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Align Technology Shares Up 9% As Q4 Results Top Estimates, Rosy Revenue Outlook

Shares of Align Technology, Inc. (ALGN) gained more than nine percent in Wednesday's extended trade after the medical devices company reported results for the fourth quarter that topped analysts' expectations. The company also issued revenue guidance for the first quarter, above Street view.

However, the company reported a profit for the quarter that more than halved from last year, reflecting significantly lower operating margins amid higher operating expenses and goodwill impairment.

Separately, the company announced the resignation of its CFO Kenneth Arola, effective March 4, 2013. The company has named Roger George, Align's vice president, corporate and legal affairs and general counsel, as interim CFO, while its started search for a new CFO.

"I'm very pleased to report a solid fourth quarter which culminated in a record fiscal year for with over 17 percent growth for Invisalign volume. Despite a soft start this quarter in North America for Align and most of the dental industry, Invisalign case submissions rebounded in December and this trend has continued into the first quarter of 2013," President and CEO Thomas Prescott said in a statement.

The San Jose, California-based company reported net income of $9.56 million or $0.12 per share for the fourth quarter, lower than $20.45 million or $0.25 per share in the prior-year quarter. Results for the latest quarter include impairment of goodwill of $11.93 million.

Excluding items, adjusted earnings for the quarter was $22.33 million or $0.27 per share, compared to $22.98 million or $0.28 per share in the year-ago quarter.

On average, 13 analysts polled by Thomson Reuters expected the company to report earnings of $0.22 per share for the fourth quarter. Analysts' estimates typically exclude special items.

Total net revenue for the quarter increased 10.8 percent to $142.84 million from $128.90 million in the same quarter last year, and topped ten Wall Street analysts consensus estimate of $134.74 million.

Revenues for the latest quarter include the release of $4.9 million of previously deferred revenue for Invisalign case refinement.

Invisalign clear aligner sales totaled $132.8 million for the quarter, up 11.7 percent from a year ago. During the quarter, the company shipped 90,500 Invisalign cases, up from 82,600 cases last year. Meanwhile, scanner and CAD/CAM services revenue remained flat with last year at $9.98 million.

Operating margin for the quarter contracted 850 basis points to 12.0 percent from last year's 20.5 percent, while gross margin expanded 40 basis points to 74.5 percent from last year. Total operating expenses increased to $89.41 million from $69.12 million in the year-ago quarter.

For fiscal 2012, the company reported net income of $58.69 million or $0.71 per share, lower than $66.72 million or $0.83 per share in the prior year. Excluding items, adjusted earnings for the year was $96.75 million or $1.17 per share, compared to $78.14 million or $0.97 per share in the year ago. Total net revenue for the full year increased 16.7 percent to $560.04 million from $479.74 million in the previous year.

Street was looking for full-year 2012 earnings of $1.12 per share on annual revenues of $552.18 million.

Looking ahead to the first quarter of fiscal 2013, the company expects earnings in a range of $0.21 to $0.23 per share, on anticipated revenues between $146.0 million and $150.5 million.

Street is currently looking for first-quarter earnings of $0.26 per share on quarterly revenues of $144.52 million.

"We are starting off the new year with several new products and feature enhancements including the new iTero scanner, Invisalign Outcome Simulator, and Invisalign G4 enhancements which will contribute to our growth throughout the year," Prescott added.

ALGN closed Wednesday's regular trading session at $29.27, up $0.50 or 1.74% on a volume of 3.98 million shares. The stock soared a further $2.74 or 9.36% in after-hours trading.

by RTTNews Staff Writer

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