Envista Raises Guidance as Core Sales Growth Cools to 5%
Envista Holdings posted 5% core sales growth in the second quarter, less than half the 10.8% pace it logged three quarters earlier, even as it raised its full-year outlook.
Envista Holdings (NVST) reported second-quarter sales of $731 million, with core sales growth of 5.0%, as the dental products maker raised its full-year guidance despite a deceleration in its top-line growth rate.
The deceleration has been building for two quarters. Core sales growth ran at 10.8% in the fourth quarter of 2025 and 9.4% in the third, then slowed to 9.5% in the first quarter of 2026 before dropping to 5.0% in the second. The slowdown arrived alongside a reversal in which of Envista's two segments was driving growth. Equipment & Consumables accelerated to 8.5% core growth in the second quarter from 11.5% in the first, while Specialty Products & Technologies decelerated sharply, to 3.1% from 8.4% over the same span.
Profitability metrics moved in the opposite direction from the top line. Adjusted EBITDA margin expanded to 14.7% in the second quarter, up 230 basis points year-over-year, extending margin gains recorded in each of the prior three quarters — 14.0% in the first quarter of 2026, 14.8% in the fourth quarter of 2025 and 14.5% in the third. Adjusted diluted earnings per share rose to $0.41, up 58% from a year earlier, following growth of 50% in the first quarter and 58% in the fourth quarter of 2025. GAAP net income more than doubled to $54 million from $26 million a year earlier, continuing a recovery from a $30 million GAAP net loss in the third quarter of 2025 that had been driven by a tax charge tied to an intercompany loan restructuring.
The quarter's adjusted results included a new one-time item, labeled "tariff refunds," tied to a U.S. Supreme Court ruling that refunded tariffs collected under the International Emergency Economic Powers Act. The adjustment reduced adjusted earnings per share by $0.08 and adjusted EBITDA by $12.6 million, and had no equivalent in any of the four prior quarters reviewed.
Cash generation improved markedly from the first quarter. Operating cash flow swung to a positive $119 million from negative $3 million, and free cash flow turned to a positive $105 million from negative $16 million.
Envista raised its full-year 2026 guidance across all three headline metrics: core sales growth to 3.5%-4.5% from 2%-4%, adjusted EBITDA growth to 11%-14% from 7%-13%, and adjusted diluted earnings per share to $1.50-$1.55 from $1.35-$1.45. Free cash flow conversion guidance held at roughly 100%.
Share repurchases continued but at a slower pace than the prior quarter, with the company buying back 2.4 million shares for about $59 million, versus 1.6 million shares for about $43 million in the first quarter. Remaining buyback authorization rose to $283 million from $41 million at the end of the first quarter, helped by a new $300 million program authorized May 5, 2026.