Align Technology (ALGN) investor relations material

Market environment and growth opportunities

• U.S. orthodontics market remains challenged by inflation and patient reluctance, but is stable and under-penetrated, with most cases still using wires and brackets.

• Product portfolio expansion, including lower upfront cost options and enhanced financing, aims to drive adoption among doctors and patients.

• Financing options and visualization tools are increasingly important for patient conversion, especially in a tough macro environment.

• International markets (EMEA, APAC) are more under-penetrated and have shown double-digit growth, driven by new product launches and targeted investments.

• DSOs in North America are growing double digits, but retail remains the main focus for conversion and growth.

Product innovation and adoption

• Recent launches include DSP, IPE, Invisalign First, and no-refinement (no-AA) products, with strong adoption in DSOs and retail channels.

• No-AA products lower upfront costs, making aligners more competitive with wires and brackets and expanding utilization.

• Product mix shift toward no-AA and touch-up cases has contributed to improved gross margins.

• Doctors are adapting to fewer refinements due to improved predictability, supporting higher case volumes.

• New products are being rolled out in APAC and Europe, supporting continued growth despite tougher comps.

Financial performance and guidance

• Guidance for mid-single digit year-over-year case growth in the second half, despite tougher comps in international markets.

• Gross margin improvement attributed to product mix and productivity initiatives.

• Operating margin expected to expand by at least 100 basis points this year and next, supported by structural cost initiatives and local manufacturing.

• R&D spend has increased significantly post-COVID but is expected to show leverage as development spending rises and new products reach market.