Align Technology, Inc. (NASDAQ:ALGN), a leading global medical device company that designs, manufactures, and sells the Invisalign System of clear aligners, iTero intraoral scanners, and exocad CAD/CAM software for digital orthodontics and restorative dentistry, stock rose 1.60% (As on December 13, 11:15:25 AM UTC-4, Source: Google Finance) after Goldman Sachs downgraded the company to Sell from Neutral with a $197 price target. In a weaker macro environment, the firm sees clear aligners and implants as most exposed to potential trade downs and delayed purchases and for Align it also sees increased competitive challenges in the general practitioner and ortho channels.
Moreover, the third quarter results reflect lower than expected demand and a more difficult macro environment than the company experienced in the first half of 2023. Dental practices and industry research firms have reported deteriorating trends, including decreased patient visits and increased patient appointment cancellations, along with fewer orthodontic case starts overall, especially among adult patients. The September Gaidge report, which reflect more than 1,200 North American Ortho Practices, shows deceleration for orthodontic treatment with new orthodontic patient appointments down 8.7% year-over-year and ortho case starts were down 6.9% year-over-year, the biggest decrease in over a year.
As of September 30, 2023, the company had over $1.3 billion in cash, cash equivalents and short-term and long-term marketable securities compared to over $1.0 billion as of June 30, 2023. As of September 30, 2023, the company had $300.0 million available under a revolving line of credit.
During the quarter, the company announced a definitive agreement to acquire privately held Cubicure GmbH, for approximately €79 million subject to customary closing adjustments and adjustments for Align’s existing ownership of capital stock of Cubicure. The acquisition is expected to close in Q4 2023 or early 2024. The acquisition of Cubicure will strengthen Align’s existing intellectual property portfolio and know-how in direct 3D printing of appliances. Integration with Cubicure will also extend and scale Align’s printing, materials, and manufacturing capabilities for the 3D printed product portfolio.
Additionally, the company expects both Clear Aligner and Systems and Services Revenues to be down sequentially reflecting a more challenging macro-economic environment for doctors and patients with fewer orthodontic case starts. For the Clear Aligner business, the company expects clear aligner teen volume to be seasonally lower in Q4’23, and the company don’t anticipate improvement in adult volumes.