 2026 results that management characterized as the opening phase of its “Return-to-Growth” action plan, with leadership emphasizing that many of the operational and commercial actions underway are not yet fully reflected in financial performance.
President and CEO Dan Scavilla said the quarter “marked the start of executing the Dentsply Sirona Return-to-Growth action plan,” calling the company “a business in transition.” Scavilla said the company is “strengthening execution, investing in key growth areas, and positioning the company for improved long-term performance,” while noting near-term performance remains affected by external pressures and the timing of investments.
First-quarter financial performance
Interim CFO Mike Pomeroy said first-quarter revenue was $880 million. On a constant-currency basis, sales declined 6.7%, which Pomeroy said was driven in part by the impact from Byte and a strong treatment center comparison in the prior-year quarter. Adjusting for those “one-time headwinds,” he said constant-currency sales were down 4.5%.
Profitability was pressured during the quarter. Pomeroy reported adjusted EBITDA margin declined 430 basis points, which he attributed to a 560-basis-point decline in gross profit driven by “lower volumes, sales mix, and tariff impacts.” He added that operating expenses declined $20 million on a constant-currency basis, reflecting the company’s restructuring and cost controls, even as it increased year-over-year R&D spending to support its action plan.
Adjusted earnings per share were $0.27. Operating cash flow was $40 million, up from $7 million a year earlier, which Pomeroy said was “primarily attributable to improvements in working capital with lower accounts receivable.” The company ended the quarter with $190 million in cash and cash equivalents, a net debt-to-EBITDA ratio of 3.3x, and retired $79 million of debt during the period.
Segment trends and regional reporting changes
Pomeroy also announced a change in external geographic reporting to Americas, EMEA, and APAC from the prior U.S., Europe, and Rest of World structure, saying the update better reflects internal management. The company provided recast comparative information with its earnings release.
- Connected Technology Solutions (CTS): Constant-currency sales declined 2.9%. Pomeroy said equipment and instruments (E&I) fell high single digits due to declines in imaging equipment and treatment centers amid a tougher comparison; adjusting for a “one-time institutional installation,” CTS was flat in constant currency. Global CAD/CAM was flat, with APAC growth offset by an EMEA decline driven by softness in the Middle East and Central Europe, partially offset by double-digit growth in the U.K., Spain, Turkey, and Denmark.
- Essential Dental Solutions (EDS): Constant-currency sales declined 7.2%, driven by lower volumes in the Americas and EMEA, partially offset by growth across endo, resto, and preventative products in APAC.
- Orthodontic & Implant Solutions (OIS): Constant-currency sales fell 13.5%; adjusting for Byte, OIS declined 7.6%. Implants declined high single digits, while SureSmile declined low single digits with a high single-digit decline in the U.S. offset in part by 11% growth in EMEA.
- Wellspect HealthCare: Constant-currency sales increased 3.4%, led by 4% growth in EMEA and what Pomeroy described as continued strength in new product sales and execution.
Return-to-Growth plan: timing and priorities
Scavilla said progress is centered on execution, customer engagement, innovation, and cost optimization. In response to a question about the timing of benefits, he reiterated that the company framed Return-to-Growth as a 24-month plan, with cost benefits from restructuring expected to become more visible later in the year. Scavilla told analysts he expects some improvements in the fourth quarter, but said “more of the improvements will be seen as we get into 2027 and certainly into 2028.”
He said the company has advanced a U.S. commercial restructuring, expanded clinical education and sales training, and is increasing engagement with customers. Scavilla also said the company is establishing a CEO advisory board of dentists to provide ongoing customer insights and emphasized returning the U.S. to growth as the top priority.
On distribution, Scavilla highlighted early traction with new and expanded partners, including an expanded agreement with Atlanta Dental Supply for connected technology solutions effective Aug. 1, which he said is the company’s fourth new distributor agreement this year. He also cited Benco installing its first CEREC system under a new agreement “ahead of schedule.”
Scavilla and Pomeroy also discussed a transition to a new distribution “capital model” and inventory dynamics. Scavilla said the first quarter did not include burn-through of inventory associated with those changes, with expectations for that to occur from the second quarter through the fourth quarter. In the Q&A, Pomeroy said none of the previously discussed first-half headwind tied to inventory sell-through under the drop-ship model was realized in the first quarter, and he expects more of the impact in late Q2 and the second half.
Innovation and product updates
Scavilla detailed several product and technology developments. He said the company launched Smart View - Detect, which he described as “the first FDA-cleared and CE-marked AI-enabled diagnostic aid” that automatically identifies potential inflammation at the root tip in 3D scans and is integrated into the DS Core platform. Scavilla said clinical evaluation showed an approximately 46% increase in detection sensitivity versus unaided review.
In endodontics, Scavilla said the company introduced the Reciproc Minima file system and X-Smart Go cordless endo motor. In imaging, he said Dentsply Sirona received FDA clearance for a dental dedicated MRI, which he framed as an expansion of soft tissue diagnostic capabilities and a longer-term clinical evidence and adoption initiative.
In Wellspect, Scavilla said adoption of Surity for females is expanding and that the company recently launched a male version to broaden the portfolio.
Margins, tariffs, and outlook
On gross margin pressure, Pomeroy cited tariffs as a key year-over-year headwind, along with unfavorable mix driven by the EDS decline and a “volume absorption” impact related to inventory accounting. Looking forward, he said the company expects tariff-related comparisons to improve and suggested the company could regain “300 basis points at a minimum” in the Q2 to Q3 timeframe on a pure apples-to-apples basis.
Management said it is monitoring macro and geopolitical conditions, including freight and oil-related input costs. Scavilla said the company is seeing headwinds in those areas but described them as not material at present.
The company maintained its full-year 2026 outlook for net sales of $3.5 billion to $3.6 billion and adjusted EPS of $1.40 to $1.50. Scavilla said he prefers to be conservative and not change guidance after one quarter.
Scavilla also said the company’s restructuring program remains on track to deliver approximately $120 million in annual savings, with benefits building through 2026 and becoming more meaningful in the second half of the year. He said roughly $20 million of operating expense reductions were visible in the first quarter and are being reinvested into growth areas such as R&D, clinical education, and commercial capabilities.
On capital allocation, Scavilla said the company reduced debt by about $80 million in the quarter, prioritizing deleveraging and maintaining credit ratings. He said the dividend elimination in the first quarter increased flexibility and that, as performance improves, the company expects to evaluate the timing of share repurchases later in the year.
About DENTSPLY SIRONA NASDAQ: XRAY
Dentsply Sirona Inc NASDAQ: XRAY is a leading global manufacturer of professional dental products and technologies. The company, formed through the merger of Dentsply International and Sirona Dental Systems in February 2016, brings together a long heritage of innovation in dental care. Headquartered in Charlotte, North Carolina, Dentsply Sirona develops and markets a comprehensive range of dental consumables, laboratory products, and advanced imaging and CAD/CAM systems.
The company's product portfolio spans preventive, restorative, orthodontic, endodontic and surgical care.
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