Recently, Align Technology (ALGN) saw an early termination of the waiting period under the HSR Act, with regard to its proposed acquisition of Cadent Holdings. The transaction, subject to clearance of other conditions, is expected to close in late April or early May 2011.
Earlier, in March 2011, Align had decided to acquire privately-held Cadent Holdings, a provider of 3D digital scanning solutions for orthodontics and dentistry, for $ 190 million in cash. The transaction will dilute fiscal 2011 EPS on a GAAP basis, while it will be accretive to the adjusted EPS in fiscal 2012.
With the proposed acquisition of Cadent, Align will be better positioned to promote the adoption of Invisalign as the intra-oral scanners become a predominant dental practice in the next 5 years. At present, doctors submit PVS impressions of the patient's dentition to Align to start a new Invisalign case.
However, through intra-oral scanning, doctors will be able to submit fully digital intra-oral scans of the dentition instead of a physical impression, an option that is more user-friendly for the doctors as well as more comfortable for patients. According to iData Research, the growth rate for intra-oral scanners will exceed 20% between 2010 and 2015.
In January 2011 Align entered into an agreement with Cadent to jointly develop software applications for Cadent scanners which are to be used in Invisalign treatment. The new applications will optimize case assessment and better plan out the Invisalign treatment.
A series of applications will be developed over the next couple of years, and the first application is expected to be available by the end of 2011. The company is currently conducting final beta tests to validate the Cadent systems, and expects to announce interoperability with Cadent scanners in the second quarter of 2011.
Align has undertaken several strategies to further penetrate the malocclusion market. However, Align is witnessing pressure on its margins due to higher operating expenses resulting from its continuous strategic investments in the international market, development of portfolio, and costs associated with the previously announced Cadent relationship. This trend is likely to continue in 2011. Moreover, the competitive landscape is quite tough with the presence of players such as Danaher Corporation (DHR) and Dentsply International (XRAY).
ALIGN TECH INC (ALGN): Free Stock Analysis Report
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DENTSPLY INTL (XRAY): Free Stock Analysis Report
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