Interview Synopsis

Align Technology – 2022 Revenue Growth Outlook

  • Public Equity
  • Healthcare
  • North America

Align Technology’s Q2 2022 results revealed the company faces significant headwinds in H2 from currency exchange rates, “lingering effects” of COVID-19 and inflationary pressure.* In light of these challenges, a former senior executive at the company believes direct 3-D printing could be a gross margin “game changer” for Align and the broader aligner industry.

Improved 3-D printing a potential “game changer” for clear aligner industry 

In the Interview, the specialist told us the clear aligners market is likely to see continued proliferation of dental service organisations and more consolidation in corporate dentistry. They also said they expect increased private equity investment, as well as the emergence of new competitors like Angelalign Technology from China. 

The specialist revealed that Align’s Invisalign offering is a premium product that has “healthy” 70%-plus margins. As such, they believe it will be less impacted by the current macroeconomic environment. However, they also told us that as prices for plastic raw materials rise, the company could pass on these cost increases to doctors who in turn pass it on to patients – potentially making aligner adoption a “challenge”. 

Align is also facing operation margin headwinds from its decision to regionalise manufacturing, according to the specialist. Whilst they said this could have a positive impact on delivering aligners to doctors quicker and save the company money on freight costs, the specialist believes these will likely be outweighed by the increase in manufacturing costs. 

Meanwhile, the specialist said that iTero intraocular scanners, which create a 3D model of teeth and gums, are a great tool for doctors selling Invisalign. They said a GP with an iTero scanner sells roughly four more Invisalign cases per year, adding that if doctors are “going to really buy into Invisalign and do more and more cases, the digital scanner is definitely the way to go”. They also told us that doctors installing Invisalign rather than legacy brackets and wires save 50-75% of their time. 

The specialist said a realistic CAGR for Align over the next five years would be “midteens” in the US, “plus or minus a couple [of] points” in China and steady in the EU. But Latin America is a “wildcard”, according to the specialist, given the market is small but growing. 

As companies look at ways to maximise margins, the specialist told us the advancement of direct 3-D printing could be a “big disruptor” for the industry. Currently, companies like Align use 3-D printers to print aligner moulds and then thermoform Smarttrack (clear aligner material) onto the mould. However, the specialist said that if someone could discover a way to bypass the latter step and print the aligner all in one, then doctors could potentially print the end aligners from their office — saving time and manufacturing costs. 

Click here to access all the human insights in Third Bridge Forum’s “Align Technology – Clear Aligners Positioning & 2022 Revenue Growth Outlook” Interview. 

* Yahoo!Finance

The information used in compiling this document has been obtained by Third Bridge from experts participating in Forum Interviews. Third Bridge does not warrant the accuracy of the information and has not independently verified it. It should not be regarded as a trade recommendation or form the basis of any investment decision.

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