Align Technology (ALGN) Baird's 2024 Global Healthcare Conference summary

Market environment and growth outlook

• Global orthodontics market remains stable, with regional variations tied to inflation and interest rates; Southeast Asia, Latin America, and the Middle East are performing better than others.

• Teen segment is less discretionary and offers significant growth potential, as only 30% of cases are teens versus 75% in the general market.

• Adult market growth is expected to be slower than teens but should outpace the overall industry once macroeconomic conditions improve.

• There are 500-600 million potential adult patients with malocclusion, indicating long-term demand.

• Teen market is projected to grow at double-digit rates when macro conditions normalize.

Product innovation and adoption

• Invisalign Palatal Expander (IPE) targets 15-20% of teen cases, with initial adoption in North America and ANZ; expansion to more countries is planned.

• IPE is priced at $500, offering flexibility and technological advantages over traditional metal devices.

• The palatal expansion market is estimated at $1.5 billion, with expectations to capture 10-20% share in the next few years.

• Doctors are seeking combined solutions (phase one and two) for skeletal expansion and teeth straightening.

• New iTero Lumina scanner with NIRI technology is approved and positioned for further growth in both ortho and restorative markets.

Pricing, ASP trends, and financial strategies

• Global ASP declined just over 5% year-over-year, with $22 of the $40 drop due to currency and $8 due to UK VAT changes.

• Remaining ASP pressure is attributed to increased sales to new submitters and lower-stage cases, which are gross margin accretive.

• ASP is expected to remain flat to slightly down, consistent with historical trends.

• Doctor Subscription Program (DSP) has grown from 1% to 4% of case volume, with potential for further growth as it expands internationally.

• DSP and leasing models for iTero scanners help doctors manage cash flow and are gross margin accretive, supporting broader adoption.