SAN JOSE, CA -- (Marketwired) -- 01/31/17 -- Align Technology, Inc. (NASDAQ: ALGN)

• Record 2016 revenues of $1.1 billion, up 27.7% year-over-year, and diluted EPS of $2.33
• 2016 Invisalign case shipments of 708.5 thousand cases, up 21.5% year-over-year
• Q4 revenues up 27.3% year-over-year to $293.2 million
• Q4 Clear Aligner** revenues up 17.5% and Scanner revenues up 156.8% year-over-year
• Q4 Invisalign case shipments up 18.5% year-over-year to 190.1 thousand cases, international Invisalign case shipments up 25.0% year-over-year
• Q4 diluted EPS $0.59, down $0.01 year-over-year

Align Technology, Inc. (NASDAQ: ALGN) today reported financial results for the fourth quarter and year ended December 31, 2016. Invisalign case shipments in the fourth quarter of 2016 (Q4'16) were 190.1 thousand, a 18.5% increase year-over-year. For Q4'16, revenues were $293.2 million, a 27.3% increase year-over-year, and net profit was $47.6 million, or $0.59 per diluted share, down $0.01 per diluted share compared to the same period in the prior year. Q4'16 EPS was unfavorably impacted by a stronger U.S. dollar, which amounted to approximately $0.08 per diluted share due to net foreign exchange losses related to the revaluation of certain balance sheet accounts.

For 2016, Invisalign case shipments were 708.5 thousand cases and iTero scanner shipments were 3,970 units, an increase of 21.5% and 229.6%, respectively. For 2016, revenues were $1.1 billion, a 27.7% increase year-over-year and net profit was $189.7 million, or $2.33 per diluted share, up $0.56 per diluted share compared to the prior year.

Commenting on Align's Q4 and 2016 results, Align Technology President and CEO Joe Hogan said, "Q4 was another record quarter for Align, reflecting continued strong growth across all geographies and customer channels compared to the prior quarter last year. These results helped us to exceed $1 billion in annual revenue for the first time in our history. In addition, more than 700 thousand patients started orthodontic treatment with Invisalign clear aligners in 2016, helping us to surpass our 4 millionth Invisalign patient. We also saw strong adoption of our new iTero Element scanner this year, which more than tripled our scanner shipments over the prior year."

GAAP Summary Financial Comparisons

Fourth Quarter Fiscal 2016

			Q4'16			Q3'16			Q4'15			Q/Q Change				Y/Y Change
Invisalign Case Shipments*				190,055			177,755			160,400			+6.9	%			+18.5	%
Net Revenues			$	293.2M		$	278.6M		$	230.3M			+5.2	%			+27.3	%
	Clear Aligner**		$	251.5M		$	243.7M		$	214.0M			+3.2	%			+17.5	%
	Scanner & Services		$	41.7M		$	34.9M		$	16.2M			+19.3	%			+156.8	%
Net Profit			$	47.6M		$	51.4M		$	48.9M			(7.3	)%			(2.6	)%
Diluted EPS			$	0.59		$	0.63		$	0.60		$	(0.04	)		$	(0.01	)

Fiscal 2016

			2016			2015			Y/Y Change
Invisalign Case Shipments*				708,500			583,235			+21.5	%
Net Revenues			$	1,079.9M		$	845.5M			+27.7	%
	Clear Aligner**		$	958.3M		$	800.2M			+19.8	%
	Scanner & Services		$	121.5M		$	45.3M			+168.3	%
Net Profit			$	189.7M		$	144.0M			+31.7	%
Diluted EPS			$	2.33		$	1.77		$	0.56
Note: Changes and percentages are based on actual values and may effect totals due to rounding
* Invisalign Shipment figures exclude SmileDirectClub aligners
** Clear aligner revenue includes revenues from Invisalign clear aligners and SmileDirectClub aligners

As of December 31, 2016, Align had $700.0 million in cash, cash equivalents and marketable securities compared to $678.7 million as of December 31, 2015. We repurchased approximately 0.4 million shares of stock for $38.0 million in Q4'16 under the April 2014 Repurchase Program. Subsequent to year-end, the Company purchased the remaining shares under this plan for $3.8 million completing the Align 2014 Repurchase Plan. Align has $300.0 million available for repurchase under its 2016 Repurchase Plan announced on April 28, 2016.

2016 Business Highlights

The following list highlights Align's key announcements over the past year:

• Launched iTero Element 1.4 software and Invisalign Outcome Simulator 4.0 application: Align announced the iTero Element 1.4 new software upgrade which includes color scanning, restorative pre-treatment scanning and optimized orthodontic scanning. In addition, the iTero scanners include the enhanced Invisalign Outcome Simulator 4.0 application now with Invisalign 3D Progress Tracking and Patient Simulation Sharing.
• Launched Invisalign G7: Align announced Invisalign G7, a new set of features designed to deliver greater control of tooth movements and improved treatment outcomes. Invisalign G7 builds on earlier Invisalign G-series releases with new features to fine-tune certain tooth movements and deliver treatment outcome quality that Invisalign providers expect, particularly with teenage patients.
• Weekly Aligner Wear Recommendation: Align announced one-week aligner wear recommendation for all Invisalign Full, Teen and Assist products instead of two-week aligner wear for each stage of Invisalign treatment. Continued Invisalign product innovation including "G-Series" features, SmartTrack aligner material, and clinically proven treatment predictability, allowed the company to confidently recommend one-week wear.
• Launched ClinCheck Pro 5.0: Align announced ClinCheck Pro 5.0, the next generation Invisalign treatment software, with ability to view side-by-side treatment plans, a more realistic 3D visual model, and a new configurable toolbar for even greater flexibility.
• 4 Million Patients Milestone: Align announced that 4 million patients started treatment with Invisalign clear aligners. This is a significant accomplishment for the company and the 100,000 Invisalign-trained doctors around the world, demonstrating increased global acceptance of Invisalign treatment as a preferred choice for straightening teeth.
• SmileDirectClub Supplier Agreement: Align announced a supply agreement with SmileDirectClub to manufacture non-Invisalign clear aligners for SmileDirectClub's doctor-directed, at-home program for affordable, cosmetic teeth straightening. SmileDirectClub aligners will include up to 20 stages without attachments or interproximal reduction (IPR), and will be manufactured by Align per SmileDirectClub's specifications for minor tooth movement.
• Research Awards Program for 2016 and 2017: Align announced the Research Awards Program for 2017. This is an ongoing annually funded program established in 2010 and designed to promote clinical and scientific dental research in universities across the globe. Align also announced that fourteen research awards totaling $310,000 were awarded to four universities in North America and eight International universities under its 2016 program.
• 3Shape Trios Scanner Interoperability: Align announced that 3Shape's TRIOS® Standard, TRIOS Color and TRIOS 3 scanners were qualified in Q4'16 for Invisalign case submission. Align and 3Shape also announced a collaborative agreement to enhance the existing STL export workflow with iTero® scanners and laboratory partners using 3Shape Dental System™ Software which will enable improved consistency for customers using the workflow.
• Invisalign Commercially Available in India: Align announced commercial availability of the Invisalign system in India in February 2016. Align is offering a comprehensive range of products including Invisalign Full, Invisalign Teen, Invisalign Lite clear aligners, and Vivera Retainers. Align began training doctors in Delhi, Mumbai, Pune, Chandigarh, Chennai, and expanded into Bangalore, Ahmedabad, Hyderabad, Calcutta, and Cochin over the year. Align also launched a consumer marketing campaign.
• ERP System Implementation: Align implemented a new ERP system in July, which provides a foundation that enables new capabilities, improves speed of execution, and will be used to improve Align's customers' experience.

Q1 2017 Business Outlook

For the first quarter of 2017 (Q1'17), Align provides the following guidance:

• Invisalign case shipments in the range of 200 thousand to 203 thousand, up approximately 22% to 24% over the same period a year ago.
• Net revenues in the range of $295 million to $298 million.
• Diluted EPS in the range of $0.64 to $0.67, which includes $0.14 of excess tax benefits.

Regarding our tax rate: At the start of 2017, we adopted accounting standards update entitled Improvements to Employee Share-Based Payment Accounting. Under this new standard, excess tax benefits and deficiencies associated with employee share-based payments are no longer recognized as additional paid-in capital on the balance sheet but instead recognized directly to income tax expense or benefit in the income statement for the reporting period in which they occur. Under this new standard, we expect our Q1 effective tax rate to be approximately 1% to 2%, which includes $12 million in excess tax benefits.

Align Web Cast and Conference Call

Align will host a conference call today, January 31, 2017 at 4:30 p.m. ET, 1:30 p.m. PT, to review its fourth quarter and year end 2016 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 13652166 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 February 14, 2017.

About Align Technology, Inc.

Align Technology is the leader in modern Clear Aligner orthodontics that designs, manufactures and markets the Invisalign® system, which provides dental professionals with a range of treatment options for adults and teenagers. Align also offers the iTero 3D digital scanning system and services for orthodontic and restorative dentistry. Align was founded in March 1997 and received FDA clearance to market the Invisalign system in 1998. 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 the iTero 3D 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 first 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, 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, 2015, which was filed with the Securities and Exchange Commission (SEC) on February 25, 2016, and its Quarterly Report on Form 10-Q for the quarter ended September 30, 2016, which was filed with the SEC on November 8, 2016. 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						Year Ended
				December 31						December 31
				2016			2015			2016			2015
Net revenues				$	293,203		$	230,276		$	1,079,874		$	845,486
Cost of net revenues					72,954			57,466			264,580			205,376
Gross profit					220,249			172,810			815,294			640,110
Operating expenses:
	Selling, general and administrative				130,268			99,582			490,653			390,239
	Research and development				21,609			13,889			75,720			61,237
		Total operating expenses			151,877			113,471			566,373			451,476
Income from operations					68,372			59,339			248,921			188,634
Interest and other income (expense), net					(7,516)			313			(6,355)			(2,533)
Net income before provision for income taxes and equity in losses of investee					60,856			59,652			242,566			186,101
Provision for income taxes					12,028			10,775			51,200			42,081
Equity in losses of investee, net of tax					1,207			-			1,684			-
Net income				$	47,621		$	48,877		$	189,682		$	144,020
Net income per share:
	Basic			$	0.60		$	0.61		$	2.38		$	1.80
	Diluted			$	0.59		$	0.60		$	2.33		$	1.77
Shares used in computing net income per share:
	Basic				79,667			79,481			79,856			79,998
	Diluted				81,248			81,051			81,484			81,521

ALIGN TECHNOLOGY, INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
				December 31			December 31,
				2016			2015
ASSETS
Current assets:
	Cash and cash equivalents			$	389,275		$	167,714
	Marketable securities, short-term				250,981			359,581
	Accounts receivable, net				247,415			158,550
	Inventories				27,131			19,465
	Prepaid expenses and other current assets				38,176			26,700
		Total current assets			952,978			732,010
Marketable securities, long-term					59,783			151,370
Property, plant and equipment, net					175,167			136,473
Equity method investments					45,061			-
Goodwill and intangible assets, net					81,998			79,162
Deferred tax assets					67,844			51,416
Other assets					13,320			8,202
		Total assets		$	1,396,151		$	1,158,633
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
	Accounts payable			$	28,596		$	34,354
	Accrued liabilities				134,332			107,765
	Deferred revenues				191,407			129,553
		Total current liabilities			354,335			271,672
Income tax payable					45,133			37,512
Other long term liabilities					1,294			1,523
		Total liabilities			400,762			310,707
Total stockholders' equity					995,389			847,926
		Total liabilities and stockholders' equity		$	1,396,151		$	1,158,633

ALIGN TECHNOLOGY, INC.

INVISALIGN BUSINESS METRICS*

				Q4			Fiscal			Q1			Q2			Q3			Q4			Fiscal
				2015			2015			2016			2016			2016			2016			2016
Invisalign Average Selling Price (ASP):
	Worldwide ASP			$	1,250		$	1,285		$	1,255		$	1,285		$	1,285		$	1,230		$	1,265
	International ASP			$	1,315		$	1,355		$	1,315		$	1,345		$	1,365		$	1,315		$	1,335
Invisalign Cases Shipped by Geography:
	North America				106,390			398,390			110,500			114,855			115,900			122,555			463,810
	International				54,010			184,845			53,195			62,140			61,855			67,500			244,690
		Total Cases Shipped			160,400			583,235			163,695			176,995			177,755			190,055			708,500
		YoY% growth			26.4%			22.0%			25.2%			22.4%			20.5%			18.5%			21.5%
		QoQ% growth			8.8%			2.1%			8.1%			0.4%			6.9%
Number of Invisalign Doctors Cases Were Shipped To:
	North America				21,835			31,710			22,355			22,575			22,570			23,265			34,065
	International				10,865			16,460			11,280			12,485			12,720			13,635			20,415
		Total Doctors Cases Shipped To			32,700			48,170			33,635			35,060			35,290			36,900			54,480
Invisalign Doctor Utilization Rates*:
	North America				4.9			12.6			4.9			5.1			5.1			5.3			13.6
		North American Orthodontists			9.9			31.8			10.4			10.7			11.1			11.3			36.6
		North American GP Dentists			3.1			7.4			3.0			3.1			3.0			3.2			7.6
	International				5.0			11.2			4.7			5.0			4.9			5.0			12.0
		Total Utilization Rates			4.9			12.1			4.9			5.1			5.0			5.2			13.0
		* # of cases shipped/# of doctors to whom cases were shipped
Number of Invisalign Doctors Trained:
	North America				1,270			4,320			875			1,125			1,300			1,420			4,720
	International				1,400			5,475			1,605			1,760			1,315			2,280			6,960
		Total Doctors Trained Worldwide			2,670			9,795			2,480			2,885			2,615			3,700			11,680
		Total to Date Worldwide			103,790			103,790			106,270			109,155			111,770			115,470			115,470

Note: Historical public data may differ due to rounding. Additionally, rounding may effect totals.

*Invisalign business metrics exclude SmileDirectClub aligners.

ALIGN TECHNOLOGY, INC.

STOCK-BASED COMPENSATION

(in thousands)

				Q4			Fiscal			Q1			Q2			Q3			Q4			Fiscal
				2015			2015			2016			2016			2016			2016			2016
Stock-based Compensation (SBC)
	SBC included in Gross Profit			$	1,008		$	3,942		$	961		$	932		$	995		$	1,078		$	3,966
	SBC included in Operating Expenses				12,799			49,006			11,563			12,767			12,716			13,136			50,182
		Total SBC Expense		$	13,807		$	52,948		$	12,524		$	13,699		$	13,711		$	14,214		$	54,148

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)
		Q1'17 Guidance
		GAAP
Net Revenues		$295.0 - $298.0
Gross Margin		74.2% - 74.5%
Operating Expenses		$162.5 - $164.5
Operating Margin		19.1% - 19.3%
Net Income per Diluted Share		$0.64 - $0.67	(1)
Business Metrics:		Q1'17
Case Shipments		200.0K - 203.0K
Capital Expenditure		$70M - $75M
Depreciation & Amortization		$8.0M - $8.5M
Diluted Shares Outstanding		81.3M	(2)
Stock Based Compensation Expense		$14.6M
Tax Rate		1% - 2%	(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
Shirley Stacy
Align Technology, Inc.
(408) 470-1150
Email contact


Press Contact
Shannon Mangum Henderson
Ethos Communication, Inc.
(678) 261-7803
Email contact

Source: Align Technology

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