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Analyzing Sirona Dental Systems’ Rise in Revenue in Fiscal 4Q15

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Nov. 24 2015, Updated 5:42 a.m. ET

Sirona Dental Systems’ price movement

Sirona Dental Systems (SIRO) has a market cap of $6.1 billion. After the release of the company’s 4Q15 earnings report, SIRO rose by 0.23% to close at $109.22 per share on November 20, 2015. SIRO’s price movements on weekly, monthly, and YTD bases are 4.1%, 2.3%, and 25.0%, respectively.

At times, the stock broke the support of 20-day and 50-day moving averages in fiscal 2015. Currently, SIRO is trading 0.89% above its 20-day moving average, 6.1% above its 50-day moving average, and 12.0% above its 200-day moving average.

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The SPDR S&P Health Care Equipment ETF (XHE) invests 1.7% of its holdings in Sirona Dental Systems. The ETF tracks an equal-weighted index of US healthcare equipment and supplies companies. The YTD price movement of XHE is 5.9%, as of November 19, 2015. The iShares Dow Jones US Medical Devices ETF (IHI) invests 1.5% of its holdings in Sirona Dental Systems.

Sirona Dental Systems’ competitors (SIRO) and their market caps are listed below:

  • Danaher Corporation (DHR)—$66.7 billion
  • Align Technology (ALGN)—$5.3 billion
  • Patterson Companies (PDCO)—$5.0 billion

Sirona Dental Systems’ performance in fiscal 4Q15 and fiscal 2015

Sirona Dental Systems reported fiscal 4Q15 revenue of $304.9 million, a rise of 5.1% when compared to revenue of $290.0 million in fiscal 4Q14. The cost of goods sold as a percentage of revenue and operating income rose by 2.3% and 11.7%, respectively, in 4Q15, as compared to 4Q14.

Its net income and EPS (earnings per share) rose to $45.4 million and $0.80, respectively, in 4Q15, as compared to net income and EPS of $42.7 million and $0.76, respectively, in 4Q14. In 4Q15, the company’s non-GAAP adjusted net income and EPS rose 21.1% and 20.4% to $63.0 million and $1.12, respectively, as compared to 4Q14.

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Sirona Dental Systems (SIRO) and DENTSPLY International (XRAY) have approved a definitive merger agreement under which the companies will combine in an all-stock merger of equals. This transaction will result in the largest manufacturer of professional dental products and technologies with an implied pro forma equity value of ~$13.3 billion, based on closing prices of SIRO and XRAY on September 14, 2015. According to the merger announcement on September 15, 2015, the new company will have a net revenue of ~$3.8 billion and an adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) of more than $900 million on a pro forma basis. This transaction will be completed in the first quarter of calendar year 2016.

Fiscal 2015 results

In fiscal 2015, the company reported revenue of $1,161.3 million, a fall of 0.83% YoY (year-over-year). The company’s gross profit margin and operating income rose by 1.9% and 8.5%, respectively, in fiscal 2015. Its net income and EPS rose to $186.2 million and $3.30, respectively, in fiscal 2015, as compared to net income and EPS of $175.7 million and $3.13, respectively, in fiscal 2014. Its non-GAAP adjusted net income and EPS rose 8.8% and 8.4% YoY to $224.5 million and $3.98, respectively.

Meanwhile, Sirona Dental Systems’ cash and cash equivalents and inventories rose by 35.3% and 4.9%, respectively, in fiscal 2015. The company’s current ratio rose to 3.0, and its debt-to-equity ratio fell to 0.41 in fiscal 2015, as compared to its current ratio and debt-to-equity ratio of 2.9 and 0.43, respectively, in fiscal 2014.

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