Core Viewpoint - Angelalign Technology Co., Ltd. firmly denies the patent infringement allegations made by Align Technology Inc. and plans to actively respond to the claims [1][2] Group 1: Company Response - The company asserts that the patent claims from competitors are baseless and lack merit, emphasizing its long-standing commitment to patent compliance and innovation in the invisible orthodontics field [1] - Rich Hirschland, the Chief Business Officer, expresses confidence in winning the case and highlights the company's history of clinical-driven innovation over the past two decades [1] Group 2: Product Innovation - Angelalign has consistently led innovation in the invisible orthodontics sector, introducing award-winning products such as the angelButton system, angelHook system, and the A6 mandibular invisible orthodontic solution, among others [1] - The company focuses on creating a fair and healthy competitive environment, aiming to provide value to both doctors and patients through its advanced product offerings [1] Group 3: Market Position and Growth - The company anticipates that its growth will not be materially affected by the ongoing litigation, and it views the situation as an opportunity to raise awareness about its brand and attract more global customers [2]

Core Insights - The article discusses Align Technology (NASDAQ: ALGN) and presents a cautiously optimistic view following their Q3 earnings report, which showed modest year-over-year revenue growth [1]. Group 1 - The author has been tracking Align Technology for approximately nine months and previously expressed a cautiously optimistic position based on their earnings performance [1]. - The article highlights the author's focus on innovative companies in the healthcare sector, particularly those developing breakthrough therapies and pharmaceuticals [1].

Core Insights - Align Technology (ALGN) reported Q2 2025 adjusted earnings per share (EPS) of $2.49, a 3.3% increase year-over-year, but missed the Zacks Consensus Estimate by 3.1% [1] - GAAP EPS for the quarter was $1.72, reflecting a 43.4% increase from $1.28 in Q2 2024 [1] - Revenue for the quarter was $1.01 billion, down 1.6% year-over-year, and also missed expectations by 4.6% [1][8] Financial Performance - Following the earnings announcement, ALGN shares dropped 36.6% the next day [2] - Full-year EPS estimates were revised down from $10.33 to $10.10, indicating an annual profit growth of 8.25% [2] - The topline estimate for 2025 has been adjusted to $4 billion, suggesting nearly zero growth [2] Stock Repurchase and Insider Activity - During the reported quarter, the company repurchased approximately 585.1 thousand shares at an average price of $164.14, completing a $225 million repurchase program [3] - The total stock repurchase program approved in January 2023 was fully completed, amounting to $1 billion [3] - CEO Joe Hogan purchased $1 million worth of shares on August 1, 2025, acquiring 7,576 shares at $131.4851 each [4] Business Segments and Growth - Clear Aligner revenues fell 3.3% year-over-year, while Imaging Systems & Services grew by 5.6% due to iTero upgrades [7] - The company achieved a record number of teen cases, treating over 6 million teens and kids globally with the Invisalign system [10] - Growth in Clear Aligner volume was noted in APAC and EMEA regions, driven by increased utilization among orthodontists and general practitioners [9] Market Outlook - Despite the weaker-than-expected results, the downward revisions in estimates were not severe, indicating a potential buying opportunity [10] - The company is focusing on digital services and aggressive growth in markets like China and India, where demand is significant [6]

PART I FINANCIAL INFORMATION This section presents the company's unaudited condensed consolidated financial statements and management's analysis [Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) This section presents Align Technology's unaudited condensed consolidated financial statements and related notes [Condensed Consolidated Statements of Operations](index=3&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Net revenues slightly decreased to $1.01 billion, while net income increased to $124.6 million due to a non-recurring legal settlement Consolidated Statements of Operations Highlights (in thousands, except per share data) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | **Net revenues** | $1,012,449 | $1,028,490 | $1,991,711 | $2,025,921 | | **Gross profit** | $708,117 | $722,628 | $1,388,225 | $1,420,444 | | **Income from operations** | $163,033 | $147,046 | $294,133 | $301,181 | | **Net income** | $124,608 | $96,564 | $217,838 | $201,592 | | **Diluted EPS** | $1.72 | $1.28 | $2.98 | $2.68 | [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets increased slightly to $6.22 billion, with a decrease in cash and a rise in stockholders' equity Balance Sheet Highlights (in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Cash and cash equivalents** | $901,157 | $1,043,887 | | **Accounts receivable, net** | $1,116,210 | $995,685 | | **Total current assets** | $2,448,058 | $2,492,441 | | **Total assets** | $6,219,094 | $6,214,600 | | **Deferred revenues (current)** | $1,317,990 | $1,331,146 | | **Total liabilities** | $2,306,315 | $2,362,615 | | **Total stockholders' equity** | $3,912,779 | $3,851,985 | [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Operating cash flow slightly decreased, investing cash outflow reduced, and financing cash outflow increased from repurchases Cash Flow Summary (in thousands) | Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | **Net cash provided by operating activities** | $181,326 | $188,491 | | **Net cash used in investing activities** | ($56,768) | ($192,077) | | **Net cash used in financing activities** | ($303,055) | ($163,275) | | **Net decrease in cash** | ($142,621) | ($176,057) | [Notes to Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Detailed notes cover accounting policies, acquisitions, legal proceedings, tax matters, and share repurchase programs - The company completed the acquisition of Cubicure GmbH on January 2, 2024, for a total purchase consideration of **$85.8 million**, which included **$47.6 million** in goodwill allocated to the Clear Aligner segment[49](index=49&type=chunk)[50](index=50&type=chunk)[52](index=52&type=chunk) - In June 2024, the company reached a settlement in principle for an antitrust lawsuit, accruing a total loss of **$31.75 million**. A payment for the full amount was made to an escrow agency subsequent to June 30, 2025[63](index=63&type=chunk)[64](index=64&type=chunk)[65](index=65&type=chunk) - The company is in a dispute with the UK's HMRC regarding VAT on clear aligner sales. While a Tax Tribunal ruled in Align's favor in April 2025, HMRC was granted permission to appeal in July 2025. The outcome and potential loss cannot be estimated at this stage[72](index=72&type=chunk)[73](index=73&type=chunk)[74](index=74&type=chunk) - The January 2023 Repurchase Program of **$1.0 billion** was completed as of June 30, 2025. A new **$1.0 billion** repurchase program was authorized in April 2025[87](index=87&type=chunk)[88](index=88&type=chunk)[89](index=89&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=29&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses operational results, financial condition, and macroeconomic challenges impacting revenue and patient demand - Strategic priorities focus on international expansion, GP treatment, patient demand, and orthodontic utilization. However, growth is challenged by macroeconomic conditions like global tariff volatility, inflation, and higher interest rates, which have negatively affected dental patient demand and led to an increase in the use of traditional wires and brackets over clear aligners[115](index=115&type=chunk)[116](index=116&type=chunk) - The company expects to undertake actions in the second half of 2025 to streamline operations and reallocate resources, which may include realigning business groups, reducing the global workforce, and optimizing the manufacturing footprint[120](index=120&type=chunk)[290](index=290&type=chunk) [Results of Operations](index=31&type=section&id=Results%20of%20Operations) Q2 2025 net revenues decreased to $1.01 billion due to lower Clear Aligner ASPs, while operating income increased from reduced expenses Net Revenues by Segment (in millions) | Segment | Q2 2025 | Q2 2024 | Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Clear Aligner | $804.6 | $831.7 | $(27.1) | (3.3)% | | Systems and Services | $207.8 | $196.8 | $11.1 | 5.6% | | **Total net revenues** | **$1,012.4** | **$1,028.5** | **$(16.0)** | **(1.6)%** | Clear Aligner Case Volume & Revenue per Case | Metric | Q2 2025 | Q2 2024 | % Change | | :--- | :--- | :--- | :--- | | Total Case Volume (thousands) | 644.4 | 642.7 | 0.3% | | Revenue per Case | $1,250 | $1,295 | (3.5)% | Gross Profit by Segment (in millions) | Segment | Q2 2025 | Q2 2024 | Gross Margin % (2025) | Gross Margin % (2024) | | :--- | :--- | :--- | :--- | :--- | | Clear Aligner | $563.8 | $588.5 | 70.1% | 70.8% | | Systems and Services | $144.3 | $134.1 | 69.4% | 68.2% | | **Total Gross Profit** | **$708.1** | **$722.6** | **69.9%** | **70.3%** | - The decrease in Clear Aligner revenue was primarily due to lower Average Selling Price (ASP) from a product mix shift to lower-priced products and higher discounts. This was partially offset by favorable foreign exchange rates and a slight increase in volume[129](index=129&type=chunk)[130](index=130&type=chunk) [Liquidity and Capital Resources](index=37&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains strong liquidity with $901 million in cash, sufficient to fund operations and capital requirements - Cash and cash equivalents stood at **$901 million** as of June 30, 2025, down from **$1.04 billion** at the end of 2024[164](index=164&type=chunk) - The company expects capital expenditures for fiscal year 2025 to be between **$100 million** and **$125 million**, primarily for technology upgrades and manufacturing expansion[166](index=166&type=chunk) - A new **$1.0 billion** stock repurchase program was authorized in April 2025, expected to be completed over three years[166](index=166&type=chunk) Cash Flow Summary - Six Months Ended June 30 (in thousands) | Flow Type | 2025 | 2024 | | :--- | :--- | :--- | | Operating activities | $181,326 | $188,491 | | Investing activities | $(56,768) | $(192,077) | | Financing activities | $(303,055) | $(163,275) | [Quantitative and Qualitative Disclosures About Market Risk](index=40&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company faces market risks including foreign currency, inflation, and investment price fluctuations, mitigated by hedging strategies - The company uses foreign currency forward contracts to minimize the short-term impact of exchange rate fluctuations, primarily for the Euro, British Pound, Chinese Yuan, Polish Zloty, and Canadian Dollar[179](index=179&type=chunk) - Inflationary trends have impacted both revenues and costs globally. The company may not be able to fully offset higher costs through price increases, potentially impacting results of operations[181](index=181&type=chunk) - The company holds investments in privately held companies valued at **$198.2 million** as of June 30, 2025. These are subject to equity price risk and are accounted for using the measurement alternative (cost minus impairment, adjusted for observable transactions)[182](index=182&type=chunk)[183](index=183&type=chunk) [Controls and Procedures](index=41&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective with no material changes to internal controls - The CEO and CFO concluded that the company's disclosure controls and procedures are **effective** as of June 30, 2025[184](index=184&type=chunk) - No material changes to internal control over financial reporting occurred during the quarter ended June 30, 2025[185](index=185&type=chunk) PART II OTHER INFORMATION This section provides information on legal proceedings, risk factors, equity sales, and other disclosures [Legal Proceedings](index=41&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in ongoing legal proceedings, including antitrust class actions and patent infringement litigation with Straumann - The company is appealing a summary judgment ruling in its favor in an antitrust class action lawsuit (Simon and Simon, PC). Oral arguments were held in April 2025[61](index=61&type=chunk) - A settlement of **$31.75 million** was agreed upon to resolve remaining claims in a separate antitrust lawsuit (Misty Snow). The court granted preliminary approval in May 2025[63](index=63&type=chunk)[64](index=64&type=chunk) - Align is engaged in ongoing litigation with Straumann, involving claims of patent infringement and false advertising by Align, and counterclaims of antitrust violations and false advertising by Straumann. A trial is scheduled for May 2026[66](index=66&type=chunk)[67](index=67&type=chunk) [Risk Factors](index=41&type=section&id=Item%201A.%20Risk%20Factors) The company faces significant risks from macroeconomic conditions, competition, supply chain, and legal and regulatory challenges - Macroeconomic conditions like inflation and potential recessions can reduce discretionary spending on elective procedures, driving patients to less costly treatments and negatively impacting demand for Align's products[190](index=190&type=chunk) - The company faces increasing competition from traditional wires and brackets, other clear aligner manufacturers (including direct-to-consumer models), and doctors who self-manufacture aligners[204](index=204&type=chunk) - The business is highly dependent on third-party suppliers for key components and materials, with some being sole-source relationships, creating supply chain vulnerabilities[225](index=225&type=chunk) - The company is subject to extensive and evolving regulations globally, including those for medical devices (FDA), data privacy (HIPAA, GDPR, CCPA), and antitrust, which could result in fines, penalties, and operational changes[239](index=239&type=chunk)[240](index=240&type=chunk)[252](index=252&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=59&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company completed its prior share repurchase program and authorized a new $1.0 billion program in April 2025 Issuer Purchases of Equity Securities (Q2 2025) | Period | Total Shares Purchased | Average Price Paid per Share | Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs | | :--- | :--- | :--- | :--- | | April 2025 | 555,454 | $163.51 | $1,005,214,000 | | May 2025 | 29,677 | $176.07 | $1,000,000,000 | | June 2025 | — | $— | $1,000,000,000 | | **Total** | **585,131** | | | - In April 2025, a new **$1.0 billion** stock repurchase program was authorized by the Board of Directors, expected to be completed over up to three years[286](index=286&type=chunk) [Other Information](index=59&type=section&id=Item%205.%20Other%20Information) The company plans operational streamlining actions in H2 2025, including workforce reductions, incurring $150-$170 million in charges - The company plans to take actions in H2 2025 to streamline operations, which may include workforce reductions and optimizing its manufacturing footprint[290](index=290&type=chunk) - These streamlining actions are expected to incur one-time charges of approximately **$150 million** to **$170 million** in the second half of 2025, primarily for asset write-downs, accelerated depreciation, and restructuring charges[291](index=291&type=chunk) [Exhibits](index=60&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Form 10-Q, including corporate governance documents and certifications - The filing includes key corporate governance documents, executive certifications, and interactive data files (XBRL)[292](index=292&type=chunk)

Core Insights - The article emphasizes the importance of long-term investing, highlighting the benefits of compounding and dividend reinvesting as key strategies for wealth creation [1] - It advocates for a balanced investment approach that combines steady accumulation of high-quality assets with high-risk, high-reward opportunities and transformative technologies [1] Group 1 - The author has over 25 years of investing experience, starting at the age of 17, and has learned valuable investment principles over this time [1] - The focus is on investing with integrity, targeting companies and industries that contribute positively to society [1] - The author identifies as an amateur investor, self-taught without formal education in investing or business, but values learning from others [1] Group 2 - The author has a PhD from Brunel University and has been teaching at the college/university level for over 20 years, indicating a strong academic background [1]

Company Overview - Align Technology is a global medical device company that designs, manufactures, and sells the Invisalign® System of clear aligners, iTero™ intraoral scanners, and exocad™ CAD/CAM software for digital orthodontics and restorative dentistry [3] Financial Performance - For the second quarter of 2025, Align Technology reported revenue of $1.01 billion, which represents a year-over-year decrease of 1.6% [4] - Following the financial results announcement, Align Technology's stock price fell by 37% [4] Legal Investigation - Robbins Geller Rudman & Dowd LLP is investigating potential violations of U.S. federal securities laws involving Align Technology, focusing on whether the company and certain executives made false or misleading statements or failed to disclose material information to investors [1][2]

Group 1 - Align Technology, Inc. (NASDAQ: ALGN) reported quarterly results that led to a significant decline in its stock price [2] - The company is categorized as a mid-cap dental medical device maker [2] - The discussion around covered call opportunities has been prevalent in the biotech sector recently [1] Group 2 - The Biotech Forum offers a model portfolio featuring 12-20 high upside biotech stocks, along with live chat for trade ideas and weekly research updates [2]

Company Overview - Align Technology is a global medical device company that designs, manufactures, and sells the Invisalign® System of clear aligners, iTero™ intraoral scanners, and exocad™ CAD/CAM software for digital orthodontics and restorative dentistry [3] Financial Performance - For the second quarter of 2025, Align Technology reported revenue of $1.01 billion, which represents a year-over-year decrease of 1.6% [4] - Following the financial results announcement, Align Technology's stock price fell by 37% [4] Legal Investigation - Robbins Geller Rudman & Dowd LLP is investigating potential violations of U.S. federal securities laws involving Align Technology, focusing on whether the company and its executives made false or misleading statements or failed to disclose material information to investors [1]

Core Viewpoint - The article emphasizes the importance of value investing and highlights Align Technology (ALGN) as a strong candidate for value investors due to its favorable valuation metrics and earnings outlook [2][3][6] Company Analysis - Align Technology (ALGN) currently holds a Zacks Rank of 2 (Buy) and has a Value grade of A, indicating it is among the strongest value stocks in the market [3] - ALGN has a PEG ratio of 1.67, which is slightly below the industry average of 1.73, suggesting it is reasonably valued considering its expected earnings growth [4] - The company's P/B ratio stands at 3.89, which is lower than the industry average of 4.60, indicating a solid market value relative to its book value [5] - Over the past year, ALGN's PEG ratio has fluctuated between a high of 4.61 and a low of 1.32, with a median of 3.67, while its P/B ratio has ranged from 5.11 to 2.78, with a median of 4.02 [4][5] Investment Outlook - The combination of ALGN's strong earnings outlook and favorable valuation metrics positions it as a likely undervalued stock, making it an attractive option for value investors [6]

Group 1 - Align Technology (ALGN) has experienced significant selling pressure, resulting in a 34.5% decline over the past four weeks, but analysts expect better earnings than previously predicted [1] - The Relative Strength Index (RSI) for ALGN is currently at 20.64, indicating that the heavy selling may be exhausting, suggesting a potential bounce back towards equilibrium [5] - There has been a consensus among sell-side analysts to raise earnings estimates for ALGN, leading to a 0.3% increase in the consensus EPS estimate over the last 30 days, which typically correlates with price appreciation [7] Group 2 - ALGN holds a Zacks Rank 2 (Buy), placing it in the top 20% of over 4,000 ranked stocks based on earnings estimate revisions and EPS surprises, indicating a strong potential for a turnaround [8]