Align at Wells Fargo Conference: Strategic Plans Amid Challenges

On Wednesday, 03 September 2025, Align Technology (NASDAQ:ALGN) presented at the Wells Fargo 20th Annual Healthcare Conference 2025. The company addressed investor concerns about slower-than-expected growth in North America and Western Europe, while outlining strategies for the rest of 2025 and into 2026. Align’s leadership discussed both challenges, such as macroeconomic headwinds, and opportunities, like expanding into new markets.

Key Takeaways

• Align plans to counter slow growth in North America and Western Europe with active conversion strategies and expansion into India and Southeast Asia.
• The company expects a step-up in Q4 performance due to seasonality and increased iTero sales.
• Align is targeting long-term revenue growth of 5% to 15%, driven by market expansion and increased volume.
• Legal actions have been initiated against Angel Align to protect Align’s intellectual property.

Financial Results

• Q2 showed sequential improvement in volume, though below expectations.
• Q3 guidance is based on June performance, with a stronger Q4 anticipated due to European seasonality and North American strength.
• UK VAT normalization is expected to benefit annual earnings by approximately $35 million.
• Margin guidance for Q3 is set at 22%, with a further improvement anticipated in Q4.

Operational Updates

• The iTero Lumina scanner rollout focuses on driving full system sales after initial upgrades.
• Align is optimizing manufacturing capacity and production locations to reduce costs.
• The company has ceased withholding VAT in the UK, which normalizes ASPs.
• Direct Fab Technology is expected to enhance design flexibility in the future.

Future Outlook

• Align expects ASP to slightly decline in 2026 due to customer mix but aims for volume growth.
• The company maintains a long-term revenue growth target of 5% to 15%.
• A margin ramp of 26% to 28% is targeted, supported by volume growth and cost control.

Q&A Highlights

• Interest rates are a key factor affecting patient conversion, with lower rates potentially aiding treatment decisions.
• Double-digit growth is noted in several markets, including Southeast Asia, China, and India.
• DSOs are highlighted as significant growth drivers, especially in North America, due to their focus on digital orthodontics.
• Align is focusing on increasing teen case starts, leveraging the Invisalign First product.

Readers are invited to refer to the full transcript for a detailed understanding of Align Technology’s strategic plans and financial outlook.

Full transcript - Wells Fargo 20th Annual Healthcare Conference 2025:

Vic Chopra, Analyst, Wells Fargo: Okay. Good morning, everyone. My name is Vic Chopra. I work on the Medical Devices team at Wells Fargo. Pleased to introduce management from Align Technologies for this session.

Joining us from the company are John Morici, CFO and EVP, Global Finance and Shirley Stacy, EVP Finance, Global Communications and Investor Relations Officer. Thank you for being here. Of course. So let’s start off with the most recent quarter and 2025. I’m just curious what investor feedback you’ve received since reporting Q2, and what have your investor conversations been focused on?

John Morici, CFO and EVP, Global Finance, Align Technologies: Well, the majority of the discussions were just on kind of how the quarter played out and what our expectations were versus what actually happened. I mean, a typical basis, you go from first quarter to second quarter, you see a sequential improvement in terms of volume. Most of the Western world, you have teens that go into treatment over that time period. You see some of that growth that you would expect as they get into that teen season. So you would see a sequential improvement in the second quarter.

And then as you go through that second quarter, as teens get out of school and so on, you would see that benefit where, they go into treatment, especially into June and so on. And the way the quarter played out, we did not see you saw some sequential, but not as much as we would have expected. So lot a of the conversations are just around, okay, what’s happened, why, and then more importantly, what we’re doing about it. And I think we can get into a lot of that as you want.

Vic Chopra, Analyst, Wells Fargo: Okay. So maybe just talk about how you see the rest of the year playing out for Q3 and Q4. I think you’ve given guidance for Q3, obviously. I think consensus has you modeling within your guidance range and then stepping up in Q4. Maybe talk about how you feel about current consensus estimates and what drives that step up in Q4 over Q3?

So as we guided for

John Morici, CFO and EVP, Global Finance, Align Technologies: Q3, used the latest information typically when we guide, but we really leaned on what we saw in June and used that to project out what we would expect for Q3. So that was based on our guidance, and then it translates to what we think the rest of the year is going to be, and that actually implies a fourth quarter as it’s being modeled now. Like you said, it would be a step up from Q3 to Q4. Typically, that step up into the fourth quarter. Europe comes back after the third quarter and really engages again just from an overall the way they are set up, come back at that time.

China is a little bit less. North America is usually fairly strong in the fourth quarter. And the expectation in the fourth quarter for that step up is we’ve seen on the iTero side a lot of with aluminum, a lot of volume that we’ve seen on upgrades and others with aluminum. We expect that more full systems will be sold in the fourth quarter, which helps us improvement on a sequential basis. We also see in Europe, where Europe being lower just from a seasonality standpoint in third quarter, they come back in the fourth quarter.

Now they’ll be able to use, and we’ve just introduced several new products there with mandibular advancement, with occlusal blocks and palatal expander and some of the DSPs, the subscription program that we have, their volume really kicks in there. We also see, and we’ve noted that in The UK, we were withholding for some of The UK VAT. Some of that, it started, we stopped doing that and kind of normalize things, which ends up increasing our ASP. We started that in August. We’ll get a full quarter effect of that in the fourth quarter.

So we use the most recent information to guide, and then we have some of these offsetting things that I mentioned to help us.

Vic Chopra, Analyst, Wells Fargo: Okay, great. So also the margin guidance implies a pretty significant step up in Q4 from your twenty two percent guidance in Q3. Maybe just talk about some of the drivers there on

John Morici, CFO and EVP, Global Finance, Align Technologies: the margin side. Well, you’ll have, as we noted, you have some of that sequential improvement, so you get volume leverage. So fourth quarter gives us some of that. We’ll also see some of the benefits from The UK VAT. So we’ll get on an annualized basis, it’s $35,000,000 or so.

So you’ll get a full fourth quarter benefit of that, as well as other cost initiatives that we have. So we talked about at the last earnings some of the restructuring and some of the changes that we’re making around capacity and where we’re planning our production and getting closer to customers so we can minimize freight and utilizing some of the latest equipment and so on. So some of that starts to play out as well as our overall restructuring that we have. So we’ve multiple ways to get there. It starts with some of that volume leverage, and then there’s some discrete items that give us confidence to be able

Vic Chopra, Analyst, Wells Fargo: to get to our overall margin. Okay, great. Let’s switch topics of the overall macro environment. You’ve highlighted a number of items such as elevated interest rates, ongoing inflation and unstable consumer confidence, which are all directly influencing patient purchasing behavior. Is any one of these having a more outsized impact on elective dental procedures than the others?

John Morici, CFO and EVP, Global Finance, Align Technologies: Well, typically, what we hear from our doctors, especially some of the bigger DSOs that when they can manage the interest rates, they can see a better conversion. So what you find is that those patients, those potential patients at that time, they like what they see from a scan. We can show them kind of an outcome simulator, and those doctors can really get those potential patients excited about what they see, what their treatment would look like when they’re completed. So they’re excited about that. The next question that comes out of that consumer potential patient’s mouth is how much it’s going to cost.

And if they can get the pricing right, they can sustain that interest or maybe even get those potential patients back to the office with pricing. But then that last mile that has to be crossed is usually around, you know, how much does it cost per month and what’s the interest rate that they’re going to charge. So doctors that partner with outside financing, HFD and others to be able to get them qualified, that they can apply for that loan and get approved. And then can they keep the interest rates low. Because look in the end, it is discretionary to some extent and they want to look to see that they are not paying a lot of interest.

That’s usually the differentiator that helps drive the conversion. So I would say out of the ones that you mentioned, interest rates would really help. If they were lower, would help with those potential patients making the decision of going to treatment.

Vic Chopra, Analyst, Wells Fargo: Okay. And just maybe talk about how you’re thinking about the trajectory for the clear aligner market, which has obviously been pressured in The U. S. What’s your visibility into recovery as you move into the back half of the year and into 2026?

John Morici, CFO and EVP, Global Finance, Align Technologies: Well, we’re seeing in many markets, the unfortunate part is they get overwhelmed a bit by North America and some parts of Western Europe, but you see many markets that are in their double digit growth. You see Southeast Asia or even China, you know, Eastern Europe, India, Turkey, LatAm, and so on, they’re double digits. You’re seeing that growth. And even within the challenged more the challenged markets of, say, Europe and Western Europe and North America, you’re seeing our DSOs, the dental service organizations, whether on the ortho side or the GP side, that are practicing more of this active conversion. What I was just describing about, you know, financing and interest rates and so on, those organizations that are taking more of an active approach to try to drive drive traffic and drive conversion within those practices, they’re growing very strong.

They’re, on average, double digit. It’s just we want to get more and more doctors behaving that way. Some will go because they’re they’re doing more with, you know, as part of DSOs, and they they end up getting, you know, part of those those larger groups. Some of it is we’ve got to go and make sure we’re we’re working with those doctors. Give them the clinical confidence where they use our products, and then and help them drive as much active conversion as possible, whether you’re on the GP side, the GP side where you’ve got to be, you know, scanning every patient, making sure those doctors can show the options on what your teeth would look like being straightened.

And and more importantly, if they’re going to do restorative work, how they can then get your teeth straightened first, then do the the restorative. It helps save healthy dentition and is much better ultimately for the patient. So there’s a lot of work around that, doctor by doctor, or even working with labs. I mean, we acquired Exocad a number of years past, and they have a good relationship with labs. And if we can work with labs that provide all the restorative outcome for those patients that are coming through, let them know that they can, you know, they can help with maybe getting the teeth straightened first, then do the restorative.

It helps save. Or active ways that we can work with orthos, make sure they understand the products and give them the clinical confidence to be able to treat maybe more and more complicated cases, but then also reaching out to those potential patients or in the teens case, their parents to be able to say, look, this gives you you have alternatives. You have Invisalign which will be able to treat, you know, help treat your child faster. So less appointments, faster treatment time, no emergencies, outcomes that they would expect and be able to have a favorable outcome, but making sure they understand the differences there. But so it’s not one size fits all in terms of how you try to drive that conversion, but the main point is you have to be active about driving conversion, especially in this challenged market.

Vic Chopra, Analyst, Wells Fargo: Okay. You’ve talked about financing. Have you seen more people access patient financing to pay for their treatment?

John Morici, CFO and EVP, Global Finance, Align Technologies: Yes, it is definitely. You know, it varies by market, but how people pay, especially if, you know, some of these treatments, especially on the orthodontic side, they

Vic Chopra, Analyst, Wells Fargo: might be $6,007

John Morici, CFO and EVP, Global Finance, Align Technologies: $8,000 And when it comes to, especially on the adult side, it becomes discretionary. Do I change do I get my teeth straightened or not? Sometimes the only way they can get things done is is by that external financing. Keeping that interest rate low as as possible, getting the approval rate higher for some of those potential patients, we work a lot with our doctors to try to enable that. Okay.

Great.

Vic Chopra, Analyst, Wells Fargo: On the second quarter call, you also talked about a shift to braces from aligners. And I think you said that’s driven in part by recent economic uncertainty, among other things. Maybe just talk about specific strategies that are being deployed to overcome uneven patient case conversion. And do you think this is a structural shift?

John Morici, CFO and EVP, Global Finance, Align Technologies: Well, I think when you have in certain markets that don’t that have maybe the challenges from an economic standpoint or uncertainty, as we described in the last call, you have some of those market impacts where that orthodontist, let’s just say on the ortho, where they’re they maybe don’t have as many patients coming through. And the patients that they do have, they want to look at their overall profitability and say, look, I’ve got my office. I have my staff. I have my own time. In the short term, it’s it’s fixed.

So when they look at ways to save, they’ll look at at things to to to reduce, and and they’ll look at our cost for Invisalign compared to wires and brackets, and there’s a gap. Whatever depends on the the practice and and what pricing that that they’re using, but it could be up to a thousand dollar difference. So those orthodontists, primarily orthodontists, make trade offs where they’ll say, look. This is I’m gonna use wires and brackets, and and I’ll push that for the children. Look.

It’s ultimately they’re providing the care. So it’s their choice with the the parent or the the patient to make sure that they they provide the care that they they need. But we’re letting people know or being active as we can to let people know that there’s alternatives. There are differences. And what we find is that even in our product portfolio, we have a lot of different options as well.

If you went back five years ago, the majority of what we sold at the company, seventy five plus percent of the cases were done with comprehensive unlimited. It’s basically five years unlimited refinement. It’s the most expensive product that we have. What we’re finding is doctors, especially orthos, are utilizing different different choices or different options that they have in that product portfolio. So we’ve introduced products like three years of of comprehensive aligners with three refinements.

That’s now our our biggest selling product that we ever had. Didn’t exist two and a half years ago. So if you take that concept further and say, there’s other parts of our portfolio. We could have a comprehensive with no refinement, and that will be at a lower list price. But that gross margin rate is better than a comprehensive unlimited.

Now you have to manage your gross profit dollars to reflect that, and that’s some of the structural changes that we announced after q two. But we’re doing things to to leverage the portfolio that we have and essentially selling the way our customers wanna buy. And sometimes, the our customers, those doctors wanna trade down for a product that has a lower acquisition cost initially, but it they might have to come back to us in a year or six months later and do refinements to make and then they’ll pay for it, and they kinda pay as you go to be able to finish the case. And many doctors wanna operate that way. We’re happy to do that.

We’re a company that has a wide variety of products to sell in in the portfolio, and we’ll make trade offs with that. But we have to manage our cost structure accordingly. But those like I said, the the gross margin rate for products like that is the highest that we have. You think about, like, the the noncomprehensive products that we have, they might be 75%, 80% gross margin. You just get less dollars for them.

But if we manage the cost to serve down below and OpEx and so on, you can generate margin improvement.

Vic Chopra, Analyst, Wells Fargo: Okay. Let’s shift gears to capital equipment. Would love to hear your thoughts on the overall dental capital equipment environment more broadly. What are you

John Morici, CFO and EVP, Global Finance, Align Technologies: hearing from your customers? Well, customers like the new technology that we’ve brought With Lumina, it’s a platform change, moves from confocal to a camera based. It’s smaller wand, faster, better use, and that that doctors really like. So they like the technology. So you’ve gotta have the right product to be able to products to sell within the capital market.

They’re a bit challenged, doctors are, in terms of as they go through their capital cycle, do they have the resources to be able to upgrade? Do they have the resources to trade in and be able to use scanner? And so and so we’re seeing more and more doctors do that. Many of them are making trades, though. They’ll they’ll upgrade the wand.

They don’t necessarily upgrade the entire system or add a new system. And I think that’s a reflection of some of the capital market. Interest rates drive a lot of decisions that that those doctors have. They’ll say, well, scanner is good enough. I don’t need to trade off, especially if I have to finance it.

So there’s some trade offs that way. But we’ve been very pleased with our our growth that we’ve seen with with Lumina and and rounding out that product portfolio. What we’re seeing on the capital markets regarding that equipment is more of having that portfolio. We’ve got a premium product that we put out, but then there’s several different products that we still sell that maybe are more affordable. Or we have certified pre owned where we’ve got trade ins of our of our scanners where they’re just at a lower price because they’re they’re pre owned, and many of our doctors still wanna shift to that.

So it’s a wide variety. Some of it is around technology, and and you better sell that. Things that we do to help our doctors, we’ll do extended payment terms or other things to give them more time to pay things back and and maybe help from that standpoint. But it really comes down to what the doctor’s goal is, what what they’re facing from a constraint standpoint. And we have a product portfolio as well as financing capabilities to help them.

Vic Chopra, Analyst, Wells Fargo: Okay. Just talking about iTero growth and the ongoing Luminar rollout, like I’m trying to figure out how we should think about that going forward, right? In Q2, we saw more upgrade than we did full system sales. And I think earlier in the conversation, you alluded to the fact that maybe we’ll see more system purchases as we go throughout the year. Maybe just elaborate on that.

So a lot of doctors upgraded. They like

John Morici, CFO and EVP, Global Finance, Align Technologies: the size and the benefit that the new one brings that I was describing. But we still have many systems that are older systems that we have element ones and element twos. We have thousands of them in the field where doctors just are used to them, and they’re just kind of the workhorse that they have. It’s up to us to get to those doctors and say, here well, here’s the benefits that Lumina brings. And we can do a lot of creative things to essentially get them into a new Lumina.

Even if they keep the old system, get them into a new system and they can see the benefits for themselves. Because many practices, if they have one scanner, they would benefit by having two. And we know that we would benefit because if they have more scanners, the more scanners they have, the more Invisalign they do. So we know there’s there’s a direct correlation there. So we’re just very attuned to what those customers want, what we can serve them with with the various products that we have, and we’ll do as much as we can to help help drive that.

Vic Chopra, Analyst, Wells Fargo: Okay. And can you maybe talk about the upgrade cycle or some of the incentives offered to existing iTero users to transition to the Lumina platform?

John Morici, CFO and EVP, Global Finance, Align Technologies: I mean, some of it’s trade in. They get a trade in benefit, so they give us their old scanner or a competitive scanner, trade them in, then we’ll a credit essentially and price benefit for that. Some things we’ll do with extended payments so that they have a little bit more time to pay. But there’s a lot of different features that we have here that really can help. But but in the end, we want we wanna help doctors digitize.

We wanna give them the latest digital technology. We know we have a great scanner here. We’re constantly investing in it to try to continue to to upgrade and and make it faster and better and more of an everyday scanner so that it’s great for the orthodontic side of things, the the teeth and and kinda how it scans and so but it also can serve as an everyday restorative scanner too. So they can use that to do the restorative work and other work that they do on a day in and

Vic Chopra, Analyst, Wells Fargo: day out basis. Okay. And is there a difference in capital demand, between DSO and non customers?

John Morici, CFO and EVP, Global Finance, Align Technologies: I think DSO customers, they they they want to surround the good ones, they want to surround their practices with, digital technology. So, having the latest scanner, we saw that with Heartland. They’ve essentially upgraded all their scanners to to Lumina now. We see that with other big DSOs where they wanna they wanna make sure that their doctors in the network are using the best technology to help drive digital orthodontics. Because in the end, they know.

Vic Chopra, Analyst, Wells Fargo: And that’s why they’re growing double digit, quite honestly, because they know that the

John Morici, CFO and EVP, Global Finance, Align Technologies: more orthodontics. Invisalign that they do, the more they can digitize their workflow. It’s certainly productive, but it also drives profitability. So I think the DSOs, we will call them kind of a force multiplier. They can really push this across their their practices.

And when you’re not in a DSO, we have to work them one by one. It’s the reality of our business. The majority of our business is sold to individual practices, but we have to be able to show that they they can grow. And even in this challenging market, like in North America, DSOs are growing much faster than the regular individual practices because of that digital orthodontic mindset that, those DSOs have taken.

Vic Chopra, Analyst, Wells Fargo: Okay. I want to touch on teen and kid case starts. Maybe just talk about sort of some of the trends you saw in the second quarter, how they performed across your three major regions, EMEA, APAC and The Americas? And how should we think about teen growth in the back half of the year?

John Morici, CFO and EVP, Global Finance, Align Technologies: Well, teens and we’ve seen in our results, and just as a market opportunity should grow faster than adults. I mean, when we think about the orthodontic case starts every year, twenty plus million orthodontic case starts every year, seventy five percent of them are teens. So when we think of our growth and and and the opportunity, if you’ve got seventy five percent of the cases that are are team in the orthodontic side, and from our standpoint, maybe on average across the globe, we’re maybe ten percent. So there’s a huge opportunity where we have better and better products. We’ve got been able to especially really work with orthodontists to give them that clinical capability, reach out to potential patients, and and let them understand the difference.

The market opportunity is there. And whether it was prior to COVID, COVID, and post COVID, Tina has been growing faster. It’s just a varying degree as as to how much faster. So the market opportunity is there. We’ve got to be able to reach those potential patients and make sure that, you know, the the best technology is in their hands, give them sometimes the product portfolio that we’re I was talking about where you there might be products that don’t have, you know, comprehensive unlimited.

But it’s it’s a product that is still comprehensive, but it’s kinda pay as you go type product that that gets them into a better price point. Sometimes that’s the sticking point. Sometimes it’s just educating teens and parents to be able to make sure they understand the differences and ask for the product by name and ultimately, you know, go into treatment. We have majority of patients that come in on on the teen side, they wanna use, you know, seventy, eighty percent of of the time that a teen or parent come in, they ask for Invisalign. Only one out of three times they get it.

And so that’s the challenge that we have, you know, trying to drive that conversion.

Shirley Stacy, EVP Finance, Global Communications and Investor Relations Officer, Align Technologies: So the features and functionality in the Invisalign First product that allows us to treat kids as young as six, and then the introduction of IPE and now MAOB, the mandibular advancement feature, those things differentiate pretty significantly. We see good interest in that.

Vic Chopra, Analyst, Wells Fargo: Okay. Good point. Looking at 2026, any puts, takes, headwinds, tailwinds that you sort of call out at this point?

John Morici, CFO and EVP, Global Finance, Align Technologies: Well, not knowing what the economies are going to do, you seem pretty much say, okay, same as it is, we’ll see if things change, if interest rates or inflation or whatever changes. So if you assume kind of stability there, it’s products that we have with with, you know, mandibular advancement, with occlusal blocks, IP, other things where we’re rolling out to other markets. We want to continue with that product portfolio to be able to help doctors treat more and more patients, giving them flexibility in terms of how what types of products that they wanna buy. Maybe they’re more price sensitive and don’t wanna pay for everything upfront. They wanna start with product that is is lower priced, but still can get the work done that they need.

But giving them that flexibility going forward, I think I think that’s important, especially in this market, and educating, you know, potential patients and their parents in case of teens of alternatives. And then ultimately, the market decides what what they’re gonna use, you know, whether a doctor puts them into treatment using our technology or or something else. But we believe that we have, you know, still a huge opportunity. It’s an underpenetrated market. Vast majority of cases are double wires and brackets.

We’re the clear aligner. You know, we’re we’re driving the clear aligner market. We know that we can, you know, continue to grow the clear aligner market. It’s a technology that really lends itself to how we think of more effective ways to treat patients. We just have to, you know, because we work through a doctor, we’ve got to make sure doctors are properly positioned to be able to use our products, and some of it’s products, some of it’s pricing, and so on.

And then we have to make sure that potential patients understand the benefits. And we stick to that. That’s kind of the, you know, the reason why direct fab is is so important for us. It doesn’t help as much next year, but years after that where you have, you know, ultimate design flexibility. That doctor can dial up however he or she wants to make those aligners thicker in some places, thinner in some places, open if there’s mixed dentition or whatever else.

It’s unique. No one else has that type of performance plastic to be able to move teeth in a predictable and reliable way. But again, it’s with that mindset, we wanna arm doctors with the best products. We wanna be the leader from a product standpoint and and get that product portfolio positioned in a right way that they can choose the more expensive products if that’s what they want, or the lower priced products if that’s what serves those doctors’ needs. We have to do a good job as as a company to be able to help promote that.

And then also make sure we do a good job from a cost structure standpoint that if that’s where the market is, we have to be properly positioned. If they go to that and the doctors choose those types of products, we think that drives additional volume and revenue.

Vic Chopra, Analyst, Wells Fargo: Okay. Super helpful. How should we think about price in 2026?

John Morici, CFO and EVP, Global Finance, Align Technologies: I think you would see, you know, pricing when you look at on aggregate from an ASP standpoint, you will see doctors trade to products that are are at a lower price. It just they either go to products that are in the comprehensive family, and they choose the comprehensive that doesn’t have as many refinements. And if it doesn’t have as many refinements, it’s a lower price. It’s just the way our structure is set up. It our cost to serve is is different.

You see many doctors, especially on the GP side or others, they’re just doing some of these touch up cases. They’re doing something where they need five or six or seven sets of aligners to treat some type of malocclusion, and they use that. And it’s a lower it’s a lower list price product, and you see that in the marketplace. And then I think you see some of the growth areas that we have that are growing faster than average. So like places like India and Southeast Asia, Eastern Europe, Turkey, those they’re growing very fast.

They’re just at a lower list price product. So the reality is when you aggregate it altogether, ASPs will I would expect to be slightly down in the future just from a mix standpoint. But don’t look at it as there’s some pricing or promotion difference that we’re creating to be able to help drive. We’re gonna be able to help drive volume and and increase utilization by leveraging the breadth of our portfolio. Some of it’s on the high end, most comprehensive case is direct fab and so on.

And some of it’s on the low stage, less less refinements. But those are lower list price, but still good good gross margin. We just have to manage what that means from a gross profit standpoint. Okay.

Vic Chopra, Analyst, Wells Fargo: That makes sense. On the Q2 call, you also said that despite the performance of the quarter, you’re sticking by the future of the business and your long range plan, which calls the 5% to 105% to 15% top line growth. Can you talk about how you feel about achieving your LRP targets given the current macroeconomic conditions?

John Morici, CFO and EVP, Global Finance, Align Technologies: Well, the market opportunity is there. If you start to say, look, the overall market grows it depends on the country and region, but say it’s it grows low single digits, the overall market Mhmm. In orthodontics and and dentistry. And then when we look at the market opportunity, the fact that that especially in teen, it’s a vastly underpenetrated market for us. Majority done was wires and brackets.

We’re doing everything we can to grow the category. We think we have an opportunity to be able to grow in excess of the market just by the fact that there will be less wires and brackets and more Invisalign, and and we think that. And then you also grow within GPs. GPs don’t revert to wires and brackets. They’re but they have to make clear aligners and Invisalign part of their practice.

Straighten teeth before you do restorative, and that helps us grow. Continuing to work with DSOs, I think that’s a force multiplier for us. Those those are growing double digit. There’s many markets that are growing double digit. They just get overwhelmed by, you know, Western Europe and and North America, but they’re already growing double digits even above the the five to 15% range.

Like I said, they just sometimes get overshadowed by everything else. So we have the playbook to be able to drive that growth. Look. If I’m looking at macro as it’s kinda what it is right now. It’s not a a great macro, especially for a higher priced discretionary product that that people have to choose from without a lot of reimbursement.

But all the actions I I just stated are are ways to help overcome that. If the economies get better, I think it’s a tailwind for us. And I think that that would help us and get back to, the higher growth that that we know we can do. But certainly, from a market opportunity, given the fact that majority vast majority of cases are wires and brackets, we can grow the category and and therefore grow our revenue.

Vic Chopra, Analyst, Wells Fargo: Okay. 5% to 15% revenue growth, it’s a pretty wide range. Maybe just any color you can provide on how you see that growth rate playing out over the planning period? And maybe just how to think about the margin ramp going forward of 26% to 28

John Morici, CFO and EVP, Global Finance, Align Technologies: So that range, look, it’s a reflection of kind of what the market is in terms of that growth. We used to have a range that was higher, but it was still 10 difference. So it’s just that reflection of where things are at. Things that we can drive to be able to build off of the overall market growth and drive higher utilization, sell to more doctors, do all the things that we can do with our product and our portfolio, That’s one way to drive that. You know, look.

If the economies get better, you’re you’re maybe on the higher end of that of that range. So we just have to work our way through this in in controlling what we can control. Mhmm. And as we go forward, we’ll be able to to update in in terms of, okay, what does that mean for this quarter or the year and so on? And and we’ll give further updates to that.

In the same way on a margin standpoint, you know, we we want to be able to pull levers that we can to drive volume. Like we said, it’s a underpenetrated market. We’re gonna lean into volume and revenue, but also wanna do it in a profitable way. And so that’s part of that. Some of that cost and and restructuring that we’re talking, getting closer to our customers with some of the manufacturing that we have, utilizing the the latest and greatest manufacturing capabilities so that even on the existing production, we’re as as profitable as we can.

And be smart about that. We get some of the benefits from some of the the VAT and other things that have that have now stabilized a bit. So there’s there’s things that we have from a overall productivity standpoint and profitability standpoint that, look, as you have volume, we’re we get a leverage benefit as we have more volume coming through our plants. As we have you know, we make over a million aligners a day, unique aligners a day. The more that you can put through your facilities, utilize that equipment and the labor that you have there, the more profitable we’ll be.

Vic Chopra, Analyst, Wells Fargo: But it really starts from getting that volume growth. Okay. You recently filed patent infringe lawsuits against Angel Align in The U. S, Europe and China. What’s the latest you can share on this?

And any key milestones we should be

John Morici, CFO and EVP, Global Finance, Align Technologies: on the lookout for? Look, we had a press release, and we talked about what we felt And and we think, you know, just given the the the patents that we have, the intellectual property that we have, that we spend hundreds of millions of dollars a year, several billion dollars over the last several years. And when a company is spending significantly less than that, and it’s just very clear from the materials to the treatment planning and other things that they’re you’re using, you’re following, you know, our using our technology that we’ve developed. And so I think this the fact that it’s in all these jurisdictions might tell you how serious they it is in terms of everywhere.

They’re they’re essentially following, you know, using our technology. And we’ll we’ll let it play out in in the courts and and go through the process. But look, we we encourage innovation. We encourage companies to to innovate and really move the category forward, all for that. It’s gotta be on a level playing field.

And and we see that that’s

Shirley Stacy, EVP Finance, Global Communications and Investor Relations Officer, Align Technologies: fair competition.

Vic Chopra, Analyst, Wells Fargo: Right. Okay. I think we’re out of time. Thanks so much for being here. Great.

Thank you. Thanks.

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