What changed in this filing

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Item 1. Business

2022-03-01 compared with 2021-03-01 · 169 added, 156 removed, 117 unchanged (74% of the section changed)

History and Overview

DENTSPLY SIRONA Inc.

(“Dentsply Sirona” or the “Company”), is the world’s largest manufacturer of professional dental products and technologies, with a 135-year history of innovation and service to the dental industry and patients worldwide.

Dentsply Sirona develops, manufactures, and markets a comprehensive solutions offering including technologically-advanced dental equipment as well as dental and healthcare consumable products under a strong portfolio of world class brands.

As The Dental Solutions Company, Dentsply Sirona’s products provide innovative, high-quality and effective solutions to advance patient care and deliver better, safer and faster dentistry.

Dentsply Sirona develops, manufactures, and markets comprehensive solutions including technologically-advanced dental equipment as well as dental and healthcare consumable products under a strong portfolio of world class brands.

Dentsply Sirona’s products provide innovative, high-quality and effective solutions to advance patient care and deliver better, safer and faster dentistry.

The Company introduced the first dental electric drill over 130 years ago, the first dental X-ray unit approximately 100 years ago, the first dental computer-aided design/computer-aided manufacturing (“CAD/CAM”) system over 30 years ago, and numerous other significant innovations including pioneering ultrasonic scaling to increase the speed, effectiveness and comfort of cleaning and revolutionizing both file and apex locater technology to make root canal procedures easier and safer.

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Dentsply Sirona’s worldwide headquarters is located in Charlotte, North Carolina and its shares of common stock are listed in the United States on Nasdaq under the symbol XRAY.

Dental products and technology and equipment accounted for approximately 90% of Dentsply Sirona’s consolidated net sales for the year ended December 31, 2020.

The remaining net sales are primarily related to consumable medical device products.

The Company conducts its business in the United States of America (“U.S.”), as well as in over 120 foreign countries, principally through its foreign subsidiaries.

Dentsply Sirona has a long-established presence in the European market, particularly in Germany, Sweden, France, the United Kingdom (“UK”), Switzerland and Italy, as well as in Canada.

The Company also has a significant market presence in the countries of the Pacific Rim, Commonwealth of Independent States (“CIS”), Central and South America, and the Middle-East region.

Principal Products

The Company conducts its business through two reportable segments:

(1) Technologies & Equipment (“T&E”) and (2) Consumables.

For the year ended December 31, 2021, T&E net revenues represented approximately 59.4% of worldwide net revenues, while Consumables net revenues represented the remaining 40.6% of worldwide net revenues.

The business is conducted in the United States of America (“U.S.”), as well as in over 150 foreign countries, principally through its foreign subsidiaries.

Dentsply Sirona has a long-established presence in the European market, particularly in Germany, Sweden, France, the United Kingdom (“UK”), Switzerland and Italy.

The Company also has a significant market presence in the Asia-Pacific region, Central and South America, the Middle-East region, and Canada.

Principal Products and Product Categories

The worldwide professional dental industry encompasses the diagnosis, treatment and prevention of disease and ailments of the teeth, gums and supporting bone.

Dentsply Sirona’s principal product categories are dental consumable products and dental technology and equipment products.

The Company offers a broad suite of products which together provide digital workflows for dental practitioners to make the highest use of technological advancements throughout each stage of patient care.

Dentsply Sirona’s principal product categories are dental technology and equipment products and dental consumable products.

Additionally, the Company manufactures and sells healthcare consumable products for urological applications.

These products are produced by the Company in the U.S.

and internationally and are distributed throughout the world under some of the most well-established brand names and trademarks in these industries, including but not limited to:

AH PLUS, ANKYLOS, AQUASIL ULTRA, ARTICADENT, ASTRA TECH, ATLANTIS, AXEOS, BYTE, CALIBRA, CAULK, CAVITRON, CELTRA, CERAMCO, CERCON, CEREC, CEREC MCX, CITANEST, CONFORM FIT, DELTON, DENTSPLY, DETREY, DYRACT, ESTHET.X, FRIOS, GALILEOS, INLAB, INTEGO, IPN, LOFRIC, LUCITONE, MAILLEFER, MIDWEST, MTM, NUPRO, OMNICAM, ORAQIX, ORIGO, ORTHOPHOS, OSSEOSPEED, PALODENT PLUS, PORTRAIT, PRIME & BOND, PROFILE, PRIMEMILL, PRIMESCAN, PROGLIDER, PROTAPER, RECIPROC, PUREVAC, RINN, SANI-TIP, SCHICK, SIMPLANT, SINIUS, SIROLASER, SIRONA, SLIMLINE, STYLUS, SULTAN, SUREFIL, SURESMILE, SYMBIOS, T1, T2, T3, T4, TENEO, THERMAFIL, TRIODENT, TRUBYTE, TRUNATOMY, VIPI, WAVEONE, WELLSPECT, XENO, XIVE, XYLOCAINE and ZHERMACK.

These products are produced by the Company globally and are distributed throughout the world under some of the most well-established brand names and trademarks in these industries, including but not limited to:

AH PLUS, ANKYLOS, AQUASIL ULTRA, ARTICADENT, ASTRA TECH, ATLANTIS, AXEOS, BYTE, CALIBRA, CAULK, CAVITRON, CELTRA, CERAMCO, CERCON, CEREC, CEREC MCX, CITANEST, CONFORM FIT, DELTON, DENTSPLY, DETREY, DYRACT, ESTHET.X, FRIOS, GALILEOS, INLAB, INTEGO, IPN, LOFRIC, LUCITONE, MAILLEFER, MIDWEST, MTM, NUPRO, OMNICAM, ORAQIX, ORIGO, ORTHOPHOS, OSSEOSPEED, PALODENT PLUS, PRIME & BOND, PROFILE, PRIMEMILL, PRIMESCAN, PROGLIDER, PROTAPER, RECIPROC, PUREVAC, RINN, SANI-TIP, SCHICK, SIMPLANT, SINIUS, SIROLASER, SIRONA, SLIMLINE, STYLUS, SULTAN, SUREFIL, SURESMILE, SYMBIOS, T1, T2, T3, T4, TENEO, THERMAFIL, TRIODENT, TRUBYTE, TRUNATOMY, VIPI, WAVEONE, WELLSPECT, XENO, XIVE, XYLOCAINE and ZHERMACK.

Technologies & Equipment Segment

Dental Technology and Equipment Products

Dental technology products consist of basic and high-tech dental equipment such as treatment centers, imaging equipment, dental handpieces, and computer aided design and machining CAD/CAM systems equipment for dental practitioners.

The product category also includes high-tech state-of-art dental implants and related scanning equipment and treatment software, and orthodontic clear aligners and appliances for dental practitioners and specialists.

The Company offers the broadest line of products to fully outfit a dental practitioner’s office.

Equipment & Instruments

The Equipment & Instruments product category consists of basic and high-tech dental equipment such as treatment centers, imaging equipment, motorized dental handpieces, and other instruments for dental practitioners and specialists.

Imaging equipment serves as the starting point for the Company’s digital workflow offerings and consists of a broad range of diagnostic imaging systems for 2D or 3D, panoramic, and intra-oral applications.

Treatment centers comprise a broad range of products from basic dentist chairs to sophisticated chair-based units with integrated diagnostic, hygiene and ergonomic functionalities, as well as specialist centers used in preventive treatment and for training purposes.

Imaging equipment consist of a broad range of diagnostic imaging systems for 2D or 3D, panoramic, and intra-oral applications.

Dental CAD/CAM systems equipment are products designed for dental offices used for dental restorations, such as inlays, onlays, veneers, crowns, bridges, copings and bridge frameworks made from ceramic, metal or composite blocks.

This product line also includes high-tech chairside economical restoration of esthetic ceramic dentistry, or CEREC equipment.

This equipment allows for in-office application that enables dentists to produce high quality restorations from ceramic material and insert them into the patient’s mouth during a single appointment.

CEREC has a number of advantages compared to the traditional out-of-mouth pre-shaped restoration method, as CEREC does not require a physical model, restorations can be created in the dentist’s office and the procedure can be completed in a single visit.

The Company estimates that at December 31, 2020 the market penetration for in-office CAD/CAM systems in the U.S.

and Germany was approximately 19% and 18%, respectively .

Net sales of dental technology and equipment products accounted for approximately 50%, 50% and 48% of the Company’s consolidated net sales for the years ended December 31, 2020, 2019, and 2018, respectively.

Healthcare Consumable Products

Healthcare consumable products consist mainly of urology catheters, medical drills and other non-medical products.

Net sales of healthcare consumable products accounted for approximately 10%, 8% and 9% of the Company’s consolidated net sales for the years ended December 31, 2020, 2019, and 2018, respectively.

This product group also includes other lab equipment such as amalgamators, mixing machines and porcelain furnaces.

Dental CAD/CAM technologies are products designed for dental offices to support numerous digital dental procedures including dental restorations.

This product category includes a full-chairside economical restoration of aesthetic ceramic dentistry offering called CEREC, as well as stand-alone CAD/CAM, digital impressions ("DI") intra-oral scanners, mills, and services.

The full-chairside offering enables dentists to practice same day or single visit dentistry.

The Company’s Orthodontic product group primarily includes a dentist-directed clear aligner solution, SureSmile, and a direct-to-consumer clear aligner solution, Byte.

The Orthodontics product category also includes a High Frequency Vibration ("HFV") technology device known as VPro or as HyperByte within Byte's product offering.

The clear aligners offerings include software technology that enables clear aligner treatment planning and for SureSmile seamless connectivity of a digital workflow from diagnostics through treatment delivery.

Certain lower-margin products within the the Company's traditional Orthodontic business have been discontinued during the course of 2020 and 2021 as part of management’s portfolio optimization restructuring actions as described further in Item 7, Management Discussion and Analysis.

The Implants product offering includes technology to support signature digital workflows for implant systems, a portfolio of innovative dental implant products, bone regenerative and restorative solutions, and educational programs, all of which provide dental professionals with a completely new way of practicing implantology.

The Implants business is supported by key technologies including custom abutments, advanced tapered immediate load screws and regenerative bone growth factor.

This category consists mainly of urology catheters and other healthcare-related consumable products.

Consumables Segment

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It also includes specialized treatment products used within the dental office and laboratory settings including products used in the preparation of dental appliances by dental laboratories.

Dentsply Sirona’s dental supplies include endodontic (root canal) instruments and materials, dental anesthetics, prophylaxis paste, dental sealants, impression materials, restorative materials, tooth whiteners and topical fluoride.

Small equipment products include intraoral curing light systems, dental diagnostic systems and ultrasonic scalers and polishers.

The Company’s products used in dental laboratories include dental prosthetics, such as artificial teeth, precious metal dental alloys, dental ceramics and crown and bridge materials.

Dental laboratory equipment products include laboratory-based CAD/CAM milling systems, amalgamators, mixing machines and porcelain furnaces.

Net sales of dental consumable products accounted for approximately 40%, 42% and 43% of the Company’s consolidated net sales for the years ended December 31, 2020, 2019, and 2018, respectively.

Endodontic & Restorative Products

The Company's Endodontic and Restorative products frequently work together to provide a tandem solution in high-tech dental procedures.

The Endodontic products include drills, filers, sealers, irrigation needles and other tools or single-use solutions which support root canal procedures.

Restorative products include dental prosthetics, such as artificial teeth, dental ceramics, digital dentures, precious metal dental alloys, and crown and bridge porcelain products.

Other Consumables

The remaining consumables products include small equipment products such as intraoral curing light systems, dental diagnostic systems and ultrasonic scalers and polishers, as well as other dental supplies including dental anesthetics, prophylaxis paste, dental sealants, impression materials, teeth whiteners and topical fluoride.

Certain lower-margin laboratory products within the Other Consumables category have been discontinued during the course of 2020 and 2021 as part of management’s portfolio optimization restructuring actions as described further in Item 7, Management Discussion and Analysis.

Net sales for each product category as a percent of the Company's total net sales for the year ended December 31, 2021, were as follows:

% of Net Sales

Equipment & Instruments 17.3 %

CAD/CAM 13.9 %

Orthodontics 6.4 %

Implants 14.7 %

Healthcare 7.1 %

Technology & Equipment segment revenue 59.4 %

Endodontic & Restorative 29.7 %

Other consumables 10.9 %

Consumables segment revenue 40.6 %

Total net sales 100.0 %

Markets, Sales and Distribution

The Company believes that the market for its products will grow over the long-term based on the following factors:

• earlier preventive care - dentistry has evolved from a profession primarily dealing with pain, infections and tooth decay to one with increased emphasis on preventive care and the role oral health plays in overall health.

• a growing demand for aesthetic dentistry and the appeal of clear aligners as an orthodontic treatment.

• increasing demand in single visit dentistry versus historical multi-visit procedure requirements.

• rapid pace of digital technologies adoption becoming a category standard versus historical manual processes.

• increasing worldwide population.

• increasing demands for patient comfort and ease of product use and handling.

• aging population in developed countries with access to greater amounts of discretionary income will require more dental care.

• natural teeth are being retained longer - individuals with natural teeth are much more likely to visit a dentist in a given year than those without any natural teeth remaining.

• increasing demand for more efficiency and better workflow in the dental office, including digital and integrated solutions.

• per capita and discretionary incomes are increasing in emerging markets.

As personal incomes continue to rise in emerging economies, healthcare, including dental services, is a growing priority.

Many surveys indicate the middle class population will expand significantly within these emerging markets.

• Increasing worldwide population, including a shift towards aging demographics, which will require greater dental care.

• Natural teeth are being retained longer - individuals with natural teeth are much more likely to visit a dentist than those without any natural teeth.

• Increasing demand for aesthetic dentistry and the appeal of clear aligners as an orthodontic treatment.

• Continued opportunities in emerging markets related to the rise in discretionary incomes making dental services an increasing priority.

• Increasing demand for single visit dentistry versus historical multi-visit procedure requirements, and for higher quality of patient care in terms of comfort and ease of product use and handling.

• Increasing demand for earlier preventive care - dentistry has evolved from a profession primarily dealing with pain, infections, and tooth decay to one with increased emphasis on earlier diagnosis, preventive care, and the role oral health plays in overall health.

• Increasing demand for more efficiency and better workflow in the dental office, including digital and integrated solutions such as the enhanced power of diagnostic equipment through 3D imaging.

The rapid pace of digital technology adoption including the digitization of clinical workflows is becoming a category standard versus traditional manual processes.

• The Company’s business is less susceptible than many other industries to general downturns in the economies in which it operates.

Many of the products the Company offers relate to dental procedures and health conditions that are considered necessary by patients regardless of the economic environment.

Dental specialty products, dental equipment and products that support discretionary dental procedures are the most susceptible to changes in economic conditions.

Dentsply Sirona employs approximately 5,100 highly trained, product-specific sales and technical staff to provide comprehensive marketing and service tailored to the particular sales and technical support requirements of its distributors, dealers and the end-users.

Dental Sales and Distribution

• The Company is well positioned to meet macroeconomic challenges and execute on a strategy of delivering value through digital workflows due to its leading market offerings in all key areas of dental procedures (implants, endodontic, restorative and aligners) as well as digital infrastructure (CAD/CAM and imaging) utilized in dental practices around the globe.

Dentsply Sirona employs approximately 5,000 highly-trained, product-specific sales and technical staff to provide comprehensive marketing, and services tailored to the sales and technical support requirements of its distributors, dealers and end-users.

Sales and Distribution

Dentsply Sirona distributes approximately two-thirds of its dental consumable and technology and equipment products through third-party distributors.

Certain highly technical products such as dental technology equipment, dental ceramics, crown and bridge porcelain products, endodontic instruments and materials, orthodontic clear aligners and appliances, and dental implants are often sold directly to the dental laboratory or dental professionals in some markets.

For the year ended December 31, 2020, two customers, Henry Schein, Inc (“Henry Schein”) and Patterson Companies, Inc.

(“Patterson”), each accounted for more than 10%, or approximately 14% and 10%, respectively, of consolidated net sales.

At December 31, 2020, only one customer, Patterson, accounted for more than 10%, or approximately 18% of the consolidated accounts receivable balance.

For the year ended December 31, 2019, only one customer, Henry Schein, accounted for more than 10%, or approximately 13% of consolidated net sales.

At December 31, 2019, two customers, Henry Schein and Patterson, accounted for approximately 12% and 17%, respectively, of the consolidated accounts receivable balance.

For the year ended December 31, 2018, only one customer, Henry Schein, accounted for approximately 10% of consolidated net sales.

In 2018 and 2017 the Company was impacted by the transition in distribution strategy with Patterson and Henry Schein.

The Company shipped initial stocking orders for the equipment products to Henry Schein primarily in the second and third quarters of 2017 which resulted in unfavorable year-over-year sales growth comparisons.

Based on the Company’s estimate, year-over-year changes in distributor inventories negatively impacted the Company’s reported sales growth for the year ended December 31, 2018 by approximately $127 million.

Based on the Company’s estimate, distributor inventories increased for the year ended December 31, 2017 by approximately $27 million as compared to a decrease of approximately $100 million for the full year 2018.

Although many of its dental sales are made to distributors, dealers and importers, Dentsply Sirona focuses much of its marketing efforts on the dentists, dental hygienists, dental assistants, dental laboratories and dental schools which are the end-users of its products.

Additionally, the Company’s Byte business produces aligners which are sold direct to consumers under doctor-directed, personalized treatment plans.

For the year ended December 31, 2021, no customer accounted for 10% or more of consolidated net sales or consolidated accounts receivable balance.

Customers that accounted for 10% or more of net sales and accounts receivable for the years ended December 31 were as follows:

% of net sales % of accounts receivable % of net sales % of accounts receivable

Henry Schein, Inc.

14 % N/A 13 % 12 %

Patterson Companies, Inc.

10 % 18 % N/A 17 %

Although a significant portion of the Company's sales are made to distributors, dealers and importers, Dentsply Sirona focuses much of its marketing efforts on the dentists, dental hygienists, dental assistants, dental laboratories and dental schools which are the end-users of its products.

As part of this end-user “pull through” marketing approach, the Company conducts extensive distributor, dealer and end-user marketing programs.

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The Company also maintains ongoing consulting and educational relationships with various dental associations and recognized worldwide opinion leaders in the dental field.

Operating Principles

The Company's focus includes the creation of more meaningful solutions for dentists built around the following five key operating principles:

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Put the customer at the center of how Dentsply Sirona is organized.

The Company is creating one integrated approach to customer service, direct and indirect selling, and clinical education to strengthen the relationship with the customer and better serve the customers' needs.

• Assume greater responsibility for Dentsply Sirona’s demand creation:

To better support dealer partners and end-user customers, the Company launched a sales force effectiveness program, with a view to improving returns on sales and marketing investments.

• Ensure that innovation is substantial and supported:

Create a comprehensive R&D program that prioritizes spending across the entire Company portfolio resulting in more impactful innovations each year.

• Lead in clinical education:

Dentsply Sirona is investing to further its leadership position through local training events and enhancing online training presence to strengthen the relationship with the dental professionals.

• Take advantage of scale:

The Company has an integrated approach to customer service, direct and indirect selling, and clinical education to strengthen the relationship with the customer and better serve the customers' needs.

• Create innovative solutions that customers love to use:

A comprehensive R&D program that prioritizes strategic spending building the next generation of digital workflow technologies and service offerings, resulting in more impactful innovations each year.

• Think and act with positive intent and the highest integrity:

Execute the business in a way that empowers our people, respects the communities in which we do business, and establishes trust with our partners and stakeholders.

• Operate sustainably in everything the Company does:

Take a thoughtful, proactive approach to creating a sustainable company through investments in our employees, customers, and the environment.

• Use size and global breadth to our advantage:

The Company is focused on integrating its dental product portfolios to unlock operational efficiencies, including performance improvements in procurement, logistics, manufacturing, sales force and marketing programs;

In addition, Dentsply Sirona is taking significant measures to simplify the business.

and at the same time simplifying the business on a worldwide scale.

In combination, these initiatives will improve organizational efficiency and better leverage the Company’s selling, general and administrative infrastructure.

Medical Sales and Distribution

The Company’s urology products are sold directly in approximately 15 countries throughout Europe and North America, and through distributors in approximately 20 additional markets.

The Company’s largest markets include the UK, Germany and France.

Key customers include urologists, continence care nurses, general practitioners and direct-to-patients.

Historical reimbursement levels within Europe have been higher for intermittent catheters which explain a greater penetration of single-use catheter products in that market.

In the United States, which the Company considers an important growth market, the reimbursement environment has improved as third-party payers have recognized the cost benefits of infection control through the use of disposable catheters.

The Company also maintains ongoing consulting and educational relationships with various medical associations and recognized worldwide opinion leaders in this field.

Product Development

Innovation and successful product development are critical to keeping market leadership position in key product categories and growing market share in other products categories while strengthening the Company’s prominence in the dental and medical markets that it serves.

While many of Dentsply Sirona’s existing products undergo brand extensions, the Company also continues to focus efforts on successfully launching innovative products that have a more significant impact on how dental and clinical professionals treat their patients.

New advances in technology are also anticipated to have a significant influence on future products in dentistry and in select areas of healthcare.

As a result, the Company pursues research and development initiatives to support this technological development, including collaborations with external research institutions, dental and medical schools.

Through its own internal research centers as well as through its collaborations with external research institutions, dental and medical schools, the Company directly invests in the development of new products, improvement of existing products and advances in technology.

The continued development of these areas is a critical step in meeting the Company’s strategic goal as a leader in defining the future of dentistry and in select areas in health care.

In addition to the direct investment in product development and improvement, the Company also invests in these activities through acquisitions, by entering into licensing agreements with third parties, and by purchasing technologies developed by third parties.

While the Company enjoys market leadership in several of its product categories, continuous innovation and product development are critical for it to continue to grow its share of the dental markets it serves.

Many of Dentsply Sirona’s existing products are undergoing brand extensions, and the Company also continues to focus efforts on successfully launching innovative products that have a more significant impact on how dental and clinical professionals treat their patients.

During 2021 the Company continued to prioritize investments supporting digitally enhanced workflows through each stage of patient care, including imaging and scanning technologies used in diagnosis, treatment planning software, and customized products to deliver treatment.

The Company’s position as an integrated global business allows for the rapid deployment of these innovations throughout the markets it serves to achieve rapid globalization and economies of scale.

New products introduced within the past three years accounted for approximately 24% of 2021 sales.

New advances in technology are also anticipated to have a significant influence on future products in digital dentistry, including both equipment and consumables.

Through investments in research and development, the Company has accelerated multiple new product development initiatives during the year, such as the rollout of software upgrades for CEREC;

the user interface for SureSmile aligners;

introduction of PrimeTaper, a self-tapping implant with a tapered design;

and ProTaper Ultimate, the next generation of endodontic files.

During 2020, the Company introduced Axeos, a new digital imaging product with a 3D wide field of view.

During 2021, the Company acquired key supporting technologies in OSSIX bone regenerative collagen through the purchase of Datum Dental, and the new VPro aligner treatment devices through the acquisition of substantially all of the assets of Propel Orthodontics LLC ("Propel").

R&D investments include activities to accelerate product and clinical innovation and develop potential improvements to the manufacturing process.

These investments also support engineering efforts that incorporate customer feedback into continuous improvement for current and next-generation products, with an objective to achieve more frequent development and release cycles.

The Company also undertakes pre-commercialization trials and testing of technological improvements prior to inception of the manufacturing process.

As is true across its other functions, the Company is continually transforming how R&D is conducted by identifying best practices, driving efficiencies, and optimizing cost structure to enable a more effective development process and faster concept-to-market timelines.

The Company is undergoing a strategic shift away from a budget dedicated to specific products and deliverables to a focus on strategic market areas with more agile funding.

Focused, cross-functional teams are being increasingly utilized to offer innovative products efficiently, to concentrate resources on the most viable and clinically relevant technologies and to maximize cost and time savings as they are brought into production.

In addition to internal product development, the Company also pursues external research and development opportunities, including acquisitions, licensing, or other arrangements with third parties.

Initiatives to support technological development also include collaborations with research institutions and dental and medical schools.

The Company annually supports the achievements of dental students conducting innovative research through its 2021 Student Competition for Advancing Dental Research and its Application Awards (SCADA) program.

The Company is also committed to participation in clinical research demonstrating the efficacy of our products prior to market introduction, for example the success of the implant registry site utilized for research involvement in conjunction with the PrimeTaper launch.

During 2021, the Company announced that it was opening a 70,000-square-foot innovation center close to its corporate office, which will house key functions such as 3D printing and complement its other flagship innovation centers in Germany and Sweden.

Through these internal research centers as well as through its collaborations with external research institutions, dental and medical schools, the Company directly invests in the development of new products, improvement of existing products and advances in technology.

These investments include an emphasis on research in digital data sharing technology, including the incorporation of long-term artificial intelligence and machine learning.

The continued development of these areas is a critical step in meeting the Company’s strategic goal as a leader in defining the future of dentistry.

The Company’s long-term plans for investment in product development include an objective to maintain a level of research and development spend that is at least 4% of annual net sales with a focus on innovation and expansion of digital, software, services, and other platform offerings.

Acquisition Activities

Dentsply Sirona believes that the dental consumable and technology products industries continue to experience consolidation with respect to both product manufacturing and distribution, although they remain fragmented thereby creating a number of acquisition opportunities.

Dentsply Sirona believes that the dental technology and consumable products industries continue to experience consolidation with respect to both product manufacturing and distribution, although they remain fragmented thereby creating a number of acquisition opportunities.

The Company views acquisitions as a key part of its growth strategy.

These acquisition activities are intended to supplement the Company’s core growth and assure ongoing expansion of its business to capitalize on significant growth drivers, including new technologies, additional products, organizational strength and geographic breadth.

During the year ended December 31, 2020, the Company made various investments, including Byte, a direct-to-consumer clear aligner business, which complements the Company's existing clear aligner product by adding a digital component and is expected to enhance scale and accelerate the growth and profitability of the Company's combined clear aligners business going forward.

These acquisition activities are intended to supplement the Company’s organic growth and assure ongoing expansion of its business to capitalize on significant growth drivers, including new technologies, additional products, organizational strength and geographic breadth.

During the year ended December 31, 2021, the Company continued this trend, beginning with the first quarter purchase of Datum Dental, Ltd., a producer and distributor of specialized regenerative dental material based in Israel, which provided the Company with a key technology to serve the Implants markets.

The Company followed in the second quarter with the purchase of substantially all of the assets of Propel, a domestic company which manufactures and sells orthodontic devices and provides in-office and at-home orthodontic accessory devices, an investment which is expected to further accelerate the growth and profitability of the Company's combined clear aligners business.

In the third quarter, the Company completed its acquisition of a partially owned affiliate based in Switzerland that primarily develops highly specialized software, which is expected to further accelerate the development of the Company's specialized software related to CAD/CAM systems.

During the year ended December 31, 2020, the Company made various investments, including the acquisition of Byte, a direct-to-consumer clear aligners business, which complements the Company's existing clear aligner product by adding a digital component and is expected to enhance scale and accelerate the growth and profitability of the Company's combined clear aligners business going forward.

This acquisition is representative of the Company's strategy of matching technological advancement in digital dentistry with innovative marketing and delivery in order to reach areas of high-growth potential for customer demand.

For more information regarding the Company's acquisition activity for the years ended December 31, 2020, 2019, and 2018, refer to Note 4, Business Combinations, in the Notes to the Consolidated Financial Statements in Part II, Item 8 of this Form 10-K.

For more information regarding the Company's acquisition activity, refer to Note 6, Business Combinations, in the Notes to the Consolidated Financial Statements in Part II, Item 8 of this Form 10-K.

Operating and Technical Expertise

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Dentsply Sirona products in Europe bear the CE mark showing that such products comply with European regulations.

All dental amalgam filling materials, including those manufactured and sold by Dentsply Sirona, contain mercury.

Various groups have alleged that dental amalgam containing mercury is harmful to human health and have actively lobbied state, federal and foreign lawmakers and regulators to pass laws or adopt regulatory changes restricting the use, or requiring a warning against alleged potential risks, of dental amalgams.

The FDA, the National Institutes of Health and the U.S.

Public Health Service have each indicated that there are no demonstrated direct adverse health effects due to exposure to dental amalgam.

In response to concerns raised by certain consumer groups regarding dental amalgam, the FDA formed an advisory committee in 2006 to review peer-reviewed scientific literature on the safety of dental amalgam.

In July 2009, the FDA concluded its review of dental amalgam, confirming its use as a safe and effective restorative material for adults and children ages 6 and above.

Also, as a result of this review, the FDA classified amalgam and its component parts, elemental mercury and powder alloy, as a Class II medical device.

Previously there was no classification for encapsulated amalgam, and dental mercury (Class II) and alloy (Class II) were classified separately.

This new regulation places encapsulated amalgam in the same class of devices as most other restorative materials, including composite and gold fillings, and makes amalgam subject to special controls by the FDA.

In that respect, the FDA recommended that certain information about dental amalgam be provided, which includes information indicating that dental amalgam releases low levels of mercury vapor, and that studies on people ages six and over as well as FDA estimated exposures of children under six, have not indicated any adverse health risk associated with the use of dental amalgam.

After the FDA issued this regulation, several petitions were filed asking the FDA to reconsider its position.

Another advisory panel was established by the FDA to consider these petitions.

Hearings of the advisory panel were held in December 2010.

In September 2020, the FDA issued an updated recommendation that certain people are at higher risk for health problems from mercury-containing amalgam dental fillings, such as pregnant women and their developing fetuses, women who are planning to become pregnant, nursing women and their newborns and infants, children, especially those younger than six years of age, people with pre-existing neurological disease such as multiple sclerosis, Alzheimer disease, or Parkinson disease, people with impaired kidney function, and people with a known allergy to mercury or other components of dental amalgam.

While the FDA's safety notice was not directed to manufacturers, Dentsply Sirona's dental amalgram products contained existing warnings against the use of the product in patients with the conditions mentioned in the FDA safety notice.

Further, we have discontinued sales for all amalgram products as of December 2020.

In Europe, particularly in Scandinavia and Germany, the contents of mercury in amalgam filling materials have been the subject of public discussion.

As a consequence, in 1994 the German health authorities required suppliers of dental amalgam to amend the instructions for use of amalgam filling materials to include a precaution against the use of amalgam for children less than eighteen years of age and to women of childbearing age.

Additionally, some groups have asserted that the use of dental amalgam should be prohibited because of concerns about environmental impact from the disposition of mercury within dental amalgam, which has resulted in the sale of mercury containing products being banned in Sweden and severely curtailed in Norway.

In the United States, the Environmental Protection Agency proposed in September 2014 certain effluent limitation guidelines and standards under the Clean Water Act to help cut discharges of mercury-containing dental amalgam to the environment.

The rule would require affected dentists to use best available technology (amalgam separators) and other best management practices to control mercury discharges to publicly-owned treatment works.

Similar regulations exist in Europe and in February 2016, the European Union adopted a ratification package regarding the United Nations Minamata Convention on Mercury, proposing rules restricting the use of dental amalgam to the encapsulated form and requiring the use of separators by dentists.

The Company strongly recommends adherence to the American Dental Association’s Best Management Practices for Amalgam Waste and includes this in every package of dental amalgam.

Dentsply Sirona also manufactures and sells non-amalgam dental filling materials that do not contain mercury.

The Company’s products that fall in category of Class I as classified by EU Medical Device Directive were mandated to be certified under the new European Union Medical Device Regulation (“MDR”).

These regulations also applied to all medical device manufacturers who market their medical devices in the EU and all such manufacturers had to perform significant upgrades to quality systems and processes including technical documentation and subject them to new certification under MDR in order to continue to sell those products in the European Union (“EU”).

Although all medical device manufacturers were required to certify their Class I products by May 2021, the EU MDR regulations for additional Classes of medical devices is mandated to be fully enforceable by May 2024.

This also includes completion of certified quality management systems to manufacturers quality management systems.

Dentsply Sirona remains focused on ensuring that all its products that are considered to be medical device will be fully certified as required by the EU MDR dates and timelines.

The Company is also subject to domestic and foreign laws, rules, regulations, self-regulatory codes, circulars and orders regarding anti-bribery and anti-corruption, including, but not limited to, the United States Foreign Corrupt Practices Act (“FCPA”), the U.S.

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jurisdictions generally prohibit companies and their intermediaries from improperly offering or paying anything of value to foreign government officials for the purpose of obtaining or retaining business.

Some of our customer relationships are with governmental entities and therefore may be subject to such anti-bribery laws.

Some of the Company’s customer relationships are with governmental entities and therefore may be subject to such anti-bribery laws.

The AKS and similar fraud and abuse laws applicable in non-U.S.

jurisdictions prohibit persons from knowingly and willfully soliciting, offering, receiving or providing remuneration, directly or indirectly, in exchange for or to induce either the referral of an individual, or the furnishing or arranging for a good or service, for which payment may be made under a health care program, such as, in the United States, Medicare or Medicaid.

In the sale, delivery and servicing of our products to other countries, we must also comply with various domestic and foreign export control and trade embargo laws and regulations, including those administered by the Department of Treasury’s Office of Foreign Assets Control (“OFAC”), the Department of Commerce’s Bureau of Industry and Security (“BIS”) and similar international governmental agencies, which may require licenses or other authorizations for transactions relating to certain countries and/or with certain individuals identified by the respective government.

Despite our internal compliance program, our policies and procedures may not always protect us from reckless or criminal acts committed by our employees or agents.

The Company’s production and sale of products is further subject to regulations concerning the supply of conflict minerals, various environmental regulations such as the Federal Water Pollution Control Act (the “Clean Water Act”) and others enforced by the Environmental Protection Agency (“EPA”) or equivalent state agencies, and the Patient Protection and Affordable Care Act as amended by the Health Care and Education Reconciliation Act (the “Health Care Reform Law”).

In the sale, delivery and servicing of the Company’s products to other countries, it must also comply with various domestic and foreign export control and trade embargo laws and regulations, including those administered by the Department of Treasury’s Office of Foreign Assets Control (“OFAC”), the Department of Commerce’s Bureau of Industry and Security (“BIS”) and similar international governmental agencies, which may require licenses or other authorizations for transactions relating to certain countries and/or with certain individuals identified by the respective government.

Despite the Company’s internal compliance program, policies and procedures may not always protect it from reckless or criminal acts committed by its employees or agents.

Violations of these requirements are punishable by criminal or civil sanctions, including substantial fines and imprisonment.

The Company is subject to domestic and foreign laws, rules, regulations, self-regulatory codes, circulars and orders governing data privacy and transparency, including, but not limited to, the Health Insurance Portability and Accountability Act of 1996 (“HIPAA”) as amended by the Health Information Technology for Economic and Clinical Health Act of 2009 (the “HITECH Act”), the Physician Payments Sunshine Provisions of the Patient Protection and Affordable Care Act, the EU Directive 2002/58/EC (and implementing and local measures adopted thereunder), France’s Data Protection Act of 1978 (rev.

Due in part to its direct-to-consumer model, the Company’s Byte aligner business in the U.S.

is subject to various state laws, rules and policies which govern the practice of dentistry within such state.

Byte contracts with an expansive nationwide network of independent licensed dentists and orthodontists for the provision of clinical services, including the oversight and control of each customer’s clinical treatment in order to comply with these regulations and ensure that the business does not violate rules pertaining to the corporate practice of dentistry.

The Company is subject to domestic and foreign laws, rules, regulations, self-regulatory codes, circulars and orders governing data privacy and transparency, including, but not limited to, the Health Insurance Portability and Accountability Act of 1996 (“HIPAA”) as amended by the Health Information Technology for Economic and Clinical Health Act of 2009 (the “HITECH Act”), the California Consumer Privacy Act, China’s Personal Information Protection Law, the Physician Payments Sunshine Provisions of the Patient Protection and Affordable Care Act, the European Union’s General Data Production Regulation, the EU Directive 2002/58/EC (and implementing and local measures adopted thereunder), France’s Data Protection Act of 1978 (rev.

2004) and France’s Loi Bertrand, certain rules issued by Denmark’s Health and Medicines Authority, and similar international laws and regulations.

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Similar reporting requirements have also been enacted in several states, and an increasing number of countries worldwide either have adopted or are considering similar laws requiring transparency of interactions with health care professionals.

The Company is subject to changes in or the imposition of tariffs could make it more difficult or costly for us to export our products to other countries.

These measures could also result in increased costs for goods imported into the United States.

This in turn could require us to increase prices to our customers which may reduce demand, or, if we are unable to increase prices, result in lowering our margin on products sold.

We cannot predict future trade policy or the terms of any renegotiated trade agreements and their impact on our business.

The adoption and expansion of trade restrictions, the occurrence of a trade war, or other governmental action related to tariffs or trade agreements or policies has the potential to adversely impact demand for our products, our costs, our customers and our suppliers, which in turn could adversely impact our business, financial condition and results of operations.

The Company believes it is in substantial compliance with the laws and regulations that regulate its business.

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The Company manufactures the majority of the products that it sells.

Most of the raw materials used by the Company in the manufacture of its products are purchased from various suppliers and are typically available from numerous sources.

No single supplier accounts for more than 10% of Dentsply Sirona’s supply requirements.

The Company sources the necessary raw materials from various suppliers, and no single supplier accounts for more than 10% of Dentsply Sirona’s supply requirements.

Intellectual Property

Products manufactured by Dentsply Sirona are sold primarily under its own tradenames and trademarks.

Dentsply Sirona also owns and maintains more than 5,000 patents throughout the world and is licensed under a number of patents owned by others.

Dentsply Sirona also owns and maintains more than 5,000 patents throughout the world and has also licensed a number of patents owned by others.

Dentsply Sirona’s policy is to protect its products and technology through patents and trademark registrations both in the U.S.

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Human Capital

The Company’s workforce is critical to meeting its strategic goals in order to deliver on the promises of growing revenues, improving margins, and simplifying the organization.

At December 31, 2020, the Company and its subsidiaries employed approximately 15,000 employees which the Company relies on to accomplish these strategic objectives in order to continue to lead the dental industry.

Of these employees, approximately 3,900 were employed in the United States and approximately 11,100 outside the United States.

Some of the Company's employees outside of the United States are covered by collective bargaining, union contract, worker councils, or other similar type programs.

The Company believes that it generally has a positive relationship with its employees.

Our key human capital management priorities include talent acquisition, diversity and inclusion, engagement, development, and retention.

Talent Acquisition, Engagement, Development, and Retention

In 2020, we enhanced our strategy for attracting, engaging, developing and retaining talent.

The Company created future-focused early career programs with universities, local trade schools that allow for on-the-job, experienced-based training.

To foster engagement and communication with employees while keeping them safe and healthy, in 2020 we conducted numerous virtual town halls and video chats, to keep our employees informed and to provide multiple opportunities for employees globally to ask management questions.

We also launched a global employee assistance program to support employees with personal or work-related issues, focusing on health, including mental and emotional well-being.

We created a global skill development approach within the Company’s segments and functions for leadership and we are currently engaged in efforts to improve the Company’s retention of critical global talent through appropriate opportunities and rewards.

We believe that our employees are true assets to our organization and contribute to the success of our business.

On December 31, 2021, our organization and its subsidiaries employed approximately 15,000 employees across the globe who are relied on to accomplish the strategic objectives that enable us to lead the dental industry.

Of these employees, approximately 3,600 were employed in the United States.

Some employees outside of the United States are covered by collective bargaining, union contracts, worker councils or other similar programs.

As an organization we value and invest in our talent which leads to our belief of a positive relationship with our employees.

Our talent strategy focuses on attracting, engaging, developing and retaining talent to support our business strategy.

We further strive to offer an inclusive environment where every employee can grow and perform.

Attract, Engage, Develop & Retain

In 2021, we continued to evolve our strategy for attracting, engaging, developing and retaining talent.

Led by the feedback and engagement of our employees, we established a new Vision, Values, Mission and Operating Principles.

We launched our first central emerging talent program focused on attracting early-career employees through strategic partnerships with core schools, Historically Black Colleges and Universities and local trade schools.

The comprehensive program provides rotational assignments, on-the-job experiences, networking events, development sessions and executive interactions.

We offer a global approach to learning and development through a partnership with LinkedIn Learning via thousands of on-demand learning modules in multiple languages.

We deployed a custom leadership development framework to assess, develop and coach leaders at multiple levels.

Our quarterly performance feedback, development planning and talent review processes have been automated for professional employees.

A robust set of aids for goal setting and development planning has been designed to support future-focused growth.

We are currently piloting employee-led experience mapping and virtual mentoring with the plan to launch globally.

We continue to conduct virtual town halls and video chats, to keep our employees informed and to provide multiple opportunities for employees globally to ask questions of our leaders.

We place an emphasis on employee feedback and evaluation, which are gathered through engagement surveys every 18 months to all employees in addition to pulse surveys strategically employed throughout the year.

Compensation and Benefits

As part of the Company’s total rewards philosophy, we offer competitive compensation and benefit programs designed to attract and retain top talent.

We are committed to providing and administering these programs in a way that treats our employees at all levels fairly and equitably.

Our total rewards offerings vary by country and include an array of programs that support our employees’ financial, physical and mental well-being, including annual performance incentive opportunities, pension and retirement savings programs, health and welfare benefits, paid time off, leave programs, flexible work schedules and employee assistance programs.

Diversity and Inclusion

We view diversity in our organization as a source of strength and we seek to provide opportunities for all employees to bring their perspective, experience, and lens to the workplace.

We view diversity in our organization as a core source of strength and we seek to provide opportunities for all employees to bring their perspective, experience and whole self to the workplace.

We believe our commitment to a diverse workforce drives innovation and customer-centricity.

To further these goals, in 2020, the Company established a global Diversity & Inclusion Council to evaluate current policies and processes to ensure they are inclusive, to benchmark challenge areas and prioritize next steps.

The Company also hired a Diversity & Inclusion Lead to develop awareness through training, career coaching, networking and talent development.

The Company continues to measure its progress against key metrics.

We have an established Diversity & Inclusion Council, helping create accountability for results, providing governance and oversight on diversity efforts and promoting organization-wide communication on progress.

We have a Diversity & Inclusion functional leader who focuses on developing awareness through training, career coaching, networking and talent development.

We measure our progress against key metrics using benchmarking data.

Diversity & Inclusion Council

The Company’s Diversity & Inclusion Council is a group of demographically and functionally diverse global employees dedicated to enabling the Diversity & Inclusion function and championing initiatives that support the organization internally and externally.

The Diversity & Inclusion Council’s top priority is to intentionally increase awareness and impact of Diversity & Inclusion priorities as well as increasing leaders’ ability to discuss and be held accountable for driving sustainable diversity, inclusion and equity outcomes.

Our Diversity & Inclusion Council is a group of demographically and functionally diverse employees from across the world dedicated to enabling the Diversity & Inclusion function and championing initiatives that support the organization internally and externally.

A top priority of the Diversity & Inclusion Council is to increase the skills of our leaders on how to discuss and be accountable for driving sustained diversity, equity and inclusion goals.

Employee Resource Groups

The Company has supported the launch of employee-led employee resource groups to foster a diverse, inclusive workplace aligned with the strategy.

Potential benefits of employee resource groups include the development of future leaders, increased employee engagement and expanded market reach.

There has been high employee participation in the employee resource groups and subsequent events.

The purpose of our Employee Resource Groups is to foster a diverse, equitable and inclusive environment enabling employees to fully participate in successfully executing our strategy.

As of December 31, 2021, our employees have led the successful establishment of 7 Employee Resource Groups consisting of over 1,600 members.

Our Employee Resource Groups have been focused on developing talent, increasing employee engagement and creating awareness.

We consistently recognize high participation in Employee Resource Group-led events.

Training and Awareness

In 2020, the Company launched training to provide further awareness on diversity and inclusion-related topics.

Specifically, we offer unconscious bias training for all employees to provide a better understanding of how employees’ actions and words influence our work environment and our interactions.

We also train and coach people managers to use performance development tools to drive inclusive behaviors and practices.

Optionally, employees were invited to attend small group discussions to share their experiences on the topic of diversity and inclusion.

We offer a catalog of on-demand Diversity & Inclusion training options aimed at strengthening awareness.

A standout option of our offerings is our ongoing Conversations of Understanding sessions.

Employees are invited to register for these small group discussions where internal volunteers share experiences on varying diversity, equity and inclusion topics.

Talent Acquisition

In 2020, the Company issued talent sourcing guidelines for director-level and above roles requiring a diverse candidate slate for consideration.

We provide internal career coaching and utilize talent profiles to highlight diverse talent for internal opportunities.

We educate our managers on inclusive hiring practices.

Our organization has talent sourcing guidelines requiring diverse candidate interview slates for director-level and above roles.

To increase internal mobility, we offer career development options and utilize our talent review processes to highlight diverse talent for open positions.

We educate our hiring managers on inclusive hiring practices.

Measuring Progress

Executive management reviews the Company’s Diversity & Inclusion key metrics on a monthly basis, including attraction, engagement, advancement, and retention of diverse talent.

In 2020, the Company deployed a pulse survey to US employees to gather feedback on diversity and inclusion-related topics.

Results of the survey were used to finalize the diversity and inclusion strategy.

Executive management reviews our Diversity & Inclusion metrics regularly, including attraction, engagement, advancement and retention.

We are actively partnering with an external consultancy to identify available talent pools in all our geographic markets and establish benchmarks throughout.

All executive leaders have action plans in place and are accountable for progress.

Environmental, Health & Safety Matters

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The Company typically implements most of its price changes in the beginning of the first or fourth quarter.

Price changes, other marketing and promotional programs including trade shows, management of inventory levels by distributors and the implementation of strategic initiatives, may impact sales levels in a given period.

In addition, major new product introductions may also impact net sales as older products become less desirable compared to the new products.

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Such statements are subject to numerous assumptions, risks, uncertainties and other factors that could cause actual results to differ materially from those described in such statements, many of which are outside of our control.

Furthermore, many of these risks and uncertainties are currently amplified by and may continue to be amplified by or may, in the future, be amplified by, the novel coronavirus (“COVID-19”) pandemic and the impact of varying private and governmental responses that affect our customers, employees, vendors and the economies and communities where they operate.

Furthermore, many of these risks and uncertainties are currently amplified by and may continue to be amplified by the novel coronavirus (“COVID-19”) pandemic and the impact of varying private and governmental responses that affect our customers, employees, vendors and the economies and communities where they operate.

No assurance can be given that any expectation, belief, goal or plan set forth in any forward-looking statement can or will be achieved, and readers are cautioned not to place undue reliance on such statements which speak only as of the date they are made.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business