- Align Technology shares plummeted roughly 20% in early trading Thursday after the company’s Invisalign product didn’t sell as well as anticipated in the second quarter.
- The company attributed the drop to "a more crowded competitive environment" for young adults in North America and slowed growth in China.
- Align’s CEO said North American sales are already recovering in July as doctors return to Invisalign after trying competing products.
- Watch Align trade live here.
Invisalign-maker Align Technology fell more than 20% in early trading Thursday after its second-quarter earnings report showed slowing growth in China and lagging sales for North American teens.
The company topped guidance for its second-quarter revenue but dampened forecasts for the next three months. Shipments of Invisalign fell below the company’s expectations, with CEO Joe Hogan attributing some of the drop to "a more crowded competitive environment" for young adults in North America.
Here are the key numbers:
Adjusted earnings per share: $1.83, versus the $1.51 estimate
Revenue: $600.7 million, versus the $598.6 million estimate
3Q net revenue guidance: $585 million to $600 million, versus the $623.8 million estimate
2Q Invisalign volume: 377,100, versus the 380,000 to 385,000 estimate
Sales of its popular tooth-aligning product also missed estimates in China. The company’s report attributed the drop in sales growth to "a tougher consumer environment." The drop in revenue from China follows the country posting its lowest economic growth rate in 27 years and other companies missing quarterly estimates in the region.
"Given the uncertainty in China, our outlook for the third quarter reflects a more cautious view for growth in the Asia Pacific region," Hogan said.
Though greater competition in North America drove shipments below expectations in the second quarter, the company’s CEO said doctors have been returning to Invisalign after sampling other products.
"It just seems that we’ve had doctors tell us they’ve tried these products, they haven’t been satisfied with the software or the results that it had, the data, whatever," Hogan told analysts on a Wednesday call.
He added that the revenue drops in North America have already begun to "work themselves out" through July.
Align has 13 "buy" ratings, 5 "hold" ratings, and no "sell" ratings from Wall Street analysts, according to Bloomberg data. The company’s shares were up 31% year-to-date through Wednesday.
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