Align Technology, Inc. ALGN delivered fourth-quarter 2024 adjusted earnings per share (EPS) of $2.44, up 0.8% from the year-ago level. The reported figure topped the Zacks Consensus Estimate by 0.4%.

Find the latest EPS estimates and surprises on Zacks Earnings Calendar.

GAAP EPS for the quarter was $1.39, reflecting a decline of 15.2% from $1.64 in the comparable period of 2023. 

Full-year adjusted EPS was $9.33, reflecting an 8.4% increase from the 2023 level. The figure surpassed the Zacks Consensus Estimate by 0.1%.

Following the earnings announcement, ALGN stock plunged 0.8% yesterday.

ALGN’s Q4 Revenues

The top line increased 4% year over year to $995.2 million but missed the Zacks Consensus Estimate by 0.2%. Revenues were favorably impacted by foreign exchange of approximately $0.9 million.

Full-year revenues totaled $4.00 billion, up 3.5% from the 2023 level. The figure was in line with the Zacks Consensus Estimate. 

ALGN’s Segments in Detail

The company has two reportable segments — Clear Aligner, and Imaging Systems and CAD/CAM Services (Systems and Services).

Revenues in the Clear Aligner segment rose 1.6% year over year to $794.3 million. 

Clear Aligner revenues had a 0.1% unfavorable foreign exchange impact.

Revenues from Imaging Systems & CAD/CAM Services rose 14.9% to $200.9 million in the reported quarter. The segment, too, witnessed an unfavorable currency impact of 0.1% year over year.

Margins

Gross profit in the quarter was $696.9 million, up 4.1% year over year. The gross margin expanded 5 basis points (bps) year over year to 70% despite an increase of 3.9% in the cost of net revenues.

SG&A expenses increased 5.6% to $425 million, while R&D expenses rose 15.5% to $94.9 million.

Operating income totaled $177.1 million, down 4.2% year over year. The operating margin contracted 153 bps to 17.8%.

Financial Details of ALGN 

The company exited the fourth quarter with cash and cash equivalents of $1.04 billion, compared with $937.4 million at the end of the fourth quarter of 2023.  

The cumulative net cash provided by operating activities at the end of 2024 was $738.2 million compared with $785.8 million at the end of 2023. 

Stock Repurchase

Currently, $225 million is available for repurchases under ALGN’s $1.0 billion Stock Repurchase Program, authorized in January 2023.

ALGN's Guidance

Align Technology provided its financial outlook for full-year 2025. It also provided a guidance for the first quarter of 2025.

Align Technology, Inc. Price, Consensus and EPS Surprise

Align Technology, Inc. price-consensus-eps-surprise-chart | Align Technology, Inc. Quote

For the full year, ALGN expects revenue growth to be in the low single digits, which suggests approximately 2% of unfavorable foreign exchange impact at current spot rates. The Zacks Consensus Estimate for 2025 revenues is pegged at $4.19 billion, suggesting 4.8% growth year over year.

The 2025 GAAP operating margin for the full year is anticipated to be approximately 2 basis points above the 2024 level. The 2025 non-GAAP operating margin is expected to be approximately 22.5%.

To support continued expansion, the company expects to invest in the range of $100-$150 million in capital expenditures, primarily related to building construction and improvements and manufacturing capacity.

For the first quarter, ALGN anticipates worldwide revenues to be in the band of $965-$985 million. The Zacks Consensus Estimate is pegged at $1.02 billion.

Our Take

Align Technology exited the fourth quarter on a mixed note. While earnings beat the Zacks Consensus Estimate, revenues lagged the same. Revenues improved on a year-over-year basis, driven by growth in Clear Aligner volumes and Imaging Systems and CAD/CAM Services revenues.  

Clear Aligner's volume growth was driven by increased shipments across all regions the company operates in. It experienced continued growth momentum from sales of iTero Lumina scanners and increased Invisalign Clear Aligner volumes in the EMEA region. 

Additionally, ALGN’s Imaging Systems & CAD/CAM Services business segment reported strong growth on a year-over-year basis, primarily due to higher ASPs, improved services revenues and increased non-system revenues driven by upgrades in the leasing rental programs.

During the quarter, Align Technology achieved several cumulative milestones, including 271.6 thousand active Invisalign-trained practitioners, 19.5 million Invisalign patients (including over 5.6 million teens and kids) and more than 2 billion clear aligners manufactured worldwide. 

Further, a declining operating income and a contraction of the operating margin are matters of concern. 

ALGN’s Zacks Rank and Key Picks

Align Technology currently carries a Zacks Rank #4 (Sell).

Some better-ranked stocks from the broader medical space are Quest Diagnostics DGX, ResMed RMD and Cardinal Health CAH. 

Quest Diagnostics reported fourth-quarter 2024 adjusted EPS of $2.23, which topped the Zacks Consensus Estimate by 1.8%. Revenues of $2.62 billion beat the Zacks Consensus Estimate by 1.9%. 

DGX carries a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

DGX has an earnings yield of 5.9% compared with the industry’s 4.1%. The company beat on earnings in each of the trailing four quarters, the average surprise being 3.8%.

ResMed, carrying a Zacks Rank #2 at present, posted second-quarter fiscal 2025 adjusted EPS of $2.43, which topped the Zacks Consensus Estimate by 5.6%. Revenues of $1.28 billion exceeded the Zacks Consensus Estimate by 1.6%.

RMD has an estimated fiscal 2025 earnings growth rate of 21.9% compared with the industry’s 13.2%. The company’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 6.9%.

Cardinal Health, carrying a Zacks Rank #2 at present, posted second-quarter fiscal 2025 adjusted EPS of $1.93, which outpaced the Zacks Consensus Estimate by 10.3%. Revenues of $55.26 billion exceeded the Zacks Consensus Estimate by 0.7%.

CAH has an estimated five-year earnings growth rate of 10.7% compared with the industry’s 9.3%. The company’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 9.6%.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Quest Diagnostics Incorporated (DGX) : Free Stock Analysis Report

Align Technology, Inc. (ALGN) : Free Stock Analysis Report

Cardinal Health, Inc. (CAH) : Free Stock Analysis Report

ResMed Inc. (RMD) : Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research