Align Technology Reports Record 2017 Financial Results: Invisalign Revenue Hits $1.3 Billion, Serves Over 5 Million Patients, and Opens First Retail Store in California

VCBeat (WeChat ID: vcbeat) has learned that dental equipment giant Align Technology (NASDAQ: ALGN, hereinafter referred to as Align) recently released its financial results for the fourth quarter and full year ended December 31, 2017, with impressive figures.

Align President and CEO Joe Hogan

According to available information, Align Technology Inc. was founded in 1997 by Zia Chishti and Kelsey Wirth. Headquartered in San Jose, California, USA, the company is a dental medical device enterprise focused on the design, manufacturing, and sales of dental-related medical equipment, including intraoral scanners and computer-aided design/computer-aided manufacturing (CAD/CAM) systems. It operates two major divisions: Clear Aligners and Scanners and Services.

In 1998, Align received FDA clearance for the market launch of its Invisalign system, and began commercial sales in 2000.

On January 26, 2001, the company successfully completed its IPO and listed on the NASDAQ.

In terms of specific performance, Invisalign’s revenue increased by 34.1% year-over-year to $1.3 billion in 2017, with shipment volume rising by 31.4% year-over-year to 930,000 units. The number of iTero scanners grew by 37.5%, generating $164.2 million in revenue and setting a historical record.

The company’s entire product portfolio generated total annual revenue of $1.5 billion, representing a year-over-year increase of 36.4%.

Fourth-quarter revenue from core business increased 43.7% year over year to a record $423 million. Diluted earnings per share (EPS) were $0.13, including an $86.6 million tax expense attributable to the new U.S. Tax Cuts and Jobs Act, or $1.06 per diluted share excluding this item.

Operating profit in the fourth quarter increased by 60.3% year-on-year to $109.6 million, with an operating margin of 26.0%. Net profit for the fourth quarter was $10.3 million.

In the fourth quarter, Invisalign shipments increased by 34.2% year-over-year to 250,000 units. Shipments in North America and international markets grew by 24.2% and 52.3%, respectively. Teen product shipments reached 63,500 units, representing a 44.1% year-over-year increase. Meanwhile, scanner and service revenue for the fourth quarter rose by 37.0% year-over-year to $57.1 million.

A key milestone in Align’s development trajectory was the acquisition of Cadent.

In March 2011, Align acquired Cadent, an Israeli company and manufacturer of intraoral scanners that include both the scanning devices and software for displaying captured images and planning treatments, for $190 million.

For a time, the iTero intraoral scanner became the only product on the market compatible with Invisalign aligners, addressing many of the issues associated with traditional silicone rubber impressions.

In fiscal year 2016, Align’s sales surpassed $1 billion for the first time.

Since October 2017, the patent protection for its Invisalign system has expired, presenting the company with new challenges.

Align President and Chief Executive Officer Joe Hogan commented on the company’s overall performance in 2017, stating: “Full-year revenue reached $1.5 billion, a year-over-year increase of 36.4%, primarily driven by record Invisalign revenues surpassing the $1 billion mark for the first time. Overall, the fourth quarter ended strongly for Align, with revenue, sales volume, and net profit all exceeding expectations.”

He attributed the revenue growth in the fourth quarter to increased Invisalign production across all regions and customer channels, as well as record-breaking iTero scanner revenue. The company demonstrated strong performance in its customer base, adding more than 4,000 new customers for three consecutive quarters.

Despite contracting from its historical peak in early 2018, the company still achieved a semi-annual stock appreciation rate of over 53% and an annual growth rate exceeding 162%, which are remarkable figures.

Given the substantial appreciation in stock prices to date, this raises the question: Should investors expect this level of growth to continue?

According to CNBC, analysts have pointed out that Align is a company with sound financials and strong operations, but this does not mean its stock is worth investing in during its valuation cycle; the company is currently overvalued.

As early as 2010, Align received a warning letter from the FDA for failing to report serious adverse events associated with Invisalign.

Regarding future development, Joe Hogan stated that the strategy will focus on driving international expansion and increasing the adoption of Invisalign orthodontic treatment, particularly among adolescent patients, while enabling general practitioner (GP) dentists to treat or consult on more Invisalign cases to meet the demand from millions of patients and providers worldwide.

1. Expanded restorative digital workflow solutions for the iTero Element intraoral scanner, including iTero Chairside CAD, as part of the partnership with Exocad GmbH;

2. Invisalign Reaches 5 Million Patients: A 12-Year-Old Canadian Teen Begins Invisalign Treatment for Mandibular Advancement;

3. Signed an agreement with Glidewell Dental for the glidewell.io In-Office Solution using the iTero Element intraoral scanning system, a chairside restorative ecosystem designed to streamline the process of prescribing and delivering laboratory-grade dental restorations;

4. Opened the first Invisalign brick-and-mortar store in San Francisco to help consumers connect with Invisalign providers;

5. As part of the company’s incentive program to support clinical and dental research, university researchers in North America, Europe, and the Asia-Pacific region received nearly $300,000 in awards;

6. Signed a distribution agreement with Patterson Dental to provide services for the iTero Element intraoral scanning system in the United States and Canada;

7. Opened the first Invisalign Treatment Planning Facility in Chengdu, China;

8. As part of the software upgrade for the iTero Element intraoral scanner, TimeLapse technology for digital scan comparison was introduced, enabling scans to be completed in as little as one minute;

9. SmartTrack material, which is patented in the United States, is an innovative multi-layer polymer that delivers gentler, more sustained forces through Invisalign clear aligners, improving control over tooth movement;

10. Invisalign reaches its one-millionth teenage patient, initiating Invisalign treatment for an 11-year-old boy from the United States;

11. Launched the first global multi-million dollar Invisalign brand platform and marketing campaign;

12. Since its launch in 2015, over 1 million scans have been submitted using the iTero Element scanner;

13. Invisalign Teen introduced a mandibular advancement feature, marking the first clear aligner solution addressing the growing need for Class II correction in adolescent patients (not yet FDA-approved in the United States);

14. The iTero intraoral scanner, utilizing Nobel Biocare and ELOS Medtech technologies, has enhanced digital implant workflow options.