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Align Technology Announces Fourth Quarter And Fiscal 2010 Results

Liquidity and Capital Resources

As of December 31, 2010, Align Technology had $312.4 million in cash, cash equivalents, and marketable securities compared to $186.5 million as of December 31, 2009.

Key Business Metrics

The following table highlights business metrics for Align Technology's fourth quarter of 2010. Additional historical information is available on the Company's website at .
Revenue by Channel ($M): Q4 10 % of Total Q4 10/Q3 10
    Revenue % Change
North American Orthodontists $28.9 31.1% (7.2%)
North American GP Dentists $33.8 36.4% (8.1%)
International $24.8 26.7% 6.9%
Non-case Revenue* $5.4 5.8% 12.0%
Total Revenue $92.9 100% (3.2%)
Revenue by Product ($M): Q4 10 % of Total Q4 10/Q3 10
    Revenue % Change
Invisalign Full $64.9 69.8% (2.6%)
Invisalign Express/Lite $8.3 9.0% (6.4%)
Invisalign Teen $10.6 11.4% (6.2%)
Invisalign Assist $3.7 4.0% (13.7%)
Non-case Revenue* $5.4 5.8% 12.0%
Total Revenue $92.9 100% (3.2%)
*includes training, ancillary products, and retainers
Cases Shipped by Channel: Q4 10 % of Total Q4 10/Q3 10
    Cases % Change
North American Orthodontists 21,920 34.5% (5.3%)
North American GP Dentists 25,275 39.8% (5.8%)
International 16,295 25.7% 0.3%
Total Cases Shipped 63,490 100% (4.1%)
Cases Shipped by Product: Q4 10 % of Total Q4 10/Q3 10
    Cases % Change
Invisalign Full 43,870 69.1% (2.4%)
Invisalign Express/Lite 8,875 14.0% (9.1%)
Invisalign Teen 6,940 10.9% (8.6%)
Invisalign Assist 3,805 6.0% (3.5%)
Total Cases Shipped 63,490 100% (4.1%)
Average Selling Price (ASP), as billed: Q4 10    
Total Worldwide Blended ASP $1,400    
International ASP $1,525    
Number of Doctors Cases were Shipped to: Q4 10    
North American Orthodontists 3,940    
North American GP Dentists 9,600    
International 4,180    
Total Doctors Cases were Shipped to Worldwide 17,720    
Doctor Utilization Rates*: Q4 10 Q3 10 Q4 09
North American Orthodontists 5.6 5.8 5.0
North American GP Dentists 2.6 2.7 2.5
International 3.9 3.8 3.8
Total Utilization Rate 3.6 3.6 3.3
* Utilization = # of cases shipped/# of doctors to whom cases were shipped
Number of Doctors Trained Worldwide: Q4 10 Cumulative  
North American Orthodontists 75 9,270  
North American GP Dentists 665 37,120  
International 495 17,435  
Total Doctors Trained Worldwide 1,235 63,825  
Total Invisalign Patients (cases shipped): Q4 10 Cumulative  
Number of Patients Treated or in Treatment (cases) 63,490 1,425,520  

2010 Business Highlights Align Technology continues to make progress with strategic initiatives including technology innovation, consumer demand creation, enhancing the customer experience, and international expansion. The following business highlights summarize the company's accomplishments related to these initiatives:
  • In January, Align announced that it added an international distributor for Europe, the Middle East and Africa (EMEA). In the two years since the Company established international distributors for Asia Pacific and Latin America, growth has accelerated in those regions and the addition of a distributor for EMEA will give the Company a complete footprint around the world so that its partners can help develop smaller, emerging markets while the Company continues its focus on larger, established markets.  
  • In July, Richard Twomey joined Align as vice president of international to lead the Company's strategic direction and operations for Europe, Asia Pacific and Latin America. Mr. Twomey's experience and knowledge with large medtech businesses in Europe and the Asia Pacific and Latin America regions give him the foundation on which to continue building the Company's strategy to drive European growth and International expansion. Mr. Twomey was previously in senior management positions within divisions of Johnson & Johnson, having served most recently as president of DePuy, International Ltd., part of the DePuy Orthopaedics, a global leader in the provision of surgical implants for orthopaedic applications, as well as diversified interests in spinal, sports medicine and neurology sectors.  
  • In August, Align introduced Invisalign G3, the most significant collection of new features and innovations in the Company's history. Invisalign G3 is engineered to deliver even better clinical results, with new aligner and software features that make it easier to use Invisalign with Class II and Class III patients, new SmartForce(TM) features designed for increased predictability of certain tooth movements, and simpler, more intuitive software to streamline treatment planning and review. Invisalign G3 is currently available in North America and will be launched internationally in the second quarter of 2011.  
  • In September, Align continued to focus on programs that increase awareness and educate prospective teen patients and their parents. Following the success of major sponsored events during the summer such as the Teen Choice awards and Journeyz Backyard BBQ Tour, a nationwide action sports tour, the Company launched a new teen focused commercial. The goal of the "Twins" TV commercial is to raise moms' awareness that there is an alternative to metal braces, and prompts parents and teens to learn more.  
  • In October, Align announced that it had received regulatory approval from the Chinese State Food and Drug Administration (SFDA) to market and sell the Invisalign system as a Class II medical device for the treatment of malocclusion. The Company also received its License of Medical Device Operation Enterprise (Enterprise License) from the Shanghai Food and Drug Administration, which allows the company to distribute Invisalign in China. The Company expects to begin commercial availability of Invisalign in the second half of 2011.  
  • Most recently, on January 10, 2011, Align announced an agreement to jointly develop software applications that will run on Cadent iTero™ and iOC™ scanners for use in Invisalign treatment. As part of the initiative to improve the Invisalign customer experience through innovation, the new applications will optimize case assessment and planning for Invisalign treatment, and bring valuable digital tools chair-side for Invisalign providers who use Cadent scanners. In addition, the Company announced final beta tests with Cadent to validate their systems for use with Invisalign and expects to announce interoperability in the second quarter of 2011.

Q1 Fiscal 2011 Business Outlook

For the first quarter of fiscal 2011 (Q1 11), Align Technology expects net revenues to be in a range of $99.0 million to $102.5 million. GAAP earnings per diluted share for Q1 11 is expected to be in a range of $0.15 to $0.17. A more comprehensive business outlook is available following the financial tables of this release.

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