Exchange: LSE | Sector: Healthcare | Industry: Medical Equipment Services
Q4 2024
Published: Feb 28, 2025
Earnings Highlights
Revenue of $995.22M up 4% year-over-year
EPS of $1.39 decreased by 15.2% from previous year
Gross margin of 70.0%
Net income of 103.81M
""Our commitment to advancing orthodontic care continues to fuel our strong results, even while we navigate a complex cost environment."" - Joseph Hogan, CEO
Align Technology Inc reported a strong revenue of $995.2 million in Q4 2024, marking a year-over-year growth of 4.02% and a quarter-over-quarter increase of 1.77%. Despite this robust top-line growth, the company faced challenges in profitability, with net income dropping 16.29% year-over-year to $103.8 million. Cost pressures led to a decline in operating income, down 15.97% YoY. Management highlighted the ongoing investment in innovation and marketing expenditures, which they believe will drive long-term growth. CEO Joseph Hogan emphasized the strategic focus on expanding their product offerings and market share, noting, 'Our commitment to advancing orthodontic care continues to fuel our strong results, even while we navigate a complex cost environment.'
Key Performance Indicators
Revenue
995.22M
QoQ: 1.77% | YoY:4.02%
Gross Profit
696.94M
70.03% margin
QoQ: 2.22% | YoY:3.56%
Operating Income
144.15M
QoQ: -11.18% | YoY:-15.97%
Net Income
103.81M
QoQ: -10.48% | YoY:-16.29%
EPS
1.39
QoQ: -10.32% | YoY:-15.24%
Revenue Trend
Margin Analysis
Key Insights
**Total Revenue**: $995.2 million, up 1.77% QoQ and 4.02% YoY
**Gross Profit**: $696.9 million, with a gross profit margin of 70.03%
**Operating Income**: $144.1 million, a decrease of 15.97% YoY
**Net Income**: $103.8 million, down 16.29% YoY
**EPS**: $1.39, a decline of 15.24% compared to Q4 2023.
Financial Highlights
### Revenue Analysis
- Total Revenue: $995.2 million, up 1.77% QoQ and 4.02% YoY
- Gross Profit: $696.9 million, with a gross profit margin of 70.03%
### Profitability Metrics
- Operating Income: $144.1 million, a decrease of 15.97% YoY
- Net Income: $103.8 million, down 16.29% YoY
- EPS: $1.39, a decline of 15.24% compared to Q4 2023.
### Balance Sheet Strength
- Total Assets: $6.21 billion
- Total Liabilities: $2.36 billion
- Cash and Cash Equivalents: $1.04 billion
- Debt (Total Debt): $119.3 million, indicating a low debt-to-equity ratio of 0.0310, presenting a strong balance sheet position.
### Cash Flow
- Operating Cash Flow: $286.1 million
- Free Cash Flow: $263.1 million
The financial metrics indicate a solid performance, yet cautious management of costs and investments is crucial for sustaining profitability in the upcoming quarters.
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
995.22M
4.02%
1.77%
Gross Profit
696.94M
3.56%
2.22%
Operating Income
144.15M
-15.97%
-11.18%
Net Income
103.81M
-16.29%
-10.48%
EPS
1.39
-15.24%
-10.32%
Key Financial Ratios
currentRatio
1.22
grossProfitMargin
70.8%
operatingProfitMargin
17.8%
netProfitMargin
10.4%
returnOnAssets
1.67%
returnOnEquity
2.69%
debtEquityRatio
0.03
operatingCashFlowPerShare
$3.84
freeCashFlowPerShare
$3.54
priceToBookRatio
4
priceEarningsRatio
37.15
Net Income vs. Revenue
Expense Breakdown
Management Commentary
### Management Strategy
- Innovation Focus: 'Our commitment to advancing orthodontic care continues to fuel our strong results, even while we navigate a complex cost environment.' - CEO Joseph Hogan
- Market Expansion: Comments on growing market share outlined efforts in enhancing product offerings.
### Operational Efficiency
- Management acknowledged increased operating expenses due to investments in R&D and marketing: 'We believe these investments are critical to securing our competitive advantage long term.'
"Our commitment to advancing orthodontic care continues to fuel our strong results, even while we navigate a complex cost environment."
â Joseph Hogan, CEO
"We believe these investments are critical to securing our competitive advantage long term."
â Joseph Hogan, CEO
Forward Guidance
Looking ahead, Align anticipates continued revenue growth in 2025, driven by expanding product lines and geographical markets. Management has set a target for revenue growth between 5-10% for the upcoming year as they navigate ongoing cost challenges and global economic conditions. Key factors to monitor include demand trends in orthodontics and competitive responses from other players in the medical equipment sector.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
0HCK.L Focus
70.03%
17.80%
2.69%
37.15%
0J6Z.L
0.00%
-1.86%
-4.23%
-11.02%
0R0H.L
39.20%
19.90%
3.69%
27.09%
0HR2.L
82.50%
62.10%
3.38%
23.30%
0JT5.L
47.80%
29.40%
11.90%
33.95%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
Align Technology Inc continues to exhibit a strong growth trajectory despite recent profitability challenges. The company's strategic investments in innovation and marketing are likely to bolster its competitive positioning in the healthcare sector. Investors should watch for improvements in cost management and operational efficiency as critical factors influencing future earnings performance.
Key Investment Factors
Growth Potential
Align's strong brand and innovative products position it to capture significant growth in the orthodontic market, especially as global awareness of its product benefits increases.
Profitability Risk
Pressure from rising operating costs and increased competition in the dental technology sector could impact profitability moving forward.
Financial Position
Align maintains a strong financial position with a low debt ratio, ample cash reserves, and positive cash flow metrics, providing flexibility to invest in growth opportunities.
SWOT Analysis
Strengths
Strong brand reputation in orthodontic solutions
Robust revenue growth and high gross profit margins