Enterprise Value to EBITDA (EV/EBITDA)
Earnings before Interest, Tax, Depreciation and Amortization (EBITDA)
Align Technology Inc., EBITDA calculation
US$ in thousands
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
The financial data reveals significant variability in earnings over the five-year period. Net income initially demonstrated a steady increase from 2018 to 2020, peaking dramatically in 2020 with a substantial rise compared to previous years. However, following this peak, there was a pronounced decline in net income over the subsequent two years, reaching the lowest level in 2022 within the analyzed timeframe.
Examining earnings before tax (EBT) and earnings before interest and tax (EBIT), the trends closely mirror those of net income. Both metrics increased from 2018 to 2019, experienced a decline in 2020, surged to their highest values in 2021, and then decreased notably in 2022. This pattern suggests fluctuations in operational profitability and tax impacts over time, as EBIT and EBT are key indicators of operating efficiency before tax considerations.
Looking at EBITDA, which provides insight into earnings from core business operations excluding depreciation and amortization, there was an upward trend from 2018 through 2019, a drop in 2020, a peak in 2021, followed by another decrease in 2022. Despite this fluctuation, EBITDA remained relatively elevated compared to the initial years, indicating that operational earnings before non-cash charges maintained a stronger position than net income and EBIT in 2022.
- 2018 to 2019
- All financial metrics show growth, reflecting expanding profitability and operational efficiency in this period.
- 2019 to 2020
- A downturn is evident in EBT, EBIT, and EBITDA, while net income, although lower than 2019, still rose considerably compared to 2018. This suggests some volatility, potentially due to external or internal challenges impacting operational income.
- 2020 to 2021
- A significant recovery and growth phase, with all earnings measures reaching peak levels. This indicates improved business performance and profitability.
- 2021 to 2022
- There is a clear contraction across all metrics, with the steepest decline in net income, which may imply increased expenses, lower revenue, or other financial pressures impacting profitability beyond operating earnings.
Overall, the pattern of rising earnings until 2021 followed by a marked decrease in 2022 may point to cyclical factors, competitive dynamics, or operational challenges that require further investigation. The divergence between EBITDA and net income trends in 2022 suggests that non-operational factors had a stronger negative impact on profitability during that year.
Enterprise Value to EBITDA Ratio, Current
Align Technology Inc., current EV/EBITDA calculation, comparison to benchmarks
| Selected Financial Data (US$ in thousands) | |
| Enterprise value (EV) | 14,122,171) |
| Earnings before interest, tax, depreciation and amortization (EBITDA) | 724,850) |
| Valuation Ratio | |
| EV/EBITDA | 19.48 |
| Benchmarks | |
| EV/EBITDA, Competitors1 | |
| Abbott Laboratories | 21.33 |
| Elevance Health Inc. | 5.99 |
| Intuitive Surgical Inc. | 55.97 |
| Medtronic PLC | 14.88 |
| UnitedHealth Group Inc. | 10.50 |
| EV/EBITDA, Sector | |
| Health Care Equipment & Services | 13.29 |
| EV/EBITDA, Industry | |
| Health Care | 14.48 |
Based on: 10-K (reporting date: 2022-12-31).
1 Click competitor name to see calculations.
If the company EV/EBITDA is lower then the EV/EBITDA of benchmark then company is relatively undervalued.
Otherwise, if the company EV/EBITDA is higher then the EV/EBITDA of benchmark then company is relatively overvalued.
Enterprise Value to EBITDA Ratio, Historical
Align Technology Inc., historical EV/EBITDA calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Enterprise value (EV)1 | 22,338,984) | 39,216,076) | 43,916,116) | 16,327,126) | 19,979,482) | |
| Earnings before interest, tax, depreciation and amortization (EBITDA)2 | 724,850) | 1,121,152) | 472,487) | 634,113) | 512,685) | |
| Valuation Ratio | ||||||
| EV/EBITDA3 | 30.82 | 34.98 | 92.95 | 25.75 | 38.97 | |
| Benchmarks | ||||||
| EV/EBITDA, Competitors4 | ||||||
| Abbott Laboratories | 15.85 | 17.42 | 25.99 | — | — | |
| Elevance Health Inc. | 10.26 | 10.05 | 7.57 | — | — | |
| Intuitive Surgical Inc. | 41.52 | 44.54 | 59.12 | — | — | |
| Medtronic PLC | 14.99 | 24.41 | 17.92 | — | — | |
| UnitedHealth Group Inc. | 15.11 | 17.39 | 13.39 | — | — | |
| EV/EBITDA, Sector | ||||||
| Health Care Equipment & Services | 15.27 | 18.06 | 16.63 | — | — | |
| EV/EBITDA, Industry | ||||||
| Health Care | 14.00 | 14.33 | 18.21 | — | — | |
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
3 2022 Calculation
EV/EBITDA = EV ÷ EBITDA
= 22,338,984 ÷ 724,850 = 30.82
4 Click competitor name to see calculations.
- Enterprise Value (EV)
- The enterprise value demonstrates a fluctuating trend over the five-year period. Initially, it decreased from approximately $19.98 billion in 2018 to about $16.33 billion in 2019. This was followed by a significant increase to around $43.92 billion in 2020. Subsequently, EV declined to roughly $39.22 billion in 2021 and further dropped sharply to about $22.34 billion in 2022.
- Earnings Before Interest, Tax, Depreciation and Amortization (EBITDA)
- EBITDA exhibited variability within the period. It increased from $513 million in 2018 to $634 million in 2019, then experienced a decrease to $472 million in 2020. A notable surge occurred in 2021, reaching approximately $1.12 billion, followed by a reduction to about $725 million in 2022.
- EV/EBITDA Ratio
- The EV/EBITDA ratio showed considerable volatility. Starting at 38.97 in 2018, it decreased to 25.75 in 2019. In 2020, the ratio spiked dramatically to 92.95, indicating a significant disparity between the enterprise value and EBITDA for that year. The ratio then fell to 34.98 in 2021 and further declined to 30.82 in 2022.
- Overall Analysis
- The enterprise value and EBITDA both present non-linear trends with notable peaks and troughs, reflecting periods of growth and contraction. The surge in EV and the concurrent drop in EBITDA in 2020 suggest a valuation increase not matched by earnings performance, leading to a high EV/EBITDA ratio that year. The subsequent years show normalization toward lower EV/EBITDA ratios, driven by the combination of reduced enterprise value and increased, though variable, EBITDA. The data indicates that valuation multiples fluctuated significantly, influenced by changes in both market valuation and operational profitability.