Align Tech slumps on 3Q estimate and 4Q outlook
NEW YORK -- Align Technology Inc., which makes the Invisalign clear braces system, slumped Wednesday after the company gave disappointing estimates for its third-quarter results and offered a weak fourth-quarter forecast.
The company said its revenue typically slows down in the third quarter because of summer vacations, but this year that slowdown was more pronounced than usual in the North American market. Align said those conditions have persisted in October and it gave a weak fourth-quarter outlook.
The company also said it is terminating a distribution agreement for its iTero intra-oral scanners, and it may have to take a goodwill impairment charge as a result.
Align Technology shares skidded $7.05, or 20 percent, to $28.36 in aftermarket trading following the announcement. The stock reached an all-time high of $39.82 on Sept. 13
Align said its preliminary adjusted net income totaled 28 cents per share and revenue grew 8 percent to $136.5 million in the third quarter. That fell short of Wall Street estimates, as FactSet says analysts were expecting net income of 29 cents per share and $140.2 million in revenue on average.
The San Jose, Calif., company said shipments of Invisalign systems grew 17 percent to about 92,500, and shipments of the Invisalign teenager system grew 21.5 percent to 24,500.
Align is forecasting adjusted net income of 21 to 23 cents per share in the fourth quarter and said revenue will be between $134.2 million to $137.8 million. Invisalign shipments are expected to grow between 9 and 13 percent, to a range of 90,000 to 93,000.
Analysts expected net income of 31 cents per share and $147.4 million in revenue on average.
The company said Straumann Holding of Switzerland will stop distributing the iTero scanners at the end of 2012. Straumann distributes the scanners in Europe and North America under agreements with Cadent Holdings, a company Align bought in March 2011. Align said the companies decided to end the distribution deal because the arrangement didn't meet their strategic or financial requirements.
Align will continue direct sales of iTero scanners in North America and will market the devices on a more limited basis in Europe. The company said it may have to write down the value of Cadent as a result of the termination and weaker results from its non-Invisalign business. The current value of that goodwill is $135.3 million.