What happened

After the market closed on Wednesday, oral-health company Align Technology (ALGN -0.78%) reported first-quarter earnings. Many parts of its business were up in Q1 compared to the comparable period of 2019. However, business was down sequentially due to the COVID-19 pandemic.

This was an important earnings report for Align Technology, and one that investors had high hopes for. Prior to the earnings release, shares of Align traded higher, finishing the day up 8%.

A woman is holding a clear retainer.

Image source: Getty Images.

So what

Align Technology is a global company, with China accounting for about 8% of 2019's revenue. The coronavirus closed dental practices there first, but soon extended to other regions like Europe and the United States. With limited practices open, the company couldn't sell as many of its flagship Invisalign products. A March 18 update acknowledged the situation, but without giving financial details.

The uncertainty punished Align Technology's stock. At one point, shares were down over 50% from 2020 highs.

As sentiment on Wall Street turned more hopeful, Align Technology's stock rebounded. Including today's move, shares have now recovered over 50% from 2020 lows. Reasons for optimism include life returning to normal in China, and the hope that other economies could soon get back to business.

With today's earnings report, investors finally can finally stop hoping and pore over the actual numbers. In Q1, Align Technology generated $551 million in net revenue -- flat year over year, but down 15% quarter over quarter. Invisalign shipment volume also plunged: The company shipped 359,440 cases, a far cry from the 396,000 to 406,000 cases it had guided for.

By generally accepted accounting principles (GAAP), Align Technology's net income soared to $1.5 billion. That's an astounding $19.21 per diluted share. However, 96% of this was from an income tax benefit. Adjusted (non-GAAP) earnings per share were $0.73, down 42% year over year.

Now what

Align Technology has pulled its guidance for the remainder of the year, and who can blame it? The COVID-19 crisis is an ever-changing situation. And since the company does business around the world, it has to account for multiple governments' decisions on when nonessential dental practices can return to normal.

One thing that hasn't changed for Align Technology is its financial position. The company still has around $791 million in cash, cash equivalents, and marketable securities, and zero debt. Furthermore, as of this writing, it hasn't canceled its share buyback program, and has $100 million in repurchase authorization remaining.

Now, after hours, Align Technology's stock is giving up much of today's gain; that's to be expected. However, for long-term investors, now is a good time to revisit your investing thesis to see if anything has changed and respond accordingly.

Personally, I assume teeth-straightening treatments will resume someday. And Align Technology is well-capitalized, with an extensive network of dental partners to meet the opportunity.