Invisalign maker Align falls short in China; CEO says he’s optimistic

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Joseph M. Hogan is CEO of Align Technology

Jin Lee | Bloomberg | Getty Images

Align Technology CEO Joe Hogan on Thursday blamed business in China for the company’s shortfall in the second quarter, but he predicted that output will improve.

The maker of Invisalign clear aligners saw better international growth elsewhere — 39% growth in Europe, for example — but the company greatly missed expectations in China, Hogan said in a “Mad Money” interview.

“We were expecting about 70% growth out of china and we achieved about 20-30%,” Hogan said. “It’s just basically a consumer backlash right now, we feel, from a standpoint of making decisions on going ahead with aligners or not.”

Align sent off 377,100 Invisalign cases in the quarter, 5,800 short of expectations, and the company’s stock tanked 27% during the trading day Thursday. Shareholders took home $1.33 per share versus an estimated $1.51, and the company ballparked third-quarter earnings between $1.09 and $1.16. Analysts predicted about $1.45 a share for the third quarter.

Cramer noted that Estee Lauder, the cosmetics business with a large presence in China, saw strong results in the region during the May quarter. Management said it expected gradual moderation of growth in China, but sales there contributed to its performance.

Hogan shrugged off competition worries and expects that sales in the teen demographic will pick up in both China and North America this summer.

“That demographic’s a little different. We think it’s less price-selective because these kids are slated, or teens are slated, to have these treatments and the parents want to meet that time frame,” Hogan said.

Align expects to ship between 370,000 and 380,000 units in the third quarter, according to FactSet. Analyst consensus is 377,000.

“I’m still optimistic about the market in general and what’s in front of us from a growth standpoint.”

WATCH: Cramer talks about the China economy with Align CEO Joe Hogan

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