Dentsply Sirona Inc.
02/26/2026 | Press release | Distributed by Public on 02/26/2026 15:55
Annual Report for Fiscal Year Ending December 31, 2025 (Form 10-K)
Management's Discussion and Analysis of Financial Condition and Results of Operations
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following Management's Discussion and Analysis of Financial Condition and Results of Operations is a discussion and analysis of the financial condition and results of the operations of DENTSPLY SIRONA Inc. and its consolidated subsidiaries for the year ended December 31, 2025. This discussion should be read in conjunction with the consolidated financial statements and related notes included elsewhere in this Annual Report on Form 10-K. The discussion summarizing the significant factors affecting the results of operations and financial condition of DENTSPLY SIRONA Inc. for the year ended December 31, 2024 can be found in Part II, "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" of our Annual Report on Form 10-K for the year ended December 31, 2024 (the "2024 Annual Report"), which was filed with the Securities and Exchange Commission on February 27, 2025.
OVERVIEW
DENTSPLY SIRONA Inc. ("Dentsply Sirona" or the "Company"), is the world's largest diversified manufacturer of professional dental products and technologies, with a 139-year history of innovation and service to the dental industry and a vision of improving oral health and continence care globally. Dentsply Sirona develops, manufactures, and markets comprehensive solutions, including technologically advanced dental equipment supported by cloud-enabled software solutions as well as dental products and healthcare consumable products in urology and enterology under a strong portfolio of world-class brands. Dentsply Sirona's innovative products provide high-quality, effective, and connected solutions to advance patient care and deliver better, safer, and faster dentistry. Dentsply Sirona's worldwide headquarters is located in Charlotte, North Carolina. The Company's shares of common stock are listed in the United States on the Nasdaq stock market under the symbol XRAY.
2025 Operational Summary
For the year ended December 31, 2025,
•Net sales decreased 3.0% compared to the prior year. On a constant currency basis (a Non-GAAP measure as defined under the heading "Key Performance Measurements" below), net sales decreased 4.3% for the year ended December 31, 2025 compared to the prior year. Net sales were positively impacted by approximately 1.3% due to the weakening of the U.S. dollar over 2025.
•Net loss was $598 million as compared to net loss of $910 million for the prior year, primarily due to lower goodwill and intangible asset impairment charges of $650 million compared to $1,014 million in the prior year. Diluted loss per share was $3.00 compared to diluted loss per share of $4.48 in the prior year.
•Cash flow from operations was $235 million, as compared to $461 million in the prior year.
BUSINESS
Segments
The Company conducts business through four reportable segments: (1) Connected Technology Solutions, (2) Essential Dental Solutions, (3) Orthodontic and Implant Solutions, and (4) Wellspect Healthcare.
For further information on each of these segments including the product lines which comprise them, refer to Item 8, Note 6, Segment and Geographic Information, in the Notes to Consolidated Financial Statements of this Form 10-K.
Recent Developments
As previously disclosed in the Company's Current Report on Form 8-K filed January 14, 2026, the Company entered into new non-exclusive distribution agreements with Patterson Dental Holdings, a leading supplier of products and services to the dental health end market, for the distribution of dental equipment in the United States. This renewed partnership reflects both companies' commitment to supporting dental professionals with advanced technologies and expert service while setting a clear focus on driving growth and innovation in the years ahead.
The impact of global economic conditions
Various headwinds are expected to weigh on global growth in 2026, due in large part to increasing uncertainties related to global trade policies and inflation. Changes in trade policy, supply chain constraints, higher energy costs, labor shortages, and geopolitical tensions have all contributed to the risk of higher inflation and general economic uncertainty across the industry and the regions in which the Company operates.
The challenging macroeconomic conditions have impacted consumer confidence, the ability and willingness of clinicians to obtain financing to purchase equipment, and consumer discretionary spending for elective procedures, leading to adverse impacts on the Company's results of operations, particularly in the United States. The Company has taken actions to attempt to mitigate the effects of challenging macroeconomic conditions and may take further actions in the future.
Recent tariff policies
As disclosed in Part I, Item 1A, "Risk Factors," the Company's business is subject to risks related to, among other factors, tariffs and other trade protection measures put in place by the United States and other countries. The U.S. government has implemented or is in the process of implementing various tariffs on the importation of goods from certain countries, a number of which are applicable to the Company's supply chain, operations, and sales, and the tariffs enacted or proposed by the Trump Administration and retaliatory tariffs by other countries could make it significantly more difficult or costly for the Company to import certain products or materials to the United States, or export products or materials from the United States to other countries. Currently, a small portion of the products, materials, and components used in our products are imported from China, and a significant share of the dental equipment that we sell in the United States is manufactured in Europe. Europe is also a major market for our products, including certain consumable products made in the United States, while sales in China represent less than 5% of the Company's global sales on an annual basis. We continue to monitor and evaluate the ongoing and potential impacts of the tariffs and changes in trade policy, whether implemented or proposed, on our supply chain, costs, net sales and profitability. We have implemented and continue to evaluate additional strategies that would mitigate such impacts, including competitive pricing strategies to offset tariffs and evaluating potential sourcing options that work with our vendors and merchants to seek to minimize products sourced from high tariff rate countries, both for existing products and for new product development. The impact that these tariffs and changes in trade policy will ultimately have on our financial results remains uncertain, including the impact on demand for our products in certain markets if prices rise as a consequence of import tariffs. For additional information, see Part I, Item 1A, "Risk Factors".
The impact of geopolitical conflicts
Geopolitical conflicts are expected to continue to shape market dynamics and pose general threats to financial stability in affected regions, including ongoing tensions from both the Russia-Ukraine conflict and the conflict in the Middle East. Overall, the Company's operations in Russia, Ukraine, and Israel have not been materially impacted by these conflicts.
The Company's operations in Israel consist of two manufacturing facilities for implants products, with one site in northern Israel and one site in southern Israel, both of which remain open and continue to operate normally. For the twelve months ended December 31, 2025, net sales of products produced at these sites comprised approximately 3% of our consolidated net sales and approximately 13% of the net sales of the Orthodontic and Implant Solutions segment. Net assets within Israel totaled $156 million as of December 31, 2025, consisting primarily of investments in subsidiaries and affiliates, acquired technology, property, plant and equipment, cash, and inventory associated with our operations in the country.
In May 2024, in response to ongoing military actions by Israel in the Gaza strip, the government of Turkey implemented restrictions on the import of goods manufactured within Israel for sale in the Turkish market, which were still in effect as of December 31, 2025. Sales of our products made in Israel and sold in Turkey have historically represented approximately 1% of our global sales of the Implant & Prosthetic Solutions reporting unit, but this product category is an area of relatively high potential growth. The loss of sales to Turkey has been partially offset by sales of implants produced outside of Israel. It is not clear when these restrictions will be lifted or if other countries will institute similar restrictions.
In February 2022, because of the invasion of Ukraine by Russia, economic sanctions were imposed by the United States, the European Union, and certain other countries on Russian financial institutions and businesses. Due to the medical nature of our products, the current sanctions have not materially restricted our ability to continue selling many of our products to customers located in Russia. For the twelve months ended December 31, 2025, net sales in Russia and Ukraine were approximately 3% of our consolidated net sales, and net assets in these countries were $94 million as of December 31, 2025. These net assets include $56 million of cash and cash equivalents held within Russia as of December 31, 2025, as well as inventory and trade accounts receivable. Due to currency control measures imposed by the Russian government, which include restrictions on the ability of companies to repatriate or otherwise remit cash from their Russian-based operations to locations outside of Russia, we continue to be limited in our ability to transfer this cash balance out of Russia without incurring substantial costs. Additionally, beginning in September 2024, as a result of further restrictions by European financial institutions on receiving payments from Russia, our capacity to receive intercompany payments for the delivery of our products into Russia has been partially reduced, which further limits our ability to use cash received from sales in Russia for our general purposes.
Business Drivers
Drivers of changes in net sales on a constant currency basis (as defined below) include macroeconomic factors, global dental industry demand, innovation and new product launches by the Company, as well as continued investments in sales and
marketing resources to drive demand creation, including clinical education. On a short-term basis, sudden changes in the macroeconomic environment, supply chain challenges, or changes in distributor inventory levels can and have impacted the Company's sales. Demand can also fluctuate based on the timing of dental trade shows where promotions are offered, major new product introductions, and variability in dental patient traffic, which can be exacerbated by seasonal or severe weather patterns, or other demographic disruptions such as global pandemics.
The Company has a focus on maximizing operational excellence on a global basis. The Company has expanded the use of technology and has undertaken process improvement initiatives to enhance global efficiency. In addition, management continues to evaluate the worldwide consolidation and simplification of operations and functions to further reduce costs. While the Company continues consolidation initiatives, which can have an adverse impact on reported results in the short term, the Company expects that the continued benefits from these global efficiency efforts will improve its cost structure in the long-term. Meanwhile, the Company intends to continue pursuing opportunities to expand the Company's product and solutions offerings, technologies, and sales and service infrastructure through partnerships. Although the professional dental market has experienced consolidation, it remains fragmented.
The Company's business is subject to quarterly fluctuations in net sales and operating income. The timing of annual price increases, promotional activities, as well as changes in inventory levels at distributors contribute to this fluctuation. Also, the Company distributes approximately two-thirds of its dental consumable and technology and equipment products through third-party distributors whose inventory levels may increase in the period leading to a price increase and decline in the period following a price increase, although the Company seeks to anticipate and limit material fluctuations in purchasing behavior as applicable. Changes in distributors' inventory levels have impacted the Company's consolidated net sales in the past and may continue to do so in the future. In addition, the Company may from time to time engage in new distributor relationships that could cause fluctuations in consolidated net sales and operating income. We expect that distributor inventory levels will likely fluctuate and differ from the Company's projections and market demand, resulting in the Company's forecast of future results being different than expected. There can be no assurance that the Company's distributors and customers will maintain levels of inventory or patterns of build and liquidation timing in accordance with the Company's predictions or history. In addition, we expect changes in the Company's distribution model, including a reduced emphasis on distributor-held inventory, will likely increase variability in ordering patterns and further contribute to fluctuations in net sales and operating income. Any of these fluctuations could be material to the Company's consolidated financial statements. For more information about the drivers of our business and related risks, see Part I, Item 1, "Business" and Part I, Item 1A, "Risk Factors."
Byte Aligners Business
On October 24, 2024, the Company announced the voluntary suspension of the sale and marketing of its Byte aligner system and impression kits. In January 2025, the Company announced plans that the Byte aligners would no longer be offered to new patients. As a result of these developments, in the fourth quarter of 2024, the Company recorded $187 million in impairments of assets pertaining to the Byte business including a trademark, fixed assets, capitalized software and working capital. The suspension of sales in the fourth quarter of 2024 also resulted in a decline in aligner revenues in 2025 as compared to the prior year. For additional information refer to Item 8, Note 18, Restructuring and Other Costs, in the Notes to Consolidated Financial Statements of this Form 10-K, as well as the Results of Operations discussion below.
RESULTS OF OPERATIONS
2025 Compared to 2024
Net Sales and Key Performance Measurements
The Company presents net sales comparing the current year periods to the prior year periods. In addition, the Company also presents changes in net sales on a constant currency basis, which is a Non-GAAP measure. The Company defines "constant currency" as the reported net sales adjusted for the impact of foreign currency changes, which is calculated by translating current period net sales using the comparable prior period's currency exchange rates.
Constant currency is an important internal measure for the Company, and its senior management receives a monthly analysis of operating results that includes constant currency. The performance of the Company is measured on this metric along with other performance metrics.
The Company discloses changes in constant currency to allow investors to evaluate the performance of the Company's operations exclusive of the impact of foreign currency changes that may impact the comparability of results from period to period and may not be indicative of past or future performance of the normal operations of the Company. The Company
believes that this supplemental information is helpful in understanding underlying net sales trends. Our measure of constant currency may differ from those used by other companies and should not be considered in isolation from, or as a substitute for, measures of financial performance prepared in accordance with accounting principles generally accepted in the United States of America ("US GAAP").
Net Sales by Segment
Net sales by segment and percentage changes in net sales as reported and on a constant currency basis were as follows:
| Percentage Change | |||||||||||||||||||||||||||||||||||||||||||||||
|
Net Sales by Segment
|
(in millions, except percentages) | 2025 vs. 2024 | |||||||||||||||||||||||||||||||||||||||||||||
| United States | Europe | Rest of World | |||||||||||||||||||||||||||||||||||||||||||||
| 2025 | 2024 |
As Reported1
|
Constant Currency1
|
As Reported | Constant Currency | As Reported | Constant Currency | As Reported | Constant Currency | ||||||||||||||||||||||||||||||||||||||
| Connected Technology Solutions | $ | 1,036 | $ | 1,062 | (2.5)% | (3.8)% | (12.4)% | (12.4)% | 5.8% | 1.6% | (2.8)% | (2.0)% | |||||||||||||||||||||||||||||||||||
| Essential Dental Solutions | 1,469 | 1,454 | 1.1% | (0.2)% | (4.3)% | (4.4)% | 3.9% | (0.1)% | 5.4% | 6.3% | |||||||||||||||||||||||||||||||||||||
| Orthodontic and Implant Solutions | 850 | 973 | (12.6)% | (13.4)% | (24.6)% | (24.6)% | (0.5)% | (3.7)% | (8.4)% | (6.9)% | |||||||||||||||||||||||||||||||||||||
| Wellspect Healthcare | 325 | 304 | 6.6% | 3.9% | 2.6% | 4.0% | 6.3% | 2.7% | 35.4% | 36.2% | |||||||||||||||||||||||||||||||||||||
| Total | $ | 3,680 | $ | 3,793 | (3.0)% | (4.3)% | (12.3)% | (12.3)% | 3.8% | -% | (0.6)% | 0.4% | |||||||||||||||||||||||||||||||||||
| (1) Constant currency sales are a Non-GAAP measure in which the reported net sales are adjusted for the impact of foreign currency changes, which is calculated by translating current period net sales using the comparable prior period's currency exchange rates. The foreign currency impact is the only reconciling item between as reported and constant currency sales. | |||||||||||||||||||||||||||||||||||||||||||||||
Total net sales
The total net sales decrease on a constant currency basis was driven by lower volumes in the Orthodontic and Implant Solutions segment as a result of the suspension of Byte sales, as well as lower volumes of CAD/CAM and implants products, particularly in the United States. The decrease was partially offset by higher volumes of preventive and restorative and treatment centers products.
Connected Technology Solutions
The net sales decrease on a constant currency basis was primarily due to lower volumes of CAD/CAM products, most notably in the United States, driven in part by competitive pressures including pricing. The decrease was partially offset by higher volumes of imaging in Europe and Rest of World and treatment center equipment in all regions. Volumes of CAD/CAM products held by distributors at December 31, 2025 decreased by approximately $19 million compared to the beginning of 2025, and volumes of CAD/CAM products held by distributors at December 31, 2024 decreased approximately $8 million compared to the beginning of 2024. Volumes of imaging products held by distributors at December 31, 2025 decreased approximately $1 million compared to the beginning of 2025, and volumes of imaging products held by distributors at December 31, 2024 decreased approximately $7 million compared to the beginning of 2024. Distributor inventory levels for both CAD/CAM and imaging products at December 31, 2025 remain below historical averages.
Essential Dental Solutions
The net sales decrease on a constant currency basis was primarily driven by higher customer incentives on preventive and restorative products. The decrease was partially offset by higher volumes of preventive and restorative products and new endodontics products. Volumes for consumables products held by distributors at December 31, 2025 decreased by approximately $4 million compared to the beginning of 2025, and volumes for consumables products at December 31, 2024
remained consistent with the beginning of 2024.
Orthodontic and Implant Solutions
The net sales decrease on a constant currency basis was driven by lower volumes of clear aligners in the United States, primarily related to the suspension of Byte sales, as well as lower volumes for implants and prosthetics products. The decrease was partially offset by higher volumes of orthodontic products in Europe. Additionally, during 2025, the Company refined its estimate of expected customer refunds for the Byte aligner business, resulting in a $14 million adjustment that increased sales, which also partially offset the decrease to net sales.
Wellspect Healthcare
The net sales increase on a constant currency basis was primarily a result of higher volumes and new product launches.
Gross Profit
| Year Ended December 31, | ||||||||||||||||||||||||||
| (in millions, except percentages) | 2025 | 2024 | $ Change | % Change | ||||||||||||||||||||||
| Gross profit | $ | 1,840 | $ | 1,958 | $ | (118) | (6.0 | %) | ||||||||||||||||||
| Gross profit as a percentage of net sales | 50.0 | % | 51.6 | % |
(160) bps
|
|||||||||||||||||||||
Percentages are based on actual values and may not recalculate due to rounding.
Gross profit as a percentage of net sales decreased primarily due to unfavorable product mix and pricing for CAD/CAM, implants, imaging, and tariff costs. These decreases were partially offset by a benefit from foreign currency translation.
Operating Expenses
|
Year Ended December 31,
|
||||||||||||||||||||||||||
| (in millions, except percentages) | 2025 | 2024 | $ Change | % Change | ||||||||||||||||||||||
| Selling, general, and administrative expenses | $ | 1,438 | $ | 1,605 | $ | (167) | (10.4 | %) | ||||||||||||||||||
| Research and development expenses | 150 | 165 | (15) | (9.0 | %) | |||||||||||||||||||||
| Goodwill and intangible asset impairments | 650 | 1,014 | (364) | (35.9 | %) | |||||||||||||||||||||
| Restructuring costs | 24 | 53 | (29) | (54.7 | %) | |||||||||||||||||||||
| SG&A as a percentage of net sales | 39.1 | % | 42.3 | % |
(320) bps
|
|||||||||||||||||||||
| R&D as a percentage of net sales | 4.1 | % | 4.3 | % |
(20) bps
|
|||||||||||||||||||||
Percentages are based on actual values and may not recalculate due to rounding.
SG&A Expenses
The decrease in SG&A expenses was primarily driven by lower marketing expenses, particularly due to the absence of marketing for Byte products, and lower headcount costs as a result of restructuring and cost-saving initiatives.
R&D Expenses
R&D expenses decreased as the Company continues to prioritize a disciplined approach with ongoing investments in digital workflow solutions, product development initiatives, and software development, including clinical application suite and cloud deployment. The Company has historically maintained a level of investment in R&D that is at least 4% of annual net sales, and the Company plans to increase this to at least 5% of annual net sales beginning in 2026.
Goodwill and Intangible Asset Impairments
During the year ended December 31, 2025, we recorded pre-tax Goodwill and intangible asset impairment of $525 million and $125 million, respectively. See Note 11, Goodwill and Intangible Assets, in the Notes to Unaudited Consolidated Financial Statements in Part II, Item 8 of this Form 10-K.
Restructuring and Other Costs
During the year ended December 31, 2025, we recorded net expense of $24 million of restructuring costs which consist primarily of charges associated with the restructuring plan announced in 2024. For further information, see Item 8, Note 18, Restructuring and Other Costs, in the Notes to Consolidated Financial Statements of this Form 10-K.
Segment Adjusted Operating Income
| Year Ended December 31, | ||||||||||||||||||||||||||
|
(in millions, except percentages) (a)
|
2025 | 2024 | $ Change | % Change | ||||||||||||||||||||||
| Connected Technology Solutions | $ | 52 | $ | 70 | $ | (18) | (25.7 | %) | ||||||||||||||||||
| Essential Dental Solutions | 514 | 479 | 35 | 7.3 | % | |||||||||||||||||||||
| Orthodontic and Implant Solutions | 108 | 80 | 28 | 35.0 | % | |||||||||||||||||||||
| Wellspect Healthcare | 102 | 98 | 4 | 4.1 | % | |||||||||||||||||||||
(a) See Note 6, Segment and Geographic Information, in the Notes to Consolidated Financial Statements in Item 8 of this Form 10-K for a reconciliation from segment adjusted operating income to consolidated US GAAP income.
Connected Technology Solutions
The decrease in segment adjusted operating income is due to lower net sales on a constant currency basis and tariff costs, partially offset by favorable manufacturing variances, lower headcount-related costs, and lower marketing costs.
Essential Dental Solutions
The increase in segment adjusted operating income is due to lower headcount costs and professional service costs, partially offset by lower sales on a constant currency basis, unfavorable pricing, and tariff costs.
Orthodontic and Implant Solutions
The increase in segment adjusted operating income is due to favorable adjustments for estimated customer refunds and bad debt reserves for the Byte aligner business, lower headcount costs, and lower marketing costs, partially offset by lower volumes of direct-to-consumer aligners and implants and prosthetics products and tariff costs.
Wellspect Healthcare
The increase in segment adjusted operating income is due to higher net sales on a constant currency basis as a result of new product launches.
Other Income and Expenses
| Year Ended December 31, | ||||||||||||||||||||||||||
| (in millions, except percentages) | 2025 | 2024 | $ Change | % Change | ||||||||||||||||||||||
| Interest expense, net | $ | 88 | $ | 69 | $ | 19 | 28.2 | % | ||||||||||||||||||
| Other income, net | (24) | (12) | (12) | 93.8 | % | |||||||||||||||||||||
| Net interest and other income | $ | 64 | $ | 57 | $ | 7 | ||||||||||||||||||||
Percentages are based on actual values and may not recalculate due to rounding.
Interest expense, net
Interest expense, net increased compared to the prior year primarily due to a higher average carrying balance of total borrowings.
Other (income) expense, net
Other (income) expense, net for the year ended December 31, 2025 compared to the year ended December 31, 2024 was as follows:
| Year Ended December 31, | ||||||||||||||||||||
|
(in millions)
|
2025 | 2024 | $ Change | |||||||||||||||||
|
Foreign exchange gains (a)
|
(32) | (21) | (11) | |||||||||||||||||
| Defined benefit pension plan expenses | 8 | 8 | - | |||||||||||||||||
| Other non-operating loss | - | 1 | (1) | |||||||||||||||||
| Other income, net | $ | (24) | $ | (12) | $ | (12) | ||||||||||||||
(a) Foreign exchange gains include a benefit from our net investment hedges totaling $40 million, offset by revaluation of short-term intercompany receivables and payables of $8 million.
Income Taxes and Net Loss
| Year Ended December 31, | ||||||||||||||||||||
| (in millions, except per share data and percentages) | 2025 | 2024 | $ Change | |||||||||||||||||
|
Expense (benefit) for income taxes
|
$ | 112 | $ | (26) | $ | 138 | ||||||||||||||
| Effective income tax rate | (23.1 | %) | 2.8 | % | ||||||||||||||||
| Net loss attributable to Dentsply Sirona | $ | (598) | $ | (910) | $ | 312 | ||||||||||||||
| Net loss per common share - diluted | $ | (3.00) | $ | (4.48) | ||||||||||||||||
Percentages are based on actual values and may not recalculate due to rounding.
Income Taxes
An income tax expense of $112 million and an income tax benefit of $26 million were recorded for the years ended December 31, 2025 and December 31, 2024, respectively. The increase in tax expense is primarily due to a decrease in tax benefit of goodwill and intangible impairments in 2025.
Further information regarding the details of income taxes is presented in Note 16, Income Taxes, in the Notes to Consolidated Financial Statements in Item 8 of this Form 10-K.
CRITICAL ACCOUNTING ESTIMATES
The preparation of the Company's consolidated financial statements in conformity with US GAAP requires the Company to make estimates and assumptions about future events that affect the amounts reported in the consolidated financial statements and accompanying notes. Future events and their effects cannot be determined with absolute certainty. Therefore, the
determination of estimates requires the exercise of judgment. Actual results could differ from those estimates, and such differences may be material to the consolidated financial statements. The process of determining significant estimates is fact-specific and, when determining significant estimates, management considers factors such as historical experience, current and expected economic conditions, product mix and in some cases, actuarial techniques. The Company evaluates these significant factors as facts and circumstances dictate. As described below, some events could cause results to differ significantly from those determined using estimates. The Company has identified the following accounting estimates as those which are critical to its business and results of operations.
Goodwill and Indefinite-Lived Intangible Assets
Assessment of the potential impairment of goodwill and indefinite-lived intangible assets is an integral part of the Company's normal ongoing review of operations. Testing for potential impairment of these assets is dependent on significant assumptions and reflects management's best estimates at a particular point in time. The dynamic economic environments in which the Company's businesses operate and key economic and business assumptions with respect to projected selling prices, increased competition and introductions of new technologies can significantly affect the outcome of impairment tests. Estimates based on these assumptions may differ significantly from actual results. Changes in factors and assumptions used in assessing potential impairments can have a significant impact on the existence and magnitude of impairments, as well as the time at which such impairments are recognized. If there are unfavorable changes in these assumptions, particularly changes in the Company's discount rates, revenue growth rates, and operating margins, the Company may be required to recognize impairment charges.
The determination of fair value involves uncertainties around the forecasted cash flows as it requires management to make assumptions and apply judgment to estimate future business expectations. Those future expectations relate to, among other things, distribution channel changes, impact from competition, and new product developments. The Company also considers the current and projected market and economic conditions for dental and medical device industries, both in the United States and globally, when determining its assumptions. Operating cash flow assumptions may also be impacted by assumptions regarding costs and benefits from restructuring initiatives, tax rates, foreign exchange rates, capital spending and working capital changes.
A change in any of the estimates and assumptions used in the Company's annual goodwill impairment test, as described below, or unfavorable changes in the overall markets served by the Company's reporting units, among other factors, could have a negative material impact to the fair value of the Company's reporting units and indefinite-lived intangible assets and could result in a future impairment charge.
Goodwill
Goodwill represents the excess cost over the fair value of the identifiable net assets of business acquired and is allocated among the Company's reporting units. Goodwill is not amortized; instead, it is tested for impairment at the reporting unit level annually at April 1 or more frequently if events or circumstances indicate that the carrying value of goodwill may be impaired, or if a decision is made to sell, discontinue, or divest a business. Judgment is involved in determining if an indicator of impairment has occurred during the year. Such indicators may include a decline in expected cash flows, unanticipated competition, increased interest rates, or slower growth rates, among others. When testing goodwill for impairment, the Company may assess qualitative factors for its reporting units to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount including goodwill. Alternatively, the Company may bypass this qualitative assessment and perform the quantitative goodwill impairment test. It is important to note that fair values which could be realized in an actual transaction may differ from those used to evaluate the impairment of goodwill.
Goodwill is allocated among reporting units and evaluated for impairment at that level. The Company's reporting units are either an operating segment or one level below its operating segments, as determined in accordance with US GAAP.
The quantitative evaluation of impairment involves comparing the current fair value of each reporting unit to its net book value, including goodwill. The Company uses a discounted cash flow model ("DCF model") as its valuation technique to measure the fair value for its reporting units when testing for impairment, as management believes forecasted operating cash flows are the best indicator of such fair value. The discounted cash flow model uses ten-year forecasted cash flows plus a terminal value based on capitalizing the last period's cash flows using a perpetual growth rate. The significant assumptions and estimates involved in the application of the DCF model to forecast operating cash flows include, but are not limited to the discount rates, revenue growth rates (including perpetual growth rates), and future operating margin percentages of the reporting unit's business. These assumptions may vary significantly among the reporting units. Operating cash flow forecasts are based on approved business unit operating plans for the early years and historical relationships and projections in later
years. In the development of forecasted cash flows, the Company applies revenue, gross profit, and operating expense assumptions taking into consideration historical trends as well as future expectations. The revenue growth rate assumptions were developed in consideration of future expectations which included, but were not limited to, distribution channel changes, impact from competition, and new product developments for these reporting units. Discount rates are estimated for geographic regions and applied to the reporting units located within the regions. These rates are developed based on market participant data, which include assumptions regarding the Company's weighted-average cost of capital adjusted for the relevant risk associated with business-specific characteristics and the uncertainty related to the reporting unit's ability to execute on the projected cash flows. As part of the annual test, the Company reconciled the aggregate fair values of its reporting units to its market capitalization, which included a reasonable control premium based on market conditions. The Company has not materially changed its methodology for goodwill impairment testing for the years presented.
Indefinite-Lived Intangible Assets
Indefinite-lived intangible assets consist of trade names, trademarks, and in-process R&D and are not subject to amortization; instead, they are tested for impairment annually at April 1 or more frequently if events or circumstances indicate that the carrying value of indefinite-lived intangible assets may be impaired or if a decision is made to discontinue or divest a business. A significant amount of judgment is involved in determining if an indicator of impairment has occurred during the year. Such indicators may include a decline in expected cash flow, unanticipated competition, increased interest rates, or slower growth rates, among others. It is important to note that fair values that could be realized in an actual transaction may differ from those used to evaluate the impairment of indefinite-lived assets.
The fair value of acquired trade names and trademarks is estimated using a relief from royalty method, which values an indefinite-lived intangible asset by estimating the royalties saved through the ownership of an asset. Under this method, an owner of an indefinite-lived intangible asset determines the arm's length royalty that likely would have been charged if the owner had to license the asset from a third party. The royalty rate, which is based on the estimated rate applied against forecasted sales, is tax-effected and discounted at present value using a discount rate commensurate with the relative risk of achieving the cash flow attributable to the asset. Management judgment is necessary to determine key assumptions, including revenue growth rates, perpetual revenue growth rates, royalty rates, and discount rates. Other assumptions are consistent with those applied to goodwill impairment testing.
Goodwill and Indefinite-Lived Intangible Asset Impairment Test Results
For further information, see Note 11, Goodwill and Intangible Assets, in the Notes to Consolidated Financial Statements in Item 8 of this Form 10-K.
Income Taxes
Income taxes are determined using the liability method of accounting for income taxes. The Company's tax expense includes U.S. and international income taxes plus the provision for U.S. taxes on undistributed earnings of international subsidiaries not considered to be permanently invested.
The Company applies a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The Company recognizes in the consolidated financial statements the impact of a tax position if the Company believes that position is more likely than not of being sustained upon examination by the taxing authorities based on the technical merits of the position.
Certain items of income and expense are not reported in tax returns and financial statements in the same year. The tax effect of such temporary differences is reported as deferred income taxes. Deferred tax assets are recognized if it is more likely than not that the assets will be realized in future years. The Company establishes a valuation allowance for deferred tax assets for which realization is not likely. At December 31, 2025, the Company has a valuation allowance of $2,103 million against the benefit of certain deferred tax assets of foreign and domestic subsidiaries.
The Company's tax positions are subject to ongoing examinations by the tax authorities. The Company operates within multiple taxing jurisdictions throughout the world and in the normal course of business is examined by taxing authorities in those jurisdictions. Adjustments to the uncertain tax positions are recorded when taxing authority examinations are completed, statutes of limitation are closed, changes in tax laws occur or as new information comes to light regarding the technical merits of the tax position.
LIQUIDITY AND CAPITAL RESOURCES
| Year Ended December 31, | ||||||||||||||||||||
| (in millions) | 2025 | 2024 | $ Change | |||||||||||||||||
| Cash provided by (used in): | ||||||||||||||||||||
| Operating activities | $ | 235 | $ | 461 | $ | (226) | ||||||||||||||
| Investing activities | (132) | (197) | 65 | |||||||||||||||||
| Financing activities | (80) | (302) | 222 | |||||||||||||||||
| Effect of exchange rate changes on cash and cash equivalents | 31 | (24) | 55 | |||||||||||||||||
| Net increase (decrease) in cash and cash equivalents | $ | 54 | $ | (62) | $ | 116 | ||||||||||||||
Cash provided by operating activities decreased compared to the prior year primarily as a result of lower sales and changes in working capital, including higher accounts receivable due largely to timing of sales and customer remittances and higher build of inventory during the current period. For the year ended December 31, 2025, the number of days for sales outstanding in accounts receivable increased by 7 days to 62 days at December 31, 2025 as compared to 55 days at December 31, 2024, and the number of days of sales in inventory increased by 7 days to 131 days at December 31, 2025 as compared to 124 days at December 31, 2024.
Cash used by investing activities decreased compared to the prior year primarily due to lower capital expenditures of $49 million and lower net cash payments on settlement of derivatives of $7 million. For the year ended December 31, 2024, capital expenditures were $180 million, and for the year ended December 31, 2025, capital expenditures were $131 million. The Company estimates that capital expenditures will be in the range of approximately $125 million to $150 million for the twelve months ending December 31, 2026 and expects these investments to include expenses for the ongoing implementation of a new global Enterprise Resource Planning ("ERP") system, equipment upgrades, and capacity expansion to support product innovation and consolidate operations for enhanced efficiencies.
On March 19, 2025, the Company entered into a 364-day term loan of $435 million with a maturity date of March 18, 2026 (the "Bridge Loan Facility"). The proceeds were $432 million, net of issuance fees totaling $3 million. The net proceeds from the Bridge Loan Facility were used to repay indebtedness under the Company's commercial paper facility and pre-fund repayment of certain other short-term indebtedness. Subsequently, on June 12, 2025, the Company issued $550 million aggregate principal amount of 8.375% Fixed-to-Fixed Reset Rate Junior Subordinated Notes due 2055 (the "Notes") through a public offering. The proceeds from the sale of the Notes were $545 million, after deduction of underwriters' fees. On June 12, 2025, the Company used a portion of these proceeds to repay in full the outstanding principal and accrued interest due under the Bridge Loan Facility, which was then terminated as a result of the repayment. The Company intends to use the remaining proceeds from the sale of the Notes for general corporate purposes.
Cash used in financing activities decreased compared to the prior year primarily due to an increase in net proceeds on long-term borrowings of $552 million and a decrease in cash paid on share repurchases of $250 million offset by an increase in cash paid for deferred financing costs of $16 million, an increase in payments on long-term borrowings of $59 million, and a decrease of short-term borrowings of $513 million. The Company's total borrowings increased by a net $193 million during the year ended December 31, 2025.
During the year ended December 31, 2025, the Company had no repurchases of common stock under the stock repurchase program. On November 7, 2023, the Board of Directors approved an increase to the authorized share repurchase program of $1.0 billion. At December 31, 2025, $1.2 billion of authorization remains available for future share repurchases. Additional share repurchases, if any, may be made through open market purchases, Rule 10b5-1 plans, accelerated share repurchases, privately negotiated transactions, or other transactions in such amounts and at such times as the Company considers appropriate based upon prevailing market and business conditions and other factors. At December 31, 2025, the Company held 64.9 million shares of treasury stock.
On February 23, 2026, the Company's Board of Directors eliminated the declaration of quarterly dividends on the Company's common stock starting in the quarter ending March 31, 2026.
The Company's ratio of total net debt to total capitalization was as follows:
| Year Ended December 31, | ||||||||||||||
| (in millions, except percentages) | 2025 | 2024 | ||||||||||||
| Current portion of debt | $ | 313 | $ | 549 | ||||||||||
| Long-term debt | 2,015 | 1,586 | ||||||||||||
| Less: Cash and cash equivalents | 326 | 272 | ||||||||||||
| Net debt | $ | 2,002 | $ | 1,863 | ||||||||||
| Total equity | 1,340 | 1,943 | ||||||||||||
| Total capitalization | $ | 3,342 | $ | 3,806 | ||||||||||
| Total net debt to total capitalization ratio | 59.9 | % | 48.9 | % | ||||||||||
At December 31, 2025, the Company had $637 million of borrowings available under lines of credit, including lines available under its short-term arrangements and revolving credit facility. The Company's borrowing capacity includes a $700 million multi-currency revolving credit facility which expires in May 2028. The Company also has access to an aggregate $700 million under a U.S. dollar commercial paper facility, which was expanded in December 2024 from its previous capacity of $500 million. The $700 million revolver serves as a back-up to the commercial paper facility, thus the total available credit under the commercial paper facility and the multi-currency revolving credit facility in the aggregate is $700 million. The Company had $82 million outstanding borrowings under the commercial paper facility at December 31, 2025 resulting in $618 million remaining available under the revolving credit and commercial paper facilities. The Company also has access to $22 million in uncommitted short-term financing under lines of credit from various financial institutions, the availability of which is reduced by other short-term borrowings. The lines of credit have no major restrictions and are provided under demand notes between the Company and the lending institutions. At December 31, 2025, the Company has $3 million outstanding under these short-term borrowing arrangements.
The Company's revolving credit facility, term loans and senior notes contain certain covenants relating to the Company's operations and financial condition. Any breach of any such covenants would result in a default under the existing debt agreements that would permit the lenders to declare all borrowings under such debt agreements to be immediately due and payable and, through cross default provisions, would entitle the Company's other lenders to accelerate their loans. On December 24, 2025, the Company entered into agreements with the applicable noteholders to amend certain provisions of its private placement notes and also obtained consent of the requisite lenders under its revolving credit facility to amend provisions of that credit agreement. See Note 14, Financing Arrangements, in the Consolidated Financial Statements in Part II, Item 8 of this Form 10-K for more information. At December 31, 2025, the Company was in compliance with these covenants.
The Company expects on an ongoing basis to be able to finance operating cash requirements, capital expenditures, and debt service from the current cash, cash equivalents, cash flows from operations and amounts available under its existing borrowing facilities. The Company's credit facilities are further discussed in Note 14, Financing Arrangements, in the Consolidated Financial Statements in Part II, Item 8 of this Form 10-K.
The cash held by foreign subsidiaries for permanent reinvestment is generally used to finance the subsidiaries' operating activities and future foreign investments. The Company has the ability to repatriate cash to the United States, which could result in an adjustment to the tax liability for foreign withholding taxes, foreign and/or U.S. state income taxes, and the impact of foreign currency movements. At December 31, 2025, management believed that sufficient liquidity was available in the United States and expects this to continue for the next twelve months. The Company has repatriated and expects to continue repatriating certain funds from its non-U.S. subsidiaries that are not needed to finance local operations. Repatriation activities both performed and contemplated to date have not resulted in, and are not expected to result in, any significant incremental tax liability to the Company.
The Company continues to review its debt portfolio and may refinance additional debt or add debt in the near term based on strategic capital management. The Company believes there is sufficient liquidity available for the next twelve months.
Off Balance Sheet Arrangements
At December 31, 2025, the Company held $49 million of precious metals on consignment from several financial institutions. Under these consignment arrangements, the financial institutions own the precious metal, and, accordingly, the Company does not report this consigned inventory as part of its inventory on the Consolidated Balance Sheets. These consignment agreements allow the Company to acquire the precious metal at market rates at a point in time, which is approximately the same time, and for the same price as alloys are sold to the Company's customers. If the financial institutions discontinue offering these consignment arrangements, and if the Company could not obtain other comparable arrangements, the Company may be required to obtain third-party financing to fund an ownership position to maintain precious metal inventory at operational levels. For additional details, see Item 7A "Quantitative and Qualitative Disclosure About Market Risk - Consignment Arrangements."
Contractual Obligations
The Company's scheduled contractual cash obligations at December 31, 2025 were as follows:
| (in millions) |
Within
1 Year
|
Years 2-3
|
Years 4-5
|
Greater
Than
5 Years
|
Total | |||||||||||||||||||||||||||
| Long-term borrowings, including finance leases | $ | 228 | $ | 287 | $ | 914 | $ | 847 | $ | 2,276 | ||||||||||||||||||||||
| Operating leases | 52 | 64 | 26 | 12 | 154 | |||||||||||||||||||||||||||
| Purchase commitments | 141 | 105 | - | - | 246 | |||||||||||||||||||||||||||
|
Interest on long-term borrowings, net of interest rate swap agreements
|
46 | 84 | 72 | 1,099 | 1,301 | |||||||||||||||||||||||||||
| Postemployment obligations | 31 | 61 | 60 | 145 | 297 | |||||||||||||||||||||||||||
| Precious metal consignment agreements | 49 | - | - | - | 49 | |||||||||||||||||||||||||||
| $ | 547 | $ | 601 | $ | 1,072 | $ | 2,103 | $ | 4,323 | |||||||||||||||||||||||
Due to the uncertainty with respect to the timing of future cash flows associated with the Company's unrecognized tax benefits at December 31, 2025, the Company is unable to make reasonably reliable estimates of the period of cash settlement with the respective taxing authority; therefore, $52 millionof unrecognized tax benefits has been excluded from the contractual obligations table above. See Note 16, Income Taxes, in the Notes to Consolidated Financial Statements in Item 8 of this Form 10-K.
Material Trends in Capital Resources
OnDecember 24, 2025, the Company entered into agreements with the applicable noteholders to amend certain provisions of its private placement notes and also obtained consent of the requisite lenders under its revolving credit facility to amend provisions of that credit agreement. See Note 14, Financing Arrangements, in the Notes to Consolidated Financial Statements in Item 8 of this Form 10-K for more information.
On February 24, 2026, the Company's Board of Directors approved the 2026 Plan to improve operational performance and drive stockholder value creation. In connection with the 2026 Plan, the Company expects to incur non-recurring charges in the approximate range of $55 million to $65 million, the majority of which will be expensed and paid in cash in 2026 and 2027. The 2026 Plan is anticipated to result in approximately $120 million in annualized cost savings. The Company intends to reinvest a portion of the anticipated savings in targeted return-to-growth initiatives, including investments in accelerated innovation, clinical education, and sales team education focused on connected dentistry.
NEW ACCOUNTING PRONOUNCEMENTS
Refer to Note 1, Significant Accounting Policies, in the Notes to Consolidated Financial Statements in Item 8 of this Form 10-K for a discussion of recent accounting guidance and pronouncements.
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