Dentsply Sirona Inc.
11/06/2025 | Press release | Distributed by Public on 11/06/2025 08:18
Quarterly Report for Quarter Ending September 30, 2025 (Form 10-Q)
Management's Discussion and Analysis of Financial Condition and Results of Operations
Information included in or incorporated by reference in this Form 10-Q, and other filings with the SEC and the Company's press releases or other public statements, contains or may contain forward-looking statements. Please refer to the discussion under the header "Forward-Looking Statements and Associated Risks" in the forepart of this Form 10-Q.
Company Profile
DENTSPLY SIRONA Inc. is the world's largest diversified manufacturer of professional dental products and technologies, with a 138-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 solutions, 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, and its shares of common stock are listed in the United States on Nasdaq under the symbol XRAY.
BUSINESS
Segment Descriptions
Connected Technology Solutions
This segment includes the design, manufacture, and sales of the Company's dental technology and equipment products. These products include the Equipment & Instruments and CAD/CAM product categories. Dental CAD/CAM technologies are products designed for dental professionals to support numerous digital workflows for procedures such as dental restorations through integrations with DS Core, our cloud-based platform.
Essential Dental Solutions
This segment includes the development, manufacture, and sales of the Company's value-added endodontic, restorative, and preventive consumable products and small equipment used by dental professionals for the treatment of patients. Offerings in this segment also include specialized treatment products including products used in the creation of dental appliances.
Orthodontic and Implant Solutions
This segment includes the design, manufacture, and sales of the Company's various digital implant systems and innovative dental implant products, digital dentures and dental professional-directed aligner solutions. Offerings in this segment also include application of our digital services and technology, including those provided by DS Core, our cloud-based platform.
Wellspect Healthcare
This segment includes the design, manufacture, and sales of the Company's innovative continence care solutions for both urinary and bowel management. Wellspect is one of the world's leading manufacturers of intermittent urinary catheters, with LoFric as its most known brand. To help those with chronic or severe constipation, Wellspect also offers an advanced irrigation system, Navina, which combines a high degree of user convenience, clinical effectiveness and connectivity into one smart system.
The impact of global economic conditions
Various headwinds are expected to weigh on global growth throughout the remainder of 2025, 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. In recent years, the Company has experienced higher prices for certain raw materials, including electronic components, which have led to a negative impact on margins. The Company may not be successful in its efforts to fully mitigate or offset the impacts of cost inflation.
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" of our Annual Report on Form 10-K for the fiscal year ended December 31, 2024 (the "2024 Form 10-K"), the Company's business is subject to risks related to, among other factors, tariffs and other trade protection measures put in the 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, including a baseline 10% tariff on all foreign goods, a 15% tariff in lieu of the baseline tariff on goods from countries in the European Union, and higher incremental tariff rates on goods imported from other specified nations.
The tariffs enacted and proposed by the Trump Administration to date 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" in our 2024 Form 10-K.
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 nine months ended September 30, 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 $166 million as of September 30, 2025, consisting primarily of 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 September 30, 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 nine months ended September 30, 2025, net sales in Russia and Ukraine were approximately 3% of our consolidated net sales, and net assets in these countries were $91 million as of September 30, 2025. These net assets include $57 million of cash and cash equivalents held within Russia as of September 30, 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.
Distribution arrangements
In July 2024, the Company delivered a one-year notice of non-renewal in connection with its non-exclusive distribution agreements with Patterson Companies, Inc. ("Patterson") for the distribution of dental equipment in the United States and Canada. The Company remains engaged in discussions for new distribution agreements with Patterson. It is anticipated that Patterson will continue to be one of the Company's largest distributors as a percentage of the Company's global revenue while negotiations continue. However, failure to successfully renegotiate the distribution agreements or secure potential new agreements with another distributor could have a material adverse effect on the Company's business, operating results and financial condition. For additional information, see Part I, Item 1A, "Risk Factors" in our 2024 Form 10-K.
RESULTS OF OPERATIONS, THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2025 COMPARED TO THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2024
Net Sales
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 items listed above 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 US GAAP.
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||||||||||||||||||||||||||
| (in millions, except percentages) | 2025 | 2024 | $ Change | % Change | 2025 | 2024 | $ Change | % Change | ||||||||||||||||||||||||||||||||||||||||||
| Net sales | $ | 904 | $ | 951 | $ | (47) | (5.0 | %) | $ | 2,719 | $ | 2,888 | $ | (169) | (5.9 | %) | ||||||||||||||||||||||||||||||||||
| Favorable foreign exchange impact | 3.0 | % | 0.5 | % | ||||||||||||||||||||||||||||||||||||||||||||||
| Constant currency | (8.0 | %) | (6.4 | %) | ||||||||||||||||||||||||||||||||||||||||||||||
Percentages are based on actual values and may not reconcile due to rounding.
The net sales decrease on a constant currency basis for the three and nine months ended September 30, 2025 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, implants, preventive, and restorative products, particularly in the United States. The decrease was partially offset by higher volumes of treatment centers, endodontic consumables, and Wellspect Healthcare products.
Net Sales by Segment
Connected Technology Solutions
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||||||||||||||||||||||||||
| (in millions, except percentages) | 2025 | 2024 | $ Change | % Change | 2025 | 2024 | $ Change | % Change | ||||||||||||||||||||||||||||||||||||||||||
| Net sales | $ | 259 | $ | 269 | $ | (10) | (3.9 | %) | $ | 737 | $ | 769 | $ | (32) | (4.1 | %) | ||||||||||||||||||||||||||||||||||
| Favorable (unfavorable) foreign exchange impact | 3.1 | % | 0.5 | % | ||||||||||||||||||||||||||||||||||||||||||||||
| Constant currency | (7.0 | %) | (4.6 | %) | ||||||||||||||||||||||||||||||||||||||||||||||
Percentages are based on actual values and may not reconcile due to rounding.
The net sales decrease on a constant currency basis for the three and nine months ended September 30, 2025 was primarily due to lower volumes of CAD/CAM products, particularly in the United States, driven in part by competitive pressures including pricing. The decrease was partially offset by higher volumes of imaging and treatment center equipment in Europe and Rest of World.
Essential Dental Solutions
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||||||||||||||||||||||||||
| (in millions, except percentages) | 2025 | 2024 | $ Change | % Change | 2025 | 2024 | $ Change | % Change | ||||||||||||||||||||||||||||||||||||||||||
| Net sales | $ | 357 | $ | 369 | $ | (12) | (3.4 | %) | $ | 1,097 | $ | 1,108 | $ | (11) | (1.0 | %) | ||||||||||||||||||||||||||||||||||
| Favorable (unfavorable) foreign exchange impact | 2.8 | % | 0.5 | % | ||||||||||||||||||||||||||||||||||||||||||||||
| Constant currency | (6.2 | %) | (1.5 | %) | ||||||||||||||||||||||||||||||||||||||||||||||
Percentages are based on actual values and may not reconcile due to rounding.
The net sales decrease on a constant currency basis for the three and nine months ended September 30, 2025 was primarily driven by lower sales of preventive and restorative products, due primarily to the higher volumes in the prior year comparative periods from a shift in the timing of distributor orders from the fourth quarter into the third quarter of 2024 on account of the Company's Enterprise Resource Planning ("ERP") system implementation in the United States. The decrease was partially offset by higher volumes of endodontic products in Europe and Rest of World.
Orthodontic and Implant Solutions
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||||||||||||||||||||||||||
| (in millions, except percentages) | 2025 | 2024 | $ Change | % Change | 2025 | 2024 | $ Change | % Change | ||||||||||||||||||||||||||||||||||||||||||
| Net sales | $ | 205 | $ | 241 | $ | (36) | (15.0 | %) | $ | 648 | $ | 788 | $ | (140) | (17.8 | %) | ||||||||||||||||||||||||||||||||||
| Favorable (unfavorable) foreign exchange impact | 2.1 | % | 0.3 | % | ||||||||||||||||||||||||||||||||||||||||||||||
| Constant currency | (17.1 | %) | (18.1 | %) | ||||||||||||||||||||||||||||||||||||||||||||||
Percentages are based on actual values and may not reconcile due to rounding.
The net sales decrease on a constant currency basis for the three and nine months ended September 30, 2025 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 in the United States and Rest of World. The decrease was partially offset by higher volumes of orthodontic products in Europe. Additionally, during the nine months ended September 30, 2025, the Company refined its estimate of expected customer refunds for the Byte aligner business, resulting in a $13 million adjustment that increased net sales.
Wellspect Healthcare
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||||||||||||||||||||||||||
| (in millions, except percentages) | 2025 | 2024 | $ Change | % Change | 2025 | 2024 | $ Change | % Change | ||||||||||||||||||||||||||||||||||||||||||
| Net sales | $ | 83 | $ | 72 | $ | 11 | 15.6 | % | $ | 237 | $ | 223 | $ | 14 | 6.5 | % | ||||||||||||||||||||||||||||||||||
| Favorable foreign exchange impact | 6.3 | % | 1.8 | % | ||||||||||||||||||||||||||||||||||||||||||||||
| Constant currency | 9.3 | % | 4.7 | % | ||||||||||||||||||||||||||||||||||||||||||||||
Percentages are based on actual values and may not reconcile due to rounding.
The net sales increase on a constant currency basis for the three and nine months ended September 30, 2025 was primarily due to higher volumes, partly as a result of new product launches.
Net Sales by Region
United States
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||||||||||||||||||||||||||
| (in millions, except percentages) | 2025 | 2024 | $ Change | % Change | 2025 | 2024 | $ Change | % Change | ||||||||||||||||||||||||||||||||||||||||||
| Net sales | $ | 291 | $ | 374 | $ | (83) | (22.2 | %) | $ | 886 | $ | 1,089 | $ | (203) | (18.6 | %) | ||||||||||||||||||||||||||||||||||
| Unfavorable foreign exchange impact | - | % | - | % | ||||||||||||||||||||||||||||||||||||||||||||||
| Constant currency | (22.2 | %) | (18.6 | %) | ||||||||||||||||||||||||||||||||||||||||||||||
Percentages are based on actual values and may not reconcile due to rounding.
The net sales decrease on a constant currency basis for the three months ended September 30, 2025 was primarily due to lower volumes of Byte products following the suspension of sales in 2024, and lower volumes of CAD/CAM and imaging equipment. The decrease was also due to unfavorable pricing for restorative products and lower volumes of preventive and restorative consumable products as a result of distributor orders placed in the third quarter of 2024 in advance of our implementation of a new ERP system in the fourth quarter of 2024. Sales for CAD/CAM products were negatively impacted by a lower quarterly increase in distributor inventory levels of approximately $20 million in the three months ended September 30, 2025, compared to approximately $36 million in the three months ended September 30, 2024. Sales for imaging products were negatively impacted by a decrease in distributor inventory levels of approximately $1 million in the three months ended September 30, 2025, compared to an increase of approximately $10 million in the three months ended September 30, 2024. Sales for consumables products were negatively impacted by a decrease in distributor inventory levels of approximately $4 million in the three months ended September 30, 2025, compared to an increase of approximately $20 million in the three months ended September 30, 2024.
The net sales decrease on a constant currency basis for the nine months ended September 30, 2025 was primarily driven by the suspension of Byte sales. The decrease was also due to lower volumes of CAD/CAM and imaging equipment, implants and prosthetics products, and preventive and restorative products, partially offset by higher volumes of treatment centers. Sales for CAD/CAM products were negatively impacted by a lower quarterly increase in distributor inventory levels of approximately $4 million in the nine months ended September 30, 2025 compared to an increase of approximately $32 million in the nine months ended September 30, 2024. Volumes for imaging products were not significantly impacted by changes in the levels of distributor inventory during the nine months ended September 30, 2025. Sales for consumables products were negatively impacted by a decrease in distributor inventory levels of approximately $4 million in the nine months ended September 30, 2025, compared to an increase of approximately $21 million in the nine months ended September 30, 2024. Distributor inventory levels for both CAD/CAM and imaging products at September 30, 2025 remain below historical averages.
Europe
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||||||||||||||||||||||||||
| (in millions, except percentages) | 2025 | 2024 | $ Change | % Change | 2025 | 2024 | $ Change | % Change | ||||||||||||||||||||||||||||||||||||||||||
| Net sales | $ | 382 | $ | 347 | $ | 35 | 9.9 | % | $ | 1,148 | $ | 1,110 | $ | 38 | 3.5 | % | ||||||||||||||||||||||||||||||||||
| Favorable foreign exchange impact | 7.3 | % | 2.4 | % | ||||||||||||||||||||||||||||||||||||||||||||||
| Constant currency | 2.6 | % | 1.1 | % | ||||||||||||||||||||||||||||||||||||||||||||||
Percentages are based on actual values and may not reconcile due to rounding.
The net sales increase on a constant currency basis for the three and nine months ended September 30, 2025 was primarily driven by higher volumes of treatment centers, imaging equipment, and Wellspect Healthcare products, partially offset by lower volumes of CAD/CAM equipment. For the nine months ended September 30, 2025, these increases were partially offset by lower volumes of implants and prosthetics.
Rest of World
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||||||||||||||||||||||||||
| (in millions, except percentages) | 2025 | 2024 | $ Change | % Change | 2025 | 2024 | $ Change | % Change | ||||||||||||||||||||||||||||||||||||||||||
| Net sales | $ | 231 | $ | 230 | $ | 1 | 0.3 | % | $ | 685 | $ | 689 | $ | (4) | (0.6 | %) | ||||||||||||||||||||||||||||||||||
| Favorable foreign exchange impact | 1.2 | % | (1.5 | %) | ||||||||||||||||||||||||||||||||||||||||||||||
| Constant currency | (0.9 | %) | 0.9 | % | ||||||||||||||||||||||||||||||||||||||||||||||
Percentages are based on actual values and may not reconcile due to rounding.
The net sales decrease on a constant currency basis for the three months ended September 30, 2025 was primarily due to lower volumes of CAD/CAM equipment and implants products, partially offset by higher volumes of products within the Essential Dental Solutions and Wellspect Healthcare segments.
The net sales increase on a constant currency basis for the nine months ended September 30, 2025 was primarily driven by higher volumes of products within the Essential Dental Solutions and Wellspect Healthcare segments, partially offset by lower volumes of CAD/CAM equipment and lower volumes and unfavorable pricing on implants products.
Gross Profit
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||||||||||||||||||||||||||
| (in millions, except percentages) | 2025 | 2024 | $ Change | % Change | 2025 | 2024 | $ Change | % Change | ||||||||||||||||||||||||||||||||||||||||||
| Gross profit | $ | 441 | $ | 495 | $ | (54) | (11.0 | %) | $ | 1,397 | $ | 1,512 | $ | (115) | (7.6 | %) | ||||||||||||||||||||||||||||||||||
| Gross profit as a percentage of net sales | 48.8 | % | 52.1 | % | (330) bps | 51.4 | % | 52.4 | % | (100) bps | ||||||||||||||||||||||||||||||||||||||||
Percentages are based on actual values and may not reconcile due to rounding.
Gross profit as a percentage of net sales for the three months ended September 30, 2025 decreased primarily due to unfavorable product mix and pricing for CAD/CAM and restorative consumable products, as well as tariff costs, partially offset by a benefit from foreign currency.
Gross profit as a percentage of net sales for the nine months ended September 30, 2025 decreased primarily due to unfavorable product mix and pricing for CAD/CAM, implants, and restorative consumable products, as well as tariff costs. These decreases were partially offset by lower manufacturing costs and a benefit from foreign currency translation.
Operating Expenses
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||||||||||||||||||||||||||
| (in millions, except percentages) | 2025 | 2024 | $ Change | % Change | 2025 | 2024 | $ Change | % Change | ||||||||||||||||||||||||||||||||||||||||||
| Selling, general, and administrative expenses ("SG&A") | $ | 355 | $ | 390 | $ | (35) | (8.8 | %) | $ | 1,055 | $ | 1,204 | $ | (149) | (12.3 | %) | ||||||||||||||||||||||||||||||||||
| Research and development expenses ("R&D") | 37 | 40 | (3) | (9.2 | %) | 110 | 123 | (13) | (10.9 | %) | ||||||||||||||||||||||||||||||||||||||||
| Goodwill and intangible asset impairments | 262 | 504 | (242) | NM | 497 | 510 | (13) | NM | ||||||||||||||||||||||||||||||||||||||||||
| Restructuring and other costs | 5 | 23 | (18) | NM | 18 | 45 | (27) | NM | ||||||||||||||||||||||||||||||||||||||||||
| SG&A as a percentage of net sales | 39.4 | % | 41.0 | % | (160) bps | 38.8 | % | 41.7 | % | (290) bps | ||||||||||||||||||||||||||||||||||||||||
| R&D as a percentage of net sales | 4.1 | % | 4.2 | % | (10) bps | 4.0 | % | 4.3 | % | (30) bps | ||||||||||||||||||||||||||||||||||||||||
Percentages are based on actual values and may not reconcile due to rounding.
NM - Not meaningful
SG&A Expenses
The decrease in SG&A expenses for the three and nine months ended September 30, 2025 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
For the three and nine months ended September 30, 2025, 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 expects to continue to maintain a level of investment in R&D that is at least 4% of annual net sales.
Goodwill and Intangible Asset Impairments
For the three months ended September 30, 2025, the Company recorded pre-tax goodwill impairment charges of $253 million for the Implant & Prosthetic Solutions reporting unit within the Orthodontic and Implant Solutions segment and indefinite-lived intangible asset impairment charges of $4 millionand $5 millionfor the Connected Technology Solutions and Orthodontic and Implant Solutions segments, respectively.
For the nine months ended September 30, 2025, the Company recorded pre-tax goodwill impairment charges of $409 millionfor the Implant & Prosthetic Solutions reporting unit within the Orthodontic and Implant Solutions segment. The Company also recorded intangible asset impairment charges of $68 millionwithin the Connected Technology Solutions unit and $20 millionwithin the Implant & Prosthetic Solutions reporting unit within the Orthodontic and Implant Solutions segment. For further information see Note 13, Goodwill and Intangible Assets, in the Notes to Unaudited Consolidated Financial Statements in Part I, Item 1 of this Form 10-Q.
Restructuring and Other Costs
The Company recorded restructuring and other costs of $5 million and $18 million for the three and nine months ended September 30, 2025, respectively, and $23 million and $45 million for the three and nine months ended September 30, 2024, respectively. The expenses in 2025 primarily consist of costs in connection with various restructuring initiatives. The expenses in 2024 consisted primarily of severance costs in conjunction with the restructuring plans announced in February 2023 and July 2024. For further details refer to Material Trends in Capital Resourcesbelow, and Note 8, Restructuring and other costs, in the Notes to Unaudited Consolidated Financial Statements in Part I, Item 1 of this Form 10-Q.
Segment Adjusted Operating Income
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||||||||||||||||||||||||||
|
(in millions, except percentages)(a)
|
2025 | 2024 | $ Change | % Change | 2025 | 2024 | $ Change | % Change | ||||||||||||||||||||||||||||||||||||||||||
| Connected Technology Solutions | $ | 10 | $ | 16 | $ | (6) | (42.6 | %) | $ | 29 | $ | 21 | $ | 8 | 32.4 | % | ||||||||||||||||||||||||||||||||||
| Essential Dental Solutions | 116 | 132 | (16) | (11.5 | %) | 403 | 372 | $ | 31 | 8.4 | % | |||||||||||||||||||||||||||||||||||||||
| Orthodontic and Implant Solutions | 22 | 24 | (2) | (3.8 | %) | 104 | 108 | $ | (4) | (3.2 | %) | |||||||||||||||||||||||||||||||||||||||
| Wellspect Healthcare | 28 | 26 | 2 | 13.3 | % | 78 | 73 | $ | 5 | 9.6 | % | |||||||||||||||||||||||||||||||||||||||
Percentages are based on actual values and may not reconcile due to rounding.
(a) See Note 6, Segment Information, in the Notes to Unaudited Consolidated Financial Statements in Part I, Item 1 of this Form 10-Q for a reconciliation from segment adjusted operating income to consolidated US GAAP income.
Connected Technology Solutions
The decrease in segment adjusted operating income for the three months ended September 30, 2025 is due to lower net sales on a constant currency basis and tariff costs, partially offset by favorable manufacturing variances. The increase in segment adjusted operating income for the nine months ended September 30, 2025 is due to lower headcount-related costs and professional service costs, partially offset by lower net sales on a constant currency basis.
Essential Dental Solutions
The decrease in segment adjusted operating income for the three months ended September 30, 2025 is due to lower net sales on a constant currency basis, unfavorable pricing, and tariff costs, partially offset by lower headcount costs. The increase in segment adjusted operating income for the nine months ended September 30, 2025 is due to lower headcount costs and professional service costs, partially offset by lower net sales on a constant currency basis.
Orthodontic and Implant Solutions
The decrease in segment adjusted operating income for the three and nine months ended September 30, 2025 is due to the lower volumes of direct-to-consumer aligners and implants and prosthetics products and tariff costs, partially offset by lower headcount costs and professional service costs. During the nine months ended September 30, 2025, results also included favorable adjustments for estimated customer refunds and bad debt reserves for the Byte aligner business.
Wellspect Healthcare
The increase in segment adjusted operating income for the three and nine months ended September 30, 2025 is due to higher net sales on a constant currency basis as a result of new product launches.
Other Income and Expense
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||||||||||||||||||||||||||
| (in millions, except percentages) | 2025 | 2024 | $ Change | % Change | 2025 | 2024 | $ Change | % Change | ||||||||||||||||||||||||||||||||||||||||||
| Interest expense, net | $ | 23 | $ | 18 | $ | 5 | 34.4 | % | $ | 66 | $ | 53 | $ | 13 | 25.9 | % | ||||||||||||||||||||||||||||||||||
| Other income | (11) | (2) | (9) | NM | (10) | (10) | - | NM | ||||||||||||||||||||||||||||||||||||||||||
| Net interest and other expense (income) | $ | 12 | $ | 16 | $ | (4) | $ | 56 | $ | 43 | $ | 13 | ||||||||||||||||||||||||||||||||||||||
Percentages are based on actual values and may not reconcile due to rounding.
NM - Not meaningful
Interest expense, net
Interest expense, net for the three and nine months ended September 30, 2025 increased compared to the three and nine months ended September 30, 2024 primarily due to a higher average carrying balance of total borrowings.
Other income
Other income for the three and nine months ended September 30, 2025 compared to the three and nine months ended September 30, 2024 is as follows:
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||||||||||||||||
| (in millions, except percentages) | 2025 | 2024 | $ Change | 2025 | 2024 | $ Change | |||||||||||||||||||||||||||||||||||
|
Foreign exchange gains (a)
|
$ | (13) | $ | (3) | $ | (10) | $ | (13) | $ | (17) | $ | 4 | |||||||||||||||||||||||||||||
| Defined benefit pension plan expenses | 3 | 1 | 2 | 5 | 6 | (1) | |||||||||||||||||||||||||||||||||||
| Other non-operating (income) expense | (1) | - | (1) | (2) | 1 | (3) | |||||||||||||||||||||||||||||||||||
| Other income | $ | (11) | $ | (2) | $ | (9) | $ | (10) | $ | (10) | $ | - | |||||||||||||||||||||||||||||
(a) Foreign exchange gains include a benefit from our net investment hedges totaling $15 million, offset by revaluation of short-term intercompany receivables and payables of $2 million.
Income Taxes and Net Income
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||||||||||||||
| (in millions, except percentages) | 2025 | 2024 | $ Change | 2025 | 2024 | $ Change | ||||||||||||||||||||||||||||||||
| Provision for income taxes | $ | 198 | $ | 17 | $ | 181 | $ | 114 | $ | 69 | $ | 45 | ||||||||||||||||||||||||||
| Effective income tax rate | (86.5 | %) | (3.3 | %) | (33.6 | %) | (16.7 | %) | ||||||||||||||||||||||||||||||
| Net loss attributable to Dentsply Sirona | $ | (427) | $ | (494) | $ | 67 | $ | (452) | $ | (480) | $ | 28 | ||||||||||||||||||||||||||
| Diluted loss per common share | $ | (2.14) | $ | (2.46) | $ | (2.27) | $ | (2.35) | ||||||||||||||||||||||||||||||
Percentages are based on actual values and may not reconcile due to rounding.
Provision for income taxes
The effective tax rates for the three months ended September 30, 2025 and 2024 were (86.5%) and (3.3%), respectively. For the nine months ended September 30, 2025 and 2024, the rates were (33.6%) and (16.7%), respectively. The decrease in effective tax rate is primarily driven by goodwill and intangible asset impairments, the majority of which are not deductible for tax purposes.
On July 4, 2025, the One Big Beautiful Bill Act ("OBBBA") was signed into law in the United States. The OBBBA includes significant provisions, including tax cut extensions and modifications to the international tax framework. The Company evaluated the impact of the OBBBA and concluded that the effect is not material to the financial results.
CRITICAL ACCOUNTING ESTIMATES
Goodwill and Indefinite-Lived Intangible Assets
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. Indefinite-lived intangible assets consist of trade names, trademarks, and in-process R&D. Neither goodwill nor indefinite-lived intangible assets are amortized; instead, they are tested for impairment annually at April 1 or more frequently if events or circumstances indicate that the carrying value 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.
Impairment Test Results
The Company assessed the goodwill of its reporting units and its indefinite-lived intangible assets for impairment as of April 1, 2025. As a result of the Company's April 1 impairment test, it was determined that the fair values of its Implant & Prosthetic Solutions reporting unit and certain indefinite-lived intangible assets, including trade names and trademarks within the Connected Technology Solutions segment, and certain trade names within the Implant & Prosthetic Solutions reporting unit within the Orthodontic and Implant Solutions segment were below their carrying values.
The reduction in fair value for the Implant & Prosthetic Solutions reporting unit determined by this model was primarily driven by the impact of tariffs and lower projected volumes, due partly to competitive pressures, particularly in the United States and European markets. These factors contributed to reduced forecasted revenues, lower operating margins, and reduced expectations for future cash flows in the near term. As a result of this test, the Company recorded a pre-tax goodwill impairment charge as of June 30, 2025 of $156 million for the Implant & Prosthetic Solutions reporting unit within the Orthodontic and Implant Solutions segment.
As a result of the annual test of indefinite-lived intangible assets, the Company identified impairments of certain trade names and trademarks within the Connected Technology Solutions segment, and certain trade names within the Implant & Prosthetic Solutions reporting unit within the Orthodontic and Implant Solutions segment. The decline in fair value of these assets was driven by the impact of tariffs, which reduced the royalty rates used to value these assets, and lower volumes for the Company's equipment and implant products due partly to competitive pressure, which contributed to reduced forecasted revenues. As a result of this test, the Company recorded pre-tax charges of $79 million to intangible assets as of June 30, 2025, consisting of $64 million within the Connected Technology Solutions segment and $15 million within the Implant & Prosthetic Solutions reporting unit, which were recorded in Goodwill and intangible asset impairment in the Consolidated Statement of Operations.
For the three months ended September 30, 2025, the Company considered additional qualitative and quantitative factors to determine whether any events or changes in circumstances had resulted in indicators of additional impairment of goodwill or indefinite-lived intangible assets. Due to the lower-than-expected results for Implant & Prosthetic Solutions, it was determined that the fair value of this reporting unit had declined below its carrying value. The updated fair value was computed in a manner consistent with the annual test described above, with the decline primarily driven by lower-than-expected volumes, particularly in the United States, and the impact of tariffs. As a result of the updated impairment testing, as of September 30, 2025 the Company recorded a pre-tax goodwill impairment charge of $253 million for the Implant & Prosthetic Solutions reporting unit. Additionally, review of the indefinite-lived intangible assets previously impaired as of June 30, 2025, using a consistent methodology as that which was used for the annual test, indicated a further decline in fair value as of September 30, 2025 due to lower volumes for the Company's equipment and implant products. As a result, the Company recorded indefinite-lived intangible asset impairment charges of $4 million and $5 million for the Connected Technology Solutions and Orthodontic and Implant Solutions segments, respectively, for the three months ended September 30, 2025.
For further information see Note 13, Goodwill and Intangible Assets, in the Notes to Unaudited Consolidated Financial Statements in Part I, Item 1 of this Form 10-Q.
LIQUIDITY AND CAPITAL RESOURCES
| Nine Months Ended September 30, | ||||||||||||||||||||
| (in millions) | 2025 | 2024 | $ Change | |||||||||||||||||
| Cash provided by (used in): | ||||||||||||||||||||
| Operating activities | $ | 134 | $ | 374 | $ | (240) | ||||||||||||||
| Investing activities | (87) | (140) | 53 | |||||||||||||||||
| Financing activities | 19 | (264) | 283 | |||||||||||||||||
| Effect of exchange rate changes on cash and cash equivalents | 25 | (8) | 33 | |||||||||||||||||
| Net increase (decrease) in cash and cash equivalents | $ | 91 | $ | (38) | $ | 129 | ||||||||||||||
Cash provided by operating activities decreased compared to the nine months ended September 30, 2024, primarily as a result of lower net 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. At September 30, 2025, the number of days for sales outstanding in accounts receivable increased by 9 days to 64 days as compared to 55 days at December 31, 2024, and the number of days of sales in inventory increased by 21 days to 145 days at September 30, 2025 as compared to 124 days at December 31, 2024.
Cash used in investing activities decreased compared to the nine months ended September 30, 2024, due to lower capital expenditures of $39 million, an increase in cash received on derivative contracts of $10 million due to the series of USD to CHF cross currency basis swaps the Company entered into on July 1, 2025, and a decrease in cash paid on the settlement of derivatives of $3 million due to the interest rate swap closure in the prior year. The Company estimates capital expenditures to be in the range of approximately $130 million to $140 million for the full year 2025 and expects these investments to include expenses for the ongoing implementation of a new global 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 provided by financing activities increased compared to the nine months ended September 30, 2024 primarily as a result of the Company entering into the Notes as described above. The increase in cash provided by financing activities was mostly offset by repayments on the Bridge Loan Facility and commercial paper facility. The Company also had lower payments for repurchase of treasury stock of $250 million compared to the nine months ended September 30, 2024.
On November 7, 2023, the Board of Directors approved an increase to the authorized share repurchase program of $1.0 billion. At September 30, 2025, the Company had $1.19 billion of authorization remaining available for 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 September 30, 2025, the Company held 65.0 million shares of treasury stock.
The Company's ratio of total net debt to total capitalization was as follows:
| (in millions, except percentages) | September 30, 2025 | December 31, 2024 | ||||||||||||
|
Notes payable and current portion of debt
|
$ | 378 | $ | 549 | ||||||||||
| Long-term debt | 2,017 | 1,586 | ||||||||||||
| Less: Cash and cash equivalents | 363 | 272 | ||||||||||||
| Net debt | $ | 2,032 | $ | 1,863 | ||||||||||
| Total equity | 1,478 | 1,943 | ||||||||||||
| Total capitalization | $ | 3,510 | $ | 3,806 | ||||||||||
| Total net debt to total capitalization ratio | 57.9 | % | 48.9 | % | ||||||||||
At September 30, 2025, the Company had $736 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 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. 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 no outstanding borrowings under the commercial paper facility at September 30, 2025, resulting in $700 million remaining available under the revolving credit and commercial paper facilities. The Company also has access to $42 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 September 30, 2025, the Company had $5 million outstanding under short-term borrowing arrangements.
The Company's revolving credit facility and senior notes contain certain covenants relating to the Company's operations and financial condition. The most restrictive of these covenants after the amendments noted below include the following: (1) a ratio of senior debt to capitalization not to exceed 0.6, and (2) a ratio of operating income excluding depreciation and amortization to interest expense of not less than 3.0 times, in each case, as such terms are defined in the relevant agreement. 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. At September 30, 2025, the Company was in compliance with these covenants.
On June 3, 2025, the Company entered into agreements with the applicable noteholders to amend certain provisions of its private placement notes and also obtained the consent of the requisite lenders under its revolving credit facility to amend certain provisions of that credit agreement. Under the amended terms, the Company and the relevant counterparties agreed to, among other things: (i) establish the financial covenant noted above requiring that the ratio of senior debt to capitalization shall not exceed 0.6, (ii) increase the maximum allowable consolidated leverage ratio to 0.65, (iii) adjust the German subsidiary debt to be treated as permitted debt under a newly designated standalone basket, and (iv) implement provisions governing interest rate adjustments in the event that the Company's credit rating is downgraded below investment grade.
The Company expects on an ongoing basis to be able to finance operating cash requirements, capital expenditures, and debt servicefrom 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 12, Financing Arrangements, to the Unaudited Consolidated Financial Statements of this Form 10-Q.
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 September 30, 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.
Restructuring Plans
On July 29, 2024, the Board of Directors of the Company approved a plan to restructure the Company's business to improve operational performance and drive stockholder value creation (the "2024 Plan"). In connection with the 2024 Plan, the Company anticipates a net reduction in the Company's global workforce of approximately 2% to 4%. The Company anticipates that the 2024 Plan will be substantially completed by the end of 2025 and result in $80 million to $100 million in annual cost savings. The proposed changes are subject to co-determination processes with employee representative groups in countries where required.
As of September 30, 2025, in connection with the 2024 Plan, the Company has incurred $30 million in restructuring charges from inception, primarily related to employee transition, severance payments and employee benefits, which are expected to be paid by the end of 2025. Actions taken under the 2024 Plan will seek to streamline the Company's operations and global footprint, as well as improve alignment of the Company's cost structure with its strategic growth objectives. Remaining restructuring charges attributable to the 2024 Plan are not expected to be material.
On February 14, 2023, the Board of Directors of the Company approved a plan to restructure the Company's business through a new operating model with five global business units, optimize central functions and overall management infrastructure, and implement other efforts aimed at cost savings (the "2023 Plan"). The Company estimated a reduction in its global workforce of approximately 8% to 10% and annual cost savings of approximately $200 million pursuant to the 2023 Plan. The target for cost savings has been substantially met, with the benefits mostly offset in the short term by additional investments in sales personnel, the Company's new global ERP system, and other transformation initiatives. During the course of 2023 and 2024, the Company incurred $86 million in restructuring charges in conjunction with the 2023 Plan, primarily related to employee transition, severance payments, employee benefits, and facility closure costs, and $20 million in other non-recurring costs related to restructuring activities which mostly consist of consulting, legal and other professional service fees. Remaining restructuring charges attributable to the 2023 Plan are not expected to be material.
For further details refer to Note 8, Restructuring and Other Costs, in the Notes to Unaudited Consolidated Financial Statements in Part I, Item 1 of this Form 10-Q.
NEW ACCOUNTING PRONOUNCEMENTS
Refer to Part I, Item 1, Note 1, Business and Basis of Presentation, in the Notes to Unaudited Consolidated Financial Statements of this Form 10-Q for a discussion of recent accounting pronouncements.
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