Align Technology, Inc. (NASDAQ: ALGN) stock lost over 25.1% on 25th July, 2019 (as of 11:04 am GMT-4; Source: Google finance) as the company said that China sales were hurting and gave a weaker-than-expected forecast. Align’s second-quarter results easily beat expectations, but the company’s shipments of its signature Invisalign dental product were lower, and financial results for the third quarter would be affected.
ALGN in the second quarter of FY 19 has reported the adjusted earnings per share of $1.83, beating the analysts’ estimates for the adjusted earnings per share of $1.43, according to FactSet. The company had reported the adjusted revenue growth of 22.5 percent to $600.7 million in the second quarter of FY 19, beating the analysts’ estimates for revenue of $598 million. The revenue grew on the back of Invisalign volume growth primarily from international doctors as well as very strong sales from iTero scanner and services. Q2 Invisalign volumes were 24.6% year-over-year compared to 30.5% year-over-year in the second quarter 2018, reflecting continued adoption from teenage and younger patients as well as increased utilization and expansion of the customer base, which totaled over 60,000 active doctors worldwide. Total Invisalign case shipments for Q2 were lower than expected, primarily due to softness in China related to a tougher consumer environment and slower growth in young adult cases in North America. The Americas region Q2 Invisalign case volumes was up 4.2% sequentially, 16.5% year-over-year compared to 22% year-over-year in Q2 2018, reflecting growth both in the orthodontist and GP channels, as well as continued strength from teenage patients in Invisalign Go.
For the third quarter, Align predicted earnings of $1.09 to $1.16 a share, lower than the year-ago quarter, and revenue of $585 million to $600 million. Analysts on average expected third-quarter profit of $1.45 a share on sales of $624 million, according to FactSet. Invisalign case shipments for the third quarter is expected to be in the range of 370 thousand to 380 thousand, up approximately 16% to 19% over the same period a year ago. Q3 Operating margin is expected to be in the range of 19.8% to 20.5%. In addition, we expect to repurchase at least $100 million of our stock in the open market in Q3
As the company continue the operational expansion efforts, the company expect CapEx for Q3 to be approximately $50 million to $55 million, and the company expect depreciation and amortization to be in the range of $24 million to 26 million.