Dentsply Sirona (XRAY) Swings Back To Profit While Sales Keep Sliding

Dentsply Sirona (XRAY) managed to turn a profit in the second quarter of 2026 despite sales continuing to decline. Net sales dropped 4.1% year-over-year to $898 million, but the company managed to turn a $45 million net loss into a $37 million net income, with diluted earnings per share reaching $0.18. Gross margins improved, with GAAP gross margin at 54.9% and adjusted gross margin at 56.4%.

Adjusted EBITDA margin also ticked up slightly to 21.3%. Cash generation improved dramatically, with operating cash flow rising to $99 million from $48 million in the previous year. Free cash flow more than tripled to $55 million from $16 million. The company used some of this cash to repurchase 1.3 million shares for about $12 million and expanded its partnership with Medline Sinclair.

While the lone segment posting growth was Wellspect Healthcare, Orthodontic and Implant Solutions was the weakest, with sales dropping 13.2% to $197 million. The Americas region saw the worst performance, with net sales down 10.7% in constant currency. Despite the sales decline, the company maintained its full-year 2026 outlook of net sales between $3.5 billion and $3.6 billion and adjusted EPS of $1.40 to $1.50.

The balance sheet tightened, with cash and equivalents falling to $239 million from $326 million, against long-term debt of nearly $2 billion. Hedge fund ownership fell from 41 funds to 36, and short interest sits at 11.01% of float. Despite these challenges, the share price trades at a forward P/E of just 6.97, indicating the market remains unconvinced about the turnaround's prospects.

Overall, Dentsply Sirona's quarter shows improvement in margins and cash generation, but revenue continues to contract, leaving investors to wonder if the reiterated 2026 guidance will hold.