Arbitrator Requires SDC Financial, LLC to Pay Align an Additional $45.5 Million for a Total Award of $99.7 Million
15 March 2021 - 11:30PM
Align Technology, Inc. (Nasdaq: ALGN) (“Align”) today announced the
favorable outcome of a binding arbitration for the claims it
asserted against SDC Financial, LLC, SmileDirectClub, LLC,
David Katzman, David Katzman Revocable Trust, and David Katzman
2009 Family Trust (“SDC Entities”) relating to the valuation of
Align’s membership interest in SDC Financial LLC (“SDC”).
“We are pleased with the arbitrator’s March 12,
2021 final award in favor of Align, and against SDC, directing SDC
to pay Align an additional $45.5 million for a total of $99.7
million,” said John Morici, Align Technology CFO. “The first
quarter continues to be very strong with increasing momentum for
Invisalign Clear Aligners and iTero Systems and Services across
products and customer channels worldwide, reflecting the strength
of our doctor-directed model and the Align Digital Platform
- which provides technology, innovation,
digital tools and services to over 200,000 orthodontists, dentists
and labs around the world.”
As previously disclosed, on March 4, 2019 an
arbitrator ordered Align to tender its SDC Financial, LLC
membership interest for a purchase price equal to the capital
account balance as of October 31, 2017 to be determined in
accordance with Align’s operating agreements with the SDC
entities. On July 3, 2019, Align filed a confidential demand
for arbitration challenging the propriety of the SDC entities’
determination of the capital account balance as of October 31,
2017.
In the final award, the arbitrator found in
favor of Align and against SDC and determined the value of the
capital account balance to be $97.6 million, offset by the $54.2
million paid over the last two years to Align for the capital
account. The arbitrator directed SDC to pay the difference of $43.4
million plus interest of $2.1 million, and additional interest of
approximately $3,000 per day beginning on March 13, 2021 until
payment is made in full or a different rate applies by operation of
law. Align has requested the American Arbitration Association to
identify March 31, 2021 as the deadline for SDC’s payment of the
$45.5 million, consistent with the schedule prescribed by the
operating agreements, which requires SDC’s payment for redemption
of Align’s membership interests to be made in full on or before
March 31, 2021. While Align believes that based on the operating
agreements SDC should make the $45.5 million payment on or before
March 31, 2021, it is unclear whether SDC will do so in the absence
of a stated deadline in the final award.
Forward-Looking Statements
This press release contains forward-looking
statements that involve a number of risks and uncertainties. Words
such as “believes,” “anticipates,” “plans,” “intends,” “expects,”
“seeks,” “estimates,” and similar expressions are intended to
identify forward-looking statements, but other statements that are
not historical facts may also be deemed to be forward-looking
statements. Important factors that could cause actual results to
differ materially from those indicated by forward-looking
statements include risks and uncertainties relating to: the award
payable by SDC, its amount, timing and anticipated impact on
Align’s financial results, the business strategy and markets for
Align’s products and Align’s beliefs and expectations for the
quarter, including business strength, momentum, and breadth across
regions, products and channels. Forward-looking statements relating
to expectations about future events or results are based upon
information available to Align as of the date hereof. Readers are
cautioned that these forward-looking statements are only
predictions and are subject to risks, uncertainties and assumptions
that are difficult to predict. As a result, actual results may
differ materially and adversely from those expressed in any
forward-looking statement.
Factors that might cause such a difference
include, but are not limited to:
- the impact of the COVID-19 pandemic
on the health and safety of our employees, customers, patients, and
our suppliers, as well as the physical and economic impacts of the
various recommendations, orders, and protocols issued by local and
national governmental agencies in light of continual evolution of
the pandemic, including any periodic reimplementation of
preventative measures in various global locations;
- difficulties predicting customer
and consumer purchasing behavior and changes in consumer spending
habits as a result of, among other things, prevailing economic
conditions, levels of employment, salaries and wages, and consumer
confidence, particularly in light of the pandemic;
- unexpected or rapid changes in the
growth or decline of our domestic and/or international
markets;
- increasing competition from
existing and new competitors;
- rapidly evolving and groundbreaking
advances that fundamentally alter the dental industry or the way
new and existing customers market and provide products and services
to consumers;
- the ability to protect our
intellectual property rights;
- continued compliance with
regulatory requirements;
- declines in, or the slowing of the
growth of, sales of our intra-oral scanners domestically and/or
internationally and the impact either would have on the adoption of
Invisalign products;
- the willingness and ability of our
customers to maintain and/or increase product utilization in
sufficient numbers;
- the possibility that the
development and release of new products or enhancements to existing
products do not proceed in accordance with the anticipated timeline
or may themselves contain bugs or errors requiring remediation and
that the market for the sale of these new or enhanced products may
not develop as expected;
- a tougher consumer demand
environment in China generally, especially for manufacturers and
service providers whose headquarters or primarily operations are
not based in China;
- the risks relating to our ability
to sustain or increase profitability or revenue growth in future
periods (or minimize declines) while controlling expenses;
- the impact of excess or constrained
capacity at our manufacturing and treat operations facilities and
pressure on our internal systems and personnel;
- the compromise of customer and/or
patient data for any reason;
- the timing of case submissions from
our doctors within a quarter as well as an increased manufacturing
costs per case;
- foreign operational, political and
other risks relating to our international manufacturing operations;
and
- the loss of key personnel or work
stoppages.
Risks relating to the matters discussed above
are detailed are in addition to other risks detailed from time to
time by Align in its periodic reports filed with the Securities and
Exchange Commission (“SEC”), including, but not limited to, its
Annual Report on Form 10-K for the year ended December 31, 2020,
which was filed with the SEC on February 26, 2021. Align undertakes
no obligation to revise or update publicly any forward-looking
statements for any reason.
About Align Technology,
Inc.Align Technology designs, manufactures and offers
the Invisalign® system, the most advanced clear aligner system in
the world, iTero® intraoral scanners and services, and exocad
CAD/CAM software. These technology building blocks enable enhanced
digital orthodontic and restorative workflows to improve patient
outcomes and practice efficiencies for over 200 thousand doctor
customers, and is key to accessing Align’s 500 million consumer
market opportunity worldwide. Align has helped doctors treat over
9.6 million patients with the Invisalign system and is driving the
evolution in digital dentistry through the Align Digital Platform,
our integrated suite of unique, proprietary technologies and
services delivered as a seamless, end-to-end solution for patients
and consumers, orthodontists and GP dentists, and lab/partners.
Visit www.aligntech.com for more information.
For additional information about the Invisalign
system or to find an Invisalign doctor in your area, please
visit www.invisalign.com. For additional information about the
iTero systems and services, please visit www.itero.com. For
additional information about exocad dental CAD/CAM offerings and a
list of exocad reseller partners, please
visit www.exocad.com.
Investor Relations
Contact
Align
Technology
Madelyn
Homick
(408)
470-1180
mhomick@aligntech.com |
Press
Contact Zeno GroupSarah Johnson(828)
551-4201sarah.johnson@zenogroup.com |
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