These Are Align Technologies Key Demand Drivers in North America

In 1Q17, Align Technology (ALGN) has started selling its new product Invisalign Go in North America, which involves a few DSOs (dental service organizations). Already launched in the UK, France, and Germany, Invisalign Go is a solution that helps general dentists identify, plan, and execute aesthetic teeth problems.

The above diagram lists the various factors that make DSOs the highest growth segment in dentistry. Align Technology has selected DSOs as one of the key focus areas to compete effectively with peers such as Dentsply Sirona (XRAY), Danaher (DHR), and 3M Company (MMM).

While increased demand from orthodontists and the expanding customer base of GPs (general practitioners) in North America resulted in a 20.3% YoY (year-over-year) rise in Invisalign shipments in 1Q17, DSOs saw an even higher 50% YoY growth. Since DSOs are much more prone to adopt technology and innovation to drive efficiencies, they have been much more aggressive than non-DSOs in deploying the Invisalign system.

Align Technology expects the digitization of data and services to be the next phase of automation for DSOs, which is being called DSO 3.0 in the company’s new marketing programs and promotional literature. This is in line with shifting preferences of consumers toward digital experiences that help them understand their ailments and take preemptive steps to manage their conditions.

Align Technology thus expects DSOs to use technologies such as Invisalign treatment plans, progress monitoring applications, time-lapse features, and iTero scanning technology more and more. Notably, the Vanguard Small-Cap ETF (VB) has 0.34% of its total portfolio holdings in Align Technology.

Now let’s discuss the Align’s performance in international markets.