San Jose-based Align Technology, known for its orthodontic solutions, including the Invisalign clear aligner system, reported mixed third-quarter results, according to a press release published on Wednesday.
Famous for its Invisalign clear aligners, iTero scanners, and exocad CAD/CAM software, Align posted total revenues of $977.9 million, marking a 1.8 per cent increase year-over-year despite a 4.9 per cent sequential decline. Revenues were negatively affected by foreign exchange fluctuations, reducing earnings by $14.6 million compared to the previous year.
Clear aligner revenues decline
The company’s main product, clear aligners, generated $786.8 million in revenue, down 5.4 per cent from the previous quarter and 1.0 per cent year-over-year. The decline was attributed to a “sluggish dental” market in the U.S. and lower-than-expected seasonal demand, according to Align Technology president and CEO Joe Hogan.
The company saw growth in other regions, with clear aligner volume rising 2.5 per cent year-over-year to 617,220 cases. Teen cases showed a significant boost, up 6.7 per cent year-over-year and 9.1 per cent sequentially, driven by strong demand in markets like China.
“As recently reported by many analysts and third-party research firms, the underlying dental market in the U.S. remains sluggish, and our doctor customers cite similar trends,” Hogan said.
“Overall, third-quarter results were mixed, reflecting strong year-over-year revenue growth in Systems and Services, as well as good clear aligner volume in the Asia-Pacific, EMEA, and Latin American regions, partially offset by declines in the U.S.”
Align’s primary revenue driver is its clear aligner segment, which contributed $786.8 million in the third quarter of 2024, accounting for the largest share of total revenue. This segment includes products such as Invisalign, which have historically been key to the company’s financial performance. Revenue from clear aligners significantly outpaced that of the Imaging Systems and CAD/CAM Services division, which brought in $191.0 million during the same quarter.
CAD/CAM shows robust growth
The Imaging Systems and CAD/CAM Services segment demonstrated strong growth, with revenues of $191.0 million, a 15.6 per cent increase from the same period last year, reflecting increased adoption of digital orthodontic tools. The company’s non-GAAP operating margin improved slightly to 22.1 per cent from 21.8 per cent in Q3 2023, while the GAAP operating margin fell to 16.6 per cent due to currency headwinds.
Restructuring
Align also announced a restructuring plan aimed at optimizing operations, which will involve eliminating or transferring certain roles across regions, leading to approximately $30 million in severance costs for the fourth quarter.
“There are impacted employees in every region, and they will receive severance and other benefits based on applicable laws, severance plans, or contracts governing their position and country of employment,” the company said in the press release.
Frank Quinn steps in
The company anticipates these changes will improve margins in 2025 as it expands 3D printing capabilities for aligner fabrication. Executive changes include the departure of Raj Pudipeddi, executive vice-president and managing director of the Americas, with Frank Quinn taking over the role. Quinn, formerly the vice-president and general manager of the U.S., will report to Hogan.
$995M expected revenue for Q4
Looking ahead, Align expects fourth-quarter 2024 revenues to range from $995 million to $1.015 billion, with clear aligner volumes and pricing expected to rise slightly. The company plans to repurchase up to $275 million of its common stock, beginning in the fourth quarter. Despite ongoing challenges in the U.S. market, Hogan expressed optimism, citing strong international demand and continued investment in advanced manufacturing.
