On August 6, Dentsply Sirona (NASDAQ:XRAY) reported second-quarter 2026 results that pulled the stock in two directions at once. Net sales fell 4.1% year over year to $898 million, yet the company swung from a $45 million net loss a year earlier to $37 million in net income, with diluted earnings per share of $0.18 versus a $0.22 loss. Investors are left weighing a real profitability turnaround against a top line that is still shrinking.
GAAP gross margin climbed to 54.9% from 52.4% a year ago, and adjusted gross margin came in at 56.4%. Adjusted EBITDA margin ticked up slightly to 21.3% from 21.1%. Cash generation improved even more sharply. Operating cash flow jumped to $99 million from $48 million in the second quarter of 2025, helped by roughly $44 million in tariff refunds along with tighter management of inventory and payables. Free cash flow more than tripled to $55 million from $16 million. The company used some of that cash to repurchase 1.3 million shares for about $12 million during the quarter, and it also expanded its partnership with Medline Sinclair to broaden access to its Connected Technology Solutions portfolio across Canada.
Wellspect Healthcare was the lone segment posting real growth, with net sales up 7.1% to $86 million, and EMEA sales as reported were essentially flat at 0.2% growth. There were no goodwill or intangible ***** et impairments this quarter, a contrast to the $235 million charge taken in the same period last year. Despite the sales decline, the company reiterated its full-year 2026 outlook of $3.5 billion to $3.6 billion in net sales and adjusted EPS of $1.40 to $1.50.
The headline sales decline understates the underlying softness. On a constant currency basis, net sales fell 6.3%, meaning currency translation actually flattered the reported number. Orthodontic and Implant Solutions was the weakest segment, with sales dropping 13.2% to $197 million from $226 million a year ago. The Americas region fared worst geographically, with net sales down 10.7% as reported and 11.6% in constant currency.
Even the adjusted numbers show cracks: adjusted EPS of $0.52 was actually down 1.6% from a year earlier, despite the improved GAAP figures. The balance sheet tightened too, with cash and equivalents falling to $239 million from $326 million at the end of 2025, against long-term debt of nearly $2 billion. Restructuring and other costs for the first six months of 2026 totaled $69 million, up sharply from $13 million in the same period a year ago, tied in part to costs from a new global ERP system.
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GAAP gross margin climbed to 54.9% from 52.4% a year ago, and adjusted gross margin came in at 56.4%. Adjusted EBITDA margin ticked up slightly to 21.3% from 21.1%. Cash generation improved even more sharply. Operating cash flow jumped to $99 million from $48 million in the second quarter of 2025, helped by roughly $44 million in tariff refunds along with tighter management of inventory and payables. Free cash flow more than tripled to $55 million from $16 million. The company used some of that cash to repurchase 1.3 million shares for about $12 million during the quarter, and it also expanded its partnership with Medline Sinclair to broaden access to its Connected Technology Solutions portfolio across Canada.
Wellspect Healthcare was the lone segment posting real growth, with net sales up 7.1% to $86 million, and EMEA sales as reported were essentially flat at 0.2% growth. There were no goodwill or intangible ***** et impairments this quarter, a contrast to the $235 million charge taken in the same period last year. Despite the sales decline, the company reiterated its full-year 2026 outlook of $3.5 billion to $3.6 billion in net sales and adjusted EPS of $1.40 to $1.50.
The headline sales decline understates the underlying softness. On a constant currency basis, net sales fell 6.3%, meaning currency translation actually flattered the reported number. Orthodontic and Implant Solutions was the weakest segment, with sales dropping 13.2% to $197 million from $226 million a year ago. The Americas region fared worst geographically, with net sales down 10.7% as reported and 11.6% in constant currency.
Even the adjusted numbers show cracks: adjusted EPS of $0.52 was actually down 1.6% from a year earlier, despite the improved GAAP figures. The balance sheet tightened too, with cash and equivalents falling to $239 million from $326 million at the end of 2025, against long-term debt of nearly $2 billion. Restructuring and other costs for the first six months of 2026 totaled $69 million, up sharply from $13 million in the same period a year ago, tied in part to costs from a new global ERP system.
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