Envista (NYSE:NVST) reported higher third-quarter sales and adjusted earnings and raised its 2026 profit outlook, as price increases and productivity gains helped offset weaker sales in China.
The dental products company reported revenue of $691 million, up 3.2% from a year earlier, while core sales grew 2.7%. Adjusted EBITDA increased 9% to approximately $106 million, and adjusted earnings per share rose 25% to $0.40.
President and CEO Paul Keel said dental market conditions were largely unchanged from the first half of the year. Insurance-covered categories remained resilient, while more elective treatments such as orthodontics and implants continued to grow below their historical trends. He described the U.S. market as relatively soft, with macroeconomic uncertainty affecting patient and clinician confidence.
Margins Improve as China Sales Decline
Adjusted gross margin increased 20 basis points to 56.3%, and adjusted EBITDA margin rose 80 basis points to 15.3%. CFO Eric Hammes said volume, price and productivity more than offset headwinds from China and continued investment in the business.
Price contributed approximately $12 million to year-over-year sales growth. Volume added approximately $13 million before the separately disclosed impact of lower China sales, while acquisitions contributed roughly $3 million. Foreign exchange had a neutral effect on revenue.
China sales declined at a low double-digit rate as the orthodontics channel reduced inventories ahead of the country’s volume-based procurement, or VBP, process. The company said the resulting approximately $10 million reduction in orthodontics channel inventory was consistent with its expectations. Growth in China implant sales partly offset that decline, leaving a net revenue headwind of approximately $7 million.
Keel said developing markets outside China grew at a high single-digit rate, Europe grew at a mid-single-digit rate and North America grew at a low single-digit rate.
Updated Guidance Points to Higher Earnings
Envista raised and narrowed its full-year adjusted earnings outlook. Its updated expectations include:
- Core sales growth of 3.75% to 4.25%, compared with its prior range of 3.5% to 4.5%.
- Adjusted EBITDA growth of 12.5% to 14%, at the upper end of its previous range.
- Adjusted earnings per share of $1.54 to $1.58, up from $1.50 to $1.55.
- Free cash flow conversion of approximately 100%, unchanged from its prior expectation.
Hammes said the midpoint of the guidance implies slightly negative core sales growth in the fourth quarter, which will have four fewer selling days than the year-earlier period. Excluding that effect, implied fourth-quarter core growth would be consistent with the full-year range, he said.
The company expects foreign exchange to reduce reported fourth-quarter revenue growth by approximately one percentage point, with acquisitions contributing about half a percentage point. Envista also expects no significant VBP-related impact in the fourth quarter.
China Procurement Changes Expected in 2027
Keel said the latest government communications pointed to a mid-December announcement of VBP results, although he cautioned that timelines can run long. Envista expects implementation most likely to begin in the first half of 2027.
Keel distinguished the third-quarter inventory reduction from the future pricing effect. He said the company expects orthodontics prices under the program to fall approximately 50% and implant prices to decline 10% to 15%. Envista expects volume and share gains to help offset those reductions.
“In terms of growth, we think of VBP as a good guy. In terms of margin, we think of it as a bad guy,” Keel said.
Despite the anticipated China margin pressure, Keel said he expects companywide gross and EBITDA margins to expand in 2027. Hammes said Envista expects its combined China orthodontics and implants businesses to maintain roughly neutral profit dollars while seeing a lower margin rate.
Segment Growth and Capital Allocation
Specialty Products & Technologies revenue rose nearly 3% to $444 million, with core growth of 2%. Spark clear aligner sales grew at a high single-digit rate, while brackets and wires declined at a high single-digit rate, principally because of China VBP preparations. Implant sales grew at a mid-single-digit rate.
Equipment & Consumables core sales grew more than 4%, with low single-digit growth in consumables and mid-single-digit growth in diagnostics. Adjusted operating profit for the segment increased more than 15%, supported by volume, price and operating efficiency.
Envista generated $63 million in third-quarter free cash flow, including approximately $16 million in tariff refunds and offset by $14 million in net capital expenditures. It repurchased approximately 400,000 shares for roughly $10 million, and net debt stood at about 0.6 times adjusted EBITDA.
Keel said organic investment remains the company’s first capital allocation priority, followed by acquisitions. Envista expects to return cash to shareholders at a rate of around one-third of annual free cash flow, he said.
About Envista (NYSE:NVST)
Envista Holdings Corporation (NYSE: NVST) is a global dental products and technologies company headquartered in Brea, California. The company develops, manufactures and markets products used by dentists, dental specialists, dental laboratories and other oral health professionals.
Envista’s portfolio includes dental implants, orthodontic systems, digital imaging and workflow solutions, dental consumables, treatment equipment and related technologies. Its brands include Nobel Biocare, Ormco, DEXIS and Kerr, which provide products and services spanning implant dentistry, orthodontics, diagnostic imaging, restorative care and general dental practice management.
Envista was established as an independent public company in 2019 following its separation from Danaher Corporation.
