Align Technology (ALGN) investor relations material

Product innovation and pricing strategy

• Expanded product options now allow doctors to choose packages with fewer included refinements, lowering upfront costs and offering pay-as-you-go flexibility for additional refinements.

• New pricing tiers (e.g., 3x2, 3x1, 3x0) are being adopted, enabling more competitive entry-level pricing and higher gross margins on lower-refinement cases.

• The approach aims to make clear aligners more accessible and competitive with traditional wires and brackets, supporting broader market adoption.

• Revenue recognition and ASP calculations are structured to defer revenue for future obligations, maintaining reported ASP stability.

• Doctor subscription programs and touch-up cases offer further flexibility and lower list prices for specific clinical needs.

Market trends and financial environment

• Recent months saw softer-than-expected demand, particularly in June, impacting Q2 results and informing more cautious Q3 and full-year guidance.

• EMEA performance is mixed, with strong growth in Turkey and Eastern Europe but softness in France and Germany due to economic and tariff uncertainties.

• Financing solutions, such as HFD prequalification, are being integrated to reduce patient barriers and improve treatment conversion rates.

• Lower interest rates are expected to benefit both aligner and scanner sales by making financing more attractive.

• The market remains underpenetrated, and efforts continue to drive growth despite regional challenges.

Competitive landscape and R&D investment

• Market shakeout is underway, with smaller and DTC competitors exiting due to high capital and technology requirements.

• Major competitors are raising prices as they struggle with gross margin and operational scale, while the main competition remains traditional orthodontic methods.

• Litigation has been initiated against Angel Align for alleged IP infringement as they expand globally with a low-price model.

• R&D spending exceeds $350 million annually, with significant investment in direct fabrication (DirectFab) 3D printing technology for aligners.

• DirectFab enables real-time treatment planning, greater customization, and is expected to scale from retainers to full aligner production by 2027, supporting margin expansion and product differentiation.