Dentsply Sirona is gearing up for a major overhaul that the company says could save it more than $200 million per year once complete.
The cost-cutting moves come after a year in which the dental device maker not only saw its revenues fall—leading to a CEO shake-up—but also had to grapple with an investigation of its past financial reporting practices, which in turn prompted a warning from the Nasdaq and the resignation of former CFO Jorge Gomez just a few days into his tenure at Moderna.
Now, Dentsply is restructuring its business, a process that will ultimately reduce its workforce by between 8% and 10%, according to a Feb. 16 announcement. With 15,000 employees as of the end of 2021, according to that year’s annual report (PDF), that means up to 1,500 jobs could be eliminated.
“While actions that impact our team are difficult, I am confident that this plan, along with anticipated outcomes from other workstreams, will set Dentsply Sirona on a trajectory to achieve stronger, more predictable results and add significant value for all stakeholders,” CEO Simon Campion said in the release.
Beyond the layoffs, Dentsply will also rearrange its operational structure. The company will now be separated into five global business units—which Dentsply said better reflects how its regional operations are arranged—with a simplified management lineup to match. Overlaps among those businesses will be consolidated into a single, overarching unit.
Even while streamlining its management teams and making cuts to the workforce, Dentsply is planning on adding at least one new executive: a senior VP of quality and regulatory, who will work within the upper-level management team to manage quality assurance and regulatory affairs across the entire company.
Overall, the restructuring plan is expected to cost Dentsply up to $165 million in one-time charges, the majority of which will hit the company’s bottom line this year. At the same time, however, the changes are expected to begin generating cost savings for the company, ultimately reaching between $200 million and $225 million in annual savings over the next 18 months, according to Dentsply’s estimates.
Those savings will be poured back into the company—specifically, into its commercial, IT and compliance structures, among others—to help Dentsply “improve its execution, build a winning portfolio, return to growth and generate consistent returns,” Campion said.
In its most recent quarterly report, Dentsply posted a net loss of $1.077 billion for the third quarter of 2022, compared to a net gain of $84 million during the same period the previous year. Campion said at the time that the company was “not satisfied” with those results, prompting it to begin the “comprehensive review” that ultimately spawned the newly unveiled restructuring plan.
That earnings report was Dentsply’s first in a while: It delayed the publication of its first-quarter 2022 report and completely skipped over the second quarter as it underwent the internal investigation of its financial reporting practices.
The probe, which began in March 2022, focused specifically on “the company’s use of incentives to sell products to distributors in the third and fourth quarters of 2021 and whether those incentives were appropriately accounted for and the impact of those sales was adequately disclosed,” per Dentsply. The investigation wrapped up in November, when the company amended the reports in question and pledged to implement “enhancements and remedial measures” to address the issues with the reports.