Align Technology, Inc. (ALGN) Earnings Call Transcript & Summary

All right. Good morning. Thanks, everybody, for joining us. I'm Brandon Couillard. I cover the dental sector here at Jefferies. Very happy to have Align with us at the NASDAQ conference this year. Align is a global medical device and dental company focused on engaging in the manufacturing, design and marketing of the Invisalign clear aligner system as well as intraoral scanners used in the orthodontic restorative and general dentistry market. Joining us from the company, CFO, John Morici. For those in the audience, if you have a question during this fireside chat, I believe there's a submission form in the web portal for you to use or e-mail me directly. We'll do our best to get to those. And so with that -- this out of the way, we'll jump right into things. John, thanks for joining us.

Thanks, Brandon.

Just to jump right into things. So the business, as the COVID pandemic hit with vertical bound, any color you can share with us on how the recovery has played out, either geographically or by channel over the last couple of months through April, May? And any color on June you can share with us?

Yes. What we tried to give, Brandon, at earnings is -- talked about China that had gone into the crisis first and really came out first as well. And what you saw in China where certain areas were affected, they are slower to recover. Other areas not as affected came back sooner. And I think you see that play out in every location that we have. I think what is the same across every country is that as the country starts to open up, it really comes down to the regions and what is happening at the local level, what they allow in terms of treatment. Is the office open? Do they allow a certain amount of people in? What are the PPE requirements and social distancing and so on? So as you look at even the U.S. states start to open up, and then it really gets into the geographies within the states. And many of the states that were not as impacted open up first, and you see volume come back. And in other states where there was more of an impact, it takes more time. So China is a good proxy for that just from the standpoint that it plays out by geography, and we're doing everything we can to try to help our doctors as they come through this to be able to open up in a way that provides the best outcomes for their patients and do things in a way with a lot of the digital technologies that we can bring to be able to make this effective for them.

China is a relevant proxy to consider when thinking about the slope of the recovery in these western geographies. What are the similarities and differences in the channels or customer types that may affect the speed at which you've seen some recovery? I think we look back to the last quarter. You commented that China had recovered to at least 80% of pre-COVID levels. What are the distinctions we should think about?

Well, China is a unique market. And so we can use some similarities in terms of doctors opening and then seeing some of that recovery. And in China's case, as you said, about 80% or so of that volume after 3 months. China was unique from the standpoint that they were able to basically bring the country down and lock things down for a period of time and then bring things up with some of the clinics and hospitals and kind of more of a centralized approach to be able to recover on a more natural basis. Whereas other countries, it's maybe not as centrally controlled and things are much more dictated by what's going on within the regions in terms of how things open up and so on. But I think broadly, too, when you look at the market, you're still going to have seasonality patterns that exist, whereas like now you get into more of the teen season in China, U.S., other places where as teenagers get to certain age, I mean, the intuition is at a certain point in time where they need to create space or their jaw needs to be properly aligned and so on, all that still exists. It just comes now as a different way. And -- but it's all dependent on getting those offices open and doing in a way that provides safety. And really, when we look at the -- with Invisalign and what we can bring pre-pandemic, we were always about the digital technology driving productivity in those doctors' offices. And that productivity drove additional profitability as they brought more cases in. Now it's become more of a necessity. As those doctors' offices open up and maybe those doctors can't see as many patients as they used to or maybe it takes longer because of PPE and other things that they have to consider, we think Invisalign and Invisalign system really lends itself well to continue to drive productivity at those doctors' offices at a time that they need it, where they're limited in terms of some of the patients that they can see.

Yes. Maybe with that sales force theme, as you've kind of gone through this period of distancing, how is the sales force? How effective have they been in engaging with customers? Are they able to physically get back into the offices yet? And have you kind of pivoted at all in terms of their focus on existing users and taking up utilization from a guy who's using it 5 times a year, 10 times a year to 20 or -- and deemphasizing new customers? How has the sales force priorities evolved?

It's a really good question. And really, what we took at the outset was when we start with a vastly underpenetrated market, we think that -- and we thought it was very important to keep the existing investments that we have. So whether it's the R&D that we've invested in to provide much more digital technology to aid in visualization and remote monitoring and so on of patients or some of the marketing spend, where a lot of people at home or on their phones or computers and so on, and we want to be able to continue to reach them, reach them as consumers so that Invisalign is top of mind for them as they go through this. And sales is another piece where we didn't furlough people. We kept our people, did reduce salaries, did things in a way that in this vastly underpenetrated market, we want to be able to still reach out to our doctors, provide virtual training, be able to reach out to them as we go through this process so that we can help them increase their utilization, explain the tools that are available to them, both now and in the future and do things that you would have as that partnership having that investment and continue those investments in those resources, which were unique in the dental space. It was definitely many -- most companies didn't keep that investment spending. We could do that given the health of our business that we started with. And we can do that because we believe that in a vastly underpenetrated market, that's what companies do. And we think that, that is -- specifically on the sales, helps with our doctors to try to increase utilization. We think that in reaching out to new doctors and providing some of the basic training, we can do a lot of that and have done a lot of that during this time period so that when they get back, they have alternatives, and we want to be able to provide those alternatives.

In terms of some of the new products and services, you've introduced recently 2 different new virtual tools. You've got a virtual appointment tool, a virtual care tool that you've rolled out. What are those? And any metrics you can share with us in terms of the adoption you've seen of these solutions?

And really, it's an extension of -- given the crisis that we're in, a lot of these were in development and really providing more tools to our doctors to be able to treat patients the way that best suits them and their patients. So around the visualization, it's being able to either provide tools like this where you have kind of video technology or pictures to be able to see how that patient is progressing. Is the aligners fitting properly? Do they have the right -- the fit for those aligners? And are they progressing properly? Being able to do that remotely was critical during this crisis because they couldn't get to offices. And those patients then could continue onto their treatment. The doctor could say, "Look, it's progressing exactly right, keep going." Or "It's not progressing like we thought. Stay with that same set of aligners, don't move on to the next one." And then they could help prioritize getting those patients back into their office as their offices open up to get a scan, maybe do a refinement and get them further along into the treatment planning. And others, they could just continue. And so this visualization, our company is built on a digital platform, so this is a natural extension of that, being able to help them so that they -- as they need to schedule time with their doctors, it's just an extension of doc locator that we have online. But again, being able to make sure that we can help our doctors any way possible, be able to continue that care with their patients and make things as easy as possible for their patients.

Are those tools free, is there any type of fee that you collect from offering those virtual solutions? And any metrics you can share with us in terms of the number of docs that have -- that are using the platform, either in the U.S. or the country that you've rolled it out insofar?

Right now we don't charge for that. It's part of the treatment planning that we're providing. So to be able to provide that visualization, there's some -- either through a patient app that can provide this visualization or there's some internal systems that our doctors will use, but no charge for that. It's part of helping them provide care to their patients. So we think it's very important. And we think that this is a win for the doctor to be able to continue the care, and it's also a win for the patient to be able to make sure that they can confidently get through their case without seeing the doctor, in some cases, face-to-face. In terms of the metrics, we've trained over 4,000 doctors at a point relatively recent that we've spent time with, and doctors love it. It's another tool for them to be able to help provide care for their patients. And in this crisis time period, it's been critical. And as we get into the recovery, they can help triage and kind of figure out which patients they need to see first and which ones can wait a bit. And then it also helps on a go-forward basis. It helps the doctors as well as the patients have confidence that anytime they get into treatment and start a treatment that they could finish and they can finish even if there's a relapse or other unknown circumstances that happen with this virus. So it's been very -- very well received, and it's something that we'll build upon. We'll provide more tools and more ability so that these doctors can provide this care.

I don't know if you have these numbers off the top of your head, but think about a standard wire and bracket case. Maybe it's 18 months as opposed to Invisalign. How many office visits might a wire and bracket case require? How many office visits in person, do you think, an Invisalign, standard Invisalign case would need? And even now I imagine some of those could be moved virtually. Just how do we compare the 2 experiences?

Well, certainly, as with wires and brackets and Invisalign, you have that initial visit in the office. You take an x-ray. You understand what -- what's happening within the mouth and then be able to provide treatment. On a wires and brackets basis, you're going to see that dentist or orthodontist every 2 or 3 weeks. You're getting -- because you physically are getting something adjusted in your mouth to be able to move your teeth. In pre-COVID, you would have -- we would have many doctors that would go after that initial treatment setup and maybe putting on attachments and so on, they could go 7 or 8, sometimes 10 weeks without having to come back to that doctor as long as things are fitting properly. Now with some of these visual tools and technology that we have, you can go even weeks longer because as they -- as that doctor can see how things are fitting, is the gaps right? Are they wearing their aligners? Are they doing things that they should be doing and the overall health of the mouth is in a good condition, they can go weeks longer? And it just provides another tool to our doctors to be able to provide the care that their patients want. And it can go -- if you're looking at 2 or 3 weeks over that time period for a wires and brackets treatment, you might go back and forth to the doctor 10 or 12 times over that time period. Whereas with Invisalign, you might come back 3 or 4 times. So it'll be significantly less. And with these tools, it's even more productivity.

Yes. That's certainly true in the current environment. There's been some discussion of debonding on existing patients that have wires and brackets and moving them to Invisalign. Is that a trend that you're seeing in the business? And how feasible is it for doctors to perhaps switch patients mid-term? And do you have any sort of special pricing, I guess, to incentivize that transition?

So it varies kind of country by country and kind of in terms of what people want from some of this switching. We've seen in the U.S. in some examples where either patients and/or doctors come back and say, "Look, it's the uncertainty of -- I was in wires and brackets for all this time. I really didn't get a lot of movement because I couldn't see my doctor. I don't want to continue treatment this way." And they'll go to their doctor as a patient or as a parent comes in saying, "I want my child, I want to be out of wires and brackets and use Invisalign because I want that security of being able to continue treatment safely and get to a completed result." So there's many cases patients are coming to their doctors or doctors are reaching out to us. And there are some promotions, and there are some incentives that if a doctor wants to do that, we can cover some of that material cost to switch them. But it's -- and in that case, it drives utilization. It's a clear case of incremental volume that you wouldn't have had otherwise because in that case, they were already in treatment with wires and brackets and then switching over to Invisalign. But it's really a sign of the times. It's something where it was, pre-COVID, you had -- you made some of these choices. Now post-COVID, when you're worrying about safety of the patient, of the time that it takes, the safety of the overall doctor and their staff and the time that it takes in the office, there's a lot of other considerations that doctors have. And we think that being able to provide these options to our doctors is critical.

In terms of the competitive landscape, it certainly seems like the COVID environment has perhaps put a lot of your competitors with fewer resources back on their heels. You guys are playing offense right now. Seems to be on your toes, holding the growth investments in place ready for the recovery. How do you think the pandemic has changed the competitive landscape, if at all, either in office as well as that from sort of the direct-to-consumer channel?

I think from a product standpoint and what we've seen as we've gone through, there's nothing new in the market that we would say, well, this is a different product, different process than we would expect and that we see with our own. We feel that we're the leader in this market. It's a vastly underpenetrated market. And we're going to continue to make investments in R&D to help our products and our process be as efficient and predictable as possible. We're going to continue to make investments in kind of -- in the sales and the training and really trying to drive more new doctors into using our process as well as trying to drive increased utilization to have those doctors work on more price. And we're really, from a name brand standpoint, the most well-known name in orthodontics with Invisalign. So we really look at the opportunity that we have. That's the underpenetrated market with a lot of opportunities to be able to drive growth. There'll be the competition that has been in pre-COVID. There'll be in to some extent post-COVID. I think if they had a faulty or a challenged business model pre-COVID, I think it's going to be challenged or even more challenged post-COVID, just given the economics and the environment that we're in. And I think that will continue to be a challenge. But we know that whether we're on the traditional orthodontic side where 12 million case starts a year and we're 11%, 12% of that. The vast majority of those case starts are still done with wires and bracket. And then if you get on the expansive side of the market, more where the DTCs play, there's 300 million plus potential patients there that could benefit from some type of teeth straightening. So we're focused on getting into this underpenetrated market, whether it's the traditional or the DTC, we have a product portfolio that can help our doctors treat the simplest cases, the minor movement, 5 sets of aligners, all the way up to the most complicated teen cases or other cases that we have. And we're really the only company that can bring all that together. So we look at a huge opportunity in front of us. There'll be things that need to be done differently post-COVID. We want to be the leader in that and some of the digital technology that we're bringing. And like I said earlier, we think it's critical to continue that investment in this market. And when others have cut back during the crisis, we continue to move forward in the right way.

Have you seen any draconian pricing behavior from any of the other competitors? And how have you changed your promotional strategy, your campaign or other incentives, be it in terms of the advantage program or otherwise to kind of stimulate demand right now?

No real change in some of those promotions and programs that we have. We run promotions as we've done for a number of years to be able to drive a certain amount of utilization or behavior within the marketplace. There are certain promotions or kind of programs that we have around advantage and so on, where it's kind of more of a customer loyalty or incentive plan to be able to have a certain amount of volume. We've grandfathered some of those tiers in. So -- because, obviously, this year is impacted by volume, so we don't want to penalize doctors for, in some cases, having lower volume because of what we've seen. So we've done some things to keep those incentives out there and not penalize them for lower volume, and things will get more normal as we go through this year and into next year. But overall, those promotions are really around it's driving new doctors to come into using Invisalign in our system. It's driving increased utilization across our doctors who already do some cases. Can they do more? It's partnering with Invisalign and iTero to really be able to drive that platform, that Invisalign system to be able to help, especially in this environment where digital technology is absolutely critical for driving productivity, which is what you need in those dental offices or orthodontic offices. And it's something that's expected from the marketplace. So those are the things that we're focused in on. And we're not seeing anything out of the ordinary from a pricing standpoint externally and nothing that would cause us to do anything different than we've done in the past.

Do you think the earnings power of the company will be higher or lower than it otherwise would have been pre-pandemic once the new normal reveals itself in steady state?

It's interesting. Look, we're making investments in this to try to grow this marketplace and continue to invest. The investments that I described in R&D and marketing and sales, those are all Xs that we invest in to really drive that output, which is that Y is volume and trying to drive that revenue. One of the unknowns that you have in this post-COVID environment is another X around infection or the social distancing, the change that you're seeing in terms of how people view the dental and orthodontic offices, how they view their own safety, how parents view their safety as well as now their kids, is there any type of orthodontic treatment. You've got a lot of unknowns at doctors' offices where they can't treat as many patients. And they have to find ways to be more productive. But it's all coming from this X of it's just an unknown that we've never -- many companies -- most companies have never had to face something like this and certainly we haven't in our 20-plus years. And so this one could drive additional utilization. It will change the mindset of some who would say, well, I need to think a little bit differently about the treatment I go into. I want to make sure whatever I start, I finish. Doctors will have to look at it in a way where there's only a certain amount of hours that they can spend. And if they are limited in terms of the patients that they can see, they're going to have to find ways. If they want to maintain the revenue that they had, they're going to have to find ways to be more productive. So we're leaning into opportunities that this brings. But it's all about being able to provide better tools and capabilities to our doctors so they can serve their patients in a way that meets their needs. And we'll do everything we can to continue that post-COVID.

Can you talk about the income demographics of your typical U.S. customer? And I'm thinking about the end user obviously. And how do you expect sort of the unemployment to impact new case starts in the U.S. at the moment? I guess, particularly, I'm getting at this -- the percent of your business that's really tied to the adult aesthetic market and how to think about that, I guess, in the current economic reality.

Yes. And it's a good point. I mean our -- by the nature of our business, it maybe skews to a little bit higher end from a demographic standpoint in terms of income and so on. As we know, in any recession, every product becomes discretionary at some point. And so when we look at our portfolio, the teens, which is about 25% of our volume, maybe a little bit less discretionary. You get to a certain age where you need to create space or align jaw and so on or just get to teen season many times in this summer between school years and so on, you go into treatment and maybe a little bit less discretionary and people have saved up for. On the adult side, look, if there was a malocclusion before the crisis, it's still there afterwards. I think there's a lot of different financing opportunities that doctors help -- can provide to their patients to be able to help them get into treatment. There's external financing that those patients could find to make things affordable and get things on a cost basis that makes a lot of sense to them because, in many cases, some of those -- that minor movement and minor teeth straightening that's needed, it doesn't cost a lot. And it's something that's more affordable and the doctors can provide that pricing that is more affordable to those patients. So a lot of alternatives. You start with the fact that whether you're on the traditional orthodontic or kind of that DTC side, there is a tremendous market opportunity. It's a vastly underpenetrated market, a lot of things that we can help drive. And even in a recession, we'll look to be able to really try to grow our utilization and the market share. Maybe overall cases don't change or maybe even come down when you think of all the orthodontic cases. But if we can increase our share and increase the utilization of our product, there's many offsets in this environment given the circumstances.

Got you. If we look back last quarter, you pulled guidance for the year just like everybody else. Do you think you'd be in a position to reestablish forward-looking guidance on the 2Q call? And what are some of the factors that you're considering before sort of reestablishing some goalposts looking forward?

Yes, I think you're right in terms of pulling guidance. And I think when we look at the rest of this year, we know that you go through the crisis, you've got an impact, you're kind of coming down that curve, and it's tough to be able to guide not knowing how that curve is going to play out. It's similar in a way as that curve starts to come up, how do you get that recovery. A lot of people talk about the V-shape, U-shape, L-shape recoveries. It plays out like that in all different regions. And every -- it's not even country by country. Nowadays, it's region by region within countries, within states as to what's happening. So there's multiple curves that are showing up as a recovery. And it's just difficult for us to get an exact view of how things are recovering. So therefore, I think from a guidance standpoint, many companies, including us, will keep guidance to what we've given, which is try to give highlights as to what's happening but not give specific guidance. And I think when you start to see more of a sustained kind of normal rate because you also have, as you come out of this, you've got a certain amount that is going to be run rate of what your volume is going to be. And that's kind of what we were in when we could give guidance, but then you also have kind of a catch-up and some maybe some other volume that comes through that. You just want to make sure you can understand on a predictable basis what that volume is going to look like. And once we get a few more quarters behind us, we'll have more visibility to that.

Yes. Okay. Got you. We are coming into the all-important summer teen case start season. Do you expect a relatively normal year? Have we missed some of the window in terms of being able to get those patients into the office or before the school year starts? And then I'd like to talk about some of the various products within the teen market. But kind of what your current real-time view of where teen demand stands?

Yes. You're right. Teen is an important time period. You see things open up right as teens -- as you come into teen season. So I think the timing has been good, where many offices have been open for sure in June and even into May. And so you've seen that. Other countries like in China, like we've talked about, where that was open even earlier to affect their teen season. We think that you're going to have the kind of the seasonality within the business that you have in the past where teen season happens at this time. Many of the offices are open. Now there's precautions and throughput issues and so on that you're going to have in some of these offices that -- to be able to accommodate these teens in the summer. But again, we think it lends itself well to our product, which is digital technology to be able to help doctors see these patients, meet the demands that they have, be able to put teens into treatment safely, give confidence to their parents that they can -- when they start treatment, they can finish treatment, provide this visualization, really try to eliminate any roadblocks that you would have at this time so that as teen season really gets into full swing, those doctors can be as productive as possible.

Any update you can share with us in terms of mandibular advancement uptake in the U.S.? What percent of orthos are using that product right now? And perhaps maybe touch on the palate expander, where we stand as far as that program in the R&D pipeline?

Yes. Mandibular advancement is a key product that we introduced over a year ago in the U.S. and a couple of years ago outside the U.S. It's a product where you can obviously move teeth in -- through the aligners, but you can also adjust the jaw. And in 25% to 30% of teenage cases, when they're going into treatment, they need some type of jaw adjustment as well to get that bone to be positioned in the right way so that their bite as well as teeth straightening can occur. We get higher and higher adoption in the U.S. and OUS of mandibular advancement. Many doctors try it. They want to see firsthand how things work. And then as they get more and more comfortable with it, they'll use it more and more. It's becoming a bigger part of our portfolio, that as well as Invisalign first, which is really -- you mentioned palate expansion. This helps expand the arch. It's not actually moving the upper palate and expanding to -- that bone. But it is expanding the arch to be able to create space for kids that have crowding at 6 or 7 or 8 year olds where they have mixed dentition, being able to allow space so that those permanent teeth could come in. Palate expansion would be actually be a -- would be our first fully 3D-printed product that would snap to the top of a child's mouth, be able to slow the expand, put it in every couple of days, a new one. It slowly expands, acts as the bone up on top of their palate and creates space that way. That's a product that's in development. We expect to have something that we'll be testing and look at them to market more next year. But it's great technology. It's 3D technology. It'll be customized for that patient, many times a younger patient. And versus the metal contraction that goes in, where you have to adjust every night to like slowly expand that bone, this will be one that -- it pops in every night. And you can eat. You can do whatever, and then you change it out on a regular basis to be able to slowly move that upper palate to create that space.

Where are we in terms of -- if you look globally, in terms of teen penetration, where does that stand in the U.S.? And what will change going forward in terms of the challenges or gating factors you've had to accelerating teen penetration?

Well, the teen market share in the U.S. and every place across even after being at this for 20-plus years is still single-digit market share everywhere. U.S. maybe a little bit higher in higher single digits. But you go to places like China and Europe and so on, it's 3%, 4%, 2% market share, which means the vast majority of teenage cases, these orthodontic complicated cases are done with wires and brackets. I would -- 90-plus percent of those are done with wires and brackets. Teen is growing tremendously for us because of the products that I talked about and the advertising and giving alternatives and so on. And it's been on a steady growth that we've had, and we talk a lot about that on giving updates and so on. The change that we have now is really teenagers being able to want to start treatment and finish treatment and do things kind of on their own terms, maybe not have to go to the doctor as much, the dentists as much. Same way with the parents who are -- they want to make sure that they're being done safely. Can they do it -- when they start treatment, can they finish treatment? And I think doctors are much more open to this. And I think post-COVID, they're going to -- people have to have choices. And they want to decide what they want to go into treatment. Can they finish quickly? Can they finish without interruptions? And so a lot of our advertising, the marketing that we'll do will portray some of that information to either parents or kids so that they can understand that there's choices. Especially in a post-COVID world, they have many choices. And Invisalign can not only get them to the right outcome and on a predictable, reliable basis so the outcome is superior but they can get it done in a way that many times is quicker and more reliable from the standpoint that once they start they're going to finish.

You mentioned a couple of times sort of this mass market opportunity of 300 million folks globally with some form of malocclusion. Can you just sort of level set what your strategy is there and some of the ways you envision being able to access that market going forward?

Well, look, we think that 300 million at least potential patients out there through our doctors that exist. And we think that people have the means, the opportunity. They have the need, where there's -- they might have had some type of either Invisalign or wires and bracket, didn't wear their retainer, things crowd, and they have some type of movement that's needed to help them straighten their teeth. In this environment, people want to do things their own way. They want to maybe -- they want the confidence that they're going to get things done the right way. That's why we think our products with a doctor to have that initial consultation, x-ray, understanding of what's going on within that person's mouth. Sometimes you might have to have attachments on to be able to move teeth the right way versus just tipping them that some others might do. To be able to move teeth the right way with Invisalign, we think it's critical to go through that doctor. But then you don't have to go back as much. And there's a lot of visualization tools that we've talked about to be able to give that doctor the ability to look at how things are progressing without coming directly into the office and being able to make sure that they're getting the right treatment and things are progressing properly. And doctors have to look at it from a pricing standpoint. In many cases, this patient is not coming back and forth to their office much because of the nature of the treatment and maybe an easier case, more straightforward, they can do things remotely and so on. And if they don't have to charge as much, they can provide a better outcome to that patient. We think there's a huge opportunity. We think that this is a great market opportunity. It fits our portfolio of products that we have that we can, through our doctors, treat these very more simple product cases all the way to the most complicated cases. We think having a scanner in with our general dentist is absolutely critical as part of the general hygiene and scanning of that patient to be able to do whatever work that they need, whether it's a cleaning or filling or anything else, but then be able to show that patient that's in their chair here's how your teeth have changed over time. Here's the crowding that you have or the bite issue that you have, and here's what it would look like through simulation that would be in their picture of their mouth, of their smile and show them clinically what the outcome would look like with type of treatment. To be able to have that visualization right in the chair with your doctor, we think is very powerful. And that's how you access those 300 million plus potential patients. They're in the dentist chair on a regular basis. Providing a workflow that fits for those dentists is critical. And the only way you can access those 300 million plus patients is through digital technology.

I guess that's a good segue to touch on the scanner side of your business. Can you touch on just uptake of the 5D element scanner so far? I mean I think the iTero system's got some of the best apps of any scanner on the market. I think the NIRI imaging is a good example of that progress monitoring, another cool app that's unique to the platform. Just touch on the 5D uptake and maybe where penetration stands globally of the scanner system.

Well, as you mentioned, Brandon, I mean, look, the iTero scanner is the best on the market for what it does, provides the best visualization, the best digitizing what's happening within somebody's mouth. The added technology that you described with 5D, the near infrared technology to not only see through the same scan, you just do a one scan. You cannot only see the surfaces of what's happening and be able to put it into all the processes that we have for our Invisalign system, you can see inside. You could see cracks and lesions and caries and other things that might be going on below the surface. And so it's a great diagnostic technology that dentists can use as they scan patients, be able to provide additional care or highlight concerns that they might have. And be able to use all the other features that iTero brings in terms of how their teeth are wearing over time or how a simulation would look like for treatment and so on in addition to being able to drive that. So it was just recently announced a couple of months ago in the U.S., the 5D is available. It had been available outside the U.S. last year. And we're seeing -- as part of our volume, we see good uptake. It's part of our portfolio that we have of different products that we sell with iTero, and it's another great tool for our doctors to be able to provide care to their patients.

I think one other perhaps byproduct of the current sort of COVID environment is perhaps an acceleration in the transition in terms of the customer base, the market toward DSOs. Could you touch on how big DSOs are a part of your business maybe just in the U.S.? I know you partnered with Aspen, Heartland, 2 of the biggest DSOs, certainly in the country. What percent of case volumes do they account for? And maybe touch on the relative profitability of that channel versus traditional non-DSO channel?

Well, you're right. DSOs are popular, growing in the U.S., growing outside the U.S. as a way for kind of within this area, doctors kind of working together, being owned by a larger group to be able to be as efficient as possible. What we see with the DSOs that we've worked with, they believe in the digital technology. Those deals have a scanner upfront that's purchased, being able to use the Invisalign system, being able to scan all their patients, really make the iTero part of their digital workflow and their workflow for their patients and being able to talk about how they can improve their smile or improve their bite with Invisalign to be able to correct their -- to move their teeth the right way. Using -- working with DSOs, they might get some of the best pricing based on the volume. But in terms of the operating margin that we generate, where they're spending the marketing dollars, they're spending a lot of the training of their doctors and other operating expenses that we don't incur. Those are some of the best operating margin businesses that we have. And it's growing, as you see, with more and more DSOs as they've grown. And we think it becomes a bigger piece of our business because it's a bigger piece of the dental business. And we think we have the solution to help them be as profitable as possible within those, not just about driving productivity, and that's the starting point that we can help with the DSOs, but then the DSOs realize that, that productivity that we drive through the digital technology and workflow and so on can also drive profitability where they can then see more patients. They can have local marketing and other things to be able to drive more patients to these practices that are more productive. Those DSOs realize that they could be more profitable with our system.

We've got about 5 minutes left. I do want to touch on kind of the financial model. Historically, your growth algorithm top line has been 20% to 30%. Is that still relevant in the current environment? Why? And sort of given some of the secular dynamics perhaps, is it moving in your favor in terms of driving this analog to digital conversion? Do you think perhaps the high end of that range is realistic near term?

Yes. I think when you look at how we -- it's more how we invest and how we allocate resources and think about it from that standpoint. So when we look to find investments that we make, whether it's on R&D or sales people or marketing that we spend, we're thinking, when we make these investments, we want to have that right balance. We want to make these investments to grow in a vastly underpenetrated market kind of with that 20% to 30% range and be able to do this at a, say, a 25-plus percent op margin and make these investments that you can operate in that environment. Some cases, you grow internationally, you get some other great growth opportunities that we have, growing in teens and so on. We've been able to grow in some years above that 30% just in terms of how things play out. But the mindset that we have when we look to make future investments is with this 20% to 30% revenue, 25-plus percent op margin. Some cases, you do better. Look, we think that in a market where 80-plus percent of the worldwide orthodontic cases are done with wires and brackets. And we're the majority share of that remaining 20%. This is not about share shifting within clear aligners or anything else. This is about becoming the standard of care in this market. And so the investments that we're making have that in mind. We are trying to be the standard of care, and we're doing everything we can. We're doing everything we can pre-COVID. We're doing everything we can post-COVID to grow in this mindset.

I just pulled out my model. You got a fortress balance sheet. Maybe if you can just touch on this idea of diversification. Align has remained a specialty player in the market, just focus on clear aligners and scanners. Took you 20 years to go from $0 to $1 billion of revenue, then just another 2 years to go from $1 billion to $2 billion. If we look out 5 years down the road, will Align still be focused on aligners and scanners? What does the company look like in 5 years?

Well, when you look at what we're trying to create here, it's created a digital platform to be able to grow in this market. And like I said, it's a vastly underpenetrated market. You're right. We've been at this for 20-plus years, and we're still in the low teens from a market share standpoint. We have a huge opportunity to grow, and we want to continue to make investments to be able to grow in this marketplace. You're right. From a balance sheet standpoint, it has served us well throughout our company's history, not having any debt, being able to have a great business model where we can be profitable, generate cash and be able to use that cash to be able to invest back into our business, to be able to help the growth that we described, being able to provide working capital to our customers, our doctors who are challenged during this time, and we can help them work together to get through this. When we look out at our company going forward, we know that we can continue to invest, continue to grow in this category. It's a huge opportunity for us. We are not to that tipping point. We're doing everything we can to get to that tipping point. We hope in the next few years we get to that. But until we do, there's still so much opportunity for growth. There's so much opportunity to really change this industry. That's what we're focused in on, and that's what's built into our forecast.

Very good. We'll have to end it there. Unfortunately, we're out of time. Thanks, everyone, for joining us. John, thank you. Good to see you, and talk again soon.

Great. Thanks, Brandon.

Have a great day, everybody.

Take care.