Who's Thanking Align Technology This November?

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Part 2
Who's Thanking Align Technology This November? PART 2 OF 5

Why Align Technology Could Report Significant Revenue Growth for 2017

Revenue drivers in North America

In 3Q17, Align Technology (ALGN) reported YoY (year-over-year) rise of around 46.5% and a sequential rise of 26.5% in Invisalign case shipments. This growth was mainly attributed to high demand from the teen segment in North American and Asia-Pacific.

Total Invisalign shipments in 3Q17 reached ~236,000, which represents YoY growth of ~32.8% and sequential growth of ~1.8%.

Why Align Technology Could Report Significant Revenue Growth for 2017

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In 3Q17, the company reported revenues of ~$144.9 million from North America, which represents YoY growth of ~25.0% but a sequential drop of ~1.1%. This was attributable to lower demand in the GP (general practitioner) dentist channel due to summer holidays, which affected both office days for physicians and overall patient traffic.

GP utilization of Invisalign fell from 3.3 in 2Q17 to 3.1 in 3Q17, but these levels were slightly higher than the 3.0 Invisalign utilization posted for GPs in 3Q16.

Natural disasters such as Hurricanes Irma and Harvey also affected Invisalign volumes by ~1,500 in 3Q17. Most of this unanticipated drop in demand was from the adult patient segment, but this was partly offset by demand from the teen segment under treatment by orthodontists.

Invisalign Express and Lite products also saw solid demand trends in North America in 3Q17. These consist of around 14 stages of aligners and are targeted at treating less complicated patient cases.

Significant growth in revenues?

Wall Street analysts have projected that Align Technology will report revenues of ~$1.4 billion in 2017, which would mean YoY growth of ~33.8%.

Notably, Align Technology makes up about 0.11% of PowerShares QQQ’s (QQQ) total portfolio holdings. Peers Dentsply Sirona (XRAY), Danaher (DHR), and 3M Company (MMM) are expected to report revenues of ~$4.0 billion, ~$18.2 billion, and ~$31.5 billion, respectively, for fiscal 2017.

In the next part of this series, we’ll take a look at Align Technology margin growth projections for 2017.


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