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Align Technology (ALGN) Beats on Earnings and Revenues in Q3
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Align Technology, Inc.’s (ALGN - Free Report) third-quarter 2018 adjusted earnings per share (EPS) came in at $1.24, up 22.8% year over year. Earnings were above the company’s guided range of $1.13-$1.18. The figure beat the Zacks Consensus Estimate of $1.19 as well.
Revenues
Revenues grew 31.2% year over year to $505.3 million in the quarter, surpassing the Zacks Consensus Estimate by 0.8%. Revenues were ahead of the company’s guided range of $493-$503 million as well.
Per management, the top line was driven by a 35.3% year-over-year increase in Invisalign case shipments to 319,345. The upside was supported by growth in North America and international regions on an expanded customer base and higher utilization along with solid worldwide teen case growth. Moreover, increased revenues from iTero scanner contributed substantially.
Segments in Detail
Revenues at the Clear Aligner segment (84.5% of total revenues) rose 25% year over year to $427.1 million in the reported quarter, primarily driven by continued strong Invisalign case volume growth across all customer channels and geographical regions.
Align Technology, Inc. Price, Consensus and EPS Surprise
In the third quarter, Invisalign case shipments amounted to 319,345, up 35.3% year over year, aided by growth across all regions as well as expansion of customer base. During the quarter, Align Technology Invisalign cases were shipped to 52,160 doctors worldwide, of which 28,890 were to North America and 23,270 to international regions.
Revenues from Scanner and Service (15.5%) improved a significant 79.1% to $78.2 million.
Margins
Gross margin in the quarter under review was down 230 basis points (bps) year over year to 73.6% on a 43.9% rise in cost of net revenues.
During the quarter, Align Technology witnessed a 26.2% year-over-year increase in selling, general and administrative expenses to $213.9 million and a 35.1% rise in research and development (R&D) expenses to $32.7 million. The operating margin contracted 80 bps to 24.8%.
Financial Details
Align Technology exited the third quarter with cash and cash equivalents and short-term marketable securities of $605.2 million, compared with 712.6 million at the end of second-quarter 2018.
In the reported quarter, Align Technology repurchased $150 million of stock under its buy-back authorization. The company currently has approximately $550.0 million left under the May 2018 Repurchase Program.
Guidance
For the fourth quarter of 2018, the company projects EPS of $1.10-$1.15 on revenues of $505-$515 million (up 20-22% from a year ago). The company estimates Invisalign case shipments in the band of 330,000-335,000, up 29-31% from a year ago. Meanwhile, the Zacks Consensus Estimate for fourth-quarter 2018 EPS is $1.32 on revenues of $544 million. The earnings and revenues estimates exceed the guided range.
Our Take
We are upbeat about the continued strength in Invisalign volumes. In North America, the company continued to witness an expanding GP dentist customer base along with sustained strength in Invisalign utilization by orthodontists. We are also encouraged by the solid performance in the Europe, Middle East and Africa region and Asia-Pacific markets.
During the quarter, Align Technology launched the Invisalign First clear aligners for treatment of younger patients with early mixed dentition in the United States, Australia, New Zealand, Japan, and the EMEA region starting July 2018. Notably, the company shipped around 2,000 cases to over 600 doctors in the quarter.
However, due to promotional programs, adverse currency movements and product mix shift, Invisalign average selling prices were down sequentially in the quarter. Also, there was softness in the Europe, Middle East and Africa (EMEA) region sales, sequentially, due to seasonality.
Within Scanners and Service, the company witnessed rapid uptake of iTero scanners across all geographies. Align Technology has been gaining from the shipments of the iTero Element intraoral scanner to China. Moreover, the company has begun manufacturing the iTero Element intraoral scanner in China post-receipt of Certificate of Medical Device Registration and Certificate of Production from the China Food and Drug Administration (CFDA).
We are also upbeat about the company gaining from the lauch of iTero Element 2 and iTero Element Flex scanners in the United States and majority of European countries, covering France, Germany, Italy, Spain, and the United Kingdom.
Meanwhile, the company is exposed to foreign exchange fluctuations, seasonal demand fluctuations, higher operating expenses pertaining to increased head count along with higher investments targeted toward expansion of geographical presence and portfolio.
Zacks Rank & Key Picks
Align Technology carries a Zacks Rank #4 (Sell). A few better-ranked stocks in the broader medical space are Amedisys, Inc. (AMED - Free Report) , Baxter International Inc (BAX - Free Report) and Masimo Corporation (MASI - Free Report) .
Amedisys is expected to release third-quarter 2018 results on Oct 29. The Zacks Consensus Estimate for adjusted EPS is 79 cents and for revenues is $410.2 million. The stock carries a Zacks Rank of 1 (Strong Buy). You can see the complete list of today's Zacks #1 Rank stocks here.
Baxter is expected to release third-quarter 2018 results on Oct 31. The Zacks Consensus Estimate for EPS is pegged at 74 cents and for revenues at $2.79 billion. The stock has a Zacks Rank #2 (Buy).
Masimo is slated to release third-quarter 2018 results on Oct 31. The Zacks Consensus Estimate for EPS is pinned at 68 cents and for revenues at $206.3 million. The company is a Zacks #2 Ranked player.
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Align Technology (ALGN) Beats on Earnings and Revenues in Q3
Align Technology, Inc.’s (ALGN - Free Report) third-quarter 2018 adjusted earnings per share (EPS) came in at $1.24, up 22.8% year over year. Earnings were above the company’s guided range of $1.13-$1.18. The figure beat the Zacks Consensus Estimate of $1.19 as well.
Revenues
Revenues grew 31.2% year over year to $505.3 million in the quarter, surpassing the Zacks Consensus Estimate by 0.8%. Revenues were ahead of the company’s guided range of $493-$503 million as well.
Per management, the top line was driven by a 35.3% year-over-year increase in Invisalign case shipments to 319,345. The upside was supported by growth in North America and international regions on an expanded customer base and higher utilization along with solid worldwide teen case growth. Moreover, increased revenues from iTero scanner contributed substantially.
Segments in Detail
Revenues at the Clear Aligner segment (84.5% of total revenues) rose 25% year over year to $427.1 million in the reported quarter, primarily driven by continued strong Invisalign case volume growth across all customer channels and geographical regions.
Align Technology, Inc. Price, Consensus and EPS Surprise
Align Technology, Inc. Price, Consensus and EPS Surprise | Align Technology, Inc. Quote
In the third quarter, Invisalign case shipments amounted to 319,345, up 35.3% year over year, aided by growth across all regions as well as expansion of customer base. During the quarter, Align Technology Invisalign cases were shipped to 52,160 doctors worldwide, of which 28,890 were to North America and 23,270 to international regions.
Revenues from Scanner and Service (15.5%) improved a significant 79.1% to $78.2 million.
Margins
Gross margin in the quarter under review was down 230 basis points (bps) year over year to 73.6% on a 43.9% rise in cost of net revenues.
During the quarter, Align Technology witnessed a 26.2% year-over-year increase in selling, general and administrative expenses to $213.9 million and a 35.1% rise in research and development (R&D) expenses to $32.7 million. The operating margin contracted 80 bps to 24.8%.
Financial Details
Align Technology exited the third quarter with cash and cash equivalents and short-term marketable securities of $605.2 million, compared with 712.6 million at the end of second-quarter 2018.
In the reported quarter, Align Technology repurchased $150 million of stock under its buy-back authorization. The company currently has approximately $550.0 million left under the May 2018 Repurchase Program.
Guidance
For the fourth quarter of 2018, the company projects EPS of $1.10-$1.15 on revenues of $505-$515 million (up 20-22% from a year ago). The company estimates Invisalign case shipments in the band of 330,000-335,000, up 29-31% from a year ago. Meanwhile, the Zacks Consensus Estimate for fourth-quarter 2018 EPS is $1.32 on revenues of $544 million. The earnings and revenues estimates exceed the guided range.
Our Take
We are upbeat about the continued strength in Invisalign volumes. In North America, the company continued to witness an expanding GP dentist customer base along with sustained strength in Invisalign utilization by orthodontists. We are also encouraged by the solid performance in the Europe, Middle East and Africa region and Asia-Pacific markets.
During the quarter, Align Technology launched the Invisalign First clear aligners for treatment of younger patients with early mixed dentition in the United States, Australia, New Zealand, Japan, and the EMEA region starting July 2018. Notably, the company shipped around 2,000 cases to over 600 doctors in the quarter.
However, due to promotional programs, adverse currency movements and product mix shift, Invisalign average selling prices were down sequentially in the quarter. Also, there was softness in the Europe, Middle East and Africa (EMEA) region sales, sequentially, due to seasonality.
Within Scanners and Service, the company witnessed rapid uptake of iTero scanners across all geographies. Align Technology has been gaining from the shipments of the iTero Element intraoral scanner to China. Moreover, the company has begun manufacturing the iTero Element intraoral scanner in China post-receipt of Certificate of Medical Device Registration and Certificate of Production from the China Food and Drug Administration (CFDA).
We are also upbeat about the company gaining from the lauch of iTero Element 2 and iTero Element Flex scanners in the United States and majority of European countries, covering France, Germany, Italy, Spain, and the United Kingdom.
Meanwhile, the company is exposed to foreign exchange fluctuations, seasonal demand fluctuations, higher operating expenses pertaining to increased head count along with higher investments targeted toward expansion of geographical presence and portfolio.
Zacks Rank & Key Picks
Align Technology carries a Zacks Rank #4 (Sell). A few better-ranked stocks in the broader medical space are Amedisys, Inc. (AMED - Free Report) , Baxter International Inc (BAX - Free Report) and Masimo Corporation (MASI - Free Report) .
Amedisys is expected to release third-quarter 2018 results on Oct 29. The Zacks Consensus Estimate for adjusted EPS is 79 cents and for revenues is $410.2 million. The stock carries a Zacks Rank of 1 (Strong Buy). You can see the complete list of today's Zacks #1 Rank stocks here.
Baxter is expected to release third-quarter 2018 results on Oct 31. The Zacks Consensus Estimate for EPS is pegged at 74 cents and for revenues at $2.79 billion. The stock has a Zacks Rank #2 (Buy).
Masimo is slated to release third-quarter 2018 results on Oct 31. The Zacks Consensus Estimate for EPS is pinned at 68 cents and for revenues at $206.3 million. The company is a Zacks #2 Ranked player.
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Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
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