Align Technology (NASDAQ:ALGN) Chief Financial Officer John Morici said the company is seeing a steadier demand backdrop in North America and is leaning on marketing, training, and workflow tools to help doctors convert patient interest into Invisalign treatment. Morici spoke during a fireside chat at the Leerink Partners Global Healthcare Conference, joined by Madeline Valenti from investor relations.
North America: “Stability” and a focus on active conversion
Morici described North America as “more stable” than prior periods, with fewer unknowns influencing consumer behavior. While he acknowledged ongoing volatility tied to tariffs, inflation, and geopolitical events, he said consumers appear more accustomed to those dynamics and are making spending decisions within that environment.
Discussing how Align supports conversion, Morici outlined a patient journey that starts with awareness and extends to visualization and financing. He highlighted the role of iTero scans in helping patients see potential before-and-after simulations, along with “last-mile” factors such as pricing and financing options that can shift an out-of-pocket cost into a manageable monthly payment.
DSOs: standardization, workflow, and a growing portion of revenue
Morici said DSOs vary widely in sophistication, ranging from small groups of practices to larger, more developed organizations. He noted many U.S. DSOs are private-equity owned and focused on return on investment, with more advanced DSOs using infrastructure such as treatment planning services and active monitoring of refinements to manage treatment time and profitability.
Align’s North America revenue from DSOs is “about 1/3” of the region’s total, Morici said, and he argued the company is positioned well as consolidation continues because DSOs value scale, technology, and brand. He added that Align has dedicated teams that work with DSOs at different stages, aiming to train clinicians and increase utilization.
Morici also emphasized the importance of standardization in DSO environments. He described how Invisalign and iTero can fit into a general dentist’s broader workflow—where most procedures are restorative rather than orthodontic—and how tools like SmileView can support chairside discussions by showing patients visual comparisons of their current smile versus potential outcomes with orthodontics (and, in some cases, restorative work).
Portfolio expansion: early feedback on “zero refinement” offerings
Morici said early feedback on cases with zero refinements has been positive, noting that Align initially rolled the offering out with DSOs that have used it for “a number of quarters.” He framed the shift as part of the evolution of Align’s portfolio and technology, giving doctors more flexibility in how they purchase Invisalign treatment.
He contrasted the current portfolio with a decade ago, when Align’s main product was Comprehensive Unlimited—five years of treatment with unlimited refinements—designed in part to support utilization when technology and digital workflows were less mature. Today, Morici said, “90+%” of cases go through digital iTero scans, supporting improved quality and enabling offerings that may not require refinements. He also noted that three years ago Align introduced a “three-in-three” option (three years with three refinements), which he said is now the company’s top-selling product.
Asked how Align will gauge success for zero-refinement cases, Morici said the company is not setting a specific penetration target. Instead, he said the focus is on whether utilization increases, particularly among orthodontists who might otherwise choose wires and brackets. He provided an example of how pricing differences can influence that decision, describing a gap between traditional materials costs for braces and Align’s comprehensive offerings, and said a lower-priced comprehensive option without refinements could narrow that gap and potentially expand Invisalign’s “share of chair.”
Pricing, mix, and margins: managing ASP while expanding profitability
Morici said average selling price (ASP) is influenced most by geographic mix and product mix. Selling in markets such as Turkey, Latin America, and India comes with lower list prices, and those regions have been growing quickly, he said. Product mix also matters, as shorter “touch-up” offerings with fewer aligners carry lower ASPs.
At the same time, Morici said products without refinements can be favorable for gross margin, since refinements increase cost to serve. He described scenarios where a lower-ASP product could carry a high gross margin rate because it avoids refinement-related costs.
On the consumer environment, Morici said Align is not explicitly baking potential stimulus-like effects into its guidance, though he noted discretionary out-of-pocket spending—particularly for adults—could benefit if consumers receive larger tax refunds.
Morici also addressed margin expansion, pointing to 100 basis points of expected margin improvement for the year. He said Align took actions in the second half of the prior year, including restructuring aimed at improving productivity in cost of goods sold through equipment upgrades, logistics improvements, and initiatives to reduce resin and labor costs. He also cited operational efficiency efforts on the operating expense side, such as changes to organizational layers and span of control.
He added that the margin outlook is “despite” the company scaling up its DirectFab manufacturing approach, which he said carries inefficiencies early in the ramp before reaching neutral and then more productive economics at higher volume. Morici said DirectFab is expected to support production of more complex, currently manual products—such as certain retainers and appliances requiring welded components or attached buttons—beginning around the middle of the year, with additional commercial products scaling into next year. He also noted that DirectFab could reduce material waste compared to traditional manufacturing, where much of the material becomes discarded “negative” molds.
International trends and supply chain updates
Morici said Europe has delivered strong growth across multiple markets, citing mainland Europe, the U.K., the Nordics, Spain, and Italy, and said broader EMEA strength includes Turkey and the Middle East. He attributed momentum to under-penetration, increasing digitization via iTero, Align’s direct sales training efforts, and product adoption—including the Invisalign Palatal Expander and offerings within doctor subscription programs for touch-up cases. He characterized North America as “third or fourth inning” on penetration and Europe as earlier, noting that wires and brackets remain the standard of care.
In APAC, Morici said Align has seen double-digit growth, including China and the rest of the region, and described APAC as even earlier than EMEA in terms of penetration opportunity. On China’s volume-based procurement (VBP) process, he said it has been discussed for several periods, was expected to start last year, and “maybe it hits this year.” He noted VBP typically enters the public sector first and said about “85%” of Align’s sales in China are to private channels. Morici said Align believes it can manage through potential changes due to its local presence in sales, treatment planning, and manufacturing, alongside its product portfolio.
Morici also addressed questions about Align’s manufacturing facility in Israel amid the current Middle East situation, saying employees were safe and the company’s global supply chain and regional hubs have been effective in maintaining shipments. He said he did not expect an iTero supply-chain issue for the quarter.
About Align Technology (NASDAQ:ALGN)
Align Technology, Inc (NASDAQ: ALGN) pioneered the use of digital technology in orthodontics through the development of the Invisalign system, a series of clear, removable aligners that provide an alternative to traditional metal braces. Since its founding in 1997 by Zia Chishti and Kelsey Wirth, the Tempe, Arizona–based company has expanded its focus to include intraoral scanners, CAD/CAM software for dental laboratories and comprehensive digital dentistry solutions.
The company’s signature Invisalign system leverages 3D imaging and computer-aided design (CAD) to create customized aligners that gradually reposition teeth, improving patient comfort and treatment predictability.
