Shares of Patterson Companies (PDCO) are sliding after the company reported worse than expected quarterly results, lowered its guidance for 2017 and announced it has elected not to extend its exclusivity selling agreement with Dentsply Sirona (XRAY) beyond September 2017. Patterson's changes to the Sirona deal come on the heels of recent speculation that today's report from the company could include the announcement of a distribution deal with e-commerce giant Amazon (AMZN).

RESULTS: This morning, Patterson Companies reported second quarter adjusted earnings per share of 56c and revenue of $1.42B, both below consensus expectations of 60c and $1.44B, respectively. The company also lowered its 2017 earnings per share view to $2.25-$2.35, below estimates of $2.64. "In light of both external market factors and our strategic decisions, we have re-examined our financial outlook for the year. When we entered fiscal 2017, our guidance was predicated on end markets similar to those experienced in fiscal 2016. But we, along with others in our industry, have seen softness in the U.S. dental market and challenges with branded pharmaceutical companies in our animal health business," the company said.

EXCLUSIVE AGREEMENT CANCELED: Patterson also announced that it will not extend the exclusive portion of its Dentsply Sirona relationship after September 2017. "We expect this move, along with our sales realignment activities taken earlier in fiscal 2017, to better position Patterson Dental to serve the evolving dental market. In no way does this decision change our commitment to our long-standing partnership with Sirona," Scott Anderson, president and CEO of Patterson, said.

CANCELLATION POSITIVE FOR DENTSPLY SIRONA: In a post-earnings note to investors, Piper Jaffray analyst Matt O'Brien noted that he is not surprised the exclusive selling agreement with legacy Sirona products was not extended given changing industry dynamics. Assuming Henry Schein (HSIC) starts selling legacy Sirona equipment, the analyst said he views it as a positive for Dentsply Sirona as this will ultimately allow the company to increase cross-selling opportunities with those customers. Further, O'Brien told investors that he has been calling for a cancellation of the exclusive selling agreement with Patterson, saying Dentsply has been adamant about realizing sales synergies through increased cross-selling opportunities. With the Patterson exclusive agreement formally ending in September, the analyst believes there will be a seamless transition to onboard Henry Schein. He reiterated an Overweight rating and a $70 price target on Dentsply Sirona's shares.

AMAZON PARTNERSHIP: Rumors of a possible partnership between Patterson and Amazon have been circulating since the beginning of the month. Yesterday, Baird analyst Jeff Johnson speculated on the possibility of a distribution agreement with the e-commerce giant being announced today, saying that Amazon could fulfill orders placed through Patterson's order portal, lowering the latter's fulfillment costs and giving the company additional breathing room as it pursues DSO deals.

PRICE ACTION: In morning trading, shares of Patterson have dropped over 19% to $38.31, while Dentsply Sirona's stock has slid about 1% to $59.22 per share.