Dental products company Dentsply Sirona (NASDAQ: XRAY) beat Wall Street’s revenue expectations in Q1 CY2025. Its non-GAAP EPS of $0.43 per share was 43% above analysts’ consensus estimates.
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Dentsply Sirona (XRAY) Q1 CY2025 Highlights:
- Revenue: $879 million (7.8% year-on-year decline)
- Adjusted EPS: $0.43 vs analyst estimates of $0.30 (43% beat)
- Management reiterated its full-year Adjusted EPS guidance of $1.90 at the midpoint
- Operating Margin: 7.2%, up from 4.4% in the same quarter last year
- Constant Currency Revenue fell 4.4% year on year (-1.9% in the same quarter last year)
- Market Capitalization: $3.21 billion
StockStory’s Take
Dentsply Sirona’s first quarter results were shaped by persistent headwinds in North America, ongoing volatility in orthodontic and implant sales, and efforts to optimize global operations. CEO Simon Campion cited stable patient traffic in Europe and the Rest of World, while the U.S. market faced declines due to lower volumes and the continued negative impact of the Byte aligner business roll-off. Imaging and Wellspect Healthcare stood out as growth drivers, offsetting weaker performance in CAD/CAM and implant products. Campion openly acknowledged “a disappointing quarter” for the implant segment and explained that sales team retraining and improved customer relationships remain a work in progress, particularly in the U.S.
Looking forward, Dentsply Sirona expects to navigate a challenging macroeconomic environment characterized by tariff uncertainty and stable but cautious patient demand. Management is maintaining its full-year adjusted EPS outlook while increasing its reported sales guidance due to currency effects. Campion emphasized, “We have factored the tariffs into the current guidance,” estimating a $0.10 EPS impact for the year with additional mitigation options under review. The company is focused on accelerating digital product adoption, expanding its DS Core ecosystem, and enhancing customer experience through e-commerce and operational improvements. These initiatives, alongside prudent cost controls, are expected to support profitability as headwinds persist.
Key Insights from Management’s Remarks
Management attributed the quarter’s mixed performance to operational discipline, targeted cost controls, and regional disparities in demand, while noting that digital product launches and efficiency gains in Europe partially offset U.S. softness.
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Orthodontic and Implant Weakness: The continued roll-off of the Byte aligner business was a primary source of revenue decline, while U.S. implant sales lagged despite nominal growth in premium implants. Management described the implant segment as “disappointing” and highlighted ongoing retraining of sales teams to improve clinical expertise and customer relationships.
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Imaging and Wellspect Growth: Imaging posted gains across all regions, benefiting from product innovation and easier comparisons to the prior year. Wellspect Healthcare, the company’s medical device unit, delivered another quarter of broad-based growth, particularly from new product launches and strong execution outside the U.S.
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Operational Efficiencies and Cost Controls: Adjusted gross margin held steady despite lower sales, while operating margin improved due to disciplined expense management, including a notable reduction in marketing spend at the International Dental Show (IDS). Campion highlighted that sales results at IDS exceeded the previous year, despite 60% lower spending.
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Digital Ecosystem Expansion: The DS Core platform surpassed 42,000 unique users and 50,000 connected devices, with recent enhancements including AI-powered 3D imaging and workflow integration. Management views this as a key lever to drive customer engagement and increase digital product adoption.
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Customer Experience Initiatives: Dentsply Sirona revamped its company and SureSmile websites, launched new self-service e-commerce capabilities, and intensified customer feedback efforts. These changes are aimed at streamlining interactions and addressing pain points identified through surveys and direct customer engagement.
Drivers of Future Performance
Management expects future performance to hinge on digital adoption, tariff mitigation, and cautious end-market demand, with profitability supported by operational discipline.
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Tariff and Trade Policy Risk: The company’s outlook incorporates estimated tariff impacts of $0.10 EPS for the year, with exposure concentrated in goods manufactured outside the U.S. Management is pursuing mitigation strategies such as shifting production, building strategic inventory, and considering targeted price increases if needed.
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Digital and Product Innovation: Expansion of the DS Core digital ecosystem, frequent software updates leveraging cloud and AI, and connectivity across products are expected to deepen customer engagement and support adoption of higher-margin offerings. Management believes that integrating workflows for endodontics, aligners, and implants will improve recurring revenue streams.
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Cost Management and Margin Focus: Continued emphasis on cost discipline, ERP modernization, and supply chain optimization is expected to support adjusted EBITDA margin expansion. The company expects operational improvements and ongoing transformation efforts to partially offset macroeconomic headwinds and lower sales volumes.
Catalysts in Upcoming Quarters
In the coming quarters, the StockStory team will monitor (1) the pace of digital adoption and DS Core platform growth, (2) execution on supply chain and cost initiatives to sustain margin improvement, and (3) management’s ability to mitigate tariff impacts without disrupting customer demand. Progress in U.S. market stabilization and new product launches will be critical signposts for future trajectory.
Dentsply Sirona currently trades at a forward P/E ratio of 8.5×. Is the company at an inflection point that warrants a buy or sell? The answer lies in our full research report (it’s free).
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