Dentsply Sirona at Morgan Stanley Conference: Strategic Shifts and Challenges

On Monday, 08 September 2025, Dentsply Sirona (NASDAQ:XRAY) participated in the Morgan Stanley 23rd Annual Global Healthcare Conference. The company, led by CEO Dan Scavilla and CFO Matt Garza, outlined its strategic direction amidst challenges and opportunities. The leadership plans to implement structural changes to boost market penetration and reallocate resources to innovation and sales, despite anticipating a decline in revenue growth.

Key Takeaways

• New leadership aims to accelerate decision-making and structural changes.
• Revenue growth expected to decline between 2% and 4% in 2025.
• Focus on reallocating resources to R&D and sales for market competitiveness.
• Strategic retention of certain business units to leverage upcoming product launches.
• Emphasis on improving customer experience and operating efficiently.

Financial Results

• Revenue Growth: Projected organic revenue decline of 2% to 4% for 2025.
• Margin Target: Aiming for a fiscal 2025 margin of over 19%.
• Cash Generation: Targeting $300 million to $400 million in annual cash flow.
• Working Capital: Over $1 billion in working capital seen as excessive.
• Tariffs: $80 million annual impact from new tariff rates, especially affecting Swiss manufacturing.

Operational Updates

• ERP Challenges: Facing prebuild and inventory issues with ERP implementation.
• Market Penetration: Prioritizing U.S. market growth and customer engagement.
• Resource Allocation: Shifting focus from support to R&D and sales functions.
• Sales Training: Enhancing training for sales staff and customers.
• German Audit: Continuing cooperation with an audit, asserting standard tax practices.

Future Outlook

• Long-Term Growth: Planning for 2026 aims to align with market growth rates.
• EPS Target: Revisiting a $3 EPS target for 2026 based on strategic differentiation.
• M&A Strategy: Considering bolt-on acquisitions to expand total addressable market.
• R&D Investment: Increasing R&D spending to 7% or more of sales.
• Distribution Strategy: Assessing a more direct approach in distribution channels.

Q&A Highlights

• Business Retention: Retaining certain units to capitalize on product launches and mitigate cash flow impacts.
• U.S. Market Focus: Prioritizing the revitalization of the U.S. market.
• Implant Business: Enhancing implant brand definition and expanding sales force.
• SureSmile Software: Upgrading software for competitive training efficiency.
• Capital Equipment: Observing mixed demand due to high interest rates.
• PrimeScan 2: Encouraging widespread adoption and integration with DS Core.
• Distribution Evaluation: Considering the balance between dealer roles and direct sales.

In conclusion, Dentsply Sirona’s leadership is focused on strategic realignment and operational efficiency. For further insights, refer to the full transcript below.

Full transcript - Morgan Stanley 23rd Annual Global Healthcare Conference:

Erin Wright, Healthcare Services Analyst, Morgan Stanley: Good afternoon, everyone. My name is Erin Wright, the Healthcare Services Analyst at Morgan Stanley. We’re happy to have with us Dentsply Sirona, the management team. We have CEO Dan Scavilla, and Matt Garza, the CFO. Newly appointed management team here, so we’re really excited to have you here and give your views on the strategy and everything kind of going forward. For more important disclosures, please see the Morgan Stanley research disclosure website at m-morganstanley.com/researchdisclosures. If you have any questions, please reach out to your Morgan Stanley sales representative. With that, I will kick it off with sort of a higher-level question. Just in light of the recent management changes at Dentsply Sirona, new CEO, new CFO, both of you here today, can you just give us some more insight into what the new team is really thinking in terms of strategy here?

Dan Scavilla, CEO, Dentsply Sirona: Yeah. Glad to. Of course, I’m 30 days in. Matt’s just closing out 90 days, so we reserve the right to refine that and go a little bit deeper over time, of course. At the end of the day, there’s a couple of things to throw out. First off, the team before us, for the most part, was on the right track. You’re not going to see a radical shift in some of the thinking. There are things such as common ERP or other things that we would follow and continue to put through along those lines. I think both Matt and I believe that we need to make bigger moves or deeper moves in structure. We need to move faster than we are. Both of us feel like the internal processes to formulate a decision and get approval are too cumbersome. It’s actually a competitive disadvantage.

Said differently, we need to actually get out of our own way to move faster and use great products that we have. How we go about addressing the market is what I think we have to see a shift in from us.

Erin Wright, Healthcare Services Analyst, Morgan Stanley: I think, you know, as we think about turnaround stories in dental, there’s been admittedly several of them, and one of them being, you know, different iterations of the turnaround story even at Dentsply Sirona, right? I guess, you know, you said there’s not going to be that much difference relative to kind of prior management team, but can you talk about even before that and, like, where maybe others went wrong and then also where you can kind of move forward in terms of the optimal mix of your business. Today, for instance, you announced the retention of the business, I guess I should say. How are you thinking about your approach relative to others in terms of turnaround stories and what the right mix is?

Dan Scavilla, CEO, Dentsply Sirona: Yeah. I’ll start with that. It’s tough to say what others did well, especially as you’re just sort of new in the seat. If you really look at a few things, how we penetrate a market which is direct and with dealers and through DSOs, etc., I think we have to reevaluate decisions that we’re taking about that versus what we think should be the right approach. I think penetrating the market quickly and deeply is a key thing that we want to look at and understand. We’re working through capital in particular, which is suffering today because of decisions made that I think we want to go back and strengthen a different position on. Ultimately, as I said, and I think Matt will chime in here next on this, we have strong products. Are we structured correctly commercially? I’ll put a question mark on that.

I don’t think we are fully. We have to do that differently. We’re too internally focused on gaining approvals and getting things stamped before we execute. While we have to be compliant, we have to do that in a more efficient, faster way. There are really a couple, I know, basic, not overly exciting things. We also both feel that the middle of the P&L, the support groups, are larger than they should be. We need to free up those funds and put them into R&D, put them into the field so we can innovate and penetrate faster.

Erin Wright, Healthcare Services Analyst, Morgan Stanley: Okay.

Matt Garza, CFO, Dentsply Sirona: I think, Dan, just to add to that, which is something we both come to very quickly, it’s what the identity of the company can be from a P&L through cash flow perspective. You know, Dan talks a lot about resourcing and where that goes to be most effective for growth. Once you achieve that growth, the decisions that you make in strengthening that full cycle in terms of where that capital goes. Investing in the organization, repurposing some of that capital, how you’re going to balance that in terms of freeing up the balance sheet, strengthening it through debt paydown, and then determining how you’re going to return that value to shareholders, things that we’re taking on in the early days.

Erin Wright, Healthcare Services Analyst, Morgan Stanley: With the news today and retention of the what business, what was the rationale behind that, and what brought you to that decision? Was there a formal sale process going on that you walked away from, or was this something where you found kind of underlying value proposition in that business that wasn’t being recognized?

Dan Scavilla, CEO, Dentsply Sirona: You kind of answered for me. A couple of things. The board opened up strategic alternatives to look at, including a sale. They worked with Goldman to put it up. We went through the first phase where things came in. During that time, being new, I went in actually to Germany where these new products were being developed. I realized we have a lot of late-stage investment that has not yet been monetized, hasn’t been launched out. Of course, from a PE model or a spin-out model, they’re not valued into that. If you look at what we believe the intrinsic value to be and the potential of these short-term launches coming up, they weren’t accurately reflected in what was coming in. That was step one. Step two is if you actually do the full math and say, "Okay. Let’s say we spin this.

We have to do a stock buyback to keep the EPS whole. We have to do a few other things." You actually come out net zero or slightly down in cash for the shareholders. More importantly, you would have impaired your cash flow 40%. This is a large cash flow business. In the turnaround stage, you spin something, give nothing to the shareholders, and reduce your cash flow significantly. It didn’t make sense to me. Selling it at a price that doesn’t have the value of these soon-to-be launched products in there. At the end of the day, it’s in our interest to say, "Let’s hold this and continue to grow it and gain value from it, use it as a fund to help fuel the turnaround in dental." It is a fairly standalone business, so it doesn’t take a lot of time out from us.

In fact, I tell you, it’s less than 5% of my time. We’ll put up a structure that even further makes that independent.

Erin Wright, Healthcare Services Analyst, Morgan Stanley: Yeah. It’s a higher margin, good cash flow business, for sure. We feel like that retention is, was wanted. In terms of let’s go back to fundamentals in dental, how you view the long-term growth trajectory in dental, how you would characterize it now, or how you would characterize it longer term relative to what you’re seeing now across various different geographies.

Dan Scavilla, CEO, Dentsply Sirona: It’s a couple of things, right? If you go back and look at some of the published data, you would say, "Hey, dental has been growing, you know, above GDP for many years, 20-plus years. In recent years, it’s come down to grow at GDP." I think it’s fair to say that that assumption for me is to continue. I wouldn’t wait and say, "I’m waiting for the market to recover." I don’t think that’s a healthy thing to do. I think knowing that it is at GDP, we need to make sure that we continue to innovate, share the strengths we have with our customers to demonstrate value and efficiency, and simply out compete, which is not something we’re doing well today. Matt, if you want to add.

Matt Garza, CFO, Dentsply Sirona: I think as we look at the resources again and how they’re being applied, where we have opportunities to refocus some of the spend today, which sits in the corporation, into sales, into innovation, it’s a big opportunity. That can help us in those areas where Dan said to catch back up to what the market growth rates are, and then in certain instances, find opportunities to beat it. By the way, our planning process for 2026 is starting with just that question to the organization. If we believe that these are the market growth rates, how can you achieve these growth rates? It’s actually a hard question for the organization because we haven’t demonstrated that we could in the past couple of years. Let’s get into it early and talk about it.

Erin Wright, Healthcare Services Analyst, Morgan Stanley: I think that’s a good point because, I mean, there was the $3 number in terms of EPS for 2026 that was based on long-term growth trajectory or long-term growth that was different, right, than what we’re seeing now and potentially what we see kind of longer term too. I think that makes a lot of sense. As we think about 2026, what do you think or when do you think we should get more color on that front? Is it the third quarter earnings call? What sort of baseline long-term growth do you think you will imply in terms of that 2026 target?

Matt Garza, CFO, Dentsply Sirona: Yeah, Dan just looked at me.

Again, 30 days and 90 days. I think the process for 2026 is this. We want to see some demonstrated points of differences in decision-making that we are making now. We’re not expecting some of these things to take a long time, and that will inform what we believe about 2026 in terms of top-line growth. I think we can be much more pedantic and have a better understanding of things in the middle of the P&L that we control because we’re going to make changes to my organization and other organizations within the company. We can start to talk about some of those things, but want to see some proof points before we really mark out what 2026 looks like.

Dan Scavilla, CEO, Dentsply Sirona: It’s one step of the journey, right? Just keep in mind for us, returning the U.S. to health is paramount. We have to do that. Nothing else will matter in the company given its size. You have to do that through capital and implants and aligners, that kind of business. Even in that approach is significant. While we address the middle of the P&L, our goal is to be at or slightly above market. We’re not going to come back and say we’re 10% or 15% growers in a 3% market. What both Matt and I believe is we can strengthen the earnings per share and the cash flow and have meaningful growth in both of those areas for the long term that will pay down debt and unleverage the company, and quite frankly, build up a powder for us to go out and do acquisitions.

Erin Wright, Healthcare Services Analyst, Morgan Stanley: Okay. Great. Let’s talk a little bit about the near term in terms of 2025 and your expectations there. I think revenue growth negative 4% to negative 2% or organic is what you’re forecasting. Can you break down some of the key headwinds, tailwinds that’s incorporated there and what you’re seeing?

Matt Garza, CFO, Dentsply Sirona: Yeah. 2% to 4% down is what we were pointing to, right? That was based on a number of factors, right? Some ERP prebuilt last year. We’ve seen some headwinds in CTS. We’ve seen some headwinds in implants. Pointing to those, we do have bite that is coming down on a comparable basis year over year as we’ve suspended sales in that business. There are a couple of proof points. Really where I think Dan and I have focused early days on is how do you get stable? How do you demonstrate that very quickly? How do you build back the processes to grow? If I get really near term and just say, all right, Erin, going from Q2 to Q3, we do have a seasonal down. We’ve said that that’s kind of 5% to 10%.

We do see DS World coming in at the end of Q3, which leads into Q4. Our Q4 springs back largely on the basis of how dentists are going to take advantage of tax situations that they may have and what the interest rate environment may be. We’re looking at the rest of this year to be fairly balanced with the first half. It puts us really in a nice position from a guidance perspective to be able to meet guidance as we saw in the second quarter and then generate that type of top-line growth. It’s the momentum and the things that we’re going to talk about underneath going into 2026 that I think are going to be important proof points for us.

Erin Wright, Healthcare Services Analyst, Morgan Stanley: Okay. Talking about some of the things that are under your control and margins across this business, I think fiscal 2025 margin target of over 19%. Can you talk about or help us understand what’s durable here, what some of those areas in terms of low-hanging fruit from a cost-savings perspective?

Dan Scavilla, CEO, Dentsply Sirona: Yeah.

Erin Wright, Healthcare Services Analyst, Morgan Stanley: What you’re targeting first.

Dan Scavilla, CEO, Dentsply Sirona: I think the real thing is we’re looking for sustained profitable growth, and we’re looking to make sure we build the organization that can do that. This is really about when you actually have the right solution for a customer and you have a good customer experience and you execute those, your financials will follow. While we’re looking at finances, it’s not leading it. They’re going to be the result of us doing the right things. That said, it’s clear to us that we have to change how we go to market, particularly in the U.S., to penetrate that better. We have to soften up what’s in the middle of our P&L so that we put more into R&D, more into the field to do those expansions.

We’re trying to do that almost as a self-funding item as opposed to going out still leveraging more to do it along those lines. While we’re not spitting out exact margins, what we’re saying is growth will give you a margin lift anyway. It’ll give you cash. Us reallocating those things can sustain it. The ultimate thing here is just to be continuously strong and more predictable on your margins once you solidify the top line.

Matt Garza, CFO, Dentsply Sirona: The only other thing I’ll add, Dan, I think both you and I look at it the same way, and we’re trying to push that through the organization, operating in an extremely lean manner, given our backgrounds of operating in lean, bringing that philosophy to the table, and ensuring that everybody knows the value of a dollar and how they put it to use for a return.

Dan Scavilla, CEO, Dentsply Sirona: Mm-hmm.

Matt Garza, CFO, Dentsply Sirona: Minimizing those things that are not return-seeking, by and large, corporate organizations versus the sales and innovation organizations, repurposing those dollars. Dan’s talked about it today, and I share the same view. We have a significant overspend on resource functions that can go back into value-generating functions.

Erin Wright, Healthcare Services Analyst, Morgan Stanley: Can you talk a little bit about some of the, I guess in the first half of the year, can you talk about some of the moving pieces from a working capital perspective that you’re seeing, like, in terms of, you know, the cash flow dynamics, I guess, weren’t as good in the first half? How do you get back to, like, $300, $400 million in cash generation on an annual basis?

Matt Garza, CFO, Dentsply Sirona: Yes. I think in 2025, you’re seeing some unique dynamics. There was a big cash flow benefit last year from a tax credit. If you remove that, we’re kind of pointing to even slightly lower free cash flow this year than what we saw in 2024. That being said, the big dynamic of that, we had $1 billion in working capital on the balance sheet.

Dan Scavilla, CEO, Dentsply Sirona: Mm-hmm.

Matt Garza, CFO, Dentsply Sirona: That is overpositioned for us. A lot of that is being driven by prebuilds and inventories related to ERP go lives, related to tariffs. We can work through those inventories. We can drive down our inventory position. We have a phenomenal supply chain team that’s going after doing that. The other areas being very pedantic and directive on the terms that we are providing to our customers and the terms that we are getting from our suppliers, those are two key areas that we’re also working on. Now, Dan is going to tell you, we don’t have targets for that yet. The answer is they are going to be better than they are today.

Erin Wright, Healthcare Services Analyst, Morgan Stanley: Okay. From a capital allocation standpoint, you did mention potential to do deals. How are you thinking about M&A? What would be the ideal target for you? Maybe it’s too early to ask.

Dan Scavilla, CEO, Dentsply Sirona: It’s not that it’s too early to ask. Stabilize the business and the foundation before you build on it. Let’s go get ourselves in a solid state within dentistry, retaining all spec, let it grow, accumulate cash to deleverage, and then also stockpile. Let’s look at opportunistic deals, as bolt-ons or even as transitional that will expand your TAM. I think that’s really it. If you said, "Hey, do you see that happening in the next 12 months?" I doubt it. It would have to be really an amazing opportunity. I think we need to focus the organization on coming out stronger first and then building on that base.

Matt Garza, CFO, Dentsply Sirona: Dan, really cool thing in that, though, was implied a strong balance sheet and a leverage profile that gives us maximum flexibility.

Dan Scavilla, CEO, Dentsply Sirona: Mm-hmm.

Matt Garza, CFO, Dentsply Sirona: Being able to have gunpowder if we need it, or significant, significant cash reserves should we want them, is how we’re driving after it.

Erin Wright, Healthcare Services Analyst, Morgan Stanley: How do you think about the R&D strategy? I think you talked a little bit about this, but is R&D spending over 4% of sales, is that the right level? Like, what do you see?

Dan Scavilla, CEO, Dentsply Sirona: I would like it to be higher. I would say, you know, 7% or more at least, equivalent to the market.

Erin Wright, Healthcare Services Analyst, Morgan Stanley: Okay. I always thought that there was, like, going back to the mix of the business and sort of the strategy and the rationale between, like, the Dentsply Sirona merger that obviously has been shaky since then. How do you prioritize things? Are you looking at SKU rationalization? I think before, it was like 100,000 SKUs across Dentsply. I would think that that’s an area of low-hanging fruit that you could kind of take a look at. Any bigger, chunkier kind of divisions that you don’t see as you that could be deemphasized, I guess, near term?

Dan Scavilla, CEO, Dentsply Sirona: No, not really in the near term. What I would tell you even with the Dentsply Sirona thing is putting capital out and developing the, you know, chairside abilities is key. I think having the ability to have all of your field trained in that and be able to sell that to dentists can be better than it has been done. I think there’s an opportunity therein. I think the verticals are good verticals. I think EDS is solid and can continue. If you look at implants, we have to do a much better job. I think CTS is a major part, including DS Core, and how you build the future of digital dentistry. It’s all out there. I wouldn’t walk away from that. Even, you know, I don’t believe labs will ever go away to zero.

I think there’ll be a significant part that we have to pay more attention to. I think you have to verticalize this and understand how best to approach these. We’ve been doing it geographically, and I’m wondering if there’s a need for us to think more as a vertical set of verticals and just geography type approach. I honestly don’t know yet. I’m still playing with that, but I’m leaning in that direction to go deeper.

Erin Wright, Healthcare Services Analyst, Morgan Stanley: What’s the latest on tariffs in terms of your expectations there?

Matt Garza, CFO, Dentsply Sirona: For this year, it was really unchanged in terms of the net impact to the company, around $25 million. As we moved into what that actually means, though, on an annualized basis, that’s $50 million. What we said at the end of the second quarter was given the new tariff rates that were put into place, particularly Switzerland came on with a very large rate. You know that we do manufacture in Switzerland and distribute around the world. We expected that tariff impact to grow to about an $80 million annualized impact. That was only the impact that we talked about. We didn’t talk about the offsets. We didn’t talk about the things that we are looking at doing. That will come out. We’ll talk to you about that in Q3, and we’ll keep you up to date on that. We do have levers that we are going after.

One of the things within, let’s call it SKU rationalization, there is also our footprint rationalization in terms of how we operate, where things are manufactured, how we go after that, the speed at which we do that, that will help us, other levels within the supply chain organization, and of course, you know, surcharge pricing and/or tariff pricing, to be able to push through. Some of those are requirements that we’ll have to talk about.

Erin Wright, Healthcare Services Analyst, Morgan Stanley: Let’s talk about equipment first. How would you characterize the willingness to spend on capital equipment at practices right now?

Dan Scavilla, CEO, Dentsply Sirona: I think it’s a little bit mixed, right? Certainly, interest rates being high don’t help. As they decrease, there’s probably more of a willingness since dentists, individual dentists, will come out and actually use financing to get some of that type of thing. I think that a lot of the dentists that I talk to see the benefit of chairside and the need to do both milling and 3D printing. I think that they’re a wave of the future. I’m not saying they’re 100% of the future, but I think they have a prominent and growing role in the future. I think how you provide scalable options to the dentist over the long term is going to be key to capturing that real estate.

Erin Wright, Healthcare Services Analyst, Morgan Stanley: Within kind of the CAD/CAM offering, your PrimeScan portfolio with PrimeScan 2, PrimeScan Connect, you also have PrimeMill. I guess, any update on sort of the competitive landscape, ASPs, how you’re thinking about the competitive response to some of the lower ASPs that are out there?

Dan Scavilla, CEO, Dentsply Sirona: I think there’s always going to be lower-cost offerings out there. We’re not going to become the low-cost offering. You can choose between a Mercedes and a Hyundai. There’s room for both. You have to decide what your style is and go. I think a company with our background trying to become a low-cost isn’t really a realistic approach right now. It doesn’t mean we can’t drive costs out or be competitive in the right ways. I think ultimately, you want to sell based on innovation and technology that matter and get into the right market segment that will accept that.

Erin Wright, Healthcare Services Analyst, Morgan Stanley: Okay. PrimeScan 2, what’s kind of the target customer there and PrimeScan Connect and the different iterations? Do you have a sufficient offering for mid-tier to higher end, and how are you approaching the different offerings across the Prime business?

Dan Scavilla, CEO, Dentsply Sirona: The best thing about PrimeScan 2 is the fact that it’s cloud-based digital scanning. We’re really going at that almost anywhere we can for the sake of saying to modernize your practice and to capture digitally that ability to take a patient throughout from cradle to grave is going to be one of the best ways to do it. It goes right in line with our DS Core ability, to offer that as the overall arching software to do your business with and capturing and transferring data. For us, we’re really spreading wide. We’re not focusing in on PrimeScan 2. I think for the mills and the chairside, it really depends on what the dentist is dealing with, the specialists, although more generals are playing with it.

I would tell you we’re a little more open to that as opposed to saying we’re focused only on this type of dentist at this level for these things. I think we’re willing to talk to them and see what’s your best solution. Ultimately, it’s how do we build that long-term relationship by placing this capital with you, growing it based on you growing your business, and really demonstrating the efficiencies and therefore the chair turns we can get by using our systems and our approach.

Erin Wright, Healthcare Services Analyst, Morgan Stanley: Okay. Great. I’ll switch over to specialty on the implant side of the business. Can you parse out what you’re seeing now in terms of the key underlying kind of growth and key drivers of that business, both in the U.S. and international markets? How do you get back to, you know, market growth rate in that segment?

Dan Scavilla, CEO, Dentsply Sirona: Yeah, it’s a couple of things. I think with implant, you really have to further define the brands. We have a lot of brands, and I think we have a lot of white papers and clinical data that we haven’t leveraged to our ability, meaning that we haven’t fully trained our sales force or expanded our sales force in a way that’s optimal there. If you got into the implants, I think it’s a matter of having more feet on the street with better education through a differentiated portfolio offering than we have today using white papers that we have. I think that’s one on the implant side. On the aligners side, and everyone talks about aligners these days, but actually, that solution, as you know, is braces, it’s wires, it’s also the aligners.

We have the ability, honestly, I think we have some of the best robotically dense wires no one else has. When we have the SureSmile, we can actually go along the journey with a patient. You may want to start with wires. You might want to move into aligners. You may even do the opposite. We have to capitalize on that more. We also have to modernize our software to be old and cumbersome. To be competitive there, you want to go modernize your software, making it easier for the practitioners to use, and then offering them both the wires and the aligners as a way to go at it. I think those two are probably the biggest thing we have to do. Post-bite, we have to strengthen our orthopedic relationships.

I think there was something there that we have to go back and build bridges on, and that may take some time. I think we have to be more present with them now that you’ve walked away from bite and direct to consumer.

Erin Wright, Healthcare Services Analyst, Morgan Stanley: Got it. What does the innovation pipeline look like across implants?

Dan Scavilla, CEO, Dentsply Sirona: Across implants?

Erin Wright, Healthcare Services Analyst, Morgan Stanley: Yeah.

Dan Scavilla, CEO, Dentsply Sirona: are a few things I’m not going to talk about that I think are going to be relevant. I’m coming from my spine background with this and talking about, you know, vertebrae and putting things in. When I’ve seen the way the engineers are approaching this, I’m generally excited. There is some great metal technology. There are some great fastening technologies that I think, if they come through, can differentiate, but they’re early on right now.

Erin Wright, Healthcare Services Analyst, Morgan Stanley: Okay. I think we’ve updated kind of the software across SureSmile before, and you’re saying you need to still modernize the software. Is that what you were talking about on SureSmile?

Dan Scavilla, CEO, Dentsply Sirona: Yeah. I’ll be specific. I think it takes about a week to be trained on our software. It takes two hours to be trained on competitive software. That’s a big gap that has to close.

Erin Wright, Healthcare Services Analyst, Morgan Stanley: How is demand for SureSmile right now?

Dan Scavilla, CEO, Dentsply Sirona: It’s okay. It’s not the greatest. It’s moving along. It’s going through the process. If you say why, you’ve also depleted a lot of your sales force and haven’t replenished them. Ultimately, you need a relationship, and you need to be present if you want to go push. I think we have to reestablish our field if we’re going to lift that up.

Erin Wright, Healthcare Services Analyst, Morgan Stanley: Okay.

Matt Garza, CFO, Dentsply Sirona: In North America.

Dan Scavilla, CEO, Dentsply Sirona: In North America.

Matt Garza, CFO, Dentsply Sirona: You know, in Europe, it’s pushing really well. We have an educated team over there that’s doing a great job. I wanted to give a shout out to Chavi, but then you do have the dynamics within aligners. I think over the weekend, you heard one of our competitors talking about it. There is obviously some pocket share, consumer pocket share elements that are taking place. You are seeing that primarily in the U.S.

Erin Wright, Healthcare Services Analyst, Morgan Stanley: Okay. As you think about your angle in terms of your strategy, primarily focused on the GP side of the market, how do you think about ortho expansion as the offering beyond where you’re targeting now?

Dan Scavilla, CEO, Dentsply Sirona: We need to go heavier ortho than we are today.

Erin Wright, Healthcare Services Analyst, Morgan Stanley: Yeah. Okay. Point taken. As we think about the overall, let’s switch gears a little bit. The distribution strategy, you mentioned earlier about going to dealers and going to kind of distribution in terms of getting potentially better economics. Obviously, the prior CEO is vocal about that to some extent in terms of the relationship with Patterson. Where does that stand now in terms of the relationship, and how do you value distribution? How do you leverage distributors more broadly, and how is that going to change?

Dan Scavilla, CEO, Dentsply Sirona: Yeah. I would say to be determined. When you look at dealers, you say, "Listen, they’re your partners. They’re your competition. They’re your customers all in one." They’re not going away. I think how we decide to go to market either with them or without them is something I’m working on. I’ve had a chance to actually connect with Patterson’s CEO, new, and also Henry Schein. We’re just working through conversations about what makes the most sense with that. I’m not signaling anything to you yet other than I’m learning and figuring out what to do with that. I think, ultimately, we want to say, how can you rapidly penetrate the market and have sustained growth? What’s the best way to do that? I’m still in that process of evaluating direct versus other alternatives.

Erin Wright, Healthcare Services Analyst, Morgan Stanley: Okay. Would you ever go fully direct? I think it’s like two-thirds of your business today is through distribution. Is that roughly about right? Or where does that go over time then?

Dan Scavilla, CEO, Dentsply Sirona: Yeah. Your general practices tend to be, right now, through the dealers, and then you tend to be on your specialties.

Erin Wright, Healthcare Services Analyst, Morgan Stanley: Yeah.

Dan Scavilla, CEO, Dentsply Sirona: More direct. The answer is I don’t know. Give me some more time. I’m evaluating it and seeing where it is. Are you capable of doing it? Is it the best thing for the customer experience to go direct or not? Does it create the best return to the shareholders to do that? We’re just in the middle of having those conversations now. That’s not going to be a long process, but probably need another couple of months of figuring that out before I know where I want to be.

Erin Wright, Healthcare Services Analyst, Morgan Stanley: Okay. There was an ongoing kind of Salesforce excellence program, restructuring initiatives going. Can you give us, you know, what’s currently going on, what was halted from before, and you’re reassessing things? Where do we stand now in terms of some of your either Salesforce excellence program, what’s been implemented, what’s going forward, and then, you know, how do we think about your own kind of initiatives that you’re adding on or supplementing to what is existing?

Dan Scavilla, CEO, Dentsply Sirona: I think a couple of things. I think some of the margin achievement that’s been done has been through unilateral cuts throughout the company. Both Matt and I are going back saying we need to invest more in Salesforce and innovation and less in the back office corporate thing. I think that’s one shift that we’re going to do that’s going to put more feet on the street and fill more positions on the Salesforce side. I think that increased training for the Salesforce and increased training for the customers are two keys that we need to put in and figure out how to fund through reengineering of the P&L. I would say that we’re continually down on those paths right now.

Erin Wright, Healthcare Services Analyst, Morgan Stanley: Any update on the German audit?

Dan Scavilla, CEO, Dentsply Sirona: Actually, I’ll let you do that.

Matt Garza, CFO, Dentsply Sirona: Yeah. No. I mean, the way that we’ve been talking about the German audit is exactly the same, which is we’re continuing to be very open in terms of the overall dialogue. We’re providing all information that’s being requested. We have taken the stance that we followed a similar practice in tax structuring that almost every other company doing an acquisition in Europe has done. Approaching it from that basis and being very collaborative, we’re expecting it to be resolved sometime. You know, these things don’t have a very good track record of this time frame or that time frame. It just takes time.

Erin Wright, Healthcare Services Analyst, Morgan Stanley: Got it. I’ll end with a broader one for each of you. If you could answer, what has been most surprising since you’ve come on board?

Dan Scavilla, CEO, Dentsply Sirona: Actually, for me, it was the willingness of the entire team at different levels to want to drive forward and have some fight in them. I wasn’t sure what I would inherit when I came in, and I started doing skip levels, down to the reps actually in the U.S. or in Europe or manager level, not up at the VP. When I see the willingness of the team to actually come along and improve the things we’ve talked about, they’re looking for people who can make decisions and stay with those decisions and they’ll go execute. That was stronger than I anticipated. I thought there’d be some resistance or maybe just we’re tired and you’re CEO number 27, and here we go. That wasn’t the case. They really are saying, here’s what we see the issues are in our day-to-day. Can you help us improve these things?

I like that because this is a mindset shift. This turnaround is not about product. It’s about mindset. When I look at the right level, they have the right mindset. We just have to get some fight and some swagger back into the company to get this moving.

Matt Garza, CFO, Dentsply Sirona: From my perspective, I think when you enter these types of situations, you often think there’s gotta be some talent gaps. We have an extremely talented group of people who have great backgrounds across this industry and other industries, many of which just have seen excellence and want to pursue excellence again. That want was much stronger than I thought it was going to be when I was showing up. Happy to see that here.

Erin Wright, Healthcare Services Analyst, Morgan Stanley: Okay. Great. Thank you so much. Appreciate the time today.

Dan Scavilla, CEO, Dentsply Sirona: Thanks, Erin. It was.

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