Align Technology Sees Invisalign Growth Runway Despite Consumer Headwinds

Align Technology sees a substantial growth runway for Invisalign , with roughly 75% of teen and adult orthodontic cases in North America still using traditional wires and brackets. Consumer inflation and treatment hesitation remain headwinds, but the company is targeting conversion from conventional orthodontics. Lower-cost, limited-refinement products, consumer financing and visualization tools are intended to improve Invisalign adoption. Align said these offerings may reduce upfront revenue per case but can encourage doctors to perform more Invisalign treatments. International markets, which represent 55% of Align’s business, are growing at double-digit rates, while China’s volume-based procurement program could expand access to public hospitals despite potential pricing pressure. The company is also targeting at least 100 basis points of operating-margin improvement in each of the current and following years. Align Technology NASDAQ: ALGN sees continued growth potential for Invisalign clear aligners in the United States and internationally despite a challenging consumer environment, Chief Financial Officer John Morici said during a Baird investor conference. Morici said inflation and patient reluctance to begin treatment have weighed on the orthodontics market over roughly the past 18 months. Those pressures can influence how orthodontists and general practitioners invest in their practices and whether patients move forward with treatment. Still, he said the company sees substantial room to replace traditional wires-and-brackets treatments with clear aligners. Morici said approximately 75% of combined teen and adult orthodontic cases in North America are still performed using wires and brackets. “We have a huge opportunity to grow in U.S., just like the rest of the world, to get clear aligners, to have Invisalign,” Morici said. Product and Financing Efforts Target Conversion Morici said Align is seeking to help doctors compete with the upfront economics of traditional orthodontic treatment by offering products with fewer included refinements. Those offerings can lower initial costs for practices compared with more comprehensive products, while giving doctors the option to pay for refinements later if needed. The company is also emphasizing consumer financing options, which Morici described as increasingly important in converting potential patients. Align has worked with Healthcare Finance Direct and other lenders, he said, while also seeing financing become a larger consideration in Europe and other international markets. In addition to financing, Morici said visualization tools that show prospective patients what their teeth may look like after treatment can support conversion at orthodontic and general-practice offices. Align’s no-AA, or no-refinement, product initially launched with certain dental service organizations, or DSOs, in the U.S. and is being introduced to retail doctors. Morici said adoption has been favorable, although doctors must plan cases carefully when using products designed for limited or no refinements. He said the strategy is intended to expand utilization by helping doctors choose Invisalign in situations where they might otherwise use wires and brackets because of a lower lab bill. While the company may collect less cash upfront on some cases, Morici said doctors using the products have tended to perform more Invisalign cases. Align said no-refinement products can support gross-margin ...