January 30, 2007

Align Technology, Inc. Announces Q4 2006 and Fiscal Year 2006 Results

* 4th Quarter Total Revenues Grew 8% to $55.2 Million
* Fiscal 2006 Total Revenues of $206.4 Million; GAAP Net Loss of $35.0 Million, or $0.55 per share
* Excluding One-Time Items and Stock-Based Compensation, Fiscal Year 2006 non-GAAP Net Loss of $11.7 Million, or $0.19 per share
* Case Shipments Increased 22% Year Over Year
* 2007 Revenues Expected Between $240.0-255.0 Million


SANTA CLARA, Calif., Jan 30, 2007 /PRNewswire-FirstCall via COMTEX News Network/ -- Align Technology, Inc. (Nasdaq: ALGN), the inventor of Invisalign(R), a proprietary method of straightening teeth without wires and brackets, today reported financial results for the fourth quarter and full year of 2006. Total revenues for the fourth quarter of 2006 were $55.2 million, compared to $51.2 million in the fourth quarter of 2005, an increase of 7.9 percent. For fiscal year 2006, Align reported revenues of $206.4 million, compared to $207.1 million for fiscal year 2005, a decrease of 0.4 percent.

"2006 was eventful and productive," stated Thomas M. Prescott, President and CEO of Align Technology. "We resolved our legal disputes with OrthoClear and refocused our efforts on product development, customer service and market expansion. Overall, we shipped a record number of cases and our base of doctors grew tremendously. We expect 2007 to be the year we restage growth, introduce products that meet the unique needs of the Orthodontists and GPs and continue our path to profitability."

Revenue Analysis

Revenue was $55.2 million for the fourth quarter, an increase of 7.9% from the fourth quarter of 2005, and $206.4 million for the year ended December 31, 2006, a decrease of 0.4% over the prior year. In the fourth quarter, revenue per channel was:

    * $17.4 million for U.S. Ortho, including $2.0 million for Invisalign
      Express;
    * $24.5 million for U.S. GP, including $2.9 million for Invisalign
      Express;
    * $9.6 million for International; and
    * $3.7 million for Other.

    Key metrics include:

    * 3,700 U.S. Orthos, 9,000 U.S. GPs, and 2,100 International doctors
      submitted cases in the fourth quarter. Also in the fourth quarter, cases
      were shipped to 3,400 U.S. Orthos, 7,900 U.S. GPs and 1,900
      International doctors.
    * Utilization in the fourth quarter of 2006 was 4.2 for U.S. Orthos, 2.4
      for U.S. GPs, and 2.9 for International. Utilization in the ortho
      channel declined because a large number of doctors, who had not started
      cases in the previous year, started new Invisalign cases in the fourth
      quarter. Utilization was flat in the U.S. GP channel and slightly up in
      international.
    * In the fourth quarter, worldwide average selling price (ASP) for
      Invisalign was $1,320. Excluding Invisalign Express, worldwide ASP was
      $1,445.
    * Total number of cases shipped in fiscal year 2006 increased 22% to
      150,100. Included in this were 36,600 Invisalign Express cases.
    * Doctors trained worldwide in fiscal year 2006 increased by 5,000,
      including 3,800 U.S. GP dentists, to a cumulative total of 40,800.
    * Since product inception, 28,700 doctors worldwide have used Invisalign:
      6,200 U.S. Orthos; 17,200 U.S. GPs; and 5,300 International doctors. 84
      percent of these doctors have started more than one case.

A full list of quarterly metrics is available in the Fact Sheet following the financial tables of this release. Additionally, quarterly metric information for the last 8 quarters is available on Align's website at investor.aligntech.com.

Operating results reflect stock-based compensation expense of $2.2 million for Q4 and $8.9 million for full year 2006 due to the implementation of FAS 123( R ) in the first quarter of 2006. It also reflects $14.3 million of one- time costs incurred from our agreement with OrthoClear including settlement costs and costs associated with the Patients First Program. These items have been excluded in the non-GAAP financials. A reconciliation of GAAP (U.S. generally accepted accounting principles) to non-GAAP results and outlook is contained in the tables below.

    Fourth Quarter 2006 Operating Results

    Key GAAP operating results for the fourth quarter of 2006 include:

    * Gross margin was 68.8 percent, compared to 67.3 percent in the fourth
      quarter 2005.
    * Operating expenses were $56.1 million, compared to $33.8 million in the
      fourth quarter 2005. Operating expense in the fourth quarter 2006
      includes a one-time charge of $14.3 million. This includes $6.0 million
      in settlement costs related to the $20 million paid to OrthoClear ($14.0
      million was capitalized and will be amortized over 5 years) and $8.3
      million for the cost of completing the Patients First Program cases.
    * Net loss was $17.3 million, compared to a net profit of $528,000 in the
      fourth quarter 2005.
    * Net loss per share was $0.27, compared to EPS of $0.01 in the fourth
      quarter 2005.

    Key non-GAAP operating results for the fourth quarter of 2006 include:

    * Gross margin was 69.2 percent, compared to 67.3 percent in the fourth
      quarter 2005.
    * Operating expenses were $39.7 million, compared to $33.8 million in the
      fourth quarter 2005.
    * Net loss was $764,000, compared to a net profit of $528,000 in the
      fourth quarter 2005.
    * Net loss per share was $0.01, compared to EPS of $0.01 in the fourth
      quarter 2005.

    Full Year 2006 Operating Results

    Key GAAP operating results for the full year 2006 include:

    * Gross margin was 68.6 percent, compared to 69.2 percent in 2005.
    * Operating expenses were $179.1 million, compared to $140.9 million in
      2005. Operating expenses include a one-time charge for the Patients
      First Program and settlement costs taken in the fourth quarter 2006 as
      described above. 2006 operating expense also includes $19.6 million of
      legal and other OrthoClear-related expenses.
    * Net loss was $35.0 million, compared to a net profit of $1.4 million in
      2005.
    * Net loss per share was $0.55, compared to EPS of $0.02 in 2005.

    Key non-GAAP operating results for the full year 2006 include:

    * Gross margin was 68.9 percent, compared to 69.2 percent in 2005.
    * Operating expenses were $156.6 million, compared to $140.9 million in
      2005.
    * Net loss was $11.7 million, compared to a net profit of $1.4 million in
      2005.
    * Net loss per share was $0.19, compared to EPS of $0.02 in 2005.

    Liquidity and Capital Resources

As of December 31, 2006, Align had $64.1 million in cash, cash equivalents, marketable securities and restricted cash, compared to $74.4 million as of December 31, 2005. In the third quarter 2006, Align borrowed $15.0 million from its credit facility. $11.5 million remains outstanding.

Patients First Program Update

As of December 31, 2006, of the 30,500 registered cases, 19,000 completed treatment forms have been received and 3,600 cases were shipped.

Business Outlook for the First Quarter 2007 and Full Year 2007

For the first quarter 2007, Align Technology expects revenues between $56.8 and $59.8 million and GAAP earnings/loss per share between ($0.02) and $0.00. Non-GAAP EPS is expected to be between $0.02 and $0.04.

For the fiscal year 2007, Align Technology expects revenues between $240.0 and $255.0 million and GAAP earnings/loss per share between ($0.04) and $0.07. Non-GAAP EPS for fiscal year 2007 is expected to be between $0.15 and $0.27.

A more comprehensive business outlook section, including a reconciliation of GAAP to Non-GAAP financial measures, is available following the financial tables of this release.

Align Webcast and Conference Call

Align Technology will host a webcast and conference call today, January 30, 2007 at 10:00 a.m. EST, 7:00 a.m. PST, to review the fourth quarter and fiscal year 2006 results and discuss future operating trends and guidance. To access the webcast, click on "Webcasts & Presentations" on Align Technology's Investor Relations web site at http://investor.aligntech.com . To access the conference call, please dial (201) 689-8341 approximately fifteen minutes prior to the start of the call. If you are unable to listen to the call, an archived web cast will be available beginning approximately one hour after the call's conclusion and will remain available through 5:30 p.m. EDT on January 29, 2008. Additionally, a telephonic replay of the call can be accessed by dialing (877) 660-6853 with account number 292 followed by # and conference number 227475 followed by #. The replay may be accessed from international locations by dialing (201) 612-7415 and using the same account and conference numbers referenced above. The telephonic replay will be available through 5:30 p.m. EDT on February 13, 2007.

About Align Technology, Inc.

Align Technology designs, manufactures and markets Invisalign, a proprietary method for treating malocclusion, or the misalignment of teeth. Invisalign corrects malocclusion using a series of clear, nearly invisible, removable appliances that gently move teeth to a desired final position. Because it does not rely on the use of metal or ceramic brackets and wires, Invisalign significantly reduces the aesthetic and other limitations associated with braces. Invisalign is appropriate for treating adults and older teens. Align Technology was founded in March 1997 and received FDA clearance to market Invisalign in 1998.

To learn more about Invisalign or to find a certified Invisalign doctor in your area, please visit www.invisalign.com or call 1-800-INVISIBLE.

About non-GAAP Financial Measures

To supplement our consolidated financial statements, which statements are prepared and presented in accordance with GAAP, we use the following non-GAAP financial measures: non-GAAP gross profit, profit (loss) from operations, net profit (loss) and certain expenses (including sales and marketing, general and administrative and research and development), which exclude stock-based compensation and the Patients First Program and settlement costs. The presentation of this financial information is not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP. For more information on these non-GAAP financial measures, please see the tables captioned "Reconciliation of GAAP to Non-GAAP Condensed Consolidated Statements of Operations" and "Business Outlook" included at the end of this release.

We use these non-GAAP financial measures for financial and operational decision making and as a means to evaluate period-to-period comparisons. Our management believes that these non-GAAP financial measures provide meaningful supplemental information regarding our "core operating performance." Management believes that "core operating performance" represents Align's performance in the ordinary, ongoing and customary course of its operations. Accordingly, management excludes from "core operating performance" certain expenses and expenditures that may not be indicative of our operating performance including not only non-cash charges, such as stock-based compensation, but also discrete cash charges that are infrequent or one-time in nature, such as the Patients First Program and settlement costs. We believe that both management and investors benefit from referring to these non-GAAP financial measures in assessing our performance and when planning, forecasting and analyzing future periods. These non-GAAP financial measures also facilitate management's internal evaluation of period-to-period comparisons. We believe these non-GAAP financial measures are useful to investors both because (1) they allow for greater transparency with respect to key metrics used by management in its financial and operational decision making and (2) they are provided to and used by our institutional investors and the analyst community to help them analyze the health of our business.

Forward-Looking Statement

This news release, including the tables below, contain forward-looking statements, including statements regarding Align's anticipated financial results and certain business metrics for the first quarter and full year of 2007, including anticipated percentage of revenue by channel, case shipments and average selling prices, and statements by Mr. Prescott regarding introduction of new products and anticipated return to profitability in fiscal 2007. 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, risks relating to Align's ability to sustain or increase profitability or revenue growth in future periods while controlling expenses, including expenses related to the OrthoClear settlement, customer demand for Invisalign, acceptance of Invisalign by consumers and dental professionals, Align's third party manufacturing processes and personnel, foreign operational, political and other risks relating to Align's international manufacturing operations, Align's ability to protect its intellectual property rights, competition from manufacturers of traditional braces and new competitors, Align's ability to develop and successfully introduce new products and product enhancements, and the loss of key personnel, including members of its direct sales force. 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 fiscal year ended December 31, 2005, which was filed with the Securities and Exchange Commission on March 1, 2006, and its Quarterly Reports on Form 10-Q. Align undertakes no obligation to revise or update publicly any forward-looking statements for any reason.

    Investor Relations Contact:      Press Contact:
    Barbara Domingo                  Shannon Henderson
    Align Technology, Inc.           Ethos Communications, Inc.
    (408) 470-1000                   (678) 540-9222
    investorinfo@aligntech.com       align@ethoscommunication.com


    ALIGN TECHNOLOGY, INC.
    CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
    (unaudited)

                                        Three Months Ended    Year Ended
    (in thousands, except                Dec. 31, Dec. 31, Dec. 31, Dec. 31,
     per share data)                       2006     2005     2006      2005

    Revenues                             $55,191  $51,164  $206,354  $207,125

    Cost of revenues                      17,197   16,711    64,775    63,784

    Gross profit                          37,994   34,453   141,579   143,341

    Operating expenses:

    Sales and marketing                   22,121   18,570    81,993    80,068
    General and administrative            14,649   11,293    64,305    42,242
    Research and development               4,948    3,927    18,474    18,585
    Patients First Program and
     settlement costs                     14,343       --    14,343        --

    Total operating expenses              56,061   33,790   179,115   140,895

    Profit (Loss) from operations        (18,067)     663   (37,536)    2,446

    Interest and other income, net         1,008      255     3,401       283
    Provision for income taxes              (210)    (390)     (828)   (1,316)

    Net profit (loss)                   $(17,269)    $528  $(34,963)   $1,413

    Net profit (loss) per share
      - basic                             $(0.27)   $0.01    $(0.55)    $0.02
      - diluted                           $(0.27)   $0.01    $(0.55)    $0.02

    Shares used in computing net profit
     (loss) per share
      - basic                             64,252   62,045    63,246    61,644
      - diluted                           64,252   63,247    63,246    63,152


    ALIGN TECHNOLOGY, INC.
    CONDENSED CONSOLIDATED BALANCE SHEETS
    (unaudited)

                                                 December 31,     December 31,
    (in thousands)                                   2006             2005
                           ASSETS
    Current assets:
    Cash and cash equivalents                      $55,113           $74,219
    Restricted cash                                     93               150
    Marketable securities, short-term                8,931                 -
    Accounts receivable, net                        33,635            29,305
    Inventories, net                                 3,090             2,930
    Other current assets                             7,227             4,982
       Total current assets                        108,089           111,586

    Property and equipment, net                     26,904            26,427
    Goodwill and intangible assets, net             14,303             1,296
    Other long-term assets                           2,262             2,801

         Total assets                             $151,558          $142,110

             LIABILITIES AND STOCKHOLDERS' EQUITY

    Current liabilities:
    Line of credit                                 $11,500               $--
    Accounts payable                                 5,034             2,489
    Accrued liabilities                             40,307            29,372
    Deferred revenue                                10,942            16,747
       Total current liabilities                    67,783            48,608

    Other long term liabilities                        219                64

        Total liabilities                           68,002            48,672

    Total stockholders' equity                      83,556            93,438

         Total liabilities and stockholders'
          equity                                  $151,558          $142,110


    ALIGN TECHNOLOGY, INC.
    RECONCILIATION OF GAAP TO NON-GAAP CONDENSED CONSOLIDATED STATEMENTS OF
     OPERATIONS
    (unaudited)

    (in thousands, except
     per share data)
                            Three Months Ended        Three Months Ended
                             December 31, 2006         December 31, 2005
                                  Adjust-     Non             Adjust- Non
                       Reported    ments      GAAP  Reported   ments  GAAP
    Revenues           $55,191      $--     $55,191 $51,164     $-- $51,164

    Cost of revenues    17,197     (185)(a)  17,012  16,711      --  16,711

    Gross profit        37,994      185      38,179  34,453      --  34,453

    Operating expenses:

    Sales and marketing 22,121     (737)(a)  21,384  18,570      --  18,570
    General and
     administrative     14,649     (922)(a)  13,727  11,293      --  11,293
    Research and
     development         4,948     (318)(a)   4,630   3,927      --   3,927
    Patients First
     Program and
     settlement costs   14,343  (14,343)         --      --      --      --

    Total operating
     expenses           56,061  (16,320)     39,741  33,790      --  33,790

    Profit (Loss) from
     operations        (18,067)  16,505      (1,562)    663      --     663

    Interest and other
     income, net         1,008       --       1,008     255      --     255
    Provision for income
     taxes                (210)      --        (210)   (390)     --    (390)

    Net profit (loss) $(17,269) $16,505       $(764)   $528     $--    $528

    Net profit (loss)
     per share
      - basic           $(0.27)              $(0.01)  $0.01           $0.01
      - diluted         $(0.27)              $(0.01)  $0.01           $0.01

    Shares used in
     computing net
     profit (loss)
     per share
      - basic           64,252               64,252  62,045          62,045
      - diluted         64,252               64,252  63,247          63,247

    (a) Non cash stock-based compensation included in cost of sales and
        operating expenses.


    ALIGN TECHNOLOGY, INC.
    RECONCILIATION OF GAAP TO NON-GAAP CONDENSED CONSOLIDATED STATEMENTS OF
     OPERATIONS
    (unaudited)

    (in thousands, except
     per share data)
                               Year Ended                Year Ended
                           December 31, 2006          December 31, 2005
                                 Adjust-    Non              Adjust-  Non
                     Reported     ments     GAAP   Reported   ments   GAAP
    Revenues         $206,354      $--    $206,354 $207,125   $--   $207,125

    Cost of revenues   64,775     (700)(a)  64,075   63,784    --     63,784

    Gross profit      141,579      700     142,279  143,341    --    143,341

    Operating expenses:

    Sales and
     marketing         81,993   (2,862)(a)  79,131   80,068    (6)(a) 80,062
    General and
     administrative    64,305   (4,054)(a)  60,251   42,242    (6)(a) 42,236
    Research and
     development       18,474   (1,294)(a)  17,180   18,585    --     18,585
    Patients First
     Program and
     settlement costs  14,343  (14,343)         --       --    --         --

    Total operating
     expenses         179,115  (22,553)    156,562  140,895   (12)   140,883

    Profit (Loss) from
     operations       (37,536)  23,253     (14,283)   2,446    12      2,458

    Interest and other
     income, net        3,401       --       3,401      283    --        283
    Provision for income
     taxes               (828)      --        (828)  (1,316)   --     (1,316)

    Net profit
     (loss)          $(34,963)  $23,253   $(11,710)  $1,413   $12     $1,425

    Net profit (loss)
     per share
      - basic          $(0.55)              $(0.19)   $0.02            $0.02
      - diluted        $(0.55)              $(0.19)   $0.02            $0.02

    Shares used in
     computing net
     profit (loss)
     per share
      - basic          63,246               63,246   61,644           61,644
      - diluted        63,246               63,246   63,152           63,152

    (a)  Non cash stock-based compensation included in cost of sales and
         operating expenses


    ALIGN TECHNOLOGY, INC.
    FACT SHEET

The following information highlights business metrics for Align's fourth quarter of 2006. For prior quarter information, please refer to the Investor Relations website at http://investor.aligntech.com .

    (rounded to the nearest hundred, except in utilization, ASPs and
     percentage amounts)

    Cases Delivered                            4Q 2006
    U.S. Orthodontists - Full                  11,700
    U.S. Orthodontists - Invisalign Express     2,700
    U.S. GP dentists - Full                    15,100
    U.S. GP dentists - Invisalign Express       4,000
    International - Full                        5,400
    International - Invisalign Express            100
    Total Cases Delivered                      39,000


    Patients First Program Information         4Q 2006
    Final number of OC Cases                   33,100
    Cases registered                           30,500
    Completed treatment forms received         19,000
    Cases shipped                               3,600


    Doctors Trained                            4Q 2006        Cumulative Total
    U.S. Orthodontists                             --                8,000
    U.S. GP dentists                            1,300               22,000
    International                                 400               10,800
    Total Doctors Trained                       1,700               40,800


    Submitting Doctors                         4Q 2006
    U.S. Orthodontists                          3,700
    U.S. GP dentists                            9,000
    International                               2,100
    Total Submitting Doctors                   14,800


    Doctors Cases Are Shipped To               4Q 2006
    U.S. Orthodontists                          3,400
    U.S. GP dentists                            7,900
    International                               1,900
    Total Submitting Doctors                   13,200


    Doctors Starting Invisalign Treatment   Since Inception
    U.S. Orthodontists                           6,200
    U.S. GP dentists                            17,200
    International                                5,300
    Total Doctors Starting Invisalign Treatment 28,700


    % of Multiple-Case Doctors              Since Inception
    U.S. Orthodontists                            88%
    U.S. GP dentists                              86%
    International                                 73%
    Total Worldwide                               84%


    Doctor Utilization*                         4Q 2006
    U.S. Orthodontists                             4.2
    U.S. GP dentists                               2.4
    International                                  2.9

    * Doctor Utilization = # of cases / # of doctors cases are shipped to


    Blended ASP incl. Invisalign Express        4Q 2006
    U.S. Orthodontists                           1,215
    U.S. GP dentists                             1,285
    International                                1,725
    Total Worldwide ASP                          1,320


    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.

    Financials (including reconciliation of GAAP to non-GAAP
     financial measures)
    (in millions, except per share amounts and percentages)

                                                   1Q 2007

                                         GAAP     Adjustment     Non-GAAP
    Revenue                           $56.8-59.8                $56.8-59.8
    Gross Margin                      69.3-70.2%  0.3-0.4% (a)  69.6-70.6%
    Operating Expense                 $40.5-42.2  $2.3-2.6 (a)  $38.2-39.6
    Net Profit (Loss)                ($1.2)-$0.1  $2.5-2.8 (a)    $1.3-2.9
    Net Profit (Loss) per Share    ($0.02)-$0.00     $0.04 (a)  $0.02-0.04


                                                  FY 2007

                                     GAAP       Adjustment        Non-GAAP
    Revenue                      $240.0-255.0                  $240.0-255.0
    Gross Margin                   68.7-70.1%        0.50% (a)   69.2-70.6%
    Operating Expense            $167.9-175.5   $11.6-12.5 (a) $156.3-163.0
    Net Profit (Loss)             ($2.7)-$4.5   $12.7-13.7 (a)   $10.0-18.2
    Net Profit (Loss) per Share ($0.04)-$0.07   $0.19-0.20 (a)   $0.15-0.27

    (a) Non cash stock-based compensation included in cost of sales and
        operating expenses


    Business Metrics
                                    1Q 2007           FY 2007
    Channel as a % of Revenue
      U.S. Orthodontists - Full            30%               31%
      U.S. GP Dentists - Full              41%               39%
      International                        15%               14%
      Invisalign Express                    9%               12%
    Case Shipments                  41.6-43.5K      182.7-190.0K
    Blended ASP, excl Express    $1,425-$1,440     $1,410-$1,425
    Blended ASP, incl Express    $1,305-$1,315     $1,260-$1,280
    Cash                                             $54.0-58.0M
    DSO                                                 ~55 days
    Capex                                            $12.0-14.0M
    Depreciation & Amortization                      $13.0-14.0M


SOURCE Align Technology, Inc.

investors, Barbara Domingo of Align Technology, Inc., +1-408-470-1000, or
investorinfo@aligntech.com; or media, Shannon Henderson of Ethos Communications,
Inc., +1-678-540-9222, or align@ethoscommunication.com, for Align
http://www.invisalign.com

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