Summer turned out to be a hot one for Align Technology (ALGN 3.13%). The maker of dental medical devices reported third-quarter financial results on Thursday after the market closed. Those results looked quite solid.
Source: Align Technology.
By the numbers
Align generated revenue during the third quarter of $189.9 million. This reflects a jump of 15.4% over the same quarter last year. It also topped the consensus analyst estimate of $188.7 million.
Third-quarter earnings came in at $38.2 million, or $0.47 per diluted share, up from $34.5 million, or $0.42 per diluted share, last year. Align had previously projected an earnings range of $0.41 to $0.44 per share, while Wall Street expected $0.43 per share.
Next quarter appears to be shaping up pretty well, but perhaps not as impressive as the third quarter. Align provided fourth-quarter revenue guidance of $194.9 million to $199.1 million -- a year-over-year increase of 9.3% on the low-end, and 11.7% on the high-end. The company projects diluted earnings per share of $0.47 to $0.50.
Behind the numbers
Align's core clear aligner business continued to drive the company's growth. Clear aligner revenue rose by 16% year over year, and represents nearly 94% of total revenue.
Thomas M. Prescott, Align Technology's CEO, said that the good third-quarter numbers "reflect continued growth in the number of teenagers starting orthodontic treatment with Invisalign during the summer season." This wasn't surprising, considering that the company indicated that this trend appeared to be underway earlier in the summer.
Prescott also noted that the company saw Invisalign volume growth across all channels, particularly with international doctors. This helped international clear aligner revenue to climb 37% compared to the third quarter of 2013. Higher international average selling prices were only a moderate factor in this growth, with an ASP increase of 7%.
The international results were especially impressive considering the headwinds that Align typically faces in the late summer months. Many doctors take vacations during this time, and this can dampen sales. That didn't appear to be a significant issue for Align this time around.
Beyond the numbers
Investors seemed to be a little disappointed despite the solid third-quarter results. Align Technology shares were down around 1% in after-hours trading on Thursday. That's likely due primarily to the good-but-not-spectacular guidance provided by the company.
Looking ahead, Align will need to execute well on several fronts to generate excitement in the market. First, the company must continue to build brand awareness and buy-in from doctors and patients in North America. Second, Align will have to show continued progress in expanding its presence internationally, particularly in Asia. Third, the company must keep innovating to prevent rivals from gaining ground.
If Align can deliver in these areas, there should be more nice quarters like the last one. And the heat might not be limited to just summer.
