Leerink Partners upgraded Align Technology Inc ALGN, citing upside opportunities throughout 2025 given gross margin expansion opportunities.Align Technology — a medical device company that manufactures and sells dental aligners, scanners, and software for digital orthodontics and restorative dentistry — will benefit from improving consumer sentiment, easing comps and continued equipment traction with Lumina.In October, Align Technology announced that it is planning to repurchase $275 million of its common s ...

Company Performance - Shares of Align Technology (NASDAQ: ALGN), the market leader in clear aligners, have fallen more than 20% over the past year due to slowing growth in a tough macroeconomic environment where discretionary spending by consumers has been impacted [1] Analyst Background - The analyst is an individual investor with a focus on undercovered companies, particularly in technology, software, electronics, and the energy transition sectors [1] - The analyst has over 7 years of personal investing experience and a Masters degree in Electrical Engineering, currently working as an automotive battery R&D engineer in Sweden [1] - The analyst enjoys researching small to mid-cap companies that are often less covered by others, aiming to identify asymmetric investment opportunities for market-beating returns [1]

Core Insights - Align Technologies is well-positioned for growth due to the robust potential of Invisalign and strategic expansions [1][3] - The company has a market capitalization of $15.94 billion and has consistently surpassed earnings estimates [2] - The malocclusion market presents a significant opportunity for Align Technologies, with only 22 million people globally opting for orthodontic treatment annually, indicating a large untapped patient base [3] Financial Performance - In the third quarter, Align Technologies reported a 15.6% increase in Systems and Services revenues, driven by higher scanner average selling prices (ASPs) and increased service revenues [6] - Clear Aligner volume reached 617,000, reflecting a 2.5% year-over-year increase, with growth noted across all regions [12] - The Zacks Consensus Estimate for the company's 2024 revenues is projected at $4.04 billion, suggesting a 4.6% increase from the previous year [17] Market Dynamics - The company faces macroeconomic challenges, including staffing shortages and supply chain issues, which are impacting revenues and margins [7] - Adverse currency impacts are a concern, particularly due to a significant portion of revenues coming from international markets, affecting Clear Aligner ASPs [16] Strategic Initiatives - Align Technologies is focusing on strategic alliances with dental support organizations (DSOs) to drive the adoption of digital dentistry, particularly targeting young adults and teens through influencer partnerships [13] - The iTero intraoral scanners and exocad CAD/CAM software are expanding their market presence, with the launch of the next-generation iTero Lumina scanner [14]

Align Technology's (ALGN) dental procedures continue to be affected by the current economic uncertainty. The competitive landscape also remains an overhang. The stock carries a Zacks Rank #4 (Sell) currently.Factors Dragging ALGN Shares DownThe ongoing industry-wide trend of staffing shortages and supply chain-related hazards is denting revenues and margins for Align Technology. Deteriorating international trade, with global inflationary pressure leading to a tough situation related to raw material and labo ...

It has been about a month since the last earnings report for Align Technology (ALGN) . Shares have added about 5.5% in that time frame, outperforming the S&P 500.Will the recent positive trend continue leading up to its next earnings release, or is Align Technology due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers. Align Technology's Q3 Earnings Top Es ...

Align Technologies (ALGN) has received a CE Mark in Europe under the Medical Device Regulation (MDR 2017/745) for its Invisalign Palatal Expander System. The system has completed registration with MHRA for the United Kingdom and overseas territories.The latest developments mark a milestone in the company’s efforts to enhance clinical outcomes and efficiency in orthodontics. Both approvals are for broad patient applicability, including growing children, teens and adults (with surgery or other techniques).ALG ...

PART I FINANCIAL INFORMATION [Financial Statements (Unaudited)](index=3&type=section&id=Item%201.%20Financial%20Statements%20%28Unaudited%29) This section presents the unaudited condensed consolidated financial statements for Q3 and nine months ended September 30, 2024, covering operations, balance sheets, cash flows, and detailed notes [Condensed Consolidated Statements of Operations](index=3&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Q3 2024 net revenues slightly increased to **$977.9 million**, while net income decreased to **$116.0 million**; nine-month revenues grew to **$3.00 billion** with a slight net income decrease Q3 & Nine Months 2024 Statement of Operations (in thousands, except per share data) | Metric | Q3 2024 | Q3 2023 | Nine Months 2024 | Nine Months 2023 | | :--- | :--- | :--- | :--- | :--- | | **Net Revenues** | $977,872 | $960,214 | $3,003,793 | $2,905,534 | | **Gross Profit** | $681,774 | $663,076 | $2,102,218 | $2,037,339 | | **Income from Operations** | $162,298 | $166,346 | $463,479 | $471,793 | | **Net Income** | $115,963 | $121,427 | $317,555 | $321,039 | | **Diluted EPS** | $1.55 | $1.58 | $4.23 | $4.18 | [Condensed Consolidated Statements of Comprehensive Income](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income) Q3 2024 comprehensive income increased to **$126.8 million** due to foreign currency adjustments, while the nine-month comprehensive income remained nearly flat at **$332.3 million** Q3 & Nine Months 2024 Comprehensive Income (in thousands) | Metric | Q3 2024 | Q3 2023 | Nine Months 2024 | Nine Months 2023 | | :--- | :--- | :--- | :--- | :--- | | **Net Income** | $115,963 | $121,427 | $317,555 | $321,039 | | **Other Comprehensive Income (Loss)** | $10,872 | $(9,296) | $14,745 | $12,331 | | **Comprehensive Income** | $126,835 | $112,131 | $332,300 | $333,370 | [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets increased to **$6.37 billion** as of September 30, 2024, driven by higher cash, while total liabilities remained stable and stockholders' equity grew to **$3.94 billion** Balance Sheet Highlights (in thousands) | Metric | Sep 30, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | | **Cash and cash equivalents** | $1,041,935 | $937,438 | | **Total current assets** | $2,597,387 | $2,446,618 | | **Total assets** | $6,365,974 | $6,083,877 | | **Total current liabilities** | $2,063,613 | $2,066,611 | | **Total liabilities** | $2,421,620 | $2,453,388 | | **Total stockholders' equity** | $3,944,354 | $3,630,489 | [Condensed Consolidated Statements of Stockholders' Equity](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders%27%20Equity) Stockholders' equity increased to **$3.94 billion** by September 30, 2024, primarily due to **$317.6 million** in net income, partially offset by **$150.6 million** in stock repurchases - For the nine months ended September 30, 2024, the company repurchased and retired 634,000 shares of common stock for a total cost of **$150.6 million**[14](index=14&type=chunk) - Stock-based compensation expense for the nine months ended September 30, 2024, was **$134.9 million**[14](index=14&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash from operations decreased to **$452.2 million** for the nine months ended September 30, 2024, with **$201.0 million** used in investing and **$152.7 million** in financing activities Cash Flow Summary (Nine Months Ended Sep 30, in thousands) | Activity | 2024 | 2023 | | :--- | :--- | :--- | | **Net cash provided by operating activities** | $452,153 | $738,878 | | **Net cash used in investing activities** | $(200,996) | $(182,619) | | **Net cash used in financing activities** | $(152,703) | $(248,059) | | **Net increase in cash** | $104,462 | $296,995 | [Notes to Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Notes detail accounting policies, the **$85.8 million** Cubicure acquisition, a **$31.1 million** antitrust legal accrual, a **$100 million** VAT refund, and a post-quarter restructuring plan costing **$25-$30 million** - On January 2, 2024, the company completed the acquisition of Cubicure GmbH for a total purchase consideration of **$85.8 million**, resulting in **$47.6 million** of goodwill allocated to the Clear Aligner segment[53](index=53&type=chunk)[54](index=54&type=chunk)[56](index=56&type=chunk) - During the nine months ended September 30, 2024, the company accrued a loss of **$31.1 million** for legal settlements, primarily related to Section 1 antitrust claims[74](index=74&type=chunk) - In October 2024, the company reached a settlement with UK's HMRC regarding a VAT dispute, resulting in a full refund of approximately **$100 million** in previously paid assessments[78](index=78&type=chunk) - Subsequent to the quarter end, on October 23, 2024, the company announced a restructuring plan to reduce headcount by approximately 700 employees, with estimated costs of **$25.0 million** to **$30.0 million**[108](index=108&type=chunk) - On October 25, 2024, the company announced a plan to repurchase **$275.0 million** of its common stock through open market repurchases[109](index=109&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=26&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses Q3 2024 financial results, noting a **1.8%** revenue increase to **$977.9 million** driven by Systems and Services growth, macroeconomic challenges, and a slight operating margin decrease, while maintaining strong liquidity [Executive Overview of Results](index=26&type=section&id=Executive%20Overview%20of%20Results) The company's strategic priorities include international expansion and GP treatment, with Q3 2024 revenues reaching **$977.9 million**, up **1.8%** YoY, despite ongoing macroeconomic challenges - The company's growth strategy focuses on four pillars: international expansion, general practitioner (GP) treatment, patient demand, and orthodontic utilization[112](index=112&type=chunk) - Management believes sales have been and will continue to be impacted by macroeconomic conditions, including inflation and market uncertainties from military conflicts, which dampen consumer sentiment and demand[113](index=113&type=chunk) Q3 2024 Key Metrics | Metric | Value | Change (YoY) | | :--- | :--- | :--- | | Revenues | $977.9M | +1.8% | | Clear Aligner Revenues | $786.8M | -1.0% | | Systems & Services Revenues | $191.0M | +15.6% | | Clear Aligner Case Volume | - | +2.5% | | Operating Margin | 16.6% | - | [Results of Operations](index=29&type=section&id=Results%20of%20Operations) Q3 2024 net revenues increased by **$17.7 million** YoY, driven by a **15.6%** rise in Systems and Services revenue, offsetting a **1.0%** decline in Clear Aligner revenue, while gross margins varied by segment and operating expenses rose Net Revenues by Segment (in millions) | Segment | Q3 2024 | Q3 2023 | Change | % Change | | :--- | :--- | :--- | :--- | :--- | | **Clear Aligner** | $786.8 | $794.9 | $(8.1) | (1.0)% | | Americas | $349.2 | $366.6 | $(17.4) | (4.7)% | | International | $361.5 | $355.3 | $6.2 | 1.8% | | **Systems and Services** | $191.0 | $165.3 | $25.8 | 15.6% | | **Total Net Revenues** | $977.9 | $960.2 | $17.7 | 1.8% | Gross Margin by Segment | Segment | Q3 2024 | Q3 2023 | | :--- | :--- | :--- | | **Clear Aligner** | 70.3% | 70.7% | | **Systems and Services** | 67.5% | 61.0% | | **Total Gross Margin** | 69.7% | 69.1% | - Selling, general and administrative (SG&A) expenses increased in Q3 2024 compared to Q3 2023, primarily due to higher employee costs, including salary, benefits, stock-based compensation, and bonus[150](index=150&type=chunk) - For the nine months ended September 30, 2024, the company recorded a legal settlement loss of **$31.2 million**[156](index=156&type=chunk)[157](index=157&type=chunk) [Liquidity and Capital Resources](index=35&type=section&id=Liquidity%20and%20Capital%20Resources) As of September 30, 2024, the company held **$1.04 billion** in cash, with **$452.2 million** from operations, and plans over **$100 million** in capital expenditures, ongoing share repurchases, and a **$25-$30 million** restructuring cost - The company's cash and cash equivalents totaled **$1.04 billion** as of September 30, 2024[169](index=169&type=chunk) - Capital expenditures for 2024 are expected to be above **$100.0 million**, primarily for building construction and manufacturing capacity expansion[171](index=171&type=chunk) - As of September 30, 2024, **$500.0 million** remained available for repurchases under the January 2023 stock repurchase program[172](index=172&type=chunk) - A restructuring plan announced in October 2024 is expected to incur charges between **$25.0 million** and **$30.0 million**[176](index=176&type=chunk) [Critical Accounting Estimates](index=36&type=section&id=Critical%20Accounting%20Estimates) Revenue recognition, particularly determining standalone selling price (SSP) for multi-option treatment plans, is a critical accounting estimate requiring significant judgment that can materially impact revenue timing - Revenue recognition is a critical accounting estimate, specifically the determination of standalone selling price (SSP) to allocate revenue to distinct performance obligations[184](index=184&type=chunk) - Estimating SSP for clear aligner treatment plans requires significant judgment and evaluation of inputs, including historical usage data by region, country, and channel[185](index=185&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=37&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company faces significant market risks from foreign currency fluctuations, inflation impacting costs and revenues, and interest rate changes, with a **10%** currency shift potentially having a material impact - The company has significant international operations and is exposed to fluctuations in foreign currencies; a **10%** aggregate change in foreign currency exchange rates could be material[191](index=191&type=chunk)[193](index=193&type=chunk) - The company uses foreign currency forward contracts, primarily for the Euro, British Pound, Chinese Yuan, Polish Zloty, and Canadian Dollar, to minimize short-term impacts of currency fluctuations[192](index=192&type=chunk) - Rising inflation has impacted and is expected to continue to impact revenues and costs globally; the company may not be able to fully offset higher costs through price increases[194](index=194&type=chunk) [Controls and Procedures](index=38&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of September 30, 2024, with no material changes to internal control over financial reporting during the quarter - Based on an evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were effective as of September 30, 2024[195](index=195&type=chunk) - No material changes were made to the company's internal control over financial reporting during the quarter ended September 30, 2024[196](index=196&type=chunk) PART II OTHER INFORMATION [Legal Proceedings](index=38&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in multiple legal matters, including a settled shareholder derivative suit, an antitrust class action settlement for **$27.5 million**, and ongoing patent infringement litigation against Straumann, accruing **$31.1 million** in legal losses - A 2019 shareholder derivative lawsuit reached a settlement agreement, which received preliminary court approval on August 2, 2024[69](index=69&type=chunk)[199](index=199&type=chunk) - In June 2024, the company reached a settlement in principle in an antitrust lawsuit, which includes a **$27.5 million** cash payment and coupons for class members; a renewed motion for preliminary approval was filed in October 2024[73](index=73&type=chunk) - In April 2024, Align filed a lawsuit against ClearCorrect/Straumann for false advertising and patent infringement; Straumann has filed counterclaims for antitrust violations and other claims[75](index=75&type=chunk) - For the nine months ended September 30, 2024, the company accrued a loss of **$31.1 million** for legal settlements, primarily related to the antitrust claims[74](index=74&type=chunk) [Risk Factors](index=40&type=section&id=Item%201A.%20Risk%20Factors) The company faces significant risks from macroeconomic pressures, geopolitical events, intense competition, product dependence, supply chain disruptions, cybersecurity threats, and legal, regulatory, and ESG compliance failures [Macroeconomic and External Risks](index=40&type=section&id=Macroeconomic%20and%20External%20Risks) The company's performance is vulnerable to macroeconomic conditions like inflation, currency fluctuations, and recessions, alongside geopolitical events that can disrupt operations and supply chains - Macroeconomic conditions like inflation and potential recessions can adversely affect consumer confidence and discretionary spending on the company's products[202](index=202&type=chunk) - Significant international operations expose the company to material foreign currency fluctuations[204](index=204&type=chunk) - Geopolitical events, including the conflict in the Middle East, could disrupt iTero operations, which are headquartered in Israel[209](index=209&type=chunk) [Business and Industry Risks](index=41&type=section&id=Business%20and%20Industry%20Risks) Business risks include reliance on core products, intense competition from various clear aligner providers, challenges in new product adoption, and operational vulnerabilities from supply chain dependence and IT system disruptions - Net revenues are largely dependent on sales of Invisalign treatment plans and iTero intraoral scanners[216](index=216&type=chunk) - Competition is increasing rapidly from traditional wires and brackets, other clear aligner manufacturers, direct-to-consumer companies, and doctors using in-office 3D printing[221](index=221&type=chunk) - The company is highly dependent on third-party suppliers, some of whom are sole-source suppliers for key machines and materials, creating supply chain vulnerability[245](index=245&type=chunk) - The business relies on complex IT systems, and issues with software integration, updates, or cybersecurity could disrupt operations and harm the company's reputation[239](index=239&type=chunk)[240](index=240&type=chunk) [Legal, Regulatory and Compliance Risks](index=47&type=section&id=Legal%2C%20Regulatory%20and%20Compliance%20Risks) The company faces significant legal, regulatory, and compliance risks from extensive global regulations, potential cybersecurity breaches, product liability claims, increasing ESG scrutiny, and emerging AI-related legal challenges - The company is subject to extensive and frequently changing regulations for medical devices, data privacy, marketing, and anti-corruption, with non-compliance potentially leading to significant penalties[265](index=265&type=chunk)[270](index=270&type=chunk) - Cybersecurity incidents, data breaches, and failure to comply with privacy laws could lead to litigation, regulatory action, and reputational harm[273](index=273&type=chunk)[274](index=274&type=chunk) - Increasing focus on Environmental, Social, and Governance (ESG) laws and stakeholder expectations may materially increase costs and expose the company to liability and reputational risk[281](index=281&type=chunk)[288](index=288&type=chunk) - The incorporation of Artificial Intelligence (AI) into products and operations presents new legal, regulatory, and reputational risks[289](index=289&type=chunk)[290](index=290&type=chunk) [Intellectual Property Risks](index=51&type=section&id=Intellectual%20Property%20Risks) The company's success depends on its ability to obtain and enforce intellectual property rights, facing risks of patent invalidation and costly, unpredictable IP litigation - The company's success depends on its ability to obtain, maintain, and enforce its portfolio of patents and other intellectual property rights[291](index=291&type=chunk)[292](index=292&type=chunk) - The company is and will likely continue to be involved in extensive and costly litigation over IP rights, the outcomes of which are unpredictable and could adversely affect the business[300](index=300&type=chunk) [Financial, Tax and Accounting Risks](index=52&type=section&id=Financial%2C%20Tax%20and%20Accounting%20Risks) The company faces financial risks from potential asset impairment, changes in accounting rules, volatile effective tax rates due to evolving laws, and historical stock price volatility - Goodwill, intangible, or other long-lived assets could become impaired, which would require the company to record a material charge to earnings[301](index=301&type=chunk) - The company's effective tax rate may vary significantly due to changes in tax laws, regulations, and the jurisdictional mix of income[307](index=307&type=chunk)[310](index=310&type=chunk) - The market price of the company's common stock has been historically volatile and is subject to fluctuations from numerous factors beyond its control[313](index=313&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=54&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) No stock repurchases occurred during Q3 2024, with **$500.0 million** remaining available under the January 2023 repurchase program - There were no stock repurchases during the three months ended September 30, 2024[318](index=318&type=chunk) - As of September 30, 2024, **$500.0 million** remained available for repurchases under the January 2023 Repurchase Program[318](index=318&type=chunk) [Defaults Upon Senior Securities](index=54&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This section is not applicable to the company's current financial reporting - Not applicable[319](index=319&type=chunk) [Mine Safety Disclosures](index=54&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This section is not applicable to the company's operations - Not applicable[319](index=319&type=chunk) [Other Information](index=54&type=section&id=Item%205.%20Other%20Information) No director or officer adopted or terminated Rule 10b5-1 trading arrangements during Q3 2024 - No director or officer adopted or terminated a Rule 10b5-1 trading arrangement during the fiscal quarter ended September 30, 2024[319](index=319&type=chunk) [Exhibits](index=55&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Form 10-Q, including corporate documents, CEO and CFO certifications, and Inline XBRL documents - The report includes a list of filed exhibits, such as CEO and CFO certifications (Exhibits 31.1, 31.2, 32.1) and Inline XBRL data files[321](index=321&type=chunk)

Align Technology, Inc. (ALGN) recently announced the release of the next version of Invisalign Smile Architect software. The software now supports Multiple Treatment Plans, which is likely to allow doctors to visually compare and modify orthodontic only and ortho restorative treatment plans side-by-side. The Multiple Treatment Plans are integrated into ClinCheck treatment planning software which allows doctors to visually compare, review, and choose the best treatment option for each patient. Likely Trend o ...

Thank you for reading my research on Seeking Alpha. If you want to learn even more about my method and how I discover these investment opportunities, please check out my subscription marketplace service, Compounding Healthcare , and sign up for a free trial. Align Technology (NASDAQ: ALGN ) recently reported mixed Q3 earnings with a beat on EPS, but a slight miss on revenue. A glance at the headline numbers shows that the company's non-GAAP EPS came in at $2.35, which beat the Street's estimate by $0.04. Me ...

Core Viewpoint - Align Technology, Inc. reported mixed results for Q3 2024, with adjusted EPS exceeding estimates while revenues fell short of expectations [10] Financial Performance - Adjusted EPS for Q3 2024 was $2.35, a 9.8% increase year-over-year, surpassing the Zacks Consensus Estimate by 1.7% [1] - GAAP EPS for the quarter was $1.55, down 1.9% from $1.58 in Q3 2023 [1] - Revenues increased by 1.8% year-over-year to $977.9 million but missed the Zacks Consensus Estimate by 1.3% [2] - The revenue decline was impacted by foreign exchange losses of approximately $14.6 million, or 1.5% year-over-year [2] Segment Performance - Clear Aligner segment revenues decreased by 1% year-over-year to $786.8 million, affected by a 1.5% unfavorable foreign exchange impact [3] - Imaging Systems & CAD/CAM Services revenues rose by 15.6% to $191 million, also facing a 1.5% unfavorable currency impact [3] Margins and Expenses - Gross profit for the quarter was $681.8 million, up 2.8% year-over-year, with a gross margin of 69.7%, an increase of 67 basis points [4] - SG&A expenses rose by 6.4% to $434.1 million, while R&D expenses decreased by 3.9% to $85.3 million [4] - Operating income was $162.4 million, down 2.3% year-over-year, with an operating margin contraction of 72 basis points to 16.6% [4] Cash Position and Stock Repurchase - The company ended Q3 with cash and cash equivalents of $1 billion, up from $738.9 million at the end of Q2 [5] - ALGN has $500 million available for repurchases under its $1.0 billion Stock Repurchase Program authorized in January 2023 [6] Guidance - For full-year 2024, ALGN anticipates revenue growth of 4-6% year-over-year, revised down from previous guidance of 6-8% [8] - The Zacks Consensus Estimate for 2024 revenues is $4.04 billion, indicating a 4.5% growth year-over-year [8] - The company expects to invest over $100 million in capital expenditures for expansion [8] Q4 Expectations - For Q4, ALGN projects worldwide revenues between $995 million and $1.01 billion, with the Zacks Consensus Estimate at $1.02 billion [9] Recent Developments - ALGN introduced the iTero Design Suite for 3D printing and launched a new Invisalign treatment promotional program for Costco members [11] - Concerns remain regarding declining operating income and contracting operating margins [11]