SAN JOSE, CA -- (Marketwired) -- 07/27/17 --

• Q2 revenues up 32.3% year-over-year, up 14.9% sequentially to a record $356.5 million
• Q2 Invisalign case shipments for North America and International were up year-over-year 27.6% and 37.4%, respectively
• Q2 Invisalign case shipments to teenage patients up 37.6% year-over-year, up 12.6% sequentially reaching a milestone of 1 million teen patients who have started Invisalign treatment
• Q2 diluted EPS $0.85, up 37.1% year-over-year

Align Technology, Inc.(NASDAQ: ALGN) today reported financial results for the second quarter ended June 30, 2017. Invisalign case shipments in the second quarter of 2017 (Q2'17) were 231.9 thousand, a 31.0% increase year-over-year. For Q2'17, revenues were $356.5 million, a 32.3% increase year-over-year, and net profit was $69.2 million, or $0.85 per diluted share, up 37.1% per diluted share compared to the same period in the prior year.

Commenting on Align's Q2 2017 results, Align Technology President and CEO Joe Hogan said, "Our second quarter results were better than expected across key financial metrics including revenue, volume, margins, and EPS. Q2 revenues increased 32.3% year-over-year driven by strong Invisalign case shipments across all channels and especially in the teen segment. Solid execution of our strategy and key investments continue to deliver strong growth across the board, with record Invisalign volume in almost every geography. The second quarter also had an all-time high of nearly 5,000 newly trained Invisalign doctors in a quarter. Our iTero scanner business also performed well this quarter with revenues up 36.7% year-over-year."

GAAP Summary Financial Comparisons

Second Quarter Fiscal 2017

		Q2'17	Q1'17	Q2'16	Q/Q Change	Y/Y Change
Invisalign Case Shipments*		231,890	208,060	176,995	+11.5%	+31.0%
Net Revenues		$356.5M	$310.3M	$269.4M	+14.9%	+32.3%
	Clear Aligner**	$321.0M	$282.4M	$243.4M	+13.7%	+31.9%
	Scanner & Services	$35.4M	$27.9M	$25.9M	+26.9%	+36.7%
Net Profit		$69.2M	$69.4M	$50.1M	(0.3)%	+37.9%
Diluted EPS		$0.85	$0.85	$0.62	$0.00	+$0.23

Note: Changes and percentages are based on actual values and may effect totals due to rounding

* Invisalign Shipment figures does not include SmileDirectClub aligners

** Clear aligner revenue includes revenues from Invisalign clear aligners and SmileDirectClub aligners

As of June 30, 2017, Align had $676.6 million in cash, cash equivalents and marketable securities compared to $644.2 million as of March 31, 2017. During Q2'17, we paid $50 million under an accelerated stock repurchase plan ("ASR") in which we received an initial delivery of approximately 0.3 million shares of common stock. The final number of shares repurchased will be determined at completion of the ASR based on Align's volume-weighted average stock price during the term of the ASR, less an agreed upon discount. There remains approximately $250 million available for repurchases under the existing stock repurchase authorization.

On July 24, 2017, Align increased the revolving line of credit with SmileDirectClub, LLC to $30.0 million and purchased an additional 2% equity interest in SmileDirectClub for $12.8 million. As a result of this purchase, the Company now holds a 19% equity interest, on a fully diluted basis. Additionally, on July 24, 2017, Align entered into an agreement to purchase a new facility in Costa Rica for $26.1 million.

Q2 2017 Business Highlights

The following list highlights Align's key announcements for the second quarter:

• Opens New Invisalign Treatment Planning Facility in Chengdu, China: Align announced its first manufacturing operations in China and represents the Company's commitment to geographic expansion and investment in the Asia Pacific region. The Chengdu Treatment Planning and Training Centre of Excellence will provide treatment planning services for Invisalign providers in China.

• Launched TimeLapse Technology for Scan Comparisons and 1 Minute Scan: Align announced a software upgrade for its iTero Element® intraoral scanners that includes the ability to compare patient scans over time with the new TimeLapse technology, providing general practitioner dentists and orthodontists with enhanced visualization, assessment and communication tools. In addition, with the 1.5 software upgrade, patient scans can be completed in as little as 1 minute.

• Receives U.S. Patents for SmartTrack Material: Align announced that two U.S. Patents, Nos. 9,655,691 and 9,655,693, have been issued by the United States Patent and Trademark Office (USPTO) for SmartTrack aligner material, used exclusively for Invisalign aligner treatment. Launched commercially in 2013, Align's proprietary SmartTrack material is an innovative multi-layer polymer that delivers more gentle, constant force to improve control of tooth movements with Invisalign clear aligners.

• Reaches 1 Million Invisalign Teen-aged Patients: Align announced that 1 million teenage patients have started treatment with Invisalign, the most advanced clear aligner system in the world. This is a significant accomplishment for the company and its more than 100,000 Invisalign-trained doctors, reflecting increasing preference for Invisalign clear aligners for teenage orthodontic treatment.

• Global Funding Awarded Toward Advancing Orthodontic and Dental Research: Align announced twelve recipients of research grants under the company's Annual Research Award Program. Now in its eighth year of funding, nearly $300,000 is being awarded for 2017 to researchers at universities in North America, Europe and Asia Pacific.

• Launched Invisalign Brand Marketing Campaign: Align announced that it has launched a comprehensive, multi-million dollar marketing campaign for its Invisalign brand designed to challenge metal braces as the status quo method for straightening teen teeth.

Q3 2017 Business Outlook

For the third quarter of 2017 (Q3'17), Align provides the following guidance:

• Invisalign case shipments in the range of 231 thousand to 234 thousand, up approximately 30% to 32% over the same period a year ago.
• Net revenues in the range of $355 million to $360 million, up approximately 27% to 29% over the same period a year ago.
• Diluted EPS in the range of $0.78 to $0.81, which includes $0.01 of excess tax benefit.

Align Web Cast and Conference Call

Align will host a conference call today, July 27, 2017 at 4:30 p.m. ET, 1:30 p.m. PT, to review its second quarter 2017 results, discuss future operating trends and the business outlook. The conference call will also be web cast live via the Internet. To access the webcast, go to the "Events & Presentations" section under Company Information on Align's Investor Relations web site at http://investor.aligntech.com. To access the conference call, please dial 201-689-8261. An archived audio web cast will be available beginning approximately one hour after the call's conclusion and will remain available for approximately 12 months. Additionally, a telephonic replay of the call can be accessed by dialing 877-660-6853 with conference number 13665263 followed by #. For international callers, please dial 201-612-7415 and use the same conference number referenced above. The telephonic replay will be available through 5:30 p.m. ET on August 10, 2017.

About Align Technology, Inc.

Align Technology designs and manufactures the Invisalign® system, the most advanced clear aligner system in the world, and iTero® intraoral scanners and services. Align's products help dental professionals achieve the clinical results they expect and deliver effective, cutting-edge dental options to their patients. Visit www.aligntech.com for more information.

For additional information about the Invisalign system or to find an Invisalign provider in your area, please visit www.invisalign.com. For additional information about iTero digital scanning system, please visit www.itero.com.

Forward-Looking Statement

This news release, including the tables below, contains forward-looking statements, including statements regarding certain business metrics for the third quarter of 2017, including, but not limited to, anticipated net revenues, gross margin, operating expenses, operating profit, diluted earnings per share, tax rate and case shipments. Forward-looking statements contained in this news release and the tables below relating to expectations about future events or results are based upon information available to Align as of the date hereof. Readers are cautioned that these forward-looking statements are only predictions and are subject to risks, uncertainties and assumptions that are difficult to predict. As a result, actual results may differ materially and adversely from those expressed in any forward-looking statement. Factors that might cause such a difference include, but are not limited to, difficulties predicting customer and consumer purchasing behavior, Align's ability to protect its intellectual property rights, continued compliance with regulatory requirements, competition from existing and new competitors, the willingness and ability of our customers to maintain and/or increase product utilization in sufficient numbers, the possibility that the development and release of new products does not proceed in accordance with the anticipated timeline, the possibility that the market for the sale of these new products may not develop as expected, or that the expected benefits of new or existing business relationships will not be achieved as anticipated, the risks relating to Align's ability to sustain or increase profitability or revenue growth in future periods while controlling expenses, growth related risks, including capacity constraints and pressure on our internal systems and personnel, the security of customer and/or patient data is compromised for any reason, continued customer demand for our existing and new products, changes in consumer spending habits as a result of, among other things, prevailing economic conditions, levels of employment, salaries and wages and consumer confidence, the timing of case submissions from our doctors within a quarter, acceptance of our products by consumers and dental professionals, foreign operational, political and other risks relating to Align's international manufacturing operations, Align's ability to develop and successfully introduce new products and product enhancements and the loss of key personnel. These and other risks are detailed from time to time in Align's periodic reports filed with the Securities and Exchange Commission, including, but not limited to, its Annual Report on Form 10-K for the year ended December 31, 2016, which was filed with the Securities and Exchange Commission (SEC) on February 28, 2017, and its Quarterly Report on Form 10-Q for the quarter ended March 31, 2017, which was filed with the SEC on May 4, 2017. Align undertakes no obligation to revise or update publicly any forward-looking statements for any reason.

ALIGN TECHNOLOGY, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
				Three Months Ended						Six Months Ended
					June 30, 2017			June 30, 2016			June 30, 2017			June 30, 2016
Net revenues				$	356,482		$	269,362		$	666,823		$	508,082
Cost of net revenues					85,565			64,146			160,281			122,239
Gross profit					270,917			205,216			506,542			385,843
Operating expenses:
	Selling, general and adminstrative				162,964			121,467			314,112			233,677
	Research and development				24,384			18,613			47,188			33,696
		Total operating expenses			187,348			140,080			361,300			267,373
Income from operations					83,569			65,136			145,242			118,470
Interest and other income (expense), net					3,212			125			4,857			(302)
Net income before provision for income taxes and equity in losses of investee					86,781			65,261			150,099			118,168
Provision for income taxes					15,387			15,113			8,164			27,474
Equity in losses of investee, net of tax					2,215			-			3,336			-
Net income				$	69,179		$	50,148		$	138,599		$	90,694
Net income per share:
		Basic		$	0.86		$	0.63		$	1.73		$	1.14
		Diluted		$	0.85		$	0.62		$	1.70		$	1.11
Shares used in computing net income per share:
		Basic			80,188			79,951			80,047			79,891
		Diluted			81,631			81,281			81,668			81,440

ALIGN TECHNOLOGY, INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
				June 30, 2017			December 31, 2016
ASSETS
Current assets:
	Cash and cash equivalents			$	358,182		$	389,275
	Marketable securities, short-term				243,786			250,981
	Accounts receivable, net				291,694			247,415
	Inventories				35,133			27,131
	Prepaid expenses and other current assets				74,427			38,176
		Total current assets			1,003,222			952,978
Marketable securities, long-term					74,619			59,783
Property, plant and equipment, net					255,539			175,167
Equity method investments					41,724			45,061
Goodwill and intangible assets, net					91,308			81,998
Deferred tax assets					61,783			67,844
Other assets					22,992			13,320
		Total assets		$	1,551,187		$	1,396,151
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
	Accounts payable			$	45,953		$	28,596
	Accrued liabilities				158,838			134,332
	Deferred revenues				220,005			191,407
		Total current liabilities			424,796			354,335
Income tax payable					44,581			45,133
Other long term liabilities					3,522			1,294
		Total liabilities			472,899			400,762
Total stockholders' equity					1,078,288			995,389
		Total liabilities and stockholders' equity		$	1,551,187		$	1,396,151

ALIGN TECHNOLOGY, INC.
STOCK-BASED COMPENSATION
(in thousands)
				Q1			Q2			Q3			Q4			Fiscal			Q1			Q2
					2016			2016			2016			2016			2016			2017			2017
Stock-based Compensation (SBC)
		SBC included in Gross Profit		$	961		$	932		$	995		$	1,078		$	3,966		$	925		$	768
		SBC included in Operating Expenses			11,563			12,767			12,716			13,136			50,182			13,887			13,477
			Total SBC Expense	$	12,524		$	13,699		$	13,711		$	14,214		$	54,148		$	14,812		$	14,245

ALIGN TECHNOLOGY, INC.
INVISALIGN BUSINESS METRICS*
					Q1			Q2			Q3			Q4			Fiscal			Q1			Q2
						2016			2016			2016			2016			2016			2017			2017
Invisalign Average Selling Price (ASP):
	Worldwide ASP				$	1,255		$	1,285		$	1,285		$	1,230		$	1,265		$	1,270		$	1,285
	International ASP				$	1,315		$	1,345		$	1,365		$	1,315		$	1,335		$	1,325		$	1,335
Invisalign Cases Shipped by Geography:
	North America					110,500			114,855			115,900			122,555			463,810			132,885			146,510
	International					53,195			62,140			61,855			67,500			244,690			75,175			85,380
		Total Cases Shipped				163,695			176,995			177,755			190,055			708,500			208,060			231,890
			YoY % growth			25.2%			22.4%			20.5%			18.5%			21.5%			27.1%			31.0%
			QoQ % growth			2.1%			8.1%			0.4%			6.9%						9.5%			11.5%
Number of Invisalign Doctors Cases Were Shipped To:
	North America					22,355			22,575			22,570			23,265			34,065			23,910			24,695
	International					11,280			12,485			12,720			13,635			20,415			14,955			16,570
		Total Doctors Cases Shipped To				33,635			35,060			35,290			36,900			54,480			38,865			41,265
Invisalign Doctor Utilization Rates*:
		North America				4.9			5.1			5.1			5.3			13.6			5.6			5.9
			North American Orthodontists			10.4			10.7			11.1			11.3			36.6			12.6			13.6
			North American GP Dentists			3.0			3.1			3.0			3.2			7.6			3.1			3.3
		International				4.7			5.0			4.9			5.0			12.0			5.0			5.2
		Total Utilization Rates				4.9			5.1			5.0			5.2			13.0			5.4			5.6
		* # of cases shipped/# of doctors to whom cases were shipped
Number of Invisalign Doctors Trained:
		North America				875			1,125			1,300			1,420			4,720			980			1,620
		International				1,605			1,760			1,315			2,280			6,960			2,280			3,255
			Total Doctors Trained Worldwide			2,480			2,885			2,615			3,700			11,680			3,260			4,875
			Total to Date Worldwide			106,270			109,155			111,770			115,470			115,470			118,730			123,605
Note: Historical public data may differ due to rounding. Additionally, rounding may effect totals.
*Invisalign business metrics exclude SmileDirectClub aligners.

ALIGN TECHNOLOGY, INC.
BUSINESS OUTLOOK SUMMARY
(unaudited)
The outlook figures provided below and elsewhere in this press release are approximate in nature since Align's business outlook is difficult to predict. Align's future performance involves numerous risks and uncertainties and the company's results could differ materially from the outlook provided. Some of the factors that could affect Align's future financial performance and business outlook are set forth under "Forward Looking Information" above in this press release.
Financial Outlook
(in millions, except per share amounts and percentages)
	Q3'17 Guidance
	GAAP
Net Revenues	$355.0 - $360.0
Gross Margin	74.7% - 75.7%
Operating Expenses	$184.5 - $187.5
Operating Margin	22.7% - 23.6%
Net Income per Diluted Share	$0.78 - $0.81	(1)
Business Metrics:	Q3'17
Case Shipments	231.0K - 234.0K
Capital Expenditure	$70M - $75M
Depreciation & Amortization	$9.5M - $10.0M
Diluted Shares Outstanding	81.8M*	(2)
Stock Based Compensation Expense	$14.9M
Effective Tax Rate	21.0%	(1)
(1) Includes the benefit from the adoption of the new accounting standard update for share-based compensation
(2) Excludes any stock repurchases during the quarter

Investor Relations Contact
Yin Cantor
Align Technology, Inc.
(408) 470-1044
ycantor@aligntech.com

Press Contact
Shannon Mangum Henderson
Ethos Communication, Inc.
(678) 261-7803
align@ethoscommunication.com

Source: Align Technology

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