Who's Thanking Align Technology This November?

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Part 3
Who's Thanking Align Technology This November? PART 3 OF 5

Gauging Align Technology’s Net Profit Margin for Fiscal 2017

Margin performance in 3Q17

In 3Q17, Align Technology (ALGN) reported a gross margin of ~75.9%, which is 0.8% higher YoY (year-over-year) and 0.1 lower on a sequential basis.

The gross margin for the company’s Clear Aligner segment was close to 77.9%, which is 0.2% lower sequentially due to the higher number of aligners sold per Invisalign case. The negative impact of this trend was partly offset by a rise in ASP (average selling prices) of clear aligners in 3Q17.

Gauging Align Technology&#8217;s Net Profit Margin for Fiscal 2017

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In 3Q17, despite the various promotional discounts given to customers, Invisalign ASP rose sequentially by ~$25 to $1,310, buoyed by price increases, favorable shifts in product mix, and favorable foreign currency fluctuations. The gross margin for Align’s Scanner segment rose 3.3% sequentially and 2.2% YoY to 60% in 3Q17 due to higher ASPs and lower servicing costs.

In 3Q17, Align’s operating expenses totaled $193.7 million, or ~31.7% higher YoY and 3.4% higher sequentially, due to a higher number of employees and investments in consumer marketing activities. Align reported an operating margin of ~25.6%, or 3.3% higher YoY and 2.2% sequentially.

Slight rise in net profit margin

Wall Street analysts have projected that Align Technology will report a net profit margin of 19.9% in 2017, which would mean YoY growth of ~2.3%.

Notably, Align Technology makes up about 0.21% of the Health Care Select Sector SPDR Fund’s (XLV) total portfolio holdings. Peer Dentsply Sirona (XRAY) is expected to report a net loss of ~$314.15 million for fiscal 2017, while Danaher (DHR) and 3M Company (MMM) are expected to report net profit margins of ~12.6% and ~17.4%, respectively.

In the next part, we’ll take a look at Align Technology’s international market performance in 2017.


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