On July 24, 2024, Align Technology Inc (ALGN, Financial) released its 8-K filing for the second quarter of 2024. Align Technology, the leading manufacturer of clear aligners, reported mixed financial results for the quarter.
Company Overview
Align Technology is renowned for its Invisalign system, which has been a market leader since its FDA approval in 1998. The company also offers iTero intraoral scanners, which are integral to digital orthodontics and restorative dentistry. With over 230,000 Invisalign-trained dentists and orthodontists, the company has treated over 18 million patients globally.
Q2 2024 Financial Performance
Align Technology reported total revenues of $1,028.5 million for Q2 2024, reflecting a 3.1% sequential increase and a 2.6% year-over-year increase. However, these figures fell short of the analyst estimate of $1,036.38 million. The diluted net income per share was $1.28, or $2.41 on a non-GAAP basis, missing the analyst estimate of $2.41.
Revenue Breakdown
Clear Aligner revenues were $831.7 million, up 1.8% sequentially but down 0.1% year-over-year. The Imaging Systems and CAD/CAM Services segment generated $196.8 million, marking a 9.2% sequential increase and a 16.1% year-over-year increase. Foreign exchange rates negatively impacted total revenues by approximately $11.6 million sequentially and $18.1 million year-over-year.
Operational Metrics
Clear Aligner volume reached 642.7 thousand cases, a 6.2% sequential increase and a 3.2% year-over-year increase. The volume for teens increased 8.8% sequentially and 8.0% year-over-year to 216.7 thousand cases. The operating income for Q2 2024 was $147.0 million, resulting in an operating margin of 14.3%, down 1.2 points sequentially and 2.9 points year-over-year.
Financial Highlights
| Metric | Q2 2024 | Q1 2024 | Q2 2023 | Q/Q Change | Y/Y Change |
|---|---|---|---|---|---|
| Net Revenues | $1,028.5M | $997.4M | $1,002.2M | +3.1% | +2.6% |
| Clear Aligner Revenues | $831.7M | $817.3M | $832.7M | +1.8% | (0.1)% |
| Imaging Systems and CAD/CAM Services Revenues | $196.8M | $180.2M | $169.5M | +9.2% | +16.1% |
| Net Income | $96.6M | $105.0M | $111.8M | (8.1)% | (13.6)% |
| Diluted EPS | $1.28 | $1.39 | $1.46 | ($0.11) | ($0.18) |
Commentary and Analysis
"Overall, I am pleased to report solid second quarter results. Total Q2’24 revenues of $1,028.5 million were up 3.1% sequentially and 2.6% year-over-year, reflecting growth in both Clear Aligner volumes and Imaging Systems and CAD/CAM Services revenues," said Align Technology President and CEO Joe Hogan.
Despite the revenue growth, the company faced challenges due to unfavorable foreign exchange rates and a product mix shift to lower ASP products. These factors contributed to the revenue miss and lower-than-expected EPS.
Financial Position
As of June 30, 2024, Align Technology had $782.1 million in cash, cash equivalents, and marketable securities, compared to $902.5 million as of March 31, 2024. The company also completed a $75.0 million equity investment in Heartland Dental during the quarter.
Outlook
For Q3 2024, Align Technology expects worldwide revenues to range between $980 million and $1,000 million. The company anticipates a sequential decline in Clear Aligner volume and ASPs due to seasonality and foreign exchange impacts. For the full year 2024, Align Technology projects total revenue growth of 4% to 6% year-over-year.
For more detailed financial information, visit the 8-K filing.
Explore the complete 8-K earnings release (here) from Align Technology Inc for further details.
