Envista Q2 Earnings Call Highlights

Key Points

• Strong second-quarter performance: Envista reported $731 million in sales, up just over 7% year over year, with 5% core growth. Adjusted EBITDA rose 28%, margin expanded to 14.7%, adjusted EPS increased 58% to $0.41, and free cash flow reached $105 million.
• Equipment and consumables led segment growth: The segment posted 8.5% core growth, while Specialty Products & Technologies grew 3.1%, supported by double-digit Spark clear-aligner growth. New products, share gains and implant investments are central to the company’s growth strategy.
• Full-year outlook raised: Envista now expects 2026 core sales growth of 3.5%–4.5%, adjusted EBITDA growth of 11%–14% and adjusted EPS of $1.50–$1.55. Management cautioned that China’s expected orthodontic and implant procurement programs could create pricing pressure in the second half.

Envista NYSE: NVST reported second-quarter 2026 sales of $731 million, supported by 5% core revenue growth and contributions from foreign exchange and acquisitions that lifted total revenue growth to just over 7%.

President and Chief Executive Officer Paul Keel said the company delivered balanced growth across its two reporting segments and major geographies, while the dental market remained resilient amid macroeconomic pressure. The company reported 7% core growth for the first half of 2026.

Adjusted EBITDA increased 28% year over year, while adjusted EBITDA margin expanded 230 basis points to 14.7%. Adjusted earnings per share rose 58% to $0.41. The company generated $105 million in free cash flow during the quarter, representing 158% conversion, and repurchased approximately 2.4 million shares at an average price of $24 per share.

Segment growth led by equipment and consumables

Equipment and Consumables posted 8.5% core sales growth, with high-single-digit growth in both consumables and diagnostics. Keel said consumables benefited from its relative insulation from macro volatility because its products support procedures that are typically covered by insurance. Diagnostics also benefited from a market recovery following a multiyear post-COVID contraction, he said.

Keel said Envista estimates the consumables and diagnostics markets grew at mid-single-digit rates during the first half, while the company’s businesses grew at high-single-digit to low-double-digit rates. He attributed the outperformance to share gains, commercial and operational initiatives, and new-product activity.

Specialty Products & Technologies reported 3.1% core sales growth and nearly 6% total revenue growth. Spark clear aligners again delivered double-digit growth, or high-single-digit growth after accounting for changes in revenue deferrals. Implant core sales increased by low single digits, while brackets and wires declined by high single digits against a prior-year comparison that benefited from customer purchases ahead of tariff and pricing actions.

Adjusted operating profit in Specialty Products & Technologies increased $9 million, or 15%, and segment margin improved 120 basis points. Equipment and Consumables adjusted operating profit increased 25%, with operating margin rising 250 basis points, driven by pricing, volume and foreign-exchange benefits.

New products and investment initiatives

During the quarter, Envista launched ZenSeal Pro, a bioceramic endodontic sealer used in root canal procedures, and Demi Pro, a lightweight cordless curing light for restorative procedures. Keel said the company expects the launches to build on recent consumables share gains.

In orthodontics, Envista expanded Ormco Digital Bonding, or ODB, to all of its bracket systems. The digital platform was initially launched in 2023 with the Damon Ultima system. Keel said the expanded offering makes Envista the only scaled player offering complete solutions across both clear aligners and fixed orthodontics.

The company also discussed ongoing implant investments. Keel said the S-series implant launch introduced in the first quarter was ahead of plan, with roughly one-quarter of sales coming from competitive conversions. An abutments product is available in Europe and could launch in North America during the second half, subject to regulatory approvals. The company’s Versah acquisition, which added osseodensification technology, is also performing ahead of its acquisition plan, according to Keel.

China VBP expectations and second-half cadence

Envista expects China’s volume-based procurement processes for orthodontics, or VBP1, and implants, or VBP2, to occur in the second half of 2026. Management incorporated that assumption into its revised outlook.

Keel said Envista expects orthodontics VBP1 to result in price compression similar to the first implant VBP, which saw prices decline by roughly 45%, although he said the company expects share gains. For implant VBP2, Envista expects a smaller price decline of approximately 10% to 15%.

Management expects China to grow moderately in the second half, with somewhat stronger growth in the fourth quarter. Chief Financial Officer Eric Hammes said the company has maintained a lean channel position and expects its global presence, supply chain and market position to support a post-VBP response. He said Envista was down year over year in China during the first half.

Hammes also said the company expects approximately 3.5% core growth in the second half on a normalized basis. Reported fourth-quarter core growth is expected to be flat to slightly down because the quarter will have four fewer selling days than the prior-year period. Excluding the calendar effect, the company expects fourth-quarter core growth to align with its full-year guidance range.

Raised full-year outlook

Envista raised and narrowed its 2026 guidance, now expecting:

• Core sales growth of 3.5% to 4.5%.
• Adjusted EBITDA growth of 11% to 14%.
• Adjusted EPS of $1.50 to $1.55.
• Free cash flow conversion of approximately 100% of adjusted net income.

Hammes said the company expects foreign-exchange effects on both revenue and profit to be nominal to near zero in the second half, assuming currency rates remain near recent levels. He also said Envista now expects a full-year non-GAAP tax rate of about 26%, about two percentage points below its initial guidance.

Looking ahead, Envista plans to hold an investor day on Sept. 17, where management said it will provide an update on the value-creation plan introduced in March 2025, financial progress and innovation priorities across its four main businesses.

About Envista (NYSE:NVST)

Envista Holdings Corporation is a global dental products company that develops, manufactures and markets a broad portfolio of dental consumables, equipment and technology solutions. Headquartered in Brea, California, Envista serves dental practitioners, specialists and laboratories in more than 150 countries. The company's offerings span implant, orthodontic, endodontic and restorative product lines as well as digital imaging systems and practice management software.

Envista's product brands include Nobel Biocare for dental implants and restorative solutions, Ormco for orthodontic appliances and treatment systems, Kerr for restorative and endodontic materials, KaVo for dental imaging and handpieces, and Vista for surgical drills and instruments.

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