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DENTSPLY SIRONA (XRAY) Posts Weak Q1 Preliminary Results

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DENTSPLY SIRONA Inc. (XRAY - Free Report) reported preliminary first-quarter 2020 adjusted earnings per share (EPS) of 43 cents. The Zacks Consensus Estimate for earnings is pegged at 41 cents. Going by this preliminary announcement, the bottom line declined 12.2% from the prior-year quarter.

Per the preliminary results, the company’s revenues came in at $874.3million, down 7.6% from the year-ago quarter. The consensus mark for revenues is pegged at $876.9 billion. Per management, internal sales declined 4.3%.

The stock has lost 30.6% during the first quarter period, compared with the industry’s decline of 17.6%.

Business Details

Following are the preliminary segment results for the quarter under review:


Consumable revenues were down 16.8% year over year and 15.2% on an internal basis in the first quarter to $354 million. Per management, decline in organic sales stemmed from lower demand across all three regions due to lower visits by dentists and customers and procedures owing to the COVID-19 pandemic.

Technologies & Equipment

Technologies & Equipmentrevenues slipped 0.1% year over year to $520.3 million in the reported quarter. On an internal basis, sales rose 4.8%. Per management, digital dentistry and healthcare witnessed solid organic sales growth in the quarter under review, partially offset by decrease in organic sales in Equipment & Instruments and Implants.

Revenues by Geography

Per the preliminary announcement, in the United States, revenues fell 1.4% to $300.5 million and 1.2% internally. Rest of World revenues declined 15.3% year over year to $200.7 million. Revenues in the geography decreased 12% on an internal sales growth basis. European revenues declined 5.7% year on year to $373.1 million. On an internal sales growth basis, European revenues declined 2%.

Margin Analysis

Per the preliminary results, adjusted gross profit in the reported quarter amounted to $498.1million, down 7.8% on a year-over-year basis. Adjusted gross margin was 57%, down10 basis points (bps).

Adjusted operating income totaled $130.7 million, down 10.2% year over year. Adjusted operating margin down 50 bps in the quarter to 14.9%.

Financial Condition

Per the preliminary announcement, DENTSPLY SIRONA exited the first quarter with cash and cash equivalents of $235.9 million, down 41.8% from $404.9 million at the year-end 2019.

2020 Guidance

According to the preliminary announcement, due to the uncertainty regarding the duration and impact of the COVID-19 pandemic on the company’s business, the company has withdrawn previously issued 2020 guidance.

Our Take

Per the preliminary announcement, the company witnessed deterioration in both earnings and revenues. Its core Technology & Equipment and Consumables units witnessed year-over-year decline in the quarter. Contraction in margins is a concern.

Zacks Rank

The company carries a Zacks Rank of 4 (Sell).

Key Picks

Some better-ranked stocks in the broader medical space that have already announced results in this reporting cycle are Aphria Inc. (APHA - Free Report) , Biogen Inc. (BIIB - Free Report) and Eli Lilly and Company (LLY - Free Report) .

Aphria reported third-quarter fiscal 2020 adjusted EPS of 2 cents, beating the Zacks Consensus Estimate of a loss of 4 cents. Net revenues of $64.4 million surpassed the consensus mark by 14.6%. The company carries a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Biogen currently carries a Zacks Rank #2. It reported first-quarter 2020 adjusted EPS of $9.14, surpassing the Zacks Consensus Estimate by 18.1%. Revenues of $3.53 billion outpaced the consensus mark by 3.2%.

Eli Lilly reported first-quarter 2020 EPS of $1.75, outpacing the Zacks Consensus Estimate by 12.9%. Revenues of $145.3 million surpassed the consensus estimate by 6.3%. The company currently sports a Zacks Rank #1.

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