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Align Technology CEO on Q3 earnings, 'Zoom effect' as customers 'stare at themselves on meetings'

Joe Hogan, Align Technology Director, President and Chief Executive Officer, joins Yahoo Finance's Alexis Christoforous and Brian Sozzi to discuss the company’s third-quarter earnings report, future outlook for the company, and much more.

Video Transcript

- With dentists' offices opening back up after the COVID-19 lockdowns, there appears to have been a mad dash for clear teeth aligners-- at least that's the vibe we got from Align Technology's earnings call Wednesday evening. Align Technology CEO Joe Hogan is here with us now. Joe, good to see you. Your shares are up 33% this morning. Going over the earnings call, talk to us about the Zoom effect and how that is impacting your business, because the business turned on a dime versus the second quarter.

JOE HOGAN: Yeah, hey, again, thanks for having me. Yeah, we had a terrific quarter. Um, you know, overall, I'd start off by saying what was really interesting about our third quarter was how broad it was. It wasn't just North America. Uh, it was-- we had good breadth across both channels. GPs and orthos were very strong in Europe, very strong in APAC, very strong in the Americas, too.

The Zoom effect-- I'll turn to the Americas to answer that question-- is it's a-- and we hear this feedback from doctors and also from patients also is they're staring in front of themselves constantly on Zoom meetings, and they tend to notice imperfections in their face and teeth. And we have them walking into dentists asking that be corrected in some way.

And we also talk about pent-up income not being spent on vacations and different things. And your previous-- Gary, executive of Southwest, was referring to that, too. And it looks like there's more disposable income to be able to address those kinds of issues. So we certainly saw that in our third-quarter results.

- I want to talk a little bit about where you're seeing the growth, because when we think of Invisaligns, I think we think about adults using them. But are you seeing more usage among teenagers and perhaps they're moving towards Invisalign than the traditional braces?

JOE HOGAN: We're certainly seeing a move that way. When you look at our teen utilization rates in the United States, they're under 20%. And we had a good healthy growth of 25% in the quarter. Recently-- our most recent technology, we can do what's called predentition, younger children between the ages of six and 10. It was where we have these AI algorithms-- artificial intelligence algorithms-- that can predict the eruption of teeth. So we program the aligners accordingly for that teeth eruption so we can do those younger patients.

And we've had terrific feedback on that product, because you don't have to put metal wires and different kind of expansion devices on children's teeth and it's just a much better experience for them, too. So teens are certainly a big part of our focus.

- What about, uh, the dreaded retainer that-- you know, when you're done with, I mean, traditional braces, you're supposed to be wearing that retainer every night, you know, for life. How does that work with your product?

JOE HOGAN: We have a retainer. It's called Vivera. It's really recognized as the best retainer in the industry. Remember, we-- we do about 600,000 of these devices a day. And we're the largest mass customized business in the world. We 3D print aligners by doing that. And so we can get a perfect fit for those retainers. So if you feel that's a dreaded device, please contact me and we'll get you one that fits well and it's comfortable for you.

- Joe, I think a lot of investors are wondering this morning, how sustainable is what they saw in the third quarter? How sustainable is that growth? And number two, you have a key investor day coming up November 23. Are you going to put out any five-year targets there?

JOE HOGAN: You know, first of all, this story about Align in digital orthodontics is the incredible amount of growth opportunity that we have. Remember, we're less than 10% penetrated globally in just orthodontic cases-- the roughly 12 million orthodontic cases around the world plus the 300 million people that have difficulty with their teeth in some way from a straightening standpoint or malocclusion. That we can address also. So it is just an incredible opportunity that only digital and orthodontic opportunity can present.

So, I mean, that's the story from the long-term sustainability is we feel like we're just getting going on this orthodontic digital platform to really grow. On our investor day, we do give a long-range look at the company. We show the trajectory, the core technologies that we use, the consumer aspect of this business in the sense of how we advertise and encourage consumers to go to doctors, to actually be treated by a doctor, you know, with our product in their hands. So we'll certainly give much deeper insights-- and we do this every two years-- on the business and the direction of the business, too.

- All right, we'll leave it there, Align Technology CEO Joe Hogan. I would say have a great weekend, but you're probably already well on your way to having a great weekend after a quarter like this. Uh, we'll talk to you soon.

JOE HOGAN: Thanks again.