Dentsply Sirona Inc. XRAY, -0.10%, a maker of dental products and technology, said Tuesday it has completed an internal probe of financial reporting involving former and current executives and said it would restate third-quarter and full-year 2021 earnings. The probe looked at allegations of “channel stuffing”, a deceptive practice used to inflate sales and earnings by deliberately sending more product to distributors than they can reasonably sell. The practice was alleged to have been used by former members of senior management to achieve exec comp targets in 2021. “The Audit and Finance Committee concluded that there was no evidence of intentional wrongdoing or fraud,” the company said in a regulatory filing. However, the company’s former CEO and former CFO “violated provisions” of the company’s code of ethics and business conduct. “In addition, these former members of senior management did not maintain and promote an appropriate control environment focused on compliance in areas of the company’s business, nor did they sufficiently promote, monitor or enforce adherence to the Code of Ethics and Business Conduct,” said the filing. The same two execs “created a culture where employees did not feel comfortable raising concerns without fear of retaliation. The former CFO, Jorge Gomez, was ousted from Moderna Inc. MRNA, +3.03% after just two days in the job once news of the probe broke earlier this year. Gomez was CFO at Dentsply from 2019 to 2022. Dentsply said it now expects to book a pretax noncash charge for goodwill impairment in the range of $1.0 billion to $1.3 billion for the nine months through September, as macroeconomic factors such as higher cost of capital, cost inflation, the strong dollar, and increased supply chain costs, lead it to reduce guidance for revenue, operating margins and future cash flows. The company now expects third-quarter sales of about $947 million, compared with a FactSet consensus of $1.04 billion. Shares fell 6% premarket and are down 47% in the year to date, while the S&P 500 SPX, -0.40% has fallen 19%.
