DENTSPLY SIRONA Inc. XRAY reported third-quarter 2024 adjusted earnings per share (EPS) of 50 cents, which beat the Zacks Consensus Estimate of 48 cents by 4.2%. The bottom line increased 2% on a year-over-year basis.

On a GAAP basis, the company reported a loss of $2.46 per share compared with $1.25 per share in the year-ago quarter.

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Revenue Details

Revenues in the reported quarter totaled $951 million, surpassing the Zacks Consensus Estimate by 0.9%. The top line improved 0.5% year over year and 1.3% on an organic basis.

Business Details

The company reports quarterly results under four 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 businesses, the Orthodontic and Implant Solutions segment includes the implant systems and aligner solutions. These businesses were formerly part of the Technologies and Equipment segment.

The Essential Dental Solutions unit includes endodontic, restorative and preventive consumables businesses, which were part of the former Consumables segment. The Wellspect Healthcare segment includes the urology catheters business, a former part of Technologies & Equipment, and other healthcare-related consumable businesses, previously under the Consumables segment.

Connected Technology Solutions

Revenues in this segment totaled $269 million, down 2.3% year over year and 1.4% on an organic basis.

Orthodontic and Implant Solutions

Sales in this segment amounted to $241 million, down 4.6% year over year and 3.9% on an organic basis.

Essential Dental Solutions

Sales in this segment amounted to $369 million, up 6.6% year over year. On an organic basis, net sales improved 7.5%.

Wellspect Healthcare

Sales in this segment amounted to $72 million, up 0.4% year over year. On an organic basis, net sales were flat.

Revenues by Geography

In the United States, revenues increased 5.1% year over year organically to $374 million. Rest of World revenues increased 0.6% organically to $230 million. Revenues in Europe declined 2% organically on a year-over-year basis to $347 million.

DENTSPLY SIRONA Inc. Price, Consensus and EPS Surprise

DENTSPLY SIRONA Inc. price-consensus-eps-surprise-chart | DENTSPLY SIRONA Inc. Quote

Margin Analysis

Gross profit in the reported quarter was $495 million, up 0.2% on a year-over-year basis. The gross margin was 52.1%, contracting 10 basis points year over year.

Selling, general and administrative expenses totaled $390 million, up 4.8% from the year-ago quarter’s level. Research and development expenses amounted to $40 million, down 13.1% year over year.

Operating loss in the reported quarter amounted to $462 million, up 95.8% from the year-ago period’s level. This significant rise in operating loss in the third quarter was due to a $495 million goodwill impairment charge within the company’s Orthodontic and Implant Solutions segment.

Financial Update

DENTSPLY SIRONA exited the third quarter of 2024 with cash and cash equivalents of $296 million compared with $279 million at the second-quarter end.

The cumulative net cash provided by operating activities totaled $374 million compared with $217 million in the year-ago period.

2024 Guidance Revised

DENTSPLY SIRONA lowered its guidance for 2024 earnings and revenues. The company now expects sales to be in the band of $3.79-$3.83 billion, implying a decline of 3.5% to 2.5% growth organically. Previously, it expected revenues to be in the range of $3.86-$3.90 billion. The Zacks Consensus Estimate for the same is pegged at $3.89 billion.

XRAY now expects adjusted EPS in the band of $1.82-$1.86, down from the previous guidance of $1.96-$2.02. The Zacks Consensus Estimate for earnings is pinned at $1.98 per share.

Our Take

XRAY ended the third quarter with better-than-expected results, wherein both earnings and revenues surpassed their respective estimates. Moreover, a lower outlook for revenues and earnings does not bode well. Shares were down 4.9% during pre-market trading. The stock plunged 32.6% year to date against the industry’s 2.9% growth and the S&P 500’s 24.7% increase.

Per management, third-quarter organic growth was driven by favorable timing in Essential Dental Solutions of approximately $20 million related to stocking orders in anticipation of U.S. ERP deployment and higher sales in CAD/CAM, which benefited from the launch of XRAY’s new scanner, Primescan 2.

During the second quarter, the company started the second phase of its transformation plan, which will help it drive profitable growth. XRAY is likely to incur $40-$50 million in non-recurring charges in the rest of 2024 and 2025. The plan is anticipated to result in $80-$100 million in annualized cost savings over the next 12-18 months.

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XRAY’s Zacks Rank & Stocks to Consider

XRAY carries a Zacks Rank #4 (Sell) at present.

Some better-ranked stocks in the broader medical space are AngioDynamics ANGO, Quest Diagnostics DGX and RadNet RDNT. While AngioDynamics sports a Zacks Rank #1 (Strong Buy), Quest Diagnostics and RadNet carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

ANGO’s earnings surpassed estimates in three of the trailing four quarters and missed once, delivering an average surprise of 31.71%.

AngioDynamics’ shares have lost 19.2% year to date against the industry’s6.1% growth.

Quest Diagnostics has an estimated long-term growth rate of 6.8%. DGX's earnings surpassed estimates in each of the trailing four quarters, with the average being 3.3%.

Quest Diagnostics has gained 42% compared with the industry's 14.9% growth year to date.

RadNet’s earnings surpassed estimates in each of the trailing four quarters, with the average surprise being 98.2%.

RDNT's shares have surged 93.7% year to date compared with the industry’s 14.8% growth.

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