XRAY 10-K & 10-Q changes, risk factors and insider trading

We are exposed to the risk of cyber incidents, which can result from deliberate attacks or unintentional events, in the normal course of business. We use integrated information and technology systems to manage our business and deliver products and services to customers. In particular, the 2022 launch of DS Core, our cloud platform that integrates digital dentistry workflows across devices, and the 2024 launch of Primescan 2, a cloud-native intraoral scanner, have introduced new potential vulnerabilities to cyber attacks. The breadth and complexity of our information and technology systems have increased and we expect that they will continue to increase as we expand the services enabled by DS Core and further develop our Enterprise Resource Planning (“ERP”) systems and product offerings to utilize artificial intelligence (“AI”) and analytics.analytics (such as DS Core). As a result, we will increasingly be exposed to risks inherent in the development, integration and operation of the evolving information and technology supporting our product platforms, as well as our own internal infrastructure, including:

Like other large, global companies, during the normal course of business, we have experienced and expect to continue to experience cyber threats, attacks and other attempts to compromise our information systems, with such attacks and threats rapidly increasing in both sophistication and frequency. However, none, to our knowledge, have had a material adverse effect on our business, financial condition or results of operations to date. Our policies, required employee training (including that which relates to phishing prevention), procedures and technical safeguards may be insufficient to prevent or detect improper access to confidential, proprietary or sensitive data, including personal data. Cyberattacks could also cause us to incur significant costs, disrupt key business operations and divert attention of management and key information technology resources. We also face the ongoing challenge of controlling access to our information and technology infrastructure. We have experienced various cyber incidents in the past and have implemented new controls, governance, protections and procedures as a result. If we do not successfully manage these access controls, it could expose us to the risk of security breaches or disruptions. Although past cybersecurity incidents have not had a material effect on our business or operations, and although we and our service providers take efforts to ensure the integrity of our systems and anticipate, detect, avoid or mitigate such threats, we cannot provide assurances that a future cyberattack would not result in material harm to our business and results of operations. Our policies, required employee training (including phishing prevention), procedures and technical safeguards may be insufficient to prevent or detect improper access to confidential, proprietary or sensitive data, including personal data. Cyberattacks could cause us to incur significant costs, disrupt key business operations and divert attention of management and key information technology resources. We also face the ongoing challenge of controlling access to our information and technology infrastructure. We have implemented new controls, governance, protections and procedures as a result of cyber incidents experienced in the past. If we do not successfully manage these access controls, it could expose us to the risk of security breaches or disruptions. Disaster recovery plans, where in place, might not adequately protect us in the event of a system failure. Further, we currently do not have excess or standby computer processing or network capacity everywhere in the world to avoid disruption in the event of a system failure. Despite any precautions we take, damage from natural disasters, telecommunications failures, computer viruses, break-ins, human error or similar events at our computer facilities could result in interruptions in the flow of data to our servers, although we have not yet experienced such an interruption. While we have invested and continue to invest in information technology risk management and disaster recovery plans, these measures cannot fully insulate us from cyber incidents, technology disruptions or data loss and the resulting adverse effect on our operations and financial results. If our information systems are breached again, sensitive and proprietary data is compromised, surreptitiously modified, rendered inaccessible for any period of time or made public, or if we fail to make adequate or timely disclosures to affected individuals, appropriate state and federal regulatory authorities or law enforcement agencies, it could result in significant fines, penalties, court orders, sanctions and proceedings or actions against us by governmental or other regulatory authorities, customers or third parties. We may incur substantial costs and suffer other negative consequences such as liability, reputational harm and significant remediation costs and experience material harm to our business and financial results if we experience cyber incidents in the future.

We collect and process personally identifiable information (“PII”) and other data as part of our business processes and activities. This data is subject to an increasing number of U.S. and foreign laws and regulations, including oversight by regulatory or governmental bodies. The EU General Data Protection Regulation (“GDPR”), for example, imposeshas an extraterritorial scope that makes it applicable to our U.S.-based legal entities whenever we process the personal data of EU residents and impose stringent data protection requirements and provides significant penalties for noncompliance. Fines for noncompliance can amount to up to €20 million or 4% of the total worldwide annual sales from the preceding financial year (whichever is higher) and may be imposed in conjunction with the exercise of the authority’s investigatory and corrective powers. The GDPR’s extraterritorial scope makes it applicable to our U.S.-based legal entities whenever our business activities process the personal data of EU residents. Privacy laws, rules and regulations are also rapidly developing in other regions, including China, Brazil and South Korea, and the United States.

In the United States, the federal Health Insurance Portability and Accountability Act of 1996, as amended, and its implementing regulations (collectively, “HIPAA”) impose certain requirements on covered entities and their business associates to protect the privacy and security of protected health information (“PHI”) and to provide notification in the event of a breach of PHI. The U.S. Department of Health and Human Services Office for Civil Rights (“OCR”), which is responsible for enforcing HIPAA, also may enter into resolution agreements requiring the payment of civil money penalties and/or the establishment of corrective action plans to address violations of HIPAA. Pursuant to HIPAA, OCR has adopted privacy regulations to govern the use and disclosure of PHI and data security regulations that require the implementation of safeguards to protect electronic PHI.

Our Company, through its various subsidiaries, functions as both a covered entity and a business associate under HIPAA. Where necessary, we have segregated our data to ensure that PHI is handled in accordance with HIPAA requirements. We believe that we have implemented appropriate policies and procedures and security measures necessary to comply with HIPAA. However, despite our compliance efforts, we may suffer a serious breach of PHI or be subject to a cyberattack that compromises the PHI that we maintain.maintain, which may require that we pay monetary civil penalties or establish corrective action plans.

•Additionally, federal and state privacy and security-related laws may be more restrictive than HIPAA and could impose additional penalties. For example, the Federal Trade Commission uses its consumer protection authority to initiate enforcement actions in response to alleged privacy violations and data breaches. The California Consumer Privacy Act (“CCPA”) createdcreates additional data privacy obligations for covered companies and a private right of action with statutory damages for certain data breaches. In addition, the California Privacy Rights Act further expanded the CCPA to provide even greater rights to California consumers with respect to their data. Otherother states have followed California by implementing data privacy laws, including, but not limited to, Colorado, Connecticut, Utah, Virginia, and Washington. These laws and other state laws contain breach notification requirements. If we suffer a serious breach of personal data, we may be subject to breach notification requirements, government investigations, media inquiries, civil and criminal fines and penalties, litigation, and negative public perception, and we may be required to expend substantial financial and personnel resources. Any liability from failing to comply with applicable privacy and data protection laws could adversely affect our operations and our financial condition.

These varying laws, rules, regulations and industry standards impact our businesses to the extent we rely on the use of personal data,PII, including PHI, and create significant compliance challenges. In addition, certain privacy and data protection laws may apply to us indirectly through our customers, manufacturers, suppliers or other third-party partners. For example, non-compliance with applicable laws or regulations by a third-party partner that is processing personal data on our behalf may be deemed to be non-compliance or a failure to conduct proper due diligence. Any inability, or perceived inability, to adequately address privacy and data protection concerns or to comply with applicable laws, regulations, policies, industry standards, contractual obligations, or other legal obligations (including at newly acquired companies) could result in additional cost and liability to us or our officers, damage our reputation, inhibit sales, and otherwise adversely affect our business.

In addition, the legal and regulatory landscape surrounding AI technologies is rapidly evolving and uncertain, especially in the areas of intellectual property, cybersecurity, and privacy and data protection. For example, the EU AI Act was enacted on August 1, 2024, with some provisions effective in February of 2025, and becoming fully effective on August 2, 2026. Additionally, there is uncertainty around the validity and enforceability of intellectual property rights related to the use, development, and deployment of AI. Compliance with new or changing laws, regulations or industry standards relating to AI may impose significant operational costs and may limit the ability of the Company and ourits business partners to develop, deploy or use AI technologies. Failure to appropriately respond to this evolving landscape may result in legal liability, regulatory action, or brand and reputational harm.

Although we currently maintain liability insurance intended to cover cyber and certain other privacy and security breach-related claims, we cannot ensure that our insurance coverage will be adequate to cover liabilities arising out of claims asserted against us in the future if the outcomes of such claims are unfavorable to us. Insurers are seeking to limit liability and/or deny coverage for AI-related claims due to uncertainty created by the speed of technology advancement. Liabilities for claims outside or in excess of our insurance coverage, including coverage for cyber liability and certain other privacy and security breach-related claims, could have a material adverse effect on our business, financial condition, results of operations, cash flows and the trading price of our securities.

We operatesell to customers in approximately 150140 countries and our suppliers’ manufacturing facilitiesfacilities, along with those of our suppliers, are located in multiple locationscountries around the world. Potential events such as extreme weather, natural disasters, regional epidemics or global pandemics, worker strikes and social and political actions, such as trade wars, regional wars or conflicts or other events beyond our control, could impact our ongoing business operations, including due to disruptions at critical third-party vendors or the loss of critical information technology and telecommunications systems. There is potential that global climate change could result in certain types of natural disasters occurring more frequently or with increased intensity and such climate events could disrupt our third-party suppliers, production, and distribution of our products. Current or future insurance arrangements may not provide protection for costs that may arise from such events, particularly if such events are catastrophic in nature or occur in combination. Although we maintain multiple manufacturing facilities, a large number of the products manufactured by us are manufactured in facilities that are the sole source of such products. As there are a limited number of alternative third-party suppliers for these products, any disruption at a particular Company manufacturing facility could lead to delays and increased expenses and may damage our business and results of operations. If our incident response, disaster recovery and business continuity plans do not resolve these issues in an effective and timely manner, such events could result in an interruption in our operations and could cause material negative impacts on our business, financial condition or results of operations.

Additionally, a significant portion of our injectable anesthetic products, orthodontic products, certain dental cutting instruments, catheters, nickel titanium products and certain other products and raw materials are purchased from a limited number of supplierssuppliers, andincluding in certain cases single source suppliers pursuant to agreements that are subject to periodic renewal, some of which may also compete with us. As there are a limited number of suppliers for these products, there can be no assurance that we will be able to obtain an adequate supply of these products and raw materials in the future at acceptable prices. Any delays in delivery of or shortages in these products could interrupt and delay manufacturing of our products and result in the cancellation of orders. In addition, these suppliers could discontinue the manufacture or supply of these products to us or supply products to competitors. We may not be able to identify and integrate alternative sources of supply in a timely fashion, or at all. Any transition to alternate suppliers may result in delays in shipment, increase expenses and limit our ability to deliver products to customers.

Segment DescriptionsSegments

The impact of thegeopolitical Israel-Hamas warconflicts

The Company’s operations in Israel consist of two manufacturing facilities for implants products, with one site in northern Israel and one site in southern Israel, both of which remain open and continue to operate normally. For the yeartwelve months ended December 31, 2024,2025, net sales of products produced at these sites comprised approximately 3% of our consolidated net sales and approximately 13% of the net sales of the Orthodontic and Implant Solutions segment. Net assets within Israel totaled $180$156 million as of December 31, 2024,2025, consisting primarily of investments in subsidiaries and affiliates, acquired technology, property, plant and equipment, cash, and inventory associated with our operations in the country. Overall, the Company’s operations in Israel have not been materially impacted by the conflict, and consequently, the Company has not recorded any allowance for doubtful accounts, inventory reserves, or fixed asset impairments for the year ended December 31, 2024 due to the conflict. The Company continues to monitor developments and prepare contingency plans to limit potential disruption to its operations in the future.

In February 2022, because of the invasion of Ukraine by Russia, economic sanctions were imposed by the United States, the European Union, and certain other countries on Russian financial institutions and businesses. Due to the medical nature of our products, the current sanctions have not materially restricted our ability to continue selling many of our products to customers located in Russia. For the yeartwelve months ended December 31, 2024,2025, net sales in Russia and Ukraine were approximately 2%3% of our consolidated net sales, and net assets in these countries were $64$94 million.million as of December 31, 2025. These net assets include $39$56 million of cash and cash equivalents held within Russia as of December 31, 2024,2025, as well as inventory and trade accounts receivable. Due to currency control measures imposed by the Russian government, which include restrictions on the ability of companies to repatriate or otherwise remit cash from their Russian-based operations to locations outside of Russia, we continue to be limited in our ability to transfer this cash balance out of Russia without incurring substantial costs. Additionally, beginning in September 2024, as a result of further restrictions by European financial institutions on receiving payments from Russia, our capacity to receive intercompany payments for the delivery of our products into Russia has been partially reduced, which further limits our ability to use cash received from sales in Russia for our general purposes. It is unclear whether the remaining financial institutions which the Company relies upon for bank transfers from Russia will ultimately be able to continue facilitating payments, or for how long.

The primary driversDrivers of organicchanges in net sales on a constant currency basis (as defined below) include macroeconomic factors, global dental industry demand, innovation and new product launches by the Company, as well as continued investments in sales and marketing resources to drive demand creation, including clinical education. On a short-term basis, sudden changes in the macroeconomic environment, supply chain challenges, or changes in distributor inventory levels can and have impacted the Company’s sales. Demand can also fluctuate based on the timing of dental trade shows where promotions are offered, major new product introductions, and variability in dental patient traffic, which can be exacerbated by seasonal or severe weather patterns, or other demographic disruptions such as global pandemics.

The Company’s business is subject to quarterly fluctuations in net sales and operating income. The timing of annual price increases, promotional activities, as well as changes in inventory levels at distributors contribute to this fluctuation. Also, the Company distributes approximately two-thirds of its dental consumable and technology and equipment products through third-party distributors whose inventory levels tend tomay increase in the period leading up to a price increase and decline in the period following the implementation of a price increase, although thesethe Company seeks to anticipate and limit material fluctuations arein mitigatedpurchasing bybehavior limitsas on purchases ahead of these increases.applicable. Changes in distributors’ inventory levels have impacted the Company’s consolidated net sales in the past and may continue to do so in the future. In addition, the Company may from time to time engage in new distributor relationships that could cause fluctuations in consolidated net sales and operating income. DistributorWe expect that distributor inventory levels maywill likely fluctuate and differ from the Company’s projections and market demand, resulting in the Company’s forecast of future results being different than expected. There can be no assurance that the Company’s distributors and customers will maintain levels of inventory or patterns of build and liquidation timing in accordance with the Company’s predictions or history. In addition, we expect changes in the Company’s distribution model, including a reduced emphasis on distributor-held inventory, will likely increase variability in ordering patterns and further contribute to fluctuations in net sales and operating income. Any of these fluctuations could be material to the Company’s consolidated financial statements. For more information about the drivers of our business and related risks, see Part I, Item 1, “Business” and Part I, Item 1A, “Risk Factors.”

On October 24, 2024, the Company announced the voluntary suspension of the sale and marketing of its Byte aligner system and impression kits. In January 2025, the Company announced plans that the Byte aligners would no longer be offered to new patients. As a result of these developments, in the fourth quarter of 2024, the Company recorded $187 million in impairments of assets pertaining to the Byte business including a trademark, fixed assets, capitalized software and working capital. In addition to these impairments, the Company recorded an accrual for expected customer refund and other reimbursement payments stemming from the cessation of sales and business realignment, which resulted in a $35 million reduction to net sales. The suspension of sales in the fourth quarter of 2024 also resulted in a decline in aligner revenues in 2025 as compared to the prior period.year. For additional information refer to Item 8, Note 18, Restructuring and Other Costs, in the Notes to Consolidated Financial Statements of this Form 10-K, as well as the Results of Operations discussion below.

The Company presents net sales comparing the current year periods to the prior year periods. In addition, the Company also presents the changes in net sales on ana organicconstant salescurrency basis, which is a Non-GAAP measure. The Company defines “organicconstant salescurrency” as the reported net sales adjusted for: (1) net sales from acquired and divested businesses recorded prior to the first anniversary of the acquisition or divestiture; (2) net sales attributable to discontinued product lines in both the current and prior year periods; and (3) the impact of foreign currency changes, which is calculated by translating current period net sales using the comparable prior period’s currency exchange rates.

OurConstant measure of organic sales may differ from those used by other companies and should not be considered in isolation from, or as a substitute for, measures of financial performance prepared in accordance with US GAAP. Organic salescurrency is an important internal measure for the Company, and its senior management receives a monthly analysis of operating results that includes organicconstant sales.currency. The performance of the Company is measured on this metric along with other performance metrics.

As disclosed in Part I, Item 1A, “Risk Factors,” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2025 (the “2025 Form 10-K”), the Company’s business is subject to risks related to, among other factors, tariffs and other trade protection measures put in place by the United States and other countries. The U.S. government has implemented and could further implement various tariffs on the importation of certain goods from certain countries, a number of which are or may be applicable to the Company’s supply chain, operations, and sales,sales. and the tariffsTariffs enacted or proposed by the Trump AdministrationAdministration, andtogether with retaliatory tariffs imposed by other countriescountries, could make it significantly more difficult or costly for the Company to import certain products or materials to the United States, or export products or materials from the United States to other countries. Further, these tariffs remain subject to evolving modifications and court challenges. Currently, a small portion of the products, materials, and components used in our products are imported from China, and a significant sharenumber of the dental technology and equipment products that we sell in the United States isare manufactured in Europe. Europe is also a majorsignificant market for sales of our products, including certain consumable products made in the United States, while sales in China represent less than 5% of the Company’s global sales on an annual basis. During the second quarter of 2026, the Company received approximately $44 million of refunds for its prior payment of U.S. tariffs imposed under the International Emergency Economic Powers Act ("IEEPA") on goods imported into the U.S. following legal and regulatory developments affecting the administration of those tariffs. While these refunds favorably impacted the Company’s results of operations and cash flows during the quarter, the future effect of tariffs and trade policies on the Company’s business remains uncertain. We continue to monitor and evaluate the ongoing and potential impacts on our supply chain, costs, net sales, and profitability of the tariffs, changes in trade policy, whether implemented or proposed, and court rulings on the legality of certain tariffs. We have implementedexecuted actions and continue to evaluate additional strategies that wouldto mitigate such impacts, including competitive pricing strategies to offset tariffs and evaluating potentialalternative sourcing options that work with our vendors and merchants to seek to minimize products sourced from high tariff rate countries, both for existing products and forto support new product development. TheIt is difficult to predict with reasonable certainty the impact thaton theseour results of operations and customers’ demand for our products from incremental tariffs, changes in trade policy, and related court rulings will ultimately have on our financial results remains uncertain, including the impact on demand for our products in certain markets if prices rise as a consequence of import tariffs.rulings. For additional information, see Part I, Item 1A, “Risk Factors” in our 2025 Form 10-K.

The Company’s operations in Israel consist of two manufacturing facilities for implants products, with one site in northern Israel and one site in southern Israel, both of which remain open and continue to operate normally. For the threesix months ended MarchJune 31,30, 2026, net sales of products produced at these sites comprised approximately 3% of our consolidated net sales and approximately 14%15% of the net sales of the Orthodontic and Implant Solutions segment. Net assets within Israel totaled $131$130 million as of MarchJune 31,30, 2026, consisting primarily of acquired technology, property, plant and equipment, inventory, and cash associated with our operations in the country.

In February 2022, because of the invasion of Ukraine by Russia, economic sanctions were imposed by the United States, the European Union, and certain other countries imposed economic sanctions on certain Russian financial institutions and businesses.businesses and export controls on the export of certain products to Russia. Due to the medical nature of our products, the current sanctions and export controls have not materially restricted our ability to continue selling many of our products to customers located in Russia. For the threesix months ended MarchJune 31,30, 2026, net sales in Russia and Ukraine were approximately 3% of our consolidated net sales, and net assets in these countries were $89$99 million as of MarchJune 31,30, 2026. These net assets include $53$57 million of cash and cash equivalents held within Russia as of MarchJune 31,30, 2026, as well as inventory and trade accounts receivable. Due to currency control measures imposed by the Russian government, which include restrictions on the ability of companies to repatriate or otherwise remit cash from their Russian-based operations to locations outside of Russia, we continue to be limited in our ability to transfer this cash balance out of Russia without incurring substantial costs. Additionally, beginning in September 2024, as a result of further restrictions by European financial institutions on receiving payments from Russia, our capacity to receive intercompany payments for the delivery of our products into Russia has been partially reduced, which further limits our ability to use cash received from sales in Russia for our general purposes.

RESULTS OF OPERATIONS, THREE AND SIX MONTHS ENDED MARCHJUNE 31,30, 2026 COMPARED TO THREE AND SIX MONTHS ENDED MARCHJUNE 31,30, 2025

The Company’s geographic regions for reporting net sales consist of countries in (i) North and South America (“Americas”), (ii) Europe, the Middle East, and Africa (“EMEA”), and (iii) Asia Pacific (“APAC”). Prior period net sales amounts have been recast to conform to the current period presentation, reflecting a shift to a regional geographic presentation, which aligns with how the Company manages commercial activities and reports net sales internally. The change in regional geographic presentation was effective as of January 1, 2026. This change did not impact the Company’s consolidated financial statements.

The net sales decrease on a constant currency basis for the three months ended MarchJune 31,30, 2026 was driven by lower volumes of EDSOIS products in all regions primarily due to the Americasabsence andof EMEA,the Byte business in the Americas, lower volumes of OISCTS products in the Americas, andlower the absencevolumes of net sales for ByteEDS products in 2026.EMEA, and unfavorable pricing in EMEA and APAC across all segments. The decrease was partially offset by higherfavorable volumes in APAC for EDS products, price in EDSpricing in the Americas, higher volumes of CTS products in APAC, and higher volumes of Wellspect products driven by new product introductions.

The net sales decrease on a constant currency basis for the three months ended MarchJune 31,30, 2026 was driven by lower volumes of imagingCAD/CAM products in allthe regions,Americas instrumentsand unfavorable pricing in all regions, and CAD/CAM in EMEA, as well as unfavorable mix in treatment centers.EMEA. The decrease was partially offset by thehigher mixvolumes of CAD/CAM products in APAC. Volumes of CAD/CAM products held by distributors in the three months ended MarchJune 31,30, 2026 increaseddecreased approximately $9$20 million from DecemberMarch 31, 2025,2026, compared to ana increasedecrease of approximately $3$19 million in the three months ended MarchJune 31,30, 2025 from DecemberMarch 31, 2024.2025. Volumes of imagingImaging products held by distributors in the three months ended MarchJune 31,30, 2026 increaseddecreased approximately $1$8 million from DecemberMarch 31, 2025,2026, compared to ana increasedecrease of approximately $6$5 million in the three months ended MarchJune 31,30, 2025 from December 31, 2024. Distributor inventory levels for both CAD/CAM and imaging products at March 31, 2026 remain below historical averages.2025.

The net sales decrease on a constant currency basis for the three months ended MarchJune 31,30, 2026 was driven by lowerincreased volumespromotional acrossactivity all products withinin the Americas and EMEA.lower volumes in restorative products. The decrease was partially offset by higher volumes acrossof allpreventative products in the Americas and higher volumes of endodontic products in APAC. The decrease in volumes in EMEA was, in part, a result of distributors holding less inventory asvolumes of Marchproducts 31,sold 2026by as compareddistributors to priorretail periods.customers exceeding volumes of products sold to distributors. We are unable to quantify the impact to net sales for the three months ended MarchJune 31,30, 2026 from the changes in inventory levels held by EMEA distributors.2026. Changes in inventory levels held by EMEA distributors are expected to impact the amount and timing of net sales in future periods.

The net sales decrease on a constant currency basis for the three and six months ended MarchJune 31,30, 2026 was driven by the absence of net sales forof Byte products in 2026 and lower volumes inof implant products.

The net sales increase on a constant currency basis for the three and six months ended MarchJune 31,30, 2026 was driven by higher product volumes in EMEA and the benefit from new product launches and increased volumes across all regions.introductions.

The decrease in gross profit as a percentage of net sales for the threesix months ended MarchJune 31,30, 2026 was driven by lower volumes inas the EDS and OIS segments, and imaging products within the CTS segment, particularlynoted in the Americas.Net The decrease was also drivenSales by theSegment absencesection of net sales for Byte products in 2026, higher tariff costs,and unfavorable product mix in the EDS segment and implants products in the OIS segment.mix. The decrease was partially offset by a benefit fromfavorable foreign currency.currency impacts and tariff refunds.

The decreaseincrease in SG&A expenses for both the three and six months ended MarchJune 31,30, 2026 was primarily driven by lowerunfavorable headcount,foreign professionalcurrency services,impacts. andThe marketingincrease expenses,was primarilypartially asoffset aby resultthe benefits of restructuring actions, as well as lower professional services and otheradvertising cost-saving initiatives.costs.

For the three and six months ended MarchJune 31,30, 2026, R&D expenses increased as the Company is increasing allocation of capital to R&D, primarily focused on expanding DS Core to support digital workflows across ourthe Company’s product portfolio and accelerating key projects in all segments. The Company expects a level of investment in R&D thatof is at leastapproximately 5% of annual net sales in 2026.

The Company recorded restructuring and other costs of $67$2 million and $69 million for the three and six months ended MarchJune 31,30, 2026, and $9$4 million and $13 million for the three and six months ended MarchJune 31,30, 2025. The expenses in 2026 consisted primarily of severance costs in conjunction with the restructuring plan announced on February 26, 2026. The expenses in 2025 primarily consisted of costs in connection with furthering the execution of various restructuring initiatives announced in prior years.

The decrease in segment adjusted operating income for the three months ended MarchJune 31,30, 2026 is due to lower net sales volumesvolumes, unfavorable product mix and higherunfavorable tariff costs. The decrease waspricing, partially offset by tariff refunds and lower operatingwarranty expenses.costs.

The decreaseincrease in segment adjusted operating income for the three months ended MarchJune 31,30, 2026 is due to lowertariff netrefunds, salesfavorable volumespricing, and higherfavorable tariffheadcount costs. The decreaseincrease was partially offset by lower operatingnet expensessales and favorable foreign currency impact.volumes.

The decrease in segment adjusted operating income for the three months ended MarchJune 31,30, 2026 is due to lower net sales volumes, theunfavorable absence of net sales for Byte products in 2026,pricing, and higherunfavorable tariffproduct costs.mix. The decrease was partially offset by tariff refunds and lower operatingprofessional expenses.service costs.

The decrease in segment adjusted operating income for the three months ended MarchJune 31,30, 2026 is due to highera tariffone costs,time unfavorablewrite-off supplyresulting chainfrom changes,a change in manufacturing process. The decrease was partially offset by new products and afavorable decreaseforeign incurrency royalty revenue.impacts.

Interest expense, net for the three months ended MarchJune 31,30, 2026 increaseddecreased compared to the three months ended MarchJune 31,30, 2025 primarily due to higherlower interest rateaverage debt issuedbalances in September 2025 as well asand higher interest ratesincome, onprimarily commercialattributable paper.to the interest income related to tariff refunds.

Other (income) expense, net for the three and six months ended MarchJune 31,30, 2026 compared to the three and six months ended MarchJune 31,30, 2025 is as follows:

The effective tax rates for the three months ended MarchJune 31,30, 2026 and 2025 were 76.3%50.0% and 56.8%,71.2%, respectively. The increaseeffective tax rates for the six months ended June 30, 2026 and 2025 were 13.8% and 76.9%, respectively. The decrease in the effective tax rate is primarily driven by impairments recorded in the three and six months ended June 30, 2025, along with associated changes in valuation allowances.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Cash provided by operating activities increased compared to the threesix months ended MarchJune 31,30, 2025, primarily driven by higher net income, which included $44 million related to tariff refunds received from the U.S. government, lower accounts receivablereceivable, and prepaid expenses and other current assets, partially offset by higher inventoriesaccounts and lower accrued liabilities.payable. At MarchJune 31,30, 2026, the number of days for sales outstanding in accounts receivable remaineddecreased theby same1 atday 62to 61 days as compared to 62 days at December 31, 2025, and the number of days of sales in inventory remainedincreased theby same5 days to 136 days at 131June days30, 2026 as compared to 131 days at December 31, 2025. Cash provided by operating activities was favorably impacted by the receipt of tariff refunds during the six months ended June 30, 2026.

Cash used in investing activities increased compared to the threesix months ended MarchJune 31,30, 2025, dueprimarily todriven by higher capital expenditures of $33 million and settlement of a net investment hedge of $7 million.expenditures. The Company estimates capital expenditures to be in the range of approximately $125$140 million to $150$160 million for the full year 2026 and expects these investments to include expenses for supply chain equipment upgrades and capacity expansion to support product innovation, expenses associated with DS Core enhancements, and the expenses for the new global ERP system.

Cash used in financing activities increased compared to the threesix months ended MarchJune 31,30, 2025 as the prior‑year period benefited fromincluded cash inflows relatedprovided toby the issuance of $550 million of long-term borrowings, a portion of which was used to repay the 364-day bridge loan facility,and while the current‑year period primarily reflects $51 million in repayments onother short-term borrowingsborrowings. andThe $31increase millionis inalso driven by repayments on long-term borrowings.borrowings and share repurchases, partially offset by lower dividends paid.

On November 7, 2023, the Board of Directors approved an increase to the authorized share repurchase program of $1.0 billion. During the three months ended March 31, 2026, the Company did not repurchase any shares of common stock under the stock repurchase program. At MarchJune 31,30, 2026, $1.2 billion of authorization remains available for future share repurchases. For the three and six months ended June 30, 2026, the Company repurchased approximately 1.3 million outstanding shares of common stock through open market purchases at a cost of approximately $12 million. Additional share repurchases, if any, may be made through open market purchases, Rule 10b5-1 plans, accelerated share repurchases, privately negotiated transactions, or other transactions in such amounts and at such times as the Company considers appropriate based upon prevailing market and business conditions and other factors.

At MarchJune 31,30, 2026, the Company had $684$683 million of borrowings available under lines of credit, including lines available under its short-term arrangements and revolving credit facility. The Company’s borrowing capacity includes a $700 million multi-currency credit facility which expires in May 2028. The Company also has access to an aggregate $700 million under a U.S. dollar commercial paper facility. The $700 million revolver serves as a back-up to the commercial paper facility, thus the total available credit under the commercial paper facility and the multi-currency revolving credit facility in the aggregate is $700 million. The Company had $35 million in outstanding borrowings under the commercial paper facility at MarchJune 31,30, 2026, resulting in $665 million remaining available under the revolving credit and commercial paper facilities. The Company also has access to $19$18 million in uncommitted short-term financing under lines of credit from various financial institutions, the availability of which is reduced by other short-term borrowings. The lines of credit have no major restrictions and are provided under demand notes between the Company and the lending institutions. At MarchJune 31,30, 2026, the Company had less than $1 million outstanding under short-term borrowing arrangements.

The Company’s revolving credit facility and senior notes contain certain covenants relating to the Company’s operations and financial condition. At MarchJune 31,30, 2026, the Company was in compliance with these covenants.

The cash held by foreign subsidiaries for permanent reinvestment is generally used to finance the subsidiaries’ operating activities and future foreign investments. The Company has the ability to repatriate cash to the United States, which could result in an adjustment to the tax liability for foreign withholding taxes, foreign and/or U.S. state income taxes, and the impact of foreign currency movements. At MarchJune 31,30, 2026, management believed that sufficient liquidity was available in the United States and expects this to continue for the next twelve months. The Company has repatriated and expects to continue repatriating certain funds from its non-U.S. subsidiaries that are not needed to finance local operations. Repatriation activities both performed and contemplated to date have not resulted in, and are not expected to result in, any significant incremental tax liability to the Company.

On February 24, 2026, the Company’s Board of Directors approved a new restructuring plan (the “2026 Plan”) to improve operational performance and drive stockholder value creation. As of MarchJune 31,30, 2026, the Company has incurred $60$57 million in non-recurring restructuring charges and paid out approximately $16 million under the 2026 Plan since its inception, primarily related to employee severance payments, benefits, and other transition costs. In total, the Company expects to incur non-recurring charges in the approximate range of $60 million to $65 million related to the 2026 Plan, the majority of which will be expensed and paid in cash in 2026 and 2027. The 2026 Plan is anticipated to result in approximately $120 million in annualized cost savings. The Company intends to reinvest a portion of the anticipated savings in targeted return-to-growth initiatives, including investments in accelerated innovation, clinical education, and sales team education focused on connected dentistry.