Shares of Align Technology (ALGN -0.71%) were tanking 17% as of 2:36 p.m. ET on Thursday. The big decline came after the maker of Invisalign orthodontic aligners announced its first-quarter results following the market close on Wednesday.
Align reported first-quarter revenue of $973.2 million, up 8.8% year over year. The company posted adjusted earnings of $168.7 million, or $2.13 per share. In the prior-year period, Align recorded adjusted earnings of $198.4 million, or $2.49 per share. Both top- and bottom-line results were below consensus estimates.
CEO Joe Hogan acknowledged that "the first quarter proved to be a tougher than expected operating environment globally." He pointed to three primary factors that were headwinds: COVID-19, waning consumer confidence, and the repercussions of Russia's invasion of Ukraine. In addition, a stronger dollar hurt Align with around half of its revenue generated outside of the U.S.
There's mixed news for investors. The good news is that these are all macro factors that don't reflect poorly on Align's execution or its long-term prospects. The bad news is that the company can't do much about any of the headwinds.
After Align's steep decline today, the healthcare stock is down more than 50% year to date. It's possible that the situation could get worse before it gets better, especially if consumer confidence falls even further.
But Hogan rightly pointed out that Align still has less than a 10% share of the 21 million annual orthodontic case starts. The potential market is as big as it's ever been. While Align faces competition, no other company is better positioned to capitalize on the opportunity in clear aligners and intraoral scanners.