Align Technology FY Conference Summary Company Overview - **Company**: Align Technology (NasdaqGS:ALGN) - **Industry**: Healthcare Services and Dental Technology Key Points Product Portfolio Evolution - Introduction of the **Zero by Three product suite** aimed at providing flexibility to orthodontists with options for treatment duration and refinements [3][4] - The **three-year product** has become the top-selling product, reflecting advancements in technology and predictability [4][5] - The new product allows for **no refinements**, providing a lower-cost option while still offering the ability to purchase refinements as needed [5][6] Pricing and Revenue Model - The **average selling price (ASP)** is influenced by country growth and product mix, with lower list prices in emerging markets affecting overall ASP [12][13] - Anticipated **1%-2% decrease in ASP** due to new doctor onboarding and product mix changes, but gross margins are expected to remain strong at **75%-80%** [15][16] Market Dynamics and Demand Strategies - In the U.S., the market is described as **stable but discretionary**, with a focus on active patient engagement through visualization tools and financing options [19][20] - **Double-digit growth** in Doctor Service Organizations (DSOs) is noted, attributed to active marketing and patient engagement strategies [22][23] International Market Trends - Strong growth observed in **Eastern Europe, Middle East**, and parts of **Southeast Asia**, with ongoing efforts to expand in these regions [32][33] - The company is focusing on training and increasing the number of doctors using Invisalign in **Asia**, particularly in **Japan and China** [34][35] Direct Fabrication and Manufacturing Innovations - The company is advancing towards **direct fabrication** of aligners, which will eliminate the need for molds and allow for more customizable products [41][42] - Initial rollout of **directly fabricated retainers** is expected in 2026, with plans to scale up production for more complex aligners thereafter [46][47] Financial Outlook and Margin Improvement - Expected **100 basis points improvement** in operating margin due to product portfolio evolution and restructuring efforts [18][55] - The company aims to maintain a **CapEx** of **3%-4% of revenue** to support ongoing manufacturing needs and innovations [50][51] M&A Strategy - Align Technology remains focused on **M&A opportunities** that align with its core business of digital orthodontics, particularly in moving teeth [60][61] Future Goals - The company aims to drive **volume growth** and increase the number of doctors using its products, with a focus on maintaining stability in North America and expanding internationally [64][68] - Anticipation of **new product launches** and scaling of direct fabrication capabilities as key milestones for 2026 [65][66] Additional Insights - The potential impact of **stimulus checks** on consumer spending for orthodontic treatments is acknowledged, with historical data showing increased demand during such periods [25][26] - The company is well-positioned in China, with a focus on local manufacturing and treatment planning to navigate market dynamics effectively [39][40]

Align Technology FY Conference Summary Company Overview - **Company**: Align Technology (NasdaqGS:ALGN) - **Industry**: Dental Technology, specifically focusing on clear aligners and orthodontic products Key Points and Arguments US Consumer Environment - The US consumer environment is currently stable, with no dramatic changes observed in consumer confidence metrics [4][5] - Align Technology's business benefits from this stability, particularly in North America, which is a significant market for the company [5][6] Active Conversion Strategy - The company is focusing on active conversion strategies with dental service organizations (DSOs) and orthodontic service organizations (OSOs) to drive patient engagement and treatment uptake [10][12] - New products, such as the palate expander and mandibular advancement devices, are gaining traction, particularly among teens [11] International Growth - Over 50% of Align Technology's business is outside the US, with strong growth observed in regions like Southeast Asia, Latin America, and Eastern Europe, often exceeding double-digit growth rates [14][15] - The international market remains underpenetrated, providing significant growth opportunities as Align introduces new products and training for doctors [20][21] China Market Dynamics - In China, the majority of orthodontic cases are still treated with wires and brackets, with clear aligners representing less than 15% of the market [22][23] - Align Technology has a strong presence in tier one and tier two cities, where patients are willing to pay a premium for Invisalign treatments [23] - The company is well-positioned to navigate potential Value-Based Pricing (VBP) changes due to its established operations and manufacturing capabilities in China [26] Pricing Strategy - Align Technology expects to maintain a long-term average selling price (ASP) decline of 1-2%, primarily due to geographical and product mix effects [31][32] - The introduction of new products with lower service costs is expected to improve gross margins, despite potential pricing pressures from VBP [33][34] Portfolio Evolution - Align is evolving its product offerings to include fewer refinements and more options for doctors, which could disrupt the traditional orthodontic market [35][39] - The company is rolling out zero refinements in select markets, with broader implementation expected in North America starting in Q1 2026 [40] Future Outlook - Align Technology plans to continue its growth trajectory by leveraging both US and international markets, focusing on active conversion and product innovation [17][18] - The company is optimistic about the potential for increased utilization of clear aligners as the market evolves, particularly in response to VBP [27][28] Additional Important Insights - The company is actively working on scaling up direct fabrication processes, with initial products expected to launch in mid-2026 [41] - Align Technology's strategic focus on technology and product evolution positions it uniquely within the orthodontic industry, potentially setting new standards of care [39]