We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
DENTSPLY SIRONA Inc. (XRAY - Free Report) reported second-quarter 2023 adjusted earnings per share (EPS) of 51 cents, which beat the Zacks Consensus Estimate of 43 cents by 18.6%. The bottom line, however, declined 26.2% on a year-over-year basis.
On a GAAP basis, the company reported EPS of 40 cents compared with 34 cents in the year-ago quarter.
Revenues
Revenues in the reported quarter totaled $1.03 billion, which beat the Zacks Consensus Estimate by 3.6%. The top line also increased 0.5% year over year and improved 2.3% on an organic basis. All four segments were up year over year organically with aligners leading the pack, growing in double digits. Business in China also returned to growth (up more than 25%) with healthy patient traffic in most key markets.
Business Details
As a part of its restructuring plan, the company changed its reporting structure from Apr 1, 2023. The company reported second-quarter results under four new segments — Connected Technology Solutions, Essential Dental Solutions, Orthodontic and Implant Solutions, and Wellspect Healthcare.
While the Connected Technology Solutions segment consists of equipment, instruments and CAD/CAM business, the Orthodontic and Implant Solutions segment includes the implant systems and aligner solutions. These businesses were formerly part of the erstwhile Technologies and Equipment segment.
The Essential Dental Solutions unit includes endodontic, restorative and preventive consumables businesses, earlier part of the erstwhile Consumables segment. The Wellspect Healthcare segment includes urology catheters business, earlier part of Technologies & Equipment, and other healthcare-related consumable businesses, previously under the Consumable segment.
Connected Technology Solutions
Revenues in this segment totaled $309 million, up 0.6% year over year and 2.8% on an organic basis. CAD/CAM demand improved sequentially in the U.S. market while recessionary concerns led to softer demand in Europe. Supply recovery and higher demand in ROW market drove the Equipment & Instruments business.
Orthodontic and Implant Solutions
Sales in this segment amounted to $270 million, up 1.9% year over year. On an organic basis, net sales improved 3.7%. The growth was driven by SureSmile and Byte sales, coupled with growth in market share for Implants in China and global demand for products, partially offset by lower lab sales.
Essential Dental Solutions
Sales in this segment amounted to $377 million, down 0.8% year over year. On an organic basis, net sales improved 0.7%. The organic growth was driven by improved pricing and continued growth in restorative and preventive consumables in the United States, which was partially offset by lower sales in Europe.
Wellspect Healthcare
Sales in this segment amounted to $72 million, up 1.1% year over year. On an organic basis, net sales improved 3.1%. Sales were driven by growth across all regions.
Revenues by Geography
In the United States, revenues increased 1.1% year over year to $362 million. Rest of World (ROW) revenues were up 4.8% year over year to $263 million. Revenues in Europe, however, declined 2.7% year over year to $403 million. Sales in the U.S. and ROW markets increased 1.1% and 11%, respectively, on an organic basis. Organic sales declined 2% in the European market.
Margin Analysis
Gross profit in the reported quarter totaled $550 million, down 5.3% on a year-over-year basis. The gross margin came in at 53.5%, which contracted 320 basis points.
Selling, general and administrative expenses totaled $416 million, up 1.5% from the year-ago quarter’s level. Research and development expenses amounted to $49 million, up 8.9% from the prior-year quarter’s number.
Operating income totaled $80 million compared with $119 million in the year-ago period. The company recorded a tax benefit of $39 million against an income tax provision of $18 million in the year-ago period.
Financial Condition
DENTSPLY SIRONA exited the second quarter of 2023 with cash and cash equivalents of $295 million compared with $318 million at the end of the last reported quarter.
Cumulative net cash used in operating activities was $83 million against cumulative net cash provided by operating activities of $266 million in the year-ago period.
2023 Guidance Updated
DENTSPLY SIRONA updated its guidance for 2023 earnings and revenues based on encouraging performance in the first half of 2023. The company raised its earlier revenue guidance by $70 million. It now projects sales in the range of $3.98-$4.02 billion. The Zacks Consensus Estimate for the same is pegged at $3.94 billion. Revenues are expected to be up approximately 3% on an organic basis.
XRAY now expects adjusted EPS in the band of $1.92-$2.02, up from the previous projection of $1.85-$2.00. The Zacks Consensus Estimate for the same is pegged at $1.92. The raised guidance includes forex tailwind of 3 cents.
DENTSPLY SIRONA Inc. Price, Consensus and EPS Surprise
Although adjusted earnings declined year over year, it beat market expectation. Better-than-expected revenues also buoy optimism. The company has also provided an improved outlook for both top and bottom line, reflecting rising demand, favorable forex movement and positive impact of better pricing and restructuring initiatives.
Recovery of demand in China will be a key driver of top line going forward. Sales improved more than 25% during the second quarter after a prolonged period of weak demand. Moreover, continued healthy patient traffic in most key markets is expected to drive revenues. While these are promising developments, investors should keep a watch on any change of course.
Although the volume-based pricing (VBP) policy in China impacted pricing, market share gains and higher VBP volume completely offset the impact leading to strong growth in the country.
However, soft demand in Europe may act as a headwind for the rest of 2023.
Zacks Rank and Stocks to Consider
Currently, DENTSPLY SIRONA has a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader medical space that have announced quarterly results are Abbott Laboratories (ABT - Free Report) , Elevance Health, Inc. (ELV - Free Report) and Intuitive Surgical, Inc. (ISRG - Free Report) .
Revenues of $9.98 billion outpaced the consensus mark by 2.9%.
Abbott has a long-term estimated growth rate of 5.1%. ABT’s earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 12.4%.
Elevance Health reported second-quarter 2023 adjusted EPS of $9.04, which beat the Zacks Consensus Estimate by 2.5%. Revenues of $43.38 billion surpassed the Zacks Consensus Estimate by 4.5%. The company currently carries a Zacks Rank #2.
ELV has a long-term estimated growth rate of 12.1%. Its earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 2.8%.
Intuitive Surgical reported second-quarter 2023 adjusted EPS of $1.42, which beat the Zacks Consensus Estimate by 7.6%. Revenues of $1.76 billion surpassed the consensus mark by 1.4%. The company currently carries a Zacks Rank #2.
ISRG has a long-term estimated growth rate of 14.5%. Its earnings surpassed estimates in three of the trailing four quarters and missed once, delivering an average surprise of 4.2%.
Edwards Lifesciences has a long-term estimated growth rate of 6.8%. EW’s earnings surpassed estimates in three of the trailing four quarters and missed the same once, the average surprise being 1.69%.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
DENTSPLY SIRONA (XRAY) Beats on Q2 Earnings, Ups '23 EPS View
DENTSPLY SIRONA Inc. (XRAY - Free Report) reported second-quarter 2023 adjusted earnings per share (EPS) of 51 cents, which beat the Zacks Consensus Estimate of 43 cents by 18.6%. The bottom line, however, declined 26.2% on a year-over-year basis.
On a GAAP basis, the company reported EPS of 40 cents compared with 34 cents in the year-ago quarter.
Revenues
Revenues in the reported quarter totaled $1.03 billion, which beat the Zacks Consensus Estimate by 3.6%. The top line also increased 0.5% year over year and improved 2.3% on an organic basis. All four segments were up year over year organically with aligners leading the pack, growing in double digits. Business in China also returned to growth (up more than 25%) with healthy patient traffic in most key markets.
Business Details
As a part of its restructuring plan, the company changed its reporting structure from Apr 1, 2023. The company reported second-quarter results under four new segments — Connected Technology Solutions, Essential Dental Solutions, Orthodontic and Implant Solutions, and Wellspect Healthcare.
While the Connected Technology Solutions segment consists of equipment, instruments and CAD/CAM business, the Orthodontic and Implant Solutions segment includes the implant systems and aligner solutions. These businesses were formerly part of the erstwhile Technologies and Equipment segment.
The Essential Dental Solutions unit includes endodontic, restorative and preventive consumables businesses, earlier part of the erstwhile Consumables segment. The Wellspect Healthcare segment includes urology catheters business, earlier part of Technologies & Equipment, and other healthcare-related consumable businesses, previously under the Consumable segment.
Connected Technology Solutions
Revenues in this segment totaled $309 million, up 0.6% year over year and 2.8% on an organic basis. CAD/CAM demand improved sequentially in the U.S. market while recessionary concerns led to softer demand in Europe. Supply recovery and higher demand in ROW market drove the Equipment & Instruments business.
Orthodontic and Implant Solutions
Sales in this segment amounted to $270 million, up 1.9% year over year. On an organic basis, net sales improved 3.7%. The growth was driven by SureSmile and Byte sales, coupled with growth in market share for Implants in China and global demand for products, partially offset by lower lab sales.
Essential Dental Solutions
Sales in this segment amounted to $377 million, down 0.8% year over year. On an organic basis, net sales improved 0.7%. The organic growth was driven by improved pricing and continued growth in restorative and preventive consumables in the United States, which was partially offset by lower sales in Europe.
Wellspect Healthcare
Sales in this segment amounted to $72 million, up 1.1% year over year. On an organic basis, net sales improved 3.1%. Sales were driven by growth across all regions.
Revenues by Geography
In the United States, revenues increased 1.1% year over year to $362 million. Rest of World (ROW) revenues were up 4.8% year over year to $263 million. Revenues in Europe, however, declined 2.7% year over year to $403 million. Sales in the U.S. and ROW markets increased 1.1% and 11%, respectively, on an organic basis. Organic sales declined 2% in the European market.
Margin Analysis
Gross profit in the reported quarter totaled $550 million, down 5.3% on a year-over-year basis. The gross margin came in at 53.5%, which contracted 320 basis points.
Selling, general and administrative expenses totaled $416 million, up 1.5% from the year-ago quarter’s level. Research and development expenses amounted to $49 million, up 8.9% from the prior-year quarter’s number.
Operating income totaled $80 million compared with $119 million in the year-ago period. The company recorded a tax benefit of $39 million against an income tax provision of $18 million in the year-ago period.
Financial Condition
DENTSPLY SIRONA exited the second quarter of 2023 with cash and cash equivalents of $295 million compared with $318 million at the end of the last reported quarter.
Cumulative net cash used in operating activities was $83 million against cumulative net cash provided by operating activities of $266 million in the year-ago period.
2023 Guidance Updated
DENTSPLY SIRONA updated its guidance for 2023 earnings and revenues based on encouraging performance in the first half of 2023. The company raised its earlier revenue guidance by $70 million. It now projects sales in the range of $3.98-$4.02 billion. The Zacks Consensus Estimate for the same is pegged at $3.94 billion. Revenues are expected to be up approximately 3% on an organic basis.
XRAY now expects adjusted EPS in the band of $1.92-$2.02, up from the previous projection of $1.85-$2.00. The Zacks Consensus Estimate for the same is pegged at $1.92. The raised guidance includes forex tailwind of 3 cents.
DENTSPLY SIRONA Inc. Price, Consensus and EPS Surprise
DENTSPLY SIRONA Inc. price-consensus-eps-surprise-chart | DENTSPLY SIRONA Inc. Quote
Our Take
Although adjusted earnings declined year over year, it beat market expectation. Better-than-expected revenues also buoy optimism. The company has also provided an improved outlook for both top and bottom line, reflecting rising demand, favorable forex movement and positive impact of better pricing and restructuring initiatives.
Recovery of demand in China will be a key driver of top line going forward. Sales improved more than 25% during the second quarter after a prolonged period of weak demand. Moreover, continued healthy patient traffic in most key markets is expected to drive revenues. While these are promising developments, investors should keep a watch on any change of course.
Although the volume-based pricing (VBP) policy in China impacted pricing, market share gains and higher VBP volume completely offset the impact leading to strong growth in the country.
However, soft demand in Europe may act as a headwind for the rest of 2023.
Zacks Rank and Stocks to Consider
Currently, DENTSPLY SIRONA has a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader medical space that have announced quarterly results are Abbott Laboratories (ABT - Free Report) , Elevance Health, Inc. (ELV - Free Report) and Intuitive Surgical, Inc. (ISRG - Free Report) .
Abbott, carrying a Zacks Rank #2 (Buy) at present, reported second-quarter 2023 adjusted EPS of $1.08, which beat the Zacks Consensus Estimate by 3.8%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Revenues of $9.98 billion outpaced the consensus mark by 2.9%.
Abbott has a long-term estimated growth rate of 5.1%. ABT’s earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 12.4%.
Elevance Health reported second-quarter 2023 adjusted EPS of $9.04, which beat the Zacks Consensus Estimate by 2.5%. Revenues of $43.38 billion surpassed the Zacks Consensus Estimate by 4.5%. The company currently carries a Zacks Rank #2.
ELV has a long-term estimated growth rate of 12.1%. Its earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 2.8%.
Intuitive Surgical reported second-quarter 2023 adjusted EPS of $1.42, which beat the Zacks Consensus Estimate by 7.6%. Revenues of $1.76 billion surpassed the consensus mark by 1.4%. The company currently carries a Zacks Rank #2.
ISRG has a long-term estimated growth rate of 14.5%. Its earnings surpassed estimates in three of the trailing four quarters and missed once, delivering an average surprise of 4.2%.
Edwards Lifesciences has a long-term estimated growth rate of 6.8%. EW’s earnings surpassed estimates in three of the trailing four quarters and missed the same once, the average surprise being 1.69%.