Dental technology company
- Align Technology Inc.
) reported its first-quarter 2013 net loss of $42 million (or 52
cents a share), well below the year-ago earnings of $21 million
(or 26 cents a share). The decline in the net earnings was
primarily due to the inclusion of impaired assets worth $26.3
million and goodwill impairment charge of $40.7 million.
However, after adjusting for one-time items, adjusted earnings
came in at 26 cents, surpassing the company's guidance range as
well as beating the Zacks Consensus Estimate of 23 cents.
Nonetheless, adjusted earnings were in line with the year-ago
Net revenue increased 13.7% year over year to $153.6 million
in the reported quarter, surpassing the Zacks Consensus Estimate
of $149 million. It also exceeded the previously guided range of
$146-$150.5 million issued by the company.
Total Invisalign Clear Aligner revenues were up 14.8% year
over year to $141.6 million. The revenues were primarily driven
by 98,175 (up 15% year over year) cases shipped in the quarter.
Revenues from Scanner and CAD/CAM services inched up 2.2% year
over year to $12 million.
The company recorded 34.5% of the total Invisalign Clear
Aligner sales from North America orthodontists (up 17.2% year
over year to $48.9 million), 34% from North American GP Dentists
(up 6.6% to $48.2 million), 22.5% from the international market
(up 7% to $31.2 million) and 9% from non-case revenues (up 88% to
Gross margin contracted by about 110 basis points (bps) year
over year to 73.5% in the first quarter. The margin contraction
was on account of lower average selling price (ASP). The company
witnessed a 9.2% increase in sales and marketing expenses to
$42.3 million; 29.1% rise in general and administrative expenses
to $30.3 million and a 7.2% increase in research and development
expenses to $11.3 million. As a result, adjusted operating margin
contracted 190 bps to 18.8% in the quarter.
Align exited the quarter with $328.7 million in cash and cash
equivalents compared with $306.4 million at the end of fiscal
2012. During the quarter, Align also purchased 75 thousand shares
for a total of $2.4 million. Currently, the company has $92.7
million remaining under its existing stock repurchase
For the second quarter of 2013, the company expects revenue in
the range of $153.6 million and $157.4 million. The current Zacks
Consensus Estimate of $157 million remains at the upper end of
the guided range. Earnings per share are expected in the range of
26-28 cents compared with the Zacks Consensus Estimate of 30
Shipments for the Invisalign clear aligner are expected to
increase in the range of 7.2%-9.8% on a sequential basis to
Align exited first quarter 2013 on a positive note. The
company's revenue and earnings continue to increase, surpassing
the previous guidance. However, the year-over-year decrease in
the average selling price remains a cause of concern as it
negatively affects the gross margin. This is reflected in the
conservative second-quarter guidance. Eventually, the company
will likely overcome the headwinds as it has performed well.
The stock currently carries a Zack Rank #2 (Buy). However,
medical stocks such as
Oculus Innovative Sciences, Inc.
The Cooper Companies Inc.
West Pharmaceutical Services, Inc.
), which also carry a Zacks Rank #2 (Buy) are expected to do well
and warrant a look.
ALIGN TECH INC (ALGN): Free Stock Analysis
COOPER COS (COO): Free Stock Analysis Report
OCULUS INNOVATV (OCLS): Free Stock Analysis
WEST PHARM SVC (WST): Free Stock Analysis
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