Align (ALGN) Technology’s Clear Path Hits a Rough Patch

Align Technology (ALGN) unveiled a second-quarter report card that left investors scrambling for their retainers. Revenue slipped 1.6 percent to $1.01 billion and adjusted earnings of $2.49 a share came in a few pennies shy of Wall Street’s estimate. Pre-market traders responded with a 33 percent sell-off, the stock’s steepest single-day slide since early-2020 market chaos.

Chief executive Joe Hogan described the quarter as “mixed.” Scanner upgrades kept the systems business humming, but clear-aligner sales sagged 3.3 percent as volumes in North America and parts of Europe fell short of expectations. Hogan told analysts that consumer interest in Invisalign “remains strong,” yet actual case starts stalled because patients balked at out-of-pocket costs and dentists nudged some toward cheaper metal braces to use up bracket inventory . Financing has also tightened; higher interest rates make elective orthodontics harder to swallow, particularly for adults in France, Germany and the United States where late-quarter conversion rates were “nowhere near normal” .

The macro drag explains part of the disappointment, but structural pressures are mounting. Market penetration in mature economies leaves less low-hanging fruit, average selling prices are sliding as dentists opt for lower-priced “lite” offerings, and rivals—many of them cut-price Chinese vendors—are crowding the once-rarefied aligner aisle. Tariff uncertainty and a running U.K. VAT dispute have added grit to the company’s gears, shaving margins and clouding price visibility .

Management’s remedy is a sweeping mid-year realignment. Align will shrink or relocate manufacturing lines, lay off staff and write down aging equipment, booking $150 million to $170 million in charges during the back half of the year. Hogan argues the overhaul will lift operating margins by at least one percentage point in 2026 and position the firm for “next-generation manufacturing technologies” such as direct-printed aligners . In the near term, though, investors must digest thinner guidance: third-quarter sales are projected at $965 million to $985 million, and 2025 revenue is now expected to be “flat to slightly up” instead of the low-single-digit growth once forecast .

Is the turbulence merely cyclical? Partly. Inflation, elevated rates and shaky confidence have pinched discretionary dental spending before, and those headwinds should ease eventually. Yet the company also faces problems that look more permanent: intensifying competition, price compression, and a product mix drifting toward lower-margin tiers. In other words, Align’s headache is one-half macro flu, one-half growing pains of a maturing category.

For now, Hogan is betting that marketing dollars aimed at nudging wavering patients, plus a leaner cost base, can restore bite to revenue growth. Shareholders, having erased more than a third of the company’s market value overnight, seem reluctant to flash a winning smile just yet.