Shares of Alignment technology (ALGN 3.54%) were down 17% as of 2:36 p.m. ET Thursday. The sharp decline came after orthodontic aligner maker Invisalign announced its first-quarter results after the market closed 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 reported adjusted earnings of $198.4 million, or $2.49 per share. Both the upper and lower results were below consensus estimates.
CEO Joe Hogan acknowledged that “the first quarter turned out to be a more challenging than expected operating environment globally.” He pointed to three main factors that were headwinds: COVID-19, declining consumer confidence, and the fallout from Russia’s invasion of Ukraine. Additionally, a stronger dollar hurt Align with about half of its revenue generated outside of the United States.
The news is mixed 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 outlook. The bad news is that the company can’t do much against the headwinds.
After Align’s sharp decline today, the healthcare stock is down more than 50% year-to-date. Things may get worse before they get better, especially if consumer confidence falls further.
But Hogan rightly pointed out that Align still holds less than 10% of the 21 million annual orthodontic cases. The potential market is as large as it has ever been. As Align faces competition, no other company is better positioned to capitalize on the opportunity for clear aligners and intraoral scanners.