Dentsply Sirona reported second-quarter net income of 18 cents a share. Seventeen cents of it came from tariff refunds.
The dental products maker received about $44 million during the quarter, money returned by the federal government after the Supreme Court struck down tariffs imposed under the International Emergency Economic Powers Act. Dentsply was not alone. Envista, Medline and other suppliers of medical and dental products disclosed refunds in their second-quarter results, and each handled the money differently in the numbers investors use to value them.
The Ruling
On Feb. 20, the Supreme Court ruled 6-3 that the International Emergency Economic Powers Act “does not grant the President the power to unilaterally impose tariffs of indefinite scope,” according to a summary by the Penn Wharton Budget Model. The administration had used the 1977 law to impose tariffs on China in February 2025, extended them to Canada and Mexico in March 2025, and announced “reciprocal” tariffs aimed at all trading partners in April 2025.
IEEPA duties had become the largest source of U.S. customs revenue. By January 2026 they accounted for about 52% of customs duties, according to Penn Wharton. Their geographic base also widened over 2025: China’s share of IEEPA collections fell from 100% in February 2025 to about 24% by November, while the European Union accounted for about 15%, Vietnam about 11% and Mexico about 4%.
Penn Wharton estimated cumulative IEEPA tariff collections at about $164.7 billion through January 2026 and potential refunds as high as $175 billion. The ruling itself did not order immediate repayment. Importers generally have 180 days after U.S. Customs and Border Protection liquidates an entry to file a protest and request a refund, which means money arrives on a schedule set by customs paperwork rather than by a single court date.
Medical and dental companies that import components, finished devices and consumables paid IEEPA duties on those goods during 2025. The refunds now coming back raise two accounting questions: where the money lands on the income statement, and whether management counts it in the adjusted figures that analysts track.
Dentsply Puts It in Gross Profit
Dentsply booked its roughly $44 million refund through cost of goods sold, which flowed into gross profit and adjusted EBITDA. Chief Financial Officer John Fortson told analysts that “the tariff refunds translated into a positive $0.17 per share impact.”
The effect on reported results was large relative to the company’s size in the quarter. GAAP gross margin rose to 54.9% from 52.4%. Net income came in at $37 million, compared with a $45 million loss a year earlier, on net sales that fell 4.1% to $898 million. Operating cash flow more than doubled to $99 million, with Dentsply citing the refunds first and tighter handling of inventory and supplier payments second.
Dentsply excludes tariff refund benefits from its 2026 adjusted earnings outlook of $1.40 to $1.50 a share, which it reaffirmed in August along with net sales guidance of $3.5 billion to $3.6 billion. The company’s release did not specify which tariff program the refunds came from.
Chief Executive Dan Scavilla called the quarter “in line with expectations” in the earnings release. The company announced a restructuring in February that targets about $120 million in annual savings, and the refund arrived during a period when it had eliminated its dividend and was using cash to repurchase shares and reduce debt.
Envista Strips It Out
Envista, which competes with Dentsply in implants, aligners and imaging, recorded a $12.6 million benefit from IEEPA tariff refunds in the second quarter. Its reconciliation ties the adjustment to the Supreme Court ruling, and the company excludes the benefit from its adjusted operating metrics.
Almost all of the refund, $12.2 million, sat in the Specialty Products and Technologies segment, home to Nobel Biocare implants and Spark aligners. The Equipment and Consumables segment accounted for about $400,000.
Envista’s adjusted results improved without it. Free cash flow reached $105.1 million, or 158% of adjusted net income, and the company repurchased 2.4 million shares for about $59 million. Adjusted EBITDA rose about 28% to $107.7 million, and the margin widened 230 basis points to 14.7%. Adjusted earnings per share rose to 41 cents from 26 cents. GAAP net income, which includes the refund, more than doubled to $53.7 million. The company raised its full-year guidance for core sales growth to 3.5% to 4.5% and for adjusted earnings to $1.50 to $1.55 a share.
Medline Nets Out What It Owes Customers
Medline, the medical supply manufacturer and distributor, disclosed the largest figures and the most detailed accounting. It reported $332 million in IEEPA refunds, recorded as a reduction of cost of goods sold. It also accrued $89 million in repayments to customers, recorded as a reduction of net sales, for a net benefit of $243 million in the second quarter and first half. The customer repayments equal about 27% of the gross refund, a measure of how much of the original tariff cost Medline had passed along.
The customer repayment line reflects a question every importer faces: if the tariff cost was passed through to buyers, some of the refund may belong to them. Medline’s treatment returns part of the money to customers through the top line while keeping the rest in cost of goods sold.
The net benefit is included in Medline’s second-quarter net income and adjusted EBITDA, which rose 13.4% to $1.06 billion. Net income still fell 58.3% to $139 million, and the company listed higher cost of goods sold, “including the impact of tariffs,” among the factors that reduced it. Net sales rose 11.6% to $7.7 billion. Medline’s full-year adjusted EBITDA outlook of $3.3 billion to $3.4 billion excludes the refund benefit.
Others Say Little or Nothing
Not every dental company reported a refund. Henry Schein, the largest dental distributor, did not disclose a refund amount in its second-quarter release. It raised its 2026 non-GAAP earnings forecast to $5.29 to $5.39 a share and its sales growth forecast to 4.5% to 5.5%, and said that outlook excludes “any future benefits from tariff refunds.” Chief Executive Fred Lowery attributed the raise to first-half results. “Our first-half performance and the sustained momentum have positioned us to raise our FY2026 guidance,” he said. Align Technology’s release discussed the February ruling and newer tariffs imposed under Section 122 of the Trade Act of 1974, which the company said it did not expect to have a material impact.
The differences complicate comparison. Two companies with identical underlying operations can report very different GAAP margins in the same quarter depending on when customs liquidated their entries and how much duty they paid in 2025. Adjusted metrics close some of the gap, but only if each company draws the line in the same place. Dentsply’s adjusted EBITDA includes the refund, while Envista’s does not.
What Dentsply’s Numbers Look Like Underneath
Removing the refund from Dentsply’s second quarter leaves a company with shrinking sales and roughly breakeven GAAP earnings. Every operating segment except Wellspect Healthcare declined in constant currency. Connected Technology Solutions, the equipment unit, fell 3.8%. Essential Dental Solutions, the consumables business, dropped 5%. Orthodontic and Implant Solutions declined 14.9%, mostly because of the wind-down of the Byte aligner business.
Adjusted gross margin, a figure that Dentsply calculates separately from GAAP, rose to 56.4% from 55.9%. Adjusted EBITDA fell to $190 million from $197 million, while its margin rose slightly to 21.3%. Adjusted earnings per share held at 52 cents.
The refund also shaped Dentsply’s first-half cash position. Operating cash flow for the six months reached $139 million, compared with $55 million a year earlier, while capital expenditures rose to $96 million from $51 million, according to the company’s cash flow statement. Dentsply also repurchased 1.3 million shares for about $12 million in the second quarter and cut total debt to about $2.22 billion at June 30 from $2.33 billion at the end of 2025.
Holders of the Stock
Value-focused managers make up several of Dentsply’s largest disclosed shareholders. Ariel Investments reported 8,026,107 shares at the end of June, about 4% of shares outstanding, according to GuruFocus. First Eagle Investment Management, Brandes Investment Partners and Gotham Asset Management also reported positions.
Armistice Capital, the New York hedge fund, increased its Dentsply position during the quarter in which the refund arrived. It added 672,000 shares to reach 3,672,000, worth about $39 million on June 30, according to its 13F filing. The stake is a minor line in the $8.17 billion Armistice reported, a book in which drug developers and index options account for most of the value.
The refund pipeline is not finished. Penn Wharton’s estimate of up to $175 billion in potential refunds covers a broad base of importers, and each company receives its share as customs processes individual entries. Dentsply, Henry Schein and Medline have all excluded future refunds from guidance, so any additional payments in the third and fourth quarters will appear as upside to their own forecasts rather than as part of them.