Align Technology Acquires Cubicure amid Challenging Macro Environment after Third-Quarter Results Below Expectations



Align (NASDAQ:ALGN) Technology, known for its Invisalign orthodontic products, on Thursday reported weaker-than-expected third-quarter fiscal 2023 results, citing a challenging macro environment and lower demand. The company reported adjusted EPS of $2.14, up 31.3% year over year, but 5.3% below expectations. Sales rose 7.8% to $960.2 million, but were 3.7% below expectations.

The company’s clear aligner revenue increased 8.5% to $794.9 million, and its Imaging Systems and CAD/CAM Services segment revenue increased 4.9% to $165.3 million. Gross profit for the third quarter was $663.1 million, an increase of 7.1% year over year, but gross margin contracted 49 basis points to 69.1%. Operating income increased 15.8% to $166.4 million, and operating margin expanded 17.3%.

align technology We ended the third quarter with cash and cash equivalents of $1.24 billion and net cash provided by operating activities of $738.9 million. The company also announced an agreement to acquire Cubicure GmbH for approximately 79 million euros ($92 million), which will strengthen Align’s existing intellectual property portfolio and know-how in direct 3D printing of appliances. This is an expected move.

For the fourth quarter of fiscal 2023, Align Technology expects revenue to be between $920 million and $940 million. For the full year 2023, the company expects sales to be between $3.83 billion and $3.85 billion, with an adjusted operating margin of slightly above 21%. Capital expenditures are expected to be approximately $200 million.

Align Technology’s $1 billion stock repurchase program is available for buybacks, and the company is introducing innovations such as ClinCheck Live Update for 3D control and the Invisalign Practice App. The Doctor Subscription Program continues to be well-received by Align customers in the US, Canada, Iberia and Scandinavia, with further expansion in the EMEA region.

Despite these developments, the company faced deteriorating trends in dental care. However, Align Technology holds a Zacks Rank #3 (Hold), indicating a neutral outlook for the stock in the near term.

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