Is Align Tech Dental Aligner Demand Falling Compared To Traditional Braces?

On Wednesday, Align Technology Inc. (NASDAQ:ALGN) reported worse-than-expected second-quarter results and issued soft guidance.

Second quarter sales increased 3.4% sequentially and were down 1.6% year-over-year to $1.01 billion, versus estimates of $1.06 billion. The dental company reported adjusted earnings of $2.49 per share versus estimates of $2.57.

Clear Aligner revenue of $804.6 million was down 3.3% year-over-year, while Imaging Systems and CAD/CAM Services revenue increased 5.6% year-over-year to $207.8 million.

Align Technology President and CEO Joe Hogan said, "Our second quarter results were mixed…However, we experienced uneven patient case conversion, which led to a lower than typical seasonal uptick in case starts, which historically occurs late in the quarter."

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The company said quarterly results and customer office activity were partly impacted by U.S. tariff turmoil in and outside the U.S., and less affordable financing options for orthodontic treatment and capital equipment purchases.

Recent dental industry surveys for the second quarter suggest less overall patient traffic, fewer orthodontic case starts, and patient hesitation toward elective procedures.

2025 marks the fourth consecutive year orthodontic starts are down, and third-party research reports indicate that practices that use wires, brackets, and clear aligners may have shifted more of their case to metal braces in Q2.

"As we begin the third quarter and plan for the remainder of the year, our outlook anticipates the potential continued economic uncertainty and spending hesitancy that impacted demand for our clear aligners and new iTero scanner systems in the second quarter…"

"…We are evaluating actions to reduce costs and thoughtfully manage our investments while we continue to drive engagement and effectiveness of commercial and marketing programs…" Hogan added.

Analyst Reaction

Morgan Stanley sees the clear aligner market as appealing and not yet fully tapped. While the firm acknowledges that Align is leading in this space, it notes that the market is cyclical and affected by changing economic conditions and competition.

Traditional braces still appear to hold strong, showing resilience against the growing popularity of clear aligners.

Analyst Erin Wright downgraded Align from Overweight to Equal-weight, citing challenged growth for years, and limited clarity on the path.

The analyst also lowered its 2025 EPS estimate from $10.38 to $10.18, largely on a sustained lackluster backdrop in Dental impacting clear aligner demand.

"The latest shortfall and guidance reduction, shortly after a relatively positive investor day in May caught us off guard, and the miss calls into question visibility on NT growth prospects but also the achievability of its recently stated LRP in May. At this point we believe it's prudent to move to EW until we have greater clarity on market demand stabilization, case conversion, and evolving competitive dynamics," Morgan Stanley wrote in an investor note on Thursday.

Price Action: ALGN stock is down 36.80% at $128.67 at the last check on Thursday.

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