Dentsply Sirona Inc. (NASDAQ:XRAY) shares are trading lower on Thursday.
The company reported adjusted earnings per share of 50 cents for the third quarter, surpassing earnings per share of 47 cents. Quarterly sales of $951 million (up 0.5%) beat analysts’ consensus estimate of $939.10 million.
The company recorded a non-cash goodwill impairment charge of $495 million in the Orthodontic and Implant Solutions segment. This was due to continued economic challenges, legislative changes affecting Byte, lower demand, increased competition in the implant space and lower expected laboratory material volumes.
At the sector level, Connected Technology Solutions fell 2.3%, Essential Dental Solutions gained 6.6%, Orthodontic & Implant Solutions fell 4.6%, while Wellspect Healthcare fell 0.4%. %.
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Quarterly adjusted EBITDA fell 1.8% to $170 million. The adjusted EBITDA margin contracted to 17.9%, compared to 18.3% in the quarter under review.
“Organic growth in the third quarter was driven by favorable timing in Essential Dental Solutions of approximately $20 million related to storage orders in anticipation of the ERP deployment in the United States, and by increased sales in the CAD/CAM sector, which benefited from the launch of our new scanner, Primescan 2,” said Simon Campion, President and CEO.
“Due to continued market pressures impacting equipment in the United States, as well as the changing landscape with Byte, we are reducing our organic sales outlook for the full year,” Campion added.
The company had $296 million in cash and cash equivalents as of September 30. Long-term debt at the end of the quarter was $1.795 billion.
Advice: Dentsply Sirona has revised its 2024 outlook due to market pressures affecting U.S. equipment, legislative changes affecting the direct-to-consumer aligner business model, and the voluntary suspension of sales, marketing and shipments of byte aligners and impression kits.
The revised sales forecast stands at $3.79 billion – $3.83 billion, compared to prior forecasts of $3.86 billion – $3.90 billion and consensus of $3.878 billion, with an organic sales decline of 3.5% to 2.5% year over year.
The company expects 2024 adjusted EPS of $1.82 to $1.86, compared to previous forecasts of $1.96 to $2.02 and consensus of $1.98.
William Blair noted that some negative events have affected the stock since the Dentsply Sirona upgrade last year. However, the company continues to believe the stock offers an attractive risk/reward ratio for a leading dental company with broad capabilities and strong potential in a promising market.
