A maker of dental products and technologies used by dentists and orthodontists worldwide, from CEREC CAD/CAM systems and SureSmile clear aligners to catheters for continence care. It was formed in 2016 when DENTSPLY International, founded in 1899 as The Dentists' Supply Company of New York, merged with Sirona Dental Systems, whose German roots trace to 1877 and the first electric dental drill.
A $44M U.S. tariff refund lifted Q2 gross margin to 54.9%, the highest in over three years, even as revenue fell 4.1%.
A one-time tariff refund reshaped the quarter. fell 4.1% to $898 million, but rose 2.5 points to 54.9% and swung to $82 million from a $128 million loss a year ago, driven almost entirely by $44 million in U.S. tariff refunds. The underlying business continued to shrink, and the refund masks the pressure that remains.
Key takeaways
A $44 million U.S. tariff refund, recorded as a reduction to cost of goods sold, was the primary driver of the 2.5-point expansion to 54.9% — the highest quarterly gross margin since Q4 2021.
Constant-currency sales fell 6.3%, as dropped 13.2% on the absence of products and lower implant volumes.
swung to $82 million from a $128 million loss in Q2 2025, and turned positive at $37 million after a $45 million loss a year ago, both driven by the tariff refund.
Section summaries
Management's Discussion and Analysis
Q2 2026 net sales fell 4.1% to $898M, driven by OIS declines and Byte exit, while tariff refunds lifted gross margin to 54.9%.
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Consolidated decreased 4.1% as reported and 6.3% on a basis, with (OIS) down 13.2% due to the absence of and lower implant volumes.
expanded 250 to 54.9% in Q2, primarily from $44M in U.S. tariff refunds and favorable foreign currency, partially offset by lower volumes and unfavorable product mix.
SG&A expenses rose 6.7% to $364 million on unfavorable foreign exchange, while R&D spending increased 20.3% to $45 million as the company targets roughly 5% of annual for digital workflow investments.
rose 106% to $99 million and rose 244% to $55 million, aided by the tariff refunds, bringing first-half operating cash flow to $139 million.
The company recorded $69 million in restructuring costs in the first half under a new 2026 plan targeting $120 million in annualized savings, with a portion reinvested in growth initiatives.
What changed
Q1 2026 flagged as the key watch item after it fell 4.5 points to 48.5%. Q2 delivered 54.9%, but the improvement came from a one-time $44 million tariff refund, not an operational turnaround — stripping it out, underlying margin remained under pressure from lower volumes and unfavorable mix.
The Q1 2026 watch on asked whether negative $12 million was a trough. Q2 free cash flow turned positive at $55 million, and first-half free cash flow reached $43 million, though the improvement was driven by the tariff refund and lower rather than higher sales.
The strategic alternatives evaluation for , flagged in every prior filing, remains unresolved. The continues to grow and is a potential divestiture candidate, but no outcome was announced.
The FY 2025 10-K flagged Q1 2026 to see whether the 46.1% in Q4 2025 was a trough. Q1 came in at 48.5% and Q2 at 54.9%, but the Q2 figure is inflated by the tariff refund; the underlying trajectory without one-time items is still declining.
What to watch
Q3 2026 to see whether it normalizes back toward the 48-50% range now that the $44 million tariff refund has passed through, and whether the 2026 Restructuring Plan savings begin to offset the volume and mix headwinds.
Any further intangible asset in the or Implant & Prosthetic Solutions units, where remain at risk and are sensitive to discount rate and assumptions.
The outcome of the strategic alternatives evaluation for , which remains a potential divestiture candidate and a key swing factor for consolidated and debt reduction.
generation in Q3 2026 to determine whether the $55 million in Q2 is sustainable without further one-time benefits, particularly given the $2.0 billion load and the elimination of the .
SG&A expenses rose 6.7% to $364M on unfavorable FX, while R&D spending increased 20.3% to $45M as the company targets ~5% of annual for investments in and digital workflows.
The company recorded $69M in restructuring costs for H1 2026 under a new plan expected to yield $120M in annualized savings, with a portion reinvested in growth initiatives.
improved to $139M in H1, aided by the tariff refunds, and the board eliminated the quarterly while maintaining $1.2B in authorization.
Quantitative and Qualitative Disclosures About Market Risk
There have been no material changes from the information provided in Part II, Item 7A, “Quantitative and Qualitative Disclosures About Market Risk,” in our 2025 Form 10-K.
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There have been no material changes from the information provided in Part II, Item 7A, “Quantitative and Qualitative Disclosures About Market Risk,” in our 2025 Form 10-K.