Align Technology, Inc. ALGN delivered third-quarter 2024 adjusted earnings per share (EPS) of $2.35, up 9.8% from the year-ago level. The reported figure topped the Zacks Consensus Estimate by 1.7%.
GAAP EPS for the quarter was $1.55, reflecting a decline of 1.9% from $1.58 in the comparable period of 2023.
Find the latest EPS estimates and surprises on Zacks Earnings Calendar.
Following the earnings announcement, ALGN stock plunged 1.49% yesterday.
ALGN’s Q3 Revenues
The top line increased 1.8% year over year to $977.9 million but missed the Zacks Consensus Estimate by 1.3%. Revenues were unfavorably impacted by foreign exchange of approximately $14.6 million or 1.5% year over year.
ALGN’s Segments in Detail
The company has two reportable segments — Clear Aligner, and Imaging Systems and CAD/CAM Services (Systems and Services)
Revenues in the Clear Aligner segment declined 1% year over year to $786.8 million.
Clear Aligner revenues had a 1.5% unfavorable foreign exchange impact.
Revenues from Imaging Systems & CAD/CAM Services rose 15.6% to $191 million in the reported quarter. The top line, too, witnessed an unfavorable currency impact of 1.5% year over year.
Margins
Gross profit in the quarter was $681.8 million, up 2.8% year over year. The gross margin expanded 67 basis points (bps) year over year to 69.7% due to a decrease of 0.3% in the cost of net revenues.
SG&A expenses increased 6.4% to $434.1 million, while R&D expenses declined 3.9% to $85.3 million.
Operating income totaled $162.4 million, down 2.3% year over year. The operating margin contracted 72 bps to 16.6%.
Financial Details of ALGN
The company exited the third quarter with cash and cash equivalents of $1 billion compared with $738.9 million recorded at the end of the second quarter.
The cumulative net cash provided by operating activities at the end of the third quarter was $452.1 million compared with $738.9 million in the year-ago period.
Stock Repurchase
Currently, $500 million is available for repurchases under ALGN’s $1.0 billion Stock Repurchase Program, authorized in January 2023.
ALGN's Guidance
Align Technology maintained its financial outlook for full-year 2024. It also provided a guidance for the fourth quarter.
For the full year, ALGN anticipates revenues to be up 4-6% year over year (down from the previous guidance of 6-8%). The Zacks Consensus Estimate for the company’s 2024 revenues is pegged at $4.04 billion, suggesting 4.5% growth year over year.
The 2024 GAAP operating margin for the full year is anticipated to be slightly below the 2023 level. The 2024 non-GAAP operating margin is likely to be above the prior-year reported figure.
The company expects to invest more than $100 million in capital expenditures, primarily related to building construction and improvements as well as manufacturing capacity, to support continued expansion.
Align Technology, Inc. Price, Consensus and EPS Surprise
Align Technology, Inc. Price, Consensus and EPS Surprise
Align Technology, Inc. price-consensus-eps-surprise-chart | Align Technology, Inc. Quote
For the fourth quarter, ALGN anticipates worldwide revenues to be in the range of $995-$1.01 billion. The Zacks Consensus Estimate is pegged at $1.02 billion.
Our Take
Align Technology exited the third quarter on a mixed note. While earnings beat the Zacks Consensus Estimate, revenues lagged the same. On a year-over-year basis, third-quarter revenues were up driven by growth in Clear Aligner volumes and Imaging Systems and CAD/CAM Services revenues.
Clear Aligner revenue decline was due to lower average selling price (ASP). However, Clear Aligner volume from DSO customers increased year-over-year, reflecting growth across all regions. Additionally, the company’s Imaging Systems & CAD/CAM Services business segment reported strong growth on a year-over-year basis, primarily due to higher ASPs, improved services revenues and increased non-system revenues driven by upgrades in the leasing rental programs.
During this quarter, the company was involved in several significant developments. ALGN introduced the iTero Design Suite, offering doctors an intuitive way to facilitate designs for 3D printing of models, bite splints and restorations in practice. Additionally, ALGN announced the pilot of a new U.S. Invisalign treatment promotional program for Costco members.
Further, a declining operating income and a contraction of the operating margin are matters of concern.
ALGN’s Zacks Rank and Key Picks
Align Technology currently carries a Zacks Rank #4 (Sell).
Some better-ranked stocks from the broader medical space are Addus HomeCare ADUS, Intuitive Surgical ISRG and HealthEquity HQY.
Addus HomeCare sports a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
The company reported a second-quarter adjusted EPS of $1.35, which surpassed the Zacks Consensus Estimate by 12.5%. Revenues of $286.9 million outpaced the Zacks Consensus Estimate by 1.1%. ADUS beat on earnings in each of the trailing four quarters, the average surprise being 11.45%.
Intuitive Surgical, carrying a Zacks Rank #2 (Buy) at present, posted a third-quarter 2024 EPS of $1.84, which topped the Zacks Consensus Estimate by 11.5%. Revenues of $2.04 billion surpassed the Zacks Consensus Estimate by 1.2%.
ISRG has an estimated 2024 earnings growth rate of 20.1% compared with the industry’s 13.8%. The company’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 10.9%.
HealthEquity, carrying a Zacks Rank #2 at present, reported second-quarter fiscal 2025 adjusted earnings of 86 cents per share, which surpassed the Zacks Consensus Estimate by 22.9%. Revenues of $299.9 million topped the Zacks Consensus Estimate by 5.4%.
HQY has an estimated long-term earnings growth rate of 28.2% compared with the industry’s 13.4%. The company’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 19.8%.
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