Finalizing the Deal

Align Technology closes in on acquisition of Cadent for $190 million.

Recently, Align Technology saw an early termination of the waiting period under the HSR Act, with regard to its proposed acquisition of Cadent Holdings. In March, Align decided to acquire the privately held provider of 3-D digital scanning solutions for orthodontics and dentistry for $190 million in cash. The transaction will dilute fiscal 2011 earnings per share on a GAAP basis, while it will be accretive to the adjusted earnings per share in fiscal 2012.

With the acquisition of Cadent, Align will be better positioned to promote the adoption of Invisalign, as intraoral scanning becomes more predominant in dental practices over the next 5 years. At present, doctors submit polyvinyl siloxane (PVS) impressions of the patient’s dentition to Align to start a new Invisalign case.

However, with new technology, doctors will be able to submit fully digital intraoral scans of the dentition instead of a physical impression, an option that is more user-friendly for dentists and more comfortable for patients. The growth rate for intraoral scanners is expected to exceed 20% between 2010 and 2015, according to iData Research.

In January, 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 help to improve treatment planning.

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 soon.

"We are excited about the opportunities for growth that Cadent provides, not only in terms of accelerating adoption of intraoral scanning among dental professionals but also in creating greater value for existing Invisalign users," says Thomas M. Prescott, president and chief executive officer of Align Technology. "Cadent has a strong team of very talented people and a culture similar to ours with the drive, agility, and speed necessary to continue delivering innovative solutions for our customers."

The acquisition of Cadent extends Align’s strategic leverage by demonstrating the value of applications at the chair side that streamline treatment and make the entire Invisalign procedure easier on the patient and more efficient for the practice. In addition, the use of digital technologies for restorative dentistry, such as CAD/CAM and in-office restorations, has also been growing rapidly, and intraoral scanning is required to enable this essential part of dental practices.