Shares of Align Technology Inc. took a hit in Wednesday’s extended session as people cut back on dental and orthodontic visits. Despite reporting an increase in revenue from the previous year, the company fell short of analysts’ expectations.
Lower Than Expected Demand Causes Disappointment
For the third quarter, Align Technology reported revenue of $960 million, surpassing the $890 million it recorded the previous year. However, this figure fell below the projected $994 million by analysts tracked by FactSet. Net income also rose from $73 million to $121 million, or $1.58 per share. Nevertheless, adjusted earnings per share of $2.14 were slightly lower than the anticipated consensus of $2.26.
Difficult Environment and Decreased Patient Visits
Align Technology’s CEO, Joe Hogan, expressed concern about the challenging macro environment and its impact on dental practices. The company has observed trends such as decreased patient visits, increased patient appointment cancellations, and fewer orthodontic case starts in both adult and younger patients.
Outlook for Fourth Quarter and Digital Orthodontics
As Align Technology looks ahead, it expects a sequential drop in revenue for the fourth quarter. The company anticipates a range of $920 million to $940 million for the period, assuming no unforeseen circumstances arise. This projection is significantly lower than the FactSet consensus of $1.02 billion.
Despite the challenges faced by Align Technology, Hogan remains optimistic about their opportunities to drive the adoption of digital orthodontics and restorative dentistry. The company acknowledges its responsibility to optimize investments given the current operating environment.