Board Overhaul Agreement With Elliott
Align Technology, the maker of clear aligner brand Invisalign, has opened its boardroom doors to an activist hedge fund's demands. The company will add three new directors and expand this year's share buyback program to $400 million to $500 million (roughly ₩560 billion to ₩700 billion).
According to Bloomberg, Align announced on July 29 (local time) that it had reached an agreement with activist fund Elliott Investment Management on a board shake-up. Candidates for the new director seats have not yet been named; the company said it would look for people with experience in healthcare technology, medical devices, and consumer technology. It also said it had begun a broader review of its overall strategy and operations.
The Post-Pandemic Stock Slide and Second-Quarter Results
Elliott's emergence as a major Align shareholder came to light in March. During the COVID-19 pandemic, consumers who found themselves staring at their own faces on video calls flocked to clear aligners, driving Align's stock as high as $729.92 in 2021. Usage has since declined and the stock has fallen sharply. In the second quarter, revenue rose 4.3% year over year, but net income fell 13%. Bloomberg reported that Elliott believes Align has room to accelerate growth despite these results. Elliott said it would help identify board candidates but does not plan to take a board seat itself.
3D-Printed Aligners Challenging Thermoforming
Align is the market leader in aligners made through thermoforming, a process that presses thin plastic sheets onto tooth models. More recently, a 3D printing method that builds an aligner directly by stacking layers of resin has begun to challenge that position. 3D-Printed Aligners Are Displacing the Thermoforming Method covers what this technology, which originated with a resin developed by a Korean company, is being tested for. This article, by contrast, looks not at that technology but at why governance at the company that has long led the market is now under pressure.
Possible Impact on Invisalign Services in Korea
Invisalign is also distributed in Korea through its subsidiary, Invisalign Korea. At an Invisalign Day event held in Seoul this past February, the company introduced a feature that uses a smartphone camera to create a 3D scan of a patient's face, along with a feature that lets patients photograph their mouths through an app for a dentist to review remotely. The company has not yet said what effect, if any, the board shake-up or expanded buyback will have on Invisalign's pricing or services in Korea.