The company has put out a new policy in order for dentists to have the 'privilege' of buying the product.
Dentists now must complete 10 cases per year and complete 10 hours of product-relevant continuing education, or their account will be closed.
This policy is referred to in the following press release: http://investor.aligntech.com//ReleaseDetail.cfm?ReleaseID=387581
which then refers to the policy and FAQ posted at: vip.invisalign.com/proficiency
If dentists fail to meet these requirements, they will not be allowed to submit cases. This will definitely cause occasional providers or busy dentists not choosing to take the continuing education to not offer invisalign. The press release states that 'Align does not expect the Invisalign product proficiency program to have a material impact on the Company's 2009 financial results.'
They are giving dentists until the end of the year to meet the requirements, or they will be inactivated as of December. Since no one is being inactivated today, I can understand that point of view. But while I can understand the stated objective of improving end-user experience, adopting a policy like this seems to me to be rather unique in this recessionary environment. I wonder how many customers (dentists) this policy is expected to cause the company to 'fire' at December 31, 2009.
ClearCorrect has already responded to this, featuring 'No annual "proficiency requirements," do as few
or as many cases as you'd like' in bold print on their website.
This seems to be a big gamble. Any thoughts?
Check out this letter from a dental board:
June 23, 2009
Thomas M. Prescott, President and CEO
Align Technology, Inc.
881 Martin Avenue
Santa Clara, CA 65050
Dear Mr. Prescott:
The New York State Dental Association has been contacted by our members with concerns about
Align Technology, Inc.’s new “proficiency program” and the attendant requirements for dentists. As a constituent of the American Dental Association and the professional association representing dentistry in New York State, NYSDA has a responsibility both toward its member-dentists and to the public. Understandably, dentists who find that there are a limited number of patients in their practices for whom they believe Invisalign to be an appropriate treatment option are troubled by this new policy. We are vehemently opposed to this new policy. Corporations do not practice dentistry in New York. Doctors do. The decision as to whether the Invisalign technology should be used for a particular case is wholly the dentist’s and should not be influenced by quotas, incentives or any factor other than professional judgment. Remember, a dentist who is not qualified to treat two, four or nine patients employing your products and training is not qualified to treat ten. Totally unrelated to quality of care, your policy appears analogous to the now widely prohibited practice of pharmaceutical companies providing inappropriate financial incentives to influence prescribing decisions. Keep in mind that New York law would not allow a dentist to commence treatment on a patient just to meet a quota set by some third party. We cannot identify any legitimate patient protection rationale for this policy, and unless you can provide genuine evidence to the contrary, must conclude that it represents a financially motivated and unwarranted intrusion into the professional practice of dentistry by a for-profit corporation. We would like to work with you to arrive at an amicable solution to this situation. If you elect to go forward with this policy, NYSDA will seek all available remedies, including legislation, to avoid inappropriate intrusions into the dentist-patient relationship. NYSDA urges you to reconsider this new initiative and would be happy to meet with you in this regard. Therefore, I have asked our executive director and ADA past-president, Dr. Mark Feldman, to contact you next week.Thank you for your attention in this matter.
Michael R. Breault, D.D.S.
June 23, 2009
NEW YORK STATE DENTAL ASSOCIATION 20 CORPORATE WOODS BLVD., SUITE #602, ALBANY, NY 12211 • 518.465.0044 OR 800.255.2100
FAX: 518.465.3219 • E-MAIL: email@example.com • www.nysdental.org
A CONSTITUENT OF THE AMERICAN DENTAL ASSOCIATION
Thank you Gr8bites! I think Orthokings thinks that if he can shoot his mouth off about what he THINKS as opposed to what we as dentists KNOW, that he can sway the way the stock will go. I think dentists are even taking it further since they are so ticked off with Align and telling their orthodontists that they refer to that if they continue to offer their patients Invisalign that they will lose referrals from the general dentist. I haven't taken that stance yet, but on the dental boards, general dentists that refer to orthodontists have already taken that position...once again hurting the Align stock in the long run. Lets face it Align thinks they have a monopoly but there are clearly other choices out there.
I have been following your posts for a long time on these boards and you are someone I respect and look forward to reading. So If you say I don't know what I am talking about then I believe you. I stand corrected. I am just so happy that one of your fellow orthos was able to treat me in invisalign when two others said no way it could be done. Thats all. So as a layman/patient based on my indivual case I see my ortho as more knowledge and skilled on invisalign than others. As an investor I wonder why more are not like him.
Curious though you have been a long time follower of this board and I truly respect you ropinion. What are your thoughts on this Invisalign move? You have been silent for a long time
1."Besides, to get a GOOD result, the majority of clear aligner treatment needs to be finished with braces in order to get the best result!!"
2. Funny, all I see in this comment is you need to become more proficient with aligners. I mean come on a " Majortiy of cases." Please!! My case wasn't easy and it worked great.
As a practicing orthodontist, with many Invisalign cases, let me assure you that the first comment above is absolutely correct. Your response (#2) is your opinion as a layman and you do not know what you are talking about. Aligners can be an adequate substitute for braces....sometimes. That's reality. Now back to the discussion.
"Besides, to get a GOOD result, the majority of clear aligner treatment needs to be finished with braces in order to get the best result!!"
Funny, all I see in this comment is you need to become more proficient with aligners. I mean come on a " Majortiy of cases." Please!! My case wasn't easy and it worked great.
I agree it is the dentist that treats the patients and not the aligners. So why wouldn't a dentists want to get better at it so they don't have to finish a majority of their cases in fixed. I mean I know their are providers who don't have to so what makes them any different? Number of cases, number of CE hours, or just plain skill?
What makes youn think Align will be solvent in 6 months??? There are no guarantees when dealing with a dental lab, and that is exactly what Align is...a dental lab. In the end, I AM REPONSIBLE for patient care NOT Align, Clearcorrect or whomever. I can do straightwire orthodontics so I guess if one of the players disappears, my patient will have to settle for braces. Besides, to get a GOOD result, the majority of clear aligner treatment needs to be finished with braces in order to get the best result!! Once again, the DENTIST treats the patient not the aligners!!! WE determine how treatment should go. For that same reason, if you don't understand tooth movement, you shouldn't be doing aligner therapy in the first place. Just like, if you don't understand the principles of surgery, you probably shouldn't be removing wisdom teeth or placing dental implants. Like I have said before, we are not SELLING WIDGETS we are treating patients!!
ClearCorrect is offering certification with no strings attached? That seems fantastic for those doctors who won't qualify for Invisalign. My biggest question is: "is ClearCorrect so superior to Invisalign that you have no reservations in prescribing it to your patients?" What makes you think that ClearCorrect will offer the breadth of treatment options that Align provides today and will be providing in the years to come? Please note, I am not second-guessing your judgment... I just want to understand the rationale.
You hit the nail right on the head radjamax! The clients are DENTISTS not patients! This move has become very unpopular with dentists and there are multiple clear aligner companies out there not just ClearCorrect. There is another one in the UK as well. I think the time "is ripe" for the competitors to go on an advertising blitz now that Align is vulnerable. I have received multiple emails from Clear Correct as have my colleagues in the last 2 weeks offering certification with no strings attached. We will see how this will play out, but I think your spot on that this stock is headed toward $5.
"I really admire your commitment to understanding the market and the company. It shows you are a smart investor, and I am sure you have made money at it. You gotta admit there is just not that much upside left in this stock, and a whole hella lot of RISK"
100% agree and it is why i bought puts to hedge. It was getting long in the tooth even before this annoucement. Like I said on previous post. I will gladly admit to being wrong. I am certainly not in love with this company or stock and will unload 100% of my holdings if I see data change. I also greatful for the dentists coming on this board and saying how much they hate ALGN now. It certainly opened my eyes to the need to hedge short term. I can't unload my stock based on that though because there is no concrete number behind it. I do know that many providers are low to no case submitters. Losing them means nothing to the bottom line. I need concrete data first. My put hedge should protect me long enough until I see some data. BMC came out with some great data last week. The first( to my knowledge) to come out with it since the annoucment. Actually looks promising. My thesis is based on Teen and international business growth which doesn't seem to be affected by this annoucement.
As for TA, I have never been a big fan of it. Although both up days( the only ones in last 10 days LOL) have been also the heavy volume days. Always a bullish sign. One after the BMC report I might add. It shot up on heavy volume only to bleed later in the day on light volume. Which is not surprising because there is a lot of negativity floating around.
Orthokings I guess you are a long terms value investor. If you were doing any kind of TA, you would be selling....
The chart doesn't lie
June 2nd: ALGN announces requirements
Since then: Nasdaq up 5%, Med sector up 4-5%, ALGN down 20%
Do you really think that this stock was driven down by a bunch of retail traders? Nope. This is big money starting to pull out because there is just not much upside that they can see.
Now you got to ask yourself the question...why?
A lot of dentists are mad at this company. You can say they are greedy or whatever you want to say. BUT the point is, the DENTIST is the customer of this company, not the patient. The company is alienating its CUSTOMER base, which is not good for business. It WILL hurt sales. I know you realize that, maybe you don't want to believe it yet, but it will happen.
Will ALGN go bankrupt....of course it WILL NOT! There will be enough dentists who can and will do 10+ cases a year to keep this company in business. But...there will be NO GROWTH, and probably NEGATIVE GROWTH in sales/profits and especially market share.
There are alternatives out there, such as ClearCorrect, and many more will pop up because market share is now RIPE for the taking. Invisalign can go after them (although they are unlikely to as far as CC is concerned), but as ALGN lose market share and revenue, they'll simply get out-gunned legally.
Eventually, ALGN will probably get bought out by another company at some point in the future. This is fine for ALGN execs but not for long term investors...They will go from being the market leader to just another option. Being "another option" will not allow it to keep above 5$ stock price.
I really admire your commitment to understanding the market and the company. It shows you are a smart investor, and I am sure you have made money at it. You gotta admit there is just not that much upside left in this stock, and a whole hella lot of RISK!