Align Technology (NASDAQ:ALGN) executives highlighted product innovation, financing initiatives and international expansion as key growth drivers during a discussion at the 2026 Stifel Jaws & Paws Conference.
Chief Financial Officer John Morici, joined by Shirley Stacy, vice president of finance, global communications and investor relations, spoke with Stifel healthcare managing director Jonathan Block following a technology update the company held the prior day. Morici said Align is moving beyond individual products toward broader treatment “solutions,” including enhancements to its Invisalign Palatal Expander and mandibular advancement products.
Morici said the company is adding features such as hooks and buttons to the palatal expander and developing products that can move teeth while also addressing jaw and skeletal issues. He said direct fabrication technology helps support that shift by making it easier for doctors to treat multiple issues at the same time, particularly in teenagers.
Financing and Conversion Initiatives Remain a Focus
Morici said Align is also emphasizing “active conversion” strategies that it has learned from dental service organization partners and large practices. Those strategies include working with outside financing companies such as HFD to provide patients with more affordable monthly payment options and improve treatment acceptance rates.
He said Align typically pilots new initiatives, learns from the pilots and then moves toward broader releases. That approach applies to both ortho-restorative initiatives involving labs and patient financing programs. Morici said many of those efforts were piloted last year and have begun rolling out into this year.
Direct Fabrication Expected to Scale Over Time
Discussing direct fabrication, Morici said the technology remains dilutive to gross margins this year, but the company expects it to become more neutral as volume scales. He said reaching more than 10% to 15% of volume for directly fabricated products could allow the company to offset the initial margin drag.
Morici said the main margin opportunity comes from lower material costs compared with traditional manufacturing, where Align must create and discard a negative mold. He said the company initially is scaling direct fabrication through products with attachments and specialty retainers, before moving into broader retention products and then aligners. He said aligners could become more regular direct fabrication products in the later part of next year.
Morici said direct fabrication for aligners will require FDA approval, and Align is in the process of working through that. He said biocompatibility and other requirements are “well along,” and that the bigger focus is scaling the resin and manufacturing processes.
North America Remains Challenging, DSOs Grow Faster
Morici said the U.S. represents more than 40% of Align’s business and that the company has been operating in a low consumer confidence environment for several quarters. He said recent changes in consumer confidence readings have not materially changed the company’s business environment.
In North America, Morici described a split between DSOs and more traditional independent practices. He said U.S. DSOs are growing at double-digit rates by using more active conversion strategies, including scanning every patient, showing treatment visualizations, offering competitive pricing and providing financing options that lower monthly payments.
By contrast, Morici said some independent or retail-oriented doctors have taken a more passive approach and have not grown as much. Still, he said those practices are becoming “less negative,” and North America was about flat in the first quarter against a tough comparison from the prior year. Morici said the expectation is for North America to return to growth as initiatives such as financing and conversion tools gain traction, though he acknowledged macroeconomic pressures including inflation remain a factor.
International Markets Continue Double-Digit Growth
Outside North America, Morici said Align continues to see double-digit growth across APAC, EMEA and Latin America. He said growth is not uniform across every country, but larger and emerging markets are driving results, including Turkey, India, Eastern Europe and Southeast Asia.
Stacy added that continued expansion outside the United States remains an important opportunity, describing emerging markets as “still very fertile.”
Morici said Align benefits from underpenetrated markets and a direct sales force focused on bringing more doctors into the company’s ecosystem, training them, reducing churn and increasing utilization.
Margins, ASPs and New Offerings
Morici said Align expects 100 basis points of margin expansion this year, aided by restructuring, but he also pointed to additional opportunities in gross margin and operating expense leverage. He said products without refinements, including “no AA” or “Zero AA” style offerings, carry higher gross margins because they rely on more efficient treatment planning and do not include built-in refinements.
He said Align is also pursuing productivity improvements in manufacturing, including resin, labor and freight cost reductions. Morici said the company posted 250 basis points of operating margin improvement and 200 basis points of gross margin improvement in the first quarter excluding foreign exchange effects.
On research and development spending, Morici said R&D as a percentage of revenue should begin to normalize over time as products move closer to commercialization and revenue from those products increases.
Morici said average selling prices are typically affected by mix, including country mix and product mix, and that Align usually sees one to two points of ASP pressure from those factors excluding foreign exchange. For 2026, he said foreign exchange and a U.K. VAT-related benefit are expected to reduce that pressure closer to about 1%.
Discussing the no-refinement product, Morici said it is intended in part to compete more effectively with wires and brackets by narrowing the price gap for doctors. He said a doctor who might pay about $350 in material costs for wires and brackets could face a much higher cost for Invisalign, but the no-refinement product may be priced in the $700 to $800 range depending on discounts. He said doctors can purchase refinements as needed, with a U.S. refinement costing $170.
Morici said the product is designed to win more share from wires and brackets while also helping regain volume from doctors who had shifted to lower-cost clear aligner competitors. He said some competitors have increased prices, while Align has not.
For the second quarter, Morici said Align typically sees sequential revenue growth of 3% to 4% from the first quarter to the second quarter. This year, he said the midpoint of the company’s second-quarter guidance implies about 1% sequential growth, reflecting prudence around geopolitical uncertainty and patient decisions.
Morici also said DSOs account for about 35% of Align’s North America volume and about 25% of global volume. He said their gross margins are comparable to the broader business and that DSOs can be favorable from an operating margin standpoint because they handle training, local marketing and other activities. He described DSOs as a “force multiplier” for Align.
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.
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