Align Technology, Inc. (ALGN) Accused of Failing to Disclose Negative Impact of its Invisalign Promotions

According to the complaint against the company's officers and directors for alleged violations of the Securities Exchange Act of 1934 between April 25, 2018 and October 24, 2018, on July 25, 2018, Align's President and CEO Joe Hogan stated that the company's 37.5% year-over-year revenue growth was due to momentum from Invisalign doctors and increased adoption of Invisalign treatment for teenage patients. Hogan further touted that Invisalign's customer base was over 50,000 for the first time and included more than 5,000 Invisalign-trained doctors. However, Align's higher discounts to promote Invisalign were negatively impacting the company's revenue. On October 24, 2018, Align reported that its new Q3 promotion negatively reduced Invisalign's average sales price by $85—wiping out all increases in Invisalign's average sales price that the company touted throughout the year. Align further revealed that its Chief Marketing Officer would reduce his responsibilities and transition to a part-time position. On this news, Align's stock fell over 20% on October 25, 2018, and declined even further to close at $217.94 per share on October 29, 2018, and has yet to recover.

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