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

Okay, guys. Good morning. Jon Block with Stifel, and welcome to 2022 Stifel Jaws & Paws Conference. It's really great to have everyone back to see everyone in person, and we've got a packed day. We've got 30 total panels across 2 tracks, so feel free to check out the other track in the back. We've got 4 physician panels as well. So we're going to start with Align Technology, leader in clear aligners. And with us, Joe Hogan, CEO; John Morici, CFO. I'm going to hand a lot of topics, guys. Feel free to jump in, right? This is for you. If you have questions, just show up your hand, I'm going to repeat them because we don't have a mic running around.

But Joe, I'm just going to start near term. And I get a lot of questions on trends. Maybe just elaborate on how 1Q '22 ended and 2Q '22 began. And I'm going there because you guys hardly ever miss a quarter, right, and you've got a lot of visibility when you're reporting the prior one. And so maybe if you can elaborate on where March went. I think on the call, you also alluded to April and how that trajectory sort of filled out, if you would, as you exited 1Q.

Right, when you look -- like, Jon, you said that, obviously, we missed our numbers and disappointed about that. But 2 big variables in that equation. China shut down, and obviously, China shutdown continues. And Shanghai, it looks like it's going to open up. We'll wait and see what goes on. And secondly, I mean, with Beijing is -- it's just China is just a really difficult variable. And I think you know it's a difficult variable, and then it continues to be a difficult variable. And then obviously, exchange, is in a big way. So those are big variables in the equation. But overall, the rest of the Western world will perform the way we had anticipated in the first quarter. That is the biggest reason at that point in time. How do we feel about the business overall is obviously consumer confidence is still a concern out there. There's still some issues out there. But we just came back from the AAO and -- which is the orthodontic conference in the United States. It happens every year. We look closely about competition, what's going on. There's nothing new there at all in the sense of any competitor, any competitor activity so we can get into that, Jon, too, we announced some new technology we can talk about, too. We actually feel really good about the business. We feel good about our position. We feel good about the nature of the market. We have talked about for years in the sense of the growth and the penetration opportunities for the business. And we'll -- and obviously, we feel good we'll get through this and continue to breach that 20%, 30% growth rate.

And I've always got my talk track, but then we'll just jump around. I mean you just alluded to innovation, and I was at AAO. Maybe talk to us here what you're excited about. I saw the Outcome Simulator. I think there's something else going on with CBCT. But walk us through what you're excited about. And you've been at Align now for a while. Is this one of the more sort of fulsome pipelines you've had from an innovation standpoint?

Yes. No, thanks. Yes, it is. It's a lot of technology coming to fruition. We've invested heavily in over the last 3 years, even 4 years, Jon, when you think about it. We did -- as Jon mentioned, we offered -- we launched an IOSim on top of our platform for iTero with -- IOSim is a simulation, an oral simulation. And we've had this product for years, but the code in itself has been divergent in a sense from a ClinCheck standpoint. But the code -- we'll talk about Live Update for a second, but the code we use now for IOSim is actually the code that you use to do treatment planning. So a doctor can scan, you can initiate the IOSim. The algorithms that are used for that can actually be forwarded to the treatment planning in Costa Rica, which really tightens the knot around productivity. And it allows the doctor to show a patient not necessarily just a simulation that could change over time, but actually what their teeth are going to look like when you do that. Another big area that we are pushing on and we'll launch across the world is called Live Update. And so traditionally, in a digital process, we've had a pretty big analog problem between doctors in Costa Rica in the sense that they go back and forth. Doctors saying they want this; Costa Rica is saying, well, you can't do that because this is what will happen. And it's a big productivity thing for doctors. What Live Update is, is you basically scan. And through AI, we don't have to do any segmentation on a scanner anymore from the teeth itself. We know where those teeth are and how they function or whatever. And then we run the algorithms and send it directly to a doctor. A doctor uses 3D controls. 3D controls is like Photoshop. You pull 3D controls, you see the teeth. You see what our simulation is and what we suggest from an algorithmic standpoint, what a doctor should do. And actually, if the doctor can make some changes, you might want to elongate teeth or rotate them, whether to push a button, it goes right to manufacturing. I was explaining in another session a moment ago is I saw some docs in Salt Lake City last week, and they're telling me they're saving like 20, 30 hours a week by being able to do this and not have to go back and forth. That also means that patients get their aligners sooner, too, because you don't have this going back and forth while a patient waits for the treatment plan to be completed, too. So that's -- and then the CBCT piece, which is CBCT is computed tomography, 3D X-ray. And for years, orthodontists have used this to figure out particularly roots and fenestration. Roots would be -- they want to know if roots ever collide during a treatment. And fenestration is we move teeth through bone. And they want to know when they're starting to move the teeth throughout through the bone to a point that you start to get root exposure. And that's a real problem that you can have with wires or brackets or with Invisalign, too. So what we've done, we've actually taken the DICOM files you get from CT, which are the roots. We've merged them with the simulation files that we have from our iTero scan. Remember, iTero scan is nonionizing radiation. It's just a camera, basically takes a teeth. And it merges those 2 together, roots on top of the caps, so the docs can see in real time. And this isn't -- there's some companies in that, we did this years ago, too, is where you'd have a lot of people in the back room trying to superimpose this by themselves and to work 40 hours later, you'll see a simulation. This is real time. You just merge those 2 files, take a DICOM file together, you merge it with an STL file, you can see the caps and roots in real time on what's going on. And so a doctor immediately can see the treatment plan if the roots are colliding. If they are, they're going to have to modify the treatment plan. And secondly, they can see fenestration. You can see if the bone starts to dissipate as the teeth moves forward. Doctors are really excited about that. These are orthodontists primarily. GPs don't necessarily want to go into that degree of analysis. And we'll launch that fully toward the end of this quarter as we go into the third quarter, too. The initial feedback, Jon, has been really a good one.

And Joe, maybe just help us, you've got some of the innovation you just mentioned. You've got some long-term initiatives that we're going to talk about, teen case packs, DSP is doing really well. You reiterated on the call, look, we're going to grow 20% to 30%, but you pulled the guidance in '22. Are these the initiatives that allow you to get back into that LRP sooner rather than later as soon as 2023? I mean because you do have a lot on your plate and a lot of new initiatives, is that how you view it?

Yes, I think this helps doctors who want to adopt more Invisalign one way or another, right, because it's easier to deal with us. And so will that help to -- I think that helps us to secure that 20% to 30% growth rate. This business, it requires technology, technology on 2 scales. One is you have to have great clinical competency. You know what you know from your experience in the businesses, doctors have to be confident they can finish a case. And they can finish it and not embarrass themselves in front of patients. And the more and more difficult the case becomes, the more insecure a doctor is. And so we offer, by far, the best technology to assure doctors, you attack a case, you can close it. But secondly is when we're talking about Live Update, doctors can't spend all day long behind a screen going back and forth trying to finish a case. And as we're bringing more and more AI, more and more machine learning to the forefront because we've done -- and this year, we'll do about 13 million, 14 million cases, we have the most predominant orthodontic file in the history of the world. We regress against that all the time to talk to -- to develop our algorithms and to speak to docs in a sense of what you do and don't do. And so giving them that kind of speed, and we just talked about Live Update to be able to scan, hey, here it is, make a few adjustments, send it to manufacturing, it's a huge breakthrough for them, too, because of their time. I look at an ortho, an ortho is worth anything between $1,000 and $1,500 an hour. And standing over a patient cranking wires makes no sense when your time is worth that much. And so bringing this to attention to doctors from a productivity and a clinical standpoint, it's a big part of what our sales force has to do, Jon.

Okay. Again, I'm going to always look out. And if you guys have any questions, just go ahead and shout out or throw your hand up. Joe, I do want to stick with trends for a moment, then we'll go into some of the long-term initiatives. What are we looking for from the consumer? I guess maybe the first question is, what are you seeing in terms of -- they seem to be searching. Everyone looks at Google trends. I think we do a lot more than that within depth surveys. But Google trends have still been pretty healthy for you guys? Is it the conversion that lacks? And is it -- if it is the conversion, what's the signal to look for that that's going to change consumer confidence, inflation coming down? Maybe talk to us about the near term in that regard.

I think the Google search obviously is a good leading indicator of people's interest. And I think, Jon, it's -- the whole Zoom effect and things that we talked about 1.5 years ago, it still exists, right? And so people worry about their teeth. They want to -- and they know this technology is basically available. So I think they query on it a lot just to confirm that it's an opportunity, and they talk to their dentists or talk to the doctor. I do think when you want to -- the consumer confidence thing is a big -- this is an elective procedure. And that's why John and I look at those statistics really closely is, if someone's not secure about what their finances are in the future, they're going to be somewhat reluctant. That's different than an implant or something where you really have to do something in a short amount of time from a dental standpoint. This is certainly an elective procedure. It is driven by consumer confidence piece, and a strong economy helps.

Okay. And let me bounce over to some of the programs that you've got in front of you. There's a lot. I've been following you guys for 15 years, and I think this is one of the most sort of robust times in terms of new programs. The one that I am very interested in is teen case packs, right? You guys have been attacking the teen market for a while. I don't want to say it's been disappointing, the teen market, but you've had the product approved for 20, 25 years. Teen penetration is, just pick a number, somewhere around mid- to high-single digits. What are you changing with teen case packs? I think we talked about this earlier, it's a little bit more of a partnership. Maybe if you can explain that. And then why now to go down that road for Align?

Well, our strategy predominantly in the past has been to advertise extensively to teens and moms and to have those patients go into an orthodontist and ask for Invisalign. I mean that's been our strategy all along. More and more we think we want to make sure that we try to partner with orthodontists because orthodontists often resist that and say you don't qualify for Invisalign or whatever they want to say in that sense to try to move them away. And some doctors legitimately think that teens won't wear their aligners. They really believe that. And we have data all over the world that basically say teens are much more compliant than adults. And teens' teeth move so much more easy than adult teeth do. So what we've done with the teen packs, Jon, is one is if you're a doctor who is not using much Invisalign and you're down in the bronze category or beginning gold category, you're paying $1,800 to $2,000 a case, and it's expensive. Versus $300 for wires and brackets, it's hard for them to get their head around it. So what the teen pack can do is allow them to get a better price point. And we've offered here is a -- the price point is -- it has 2 AAs, 2 additional aligners. So that really helps us from an overall margin standpoint. And so we can be a little more competitive on price than what they're used to. But don't think of that as a margin play here, okay? Our margins -- our gross margins are higher on these teen packs than they are in our comprehensive cases. And it's...

Gross profit dollars net out, John, is that -- I mean with your lower ASP, higher gross margin, same gross profit dollars, is that the right way to think about it?

Gross margin percent.

Okay. Yes. Okay. I'm sorry, gross margin percent is?

Higher.

It's higher, okay.

And so it's not -- don't look at it as a trade-off. And obviously, we'll get into competitive questions or whatever, but never forget, in our business, the biggest competition is wires and brackets, by far. I mean that's -- we don't wake up at night worrying about other clear aligner companies, honestly. Tech, sales force, other things we bring to the marketplace, we're very confident with. We still have a significant marketplace opportunity to replace wires and brackets, and that's what those teen packs are about. Another aspect of the teen pack is I feel we have a good core competency in marketing. We have a good consumer brand. We know how to hit the marketplace. Part of the teen packs has been co-marketing with doctors to say, okay, in your ZIP code, we'll contribute so many dollars and so much expertise and helping you to recruit these teen patients to bring -- to give them more confidence in a sense they buy a teen pack of 25, 30, 50 or whatever, that they'll be able to draw enough teenagers in to be able to meet that demand, that pre-inventory that they purchased. And just lastly, and John says this well and he can talk about it, is we -- this is the way orthodontists buy. Orthodontists for years have bought almost a year's supply of wires and brackets upfront. It's an inventory they know is behind them, and they're out to use them. And so this is kind of in their mental model from a business standpoint. And this is an opportunity for them to think, well, I kind of have this virtual inventory that I have to sell through, and we're going to help them do that through the co-marketing.

And that helps form the partnership, maybe you can get them additional volume, get them to their breakpoints in the teen case packs.

Yes, right. Yes.

So Joe, you talked about running plays all the time, and some plays are run very successfully; others, maybe you trial them. This has been out there for -- I think it was officially launched April 1. I know it's early, it's a couple of months, but what are you seeing so far, teen case packs? I think it's only U.S. and Canada. And are you thinking about launching this internationally?

Yes, we're looking at it internationally. And initially, there's a lot of enthusiasm for it, both from our sales team and our doctors. And we're just getting into teen seasons now in a big way. As you know, what that cycle is, you're getting a big part of the normal distribution curve. So it's a play we're excited about, and feedback has been good, and we'll see where it goes.

Okay. I'm going to hit on DSP, but John, I'll throw this one to you, just back to sort of some of the trends that I alluded to earlier. This is usually a pretty seasonal business, and you usually see a pretty big uplift 1Q to 2Q. If I look at your sequentials, we've got that model going back a ridiculous number of years, sort of high single-digit growth on the clear aligners 1Q to 2Q. But we've got to really recalibrate that or do we because, again, of the way that you exited, right? You talked about Jan, Feb, and you talked about March was obviously a tough month because you missed the guide. And then April, Joe, I think in your words, April was the same as March. So we've got to sort of take this into account when we think about that usual seasonality of 1Q to 2Q that seems to be completely off the table this year because of the way that you exit in the run rate.

You certainly had the impact from the things that we've talked about with some of the lockdowns and some of the inflationary impacts and so on, the conflict and so on, that affected March and April. We certainly saw that. I think what we were talking about is, as you see some of the cycles, teen season is just starting now help offset because, typically, you'd have the first quarter to second quarter, that biggest part of the increase is teen season. And that's what helps drive that additional volume. So some of the things that we're doing to be able to drive that volume, that's what we hope to see. And as you get into third quarter, if some of the restrictions come down in China, China's teen season is huge in the third quarter as well. So hopefully, that's seasonality of returns, but it's dependent on some external factors.

And Joe, think about China being off the board until fall, I mean, is that fair? Just your thoughts from a company perspective until...

Yes. I tell you, you have to look at tea leaves on that one. But I think, yes, I just -- you can't build a plan on China right now. You just have to let it fall the way it does.

Okay. DSP program, one that we've done a lot of work on, seems to be going really well. Maybe just talk to the investors on what the DSP program is, again, plans to sort of globalize that offering. And then I think there's a part of this where DSP sort of goes somewhat hand-in-hand with teen case packs or at least gives the ortho some additional flexibility around the AA. If we can go there, and then, John, I'm going to try to tie it back to the model.

Yes, okay. Well, DSP is a digital subscription program. And so -- and actually, John, Simon and even kind of the authors of this whole thing, is they're on the lower-end cases. We had before E5, E10, E7 and these things. The market is spotty. Doctors at times would worry -- didn't like the pricing or didn't like the delivery pieces or just aspects of the service and cost aspects of it. And so -- and also, if you look at the program, it primarily driven toward orthodontists. And orthodontists in general don't buy retainers from us. The ones that are 100% Invisalign basically do. But for years, since orthodontists, wires and brackets, they have what we call a little waffle-maker in the back where they take an impression, and they'll kind of roughly make a retainer in some way after the whole process is going. So as a way to go after that retainer market and to address some concerns that we had on the low end of our product line, E10 down through, we came up with a digital prescription program, which a doc will buy so many packs, almost like a teen pack, of how many aligners that we'll give them from 10 down and also retainers. And we launched it in the market, John, was it 18 months ago or so? The feedback has been terrific. The uptake has been terrific. You've heard about it and you've run into it, Jon, too, because, again, this is selling the way orthodontists want to buy. They said, sometimes, I don't want an E7 product with 7, I want 8. And we tell them, we don't have an 8. And it just made it much more simple for them to move through it. So we feel really good about it. We've also set up some dedicated lines on retainers where for a lot of the docs, we deliver retainers to them within 2 days. And what they've always been worried about before is if we don't get a retainer on that patient, their teeth are going to move within a week or so. And by using our manufacturing expertise and what Emory and his team can do, Emory Wright is leading our operational team, we've been able to really accelerate the logistics of it. So it's a good uptake. We've hit a nerve here.

And it's driving incremental volume on what we're...

Incremental, not cannibalizing 5 or 10?

It's not cannibalizing. Obviously, when we set this up, you want to make sure it doesn't, and that was guardrail, surrounded and made sure. But we see incremental volume on the low end, some of these E5, E10 cases, that would be some of those, but large volume on the retention side. That is we're doing with us. They were doing their own or something else, but the incremental buy has been great.

And so John, walking back to the model, you've got that other line. It's run rating around $250 million per year, it's recurring. This is where DSP falls because it's not a case.

That's right.

That's sort of another thing that I think people overlook or it might be taking a little bit out of the case number. I know, again, it's mostly incremental. But it's $250 million, it's growing 40%. Is that the right rate of growth for that other line? DSP, it's early. You haven't launched it, I don't believe, internationally. Can that other line continue to grow at a 40%-plus clip? And if I walk that back to the growth rate, it's sort of adding 200 to 300 basis points to the overall growth rate.

The other line is a huge opportunity for us. So you mentioned DSP falls in this. So when you do a DSP case, it doesn't fall into overall volume. It's subscription and goes into other revenue. Same way with any of the consumer sales that we have for commerce and so on, that falls into other and so on. And those are huge opportunities for us. Those are the ones where it's an untapped market. We leverage our brand. We leverage our network. We leverage -- we hear a lot from patients or potential patients about other products that they can buy and so on and really help sell to them in a positive way. So we look at that as incremental. It's great margin. This is not at a margin-dilutive situation where you're spending. We're spending $300 million in media. Let's leverage some of that investment and being able to have them buy products, other products for a month. So it just helps us overall from a business standpoint.

Okay. You're not going to sign off of 40% growth going forward for that one?

Well, we're not going to sign off on that, but the opportunity is as big as anything else.

It's a nice try.

Yes, fair enough. I've got a lot to talk about in the next 9 minutes. Innovation, Joe, just level set us on what's going on with palate expansion. We heard a lot about that product. It's interesting in a lot of ways because it's also direct 3D printed, I believe. So when can we see that here in the U.S.? And the ability to direct print that, does that mean anything on where you guys can go longer term with direct printing aligners?

Yes, good question. Well, first of all, I'd start with palate expansion with Invisalign First. With Invisalign First, you can get doctors -- these are orthodontists, primarily. They're thrilled with it because you can get up to 8, 10 millimeters of expansion in a young person's palate, which makes room for their teeth to fall in properly and makes Phase 2, when their permanent teeth are in, much more simple. But beyond that, if you want more expansion, that's where you go to rapid palate expansion. And yes, Jon, you're right, we've been working on this for years. The product works. I can tell you from a clinical standpoint, we've had it out there. Treatment planning is really simple. I don't know if I've said this before, but treatment planning, I smile because treatment planning with 32 teeth is tough, right? In this case, it's just -- here's a treatment plan. How many millimeters of expansion do you want? That's it, right? It's simple. It is 3D printed. But Jon, this is sintering technology. So sintering technology is where you use a laser and you have a powder bath of polymer. And you laser -- and a lot of titanium and stuff for jet engine rings and things like that are done in the same kind of technology. So you laser that and you laser it, and your palate comes out of there. That's on a scalable process for aligners, okay? And it's opaque. It's not clear. So there's another process we will use to direct 3D print aligners in the future, but it won't be this process, okay? We'll scale this sintering process. Where are we right now? We're refining our algorithms. We're moving out into Canada to launch the product. There's some -- obviously, we do it in Canada because there's some regulatory things we have to get through in the United States. They are a little bit different. But right now, I feel good about our ability to scale it. I feel good about the capability of the product line. Right now, it's just time and distance. There's not any invention left in it.

And time and distance, this is a product maybe for 2023 here in the U.S.?

Yes, it should be, unless there's some unforeseen regulatory thing that I don't participate in right now.

And when I think about aligners, I think ASPs of Invisalign First could be at the lower end because you're getting that patient arguably 2x. But I think about pricing of $1,000 plus, this is palate expansion. Is this a $1,000 ASP? Is it much lower when we think about it?

I haven't gotten into the pricing yet, but I mean we'll have adequate margins in pricing, Jon, for sure.

Okay. And then what about maybe the relaunch of mandibular advancement. So there were some integrity issues, and I think we picked up on -- with the wing tips, and you went back and are relaunching the product. Is that out there as we speak now? And Joe, what about reengaging new orthodontists, right? Obviously, you've got a massive direct sales force to help with that, but your ability to go ahead and do that.

That's a good question. Look, we're still excited about mandibular advancement. I'd say our docs, as you picked up, Jon, have been somewhat disappointed in it at times. If there's a certain length of tooth of your cap in a certain way a person's jaw is formed, the way that the mandibular advancement works was that you could just -- you have to -- I wish I had a diagram I could show you, is the straight areas down to engage with one another. If it wasn't the right kind of a fit, they would break or they would bend, and you lose the ability to move the mandible forward when you close your mouth. So we just announced what's called curved wings. So instead of those wings coming straight down, we've actually -- it's hard to manufacture this way, but you have to think about manufacturing over a curved surface, they actually curve back, and they engage much better. And the initial feedback from doctors has been very enthusiastic that we've cured most of the short cap issues and whatever. And besides that, we have some tech on twin block, which is occlusal blocks that we're working on, too, that we'll get out sooner or later, too. So that mandibular advancement marketplace, Jon, we'll get it, right? This is a great innovation. We'll have another innovation behind that one. And the idea that you can move your mandible forward and straighten your teeth at the same time is a real productivity advantage for doctors and for patients, too.

So that Gen 2 math is out there today? Is there...

Yes, we have worked -- we haven't fully launched it yet. But we're -- shortly, we'll be doing it.

Okay. And a couple of more topics that I want to make sure I hit on. So clear aligner competition, and I know you've talked about, hey, you're not seeing it in a big way. There aren't a lot of inroads. But I do get asked the question on the [ doc ship 2 ] number was down again in 1Q '22 versus 4Q, and it was down 4Q versus 3Q. And our team internally, when it was down 4Q versus 3Q, and it was down for the first time sequentially in many, many years, we sort of said, it's COVID. COVID flared up, right? And there's a lot of GPs that might only order 1 or 2 cases. They didn't order, the [ doc ship 2 ] number comes down. But then it was down again in 1Q. So I'm getting more incoming questions of like, hey, look, we can see it, right? Those are docs that defected, they arguably haven't ordered in 6 months. Now I know there's COVID December, COVID January, February of '22. There's something called China going on. But can you talk to, Joe, competition, big picture and then maybe walk it back to the [ doc ship 2 ] number and why investors shouldn't be concerned that that's a sign of competition inroads -- competitive inroads?

Yes. Well, I'll just start off from an overall competitive standpoint, it's still wires and brackets. That's the game, okay? We see competition out there, but I call it fringe competition. And this market is big enough for fringe competition. Remember, there's 2 huge things you need in this business. You need technology in a huge way, and you need to keep advancing that technology. Even we've been on for 25 years, we're talking about advancements now that are tremendous, we couldn't have thought about 5 years ago. And we've been spending close to $300 million a year on engineering. It's bigger than most people's orthodontic business when you think about that. So technology is critical in the business. Doctors more and more understand what we offer from an Align standpoint, from iTero, all the way to our treatment planning capability, the breadth of clinical options that you have. I just talked about palate expansion, Invisalign First, all those things, and all the way to our Virtual Care product that we can track patients later on. So technology is critical that you have this digital format that we talk about. Doctors are comfortable, both clinical efficacy and clinical efficiency as you move forward. There's no one -- we were just at the AAO. And what we saw at the AAO was one competitor saying their aligner was clearer than our -- more clearer than ours. If that's all you got to compete on, it's Clarity, okay, and you don't basically understand material science in the sense of why ours is maybe 10% less clearer. It's a different deal. Second thing is you need a sales force. Sales force, this is a very sophisticated product. You have to walk in and you have to -- a completely different conversation with a GP than you have with an ortho, completely different. And that's why we split our sales forces years ago to have products for a GP standpoint, products from an orthodontic standpoint, salespeople that know the kind of a work process that a GP has, salespeople understand what an orthodontic process is, too. And I mean you see the demise of the direct-to-consumer companies in clear aligners. That's it. They don't have tech. They don't have docs. They don't have a sales force. They really have nothing to sell. And I think what we're basically showing, if you want to be in this industry, if you want to be in the clear aligner industry, you need tech, you need a sales force, you need to be able to advance it going forward.

The [ doc ship 2 ] number, I mean, was that COVID? Was that China? Do we see that bounce back? Is it the long tail? And hey, John, there's -- I know you care about every customer, but those are onesies and twosies, and some are going to defect. But...

Two things. One is, if you look at our Q1 number this year versus Q1 last year, those utilization rates are basically the same, okay? Now also, a lot of the new docs come in, in expansion marketplaces. Brazil was bombed with COVID, okay? And LatAm is a big market for us. We don't necessarily break it out for you, Jon. You can't see it. And China and those -- some of those markets are big for us, too, they were overwhelmed with COVID, too. So I don't look at those utilization numbers at all as some competitive aspect that's eroding our base out there, Jon. This is more about how we train doctors, how we bring those doctors on and the restrictions that we've had recently, particularly in the developing market.

John, would you add anything?

Yes, I mean -- and we haven't had to do anything from a pricing standpoint, from a competition standpoint. Our ASPs have been -- actually have increased over the last several quarters. So we haven't priced to compete in that way. We know what our product can do. We know the potential of it. And pricing-wise, we haven't had to do any changes.

And then my job is to stay on time today, but in the very first meeting, I'll run 1 minute over. So on the scanner, I did feel that the talk track from you guys was a little bit different. You mentioned docs showing more trepidation. Schein puts up a good equipment number. Straumann has a good scanner number. When I was at AAO, I heard something about your inability to run some sort of trials and pilots that were shut down for COVID in 1Q. Joe, is it the end market? Or was it just something like more disruption that was going on COVID-related that hit the scanner for you guys in 1Q?

Well, first of, we're the biggest scanner player out there, right? So -- and we're dealing with the law of large numbers. I've been -- goodness, most of my life, I've been in the capital equipment industry. It's -- when the economics get shaky, people are a little less likely to make a big capital expenditure. And we're dealing with family practices in offices, Jon, right? So I think, yes, did COVID hurt us? Yes, in that sense. The consumer confidence levels hurt us in that area, too. I couldn't be more confident about our scanner, iTero. What we just launched with IOSim, we talked about the platform that iTero Plus really -- when I say that -- that platform is our future platform, right, so we'll graft a lot of new technology coming on board over the next couple of years into that platform going forward. When you talk about competition or whatever, I mean, obviously, Meta is out there, a Korean company, they're in a complete different -- it's a low end. And we compete with that with our CPO product, our certified preowned kind of a piece. And I know you had a comment about Straumann being -- Straumann pretty much second market, 3D-Shape or whatever. The dynamics of that marketplace haven't changed.

Okay. So a little bit of the market, a little bit of COVID, to your point.

Yes, bingo. Yes. And the last part of it, really, really confident about our scanner platform, and we will take that in the future, too.

And Outcome Simulator...

Exactly, yes.

We're going to end there. Guys, thanks very much for your time.

Thanks, Jon.

Thank you.