ALGN 10-K & 10-Q changes, risk factors and insider trading

Our business, reputation, results of operations, financial condition, cash flows and stock price can be affected by a number of factors, whether currently known or unknown, or that we currently believe to be immaterial.material. including those described below. When any one or more of these risks materialize from time to time, our business, reputation, results of operations, financial condition, cash flows and stock price can be materially and adversely affected. The risks below are not the only ones we face. Because of the following factors, as well as other factors affecting our results of operations and financial condition, past financial performance should not be considered to be a reliable indicator of future performance, and investors should not use historical trends to anticipate results or trends in future periods. Therefore, you should review this section carefully, as well as our consolidated financial statements and notes thereto and other information appearing in this Annual Report on Form 10-K, for important information regarding these and other risks that may affect us. Additionally, you should consider these risk factors in connection with evaluating the forward-looking statements contained in this Annual Report on Form 10-K.

Our business, financial condition and results of operations depend on globalGlobal and regional economic conditions. Inflation, fluctuations in foreign currency exchange rates, changes in consumer confidence and demand, general economic weakness and actual or potential slowdowns or recessionsconditions have and could in the future materially affect our business, financial condition,condition and results of operations.

Macroeconomic conditions impact consumer confidence and discretionary spending, which can adversely affect demand for our products. Consumer spending habits are affected by, among other things, inflation, fluctuations in foreign currency exchange rates, consumer confidence, general economic weakness, actual or potential slowdowns or recessions, pandemics, wars and military actions, employment levels, wages, debt obligations, discretionary income, interest rates, volatility in capital and perceptions of current and future economic conditions. Macroeconomic conditions can, among other things, reduce or shift spending away from elective procedures, drive patients to pursue less costly orthodontic treatments, decrease the number of orthodontic case starts, reduce patient traffic in dentists’dental offices, or reduce demand for dental services generally. Further,Consumer spending habits are affected by, among other things, fluctuations in foreign currency exchange rates, changes in consumer confidence and demand, inflation, general economic weakness, actual or potential slowdowns or recessions, employment levels, health insurance coverage, wages, debt obligations, discretionary income, interest rates, cultural and social influences, market volatility and perceptions of current and future economic conditions. For instance, decreased demand for dental services canhas and may in the future cause dentistsdoctors and labs to revert to wires and brackets and postpone investments in capital equipment,equipment. such as intraoral scanners and CAD/CAM equipment and software. The declines in, or uncertainUncertain economic outlooks for, or declines in the economic outlooks of, the United States, Chinese, European and certain other international economies have and could in the future materially adversely affect consumer demand and dental practice spending. Increases in the cost of fuel and energy, food and other essential items as well as higherHigher interest rates have and could in the future reduce consumers’ disposable income, which could cause a decrease in discretionary spending for our products.

Inflation has and may continue to adversely impact spending and trade activities, and may unpredictably impact global and regional economies. Efforts by central banks and federal, state and local governments to combat inflation could result in an economic recession or slowdown or adversely impact consumer spending for a prolonged period of time. Higher inflationinflation, hasas well as the cost of fuel, energy and may continue to increase domestic and international shipping costs, food and other essential or discretionary items, raw material prices and labor rates, has and may continue to rise, which could adversely impact the costs of producing, procuring and shipping our products. Our products or one or more of the materials or components of our products may also be subject to tariffs imposed by the United States or other countries. We may not be able to fully mitigate the impact of the increased costs or pass price increases on to our customers, resultingwhich could result in downward pressure on our operating results. Attempts to offset cost increases with price increases may reduce sales, increase customer dissatisfaction or otherwise harm our reputation. Any of these events could materially affect our business, financial condition or results of operations.

We have significant international operations and sales and are therefore exposed to fluctuations in foreign currencies that have and may continue to adversely impact our business, financial condition or results of operations. Although the U.S. dollar is our reporting currency, a large portion of our net revenues and expenses are generated in foreign currencies. While we forecast our balance sheet exposures to foreign currency fluctuations and utilize foreign currency forward contracts to moderate the impact of exchange ratecurrency fluctuations on certain assets and liabilities, these contracts may not eliminate our exposure to fluctuations in foreign currency.exposure. Currency exchange rate fluctuations have and may continue to materially adversely affect our results of operations and cash flows.

Geopolitical events, tariffs, trade and international disputes, wars, military actions andactions, terrorism, or major public health crises have and could in the future harm or disrupt international commerce and the global economy, and could materially adversely affect our business with our customers and consumers, suppliers, contract manufacturers, distributors and other business partners.business. Such events have and could result in, among other things, supply chain and trade disruptions, changes in diplomatic and trade relationships, new tariffs and retaliatory tariffs, trade protection measures, quotas, embargoes, trade sanctions,sanctions and countersanctions, customs inquiriesinvestigations or restrictions, boycotts, reduced consumer spending, government shut downs,shutdowns, cyberattacks, energy shortages or power outages, energy rationing that adversely impacts our manufacturing facilities, rising fuel or rising costs of producing, procuring, and shipping our products, constraints, volatility or disruption in the financial markets, employee deaths or injuries to our employees,injuries, restrictions and shortages of food, water, shelter and medical supplies, data or information exchange, disruptions, interruptions or limitations in telecommunication services, critical systems or applications reliant on a stable and uninterrupted communications infrastructure, and protests that may impact delivery of our products to customers or destruction of property. Such events may also cause a shift in public opinion about companies based in the United States or in the regions where we operate or plan to operate, which could adversely impact our reputation and business.

Tariffs or proposed tariffs, such as those on Chinese, Mexican, Canadian or other foreign goods, and any retaliatory trade measures in response may increase the cost of our products and the components and raw materials used to make them. Specifically, we manufacture clear aligners in our facility in Mexico and ship them to the United States, primarily for our United States customers with the remainder eventually shipping to other international locations. Tariffs would result in additional costs for our products, which may impact operating margin, reduce demand for our products and adversely impact our gross margin. Foreign countries have and may alsocontinue to adopt or rescind other measures,measures such as controls on the import or export of goods, technology or data, including personal data, thatwhich could adversely impact our operations and supply chains or limit our ability to offer certain products andor services. TheseWe measures could require us tomay take various actions,actions in response to these measures, including changing suppliers, where we manufacture our products, or restructuring business relationships. ComplyingSuch with new or revised trade restrictionsactions may be expensive, time-consuming, disruptive to our logistics and operations, irreversible, and more costly for us and our customers. SuchTrade restrictions may be announced with little or no advance notice and we may be unable to effectively mitigate any adverse impacts in a timely manner or at all.

Military conflictsconflicts, wars, and escalation of terrorist or gang activities have and may in the future materially adversely impact the economies in which we operate. Our iTero operations, headquartered in Israel, are close to areas that have been affected by ongoingthe violenceconflict between Israel and military action, which may impact our employees and our iTero business and operations. Some employees and consultants in Israel have been called for military service in the current conflict and they may be absent for certain periods of time. Furthermore, our facilities may be damaged or our manufacturing capability or delivery schedules may be impacted as a result of the ongoing conflict.Hamas. Our supply chains and demand for our products could be impaired as a result of political instability, drug trafficking, the continuation or escalation of terrorist or gang activities (particularly with respect to our manufacturing operations in Mexico), hostilities, export and import restrictions, sanctions or boycotts. These events could disrupt ongoing operations and may materially impact the logistics, timing and cost of shipping of our products and materials or our ability to operate out of impacted areas.areas, and our ongoing contingency planning and business continuity measures to mitigate these risks may not be sufficient. Additionally, China’s territorial conflicts with other neighboring countries may impact our operations and sales in China. We cannot predict the progress or outcome of these events or the reactions by governments, businesses or consumers and each event could, individually or in the aggregate, materially adversely affect our business, financial condition,condition and results of operations.

OurNatural operations may be impacted by natural disasters, which may become more frequent or severe as a result of climate change, anddisasters may adversely impact our business, financial condition and results of operations, as well as those of our customers and consumers, suppliers, contract manufacturers, distributorscommercial intermediaries and other business partners.

Natural disasters such as earthquakes, tsunamis, floods, droughts, hurricanes, wildfires, urban fires and extreme weather conditions (including those caused by climate change) can cause deaths, injuries and major public health crises, power outages, property damage, restrictions and shortages of food, water, shelter and medical supplies, telecommunications failures, materials scarcity, price volatility and other adverse consequences. If a natural disaster occurs in a region where one of our facilities or those of our customers or suppliers are located, our or their employees or facilities could be impacted, valuable research could be lost, and our ability to create treatment plans, respond to customer inquiries or manufacture and ship our products could be compromised, causing significant delays and reputational harm. Climate change could increase the frequency and severity of natural disasters andsuch as hurricanes, tornadoes, earthquakes, wildfires, droughts, extreme temperatures, or flooding which could changecause thesupply supply,chain interruptions, increase demand orand negatively impact availability of sources of energy or resources material to manufacturing our products and operations.operations, or cause damage to our products and facilities. It could also affect the availability or cost of materials, goods, and services on which we and our suppliers, contract manufacturers, distributorscommercial intermediaries and other business partners rely, which could materially adversely impact our business, financial condition and results of operations.

Demand for our products and services may not increase or may decrease for many reasons, including resistance to the innovative and business-model-disruptive nature of some of our products and services, which could have a material impact on our business, financial condition and results of operations.services.

Our products and services require our customers and consumers to forego traditional treatment methods. For example, Invisalign treatment is a significant departure from traditional orthodontic wires and brackets, and our customers and consumers may not find it cost-effective or preferable. A number of dental professionals believe Invisalign treatment is only appropriate for a limited percentage of patients. Additionally, our clear aligners and iTero products utilize digital technology and some dental professionals have and may continue to resist moving to a digital platform. Increased acceptance of our products and services depends in part on the recommendations of dental professionals, professional associations, societies and organizations, as well as other factors, including efficacy, safety, ease of use, reliability, aesthetics, third-party reimbursement andreimbursement, price compared to competing products and traditional treatment methods.methods and competing products, and perceptions regarding single-use or non-recyclable plastics. Additionally, negative experiences with clear aligner products manufactured or distributed by competitors may adversely affect our reputation and demand for the Invisalign System if consumers or dental professionals attribute these negative experiences to clear aligner therapy generally, even if our products differ significantly in design, quality, and clinical effectiveness. If demand for our products or services fails to increase, or decreases, our business, financial condition and results of operations may be materially adversely affected.

Our net revenues depend primarily on sales of the Invisalign System and iTero intraoral scanners and declines in salesvolume or the average selling price (“ASP”) of these products may adversely affect net revenues, gross profit, operating profit and net income.

Our net revenues are primarily dependent on sales of the Invisalign System and iTero intraoral scanners. Of the two, we expect the Invisalign System to continue to represent the majority of our net revenues,revenues makingand sales of itremain critical to our success.

The ASPs of our products, particularly the Invisalign System, are influenced by numerous factors, including the mix of product treatment packages, geographical mix, channel mix and timing of products soldsold, (particularly the timingpromotions and quantitydiscounts, of orders for additional clear aligners for certain Invisalign products)inflation and foreign currency exchange rates. In addition, we sell our products at different prices and with varying shipping and handling charges or processing fees that may differ by country. Our ASPs for the Invisalign System and iTero intraoral scanners have been and could in the future be adversely affected if:

•we introduce new or change existing products or services, or modify how we marketmarket, lease or sell any of our new or existing products or services;

To stimulate product and services demand, weWe have a history of offering volume discounts, price reductions,reductions and other promotions to targeted customers and consumers and releasing lower priced products.products These promotional campaigns and lower-priced productswhich have had, and may in the future have, unexpected and unintended consequences, including reduced net revenues, gross margins,profit, operating marginprofit and net income, ASPs and volume.income.

The dental industry is experiencing immense and rapid digital transformation. While solutions such as the Invisalign System, iTero intraoral scanners, CAD/CAM softwaretransformation and digital platform facilitate this transition, we face competition from companies that seek to introduce new technologies and products and companies that remain dedicated to traditional products. We may be unable to compete with theseexisting competitors and emerging companies that introduce new technologies, products or theyservices, and customers who alone or with others create orthodontic appliances and solutions or other products or services that compete with us. While our product portfolio facilitates this transition, our competitors may render our technology or products obsolete or economically unattractive, particularly as competitors incorporate AI and machine learning into new or existing services and technologies that facilitate changes in doctor-patient interactions, expectations and treatment workflows. We may be unable to devote adequate financial resources to develop or acquire new AI technologies and systems in the future and sufficiently meet evolving industry trends and consumer demands.

The number and types of competitors we face are diverse and growing rapidly. The Invisalign System competes primarily against traditional wires and brackets and increasingly with clear aligners manufactured and distributed by new market entrants and existing competitors, including traditional medical device companies, laboratories, startups and, in some cases, doctors and DSOs. Our competitors also include DTC companies that provide clear aligners using a business model requiring little orto no in-office care from trained and licensed doctors, and doctors and DSOs who manufacture custom aligners inor theirprocure officesproducts usingfrom 3Dthird-party printingwhite-label technology.providers. Large consumer product companies may also start supplying orthodontic products. Orthodontists, GPs and DSOs have and may continue to sample competitive and alternative products andproducts, take advantage of competitive promotions and sale opportunities.opportunities, or engage in “bait and switch,” “margin steering” or similar practices that take advantage of the significant brand recognition of Invisalign to offer alternative products.

Our iTero intraoral scanners are also facing increased competition from new and existing competitors. Our scanners compete with polyvinyl siloxane impressions and numerous new orand existing intraoral scanners,scanners and traditional impression methods, as well as traditional bite wing 2D dental x-raysX-rays and dental imaging systems that leverage NIRI technology and AI for detecting interproximal caries. We have and may continue to experience competition with respect to our scanners byand software solutions from competitors who introduce products at lower prices or with functionalityenhanced features or functionalities that better meets customer demand.demand, including expansion of their portfolios in the digital ecosystem. If we are unable to compete effectively with existing products, existing competitors, new market entrants, or respond effectively to new technologies, our business, financial condition, and results of operations could be materially adversely impacted.

Our success depends on our ability to successfullyquickly and profitably develop, introduce,manufacture, achieve market acceptance of,market, and manageobtain newand maintain regulatory approvals or clearances of new, improved or refurbished products and services.

•successfullycost-effectively and efficiently predict, timely innovate, develop, manufacture, quality test, market, launch, dispose of and launchsell new or improved technologies, applications, features, products and services to meet market demand and keep pace with changes in technology, customers’ demands and industry standards;

•successfully and timely obtain and maintain regulatory approvalapprovals or clearanceclearances of new or improved products or services from government agencies such as the FDA and analogous agencies in other countries;

•design and manufacture products that achieve the clinical and practice outcomes we believe necessary for market acceptance;

If we fail to accurately predict the needs and preferences of customers and their patients, or fail to offer viable products or services, we may invest heavily in research and development that does not lead to significant revenues. Even if we successfully innovate and develop new or improved products and services, we may incur substantial costs doing so and our profitability may suffer. Introduction and acceptance of any products and services may take significant time and effort, particularly if they require doctor education and training to understand their benefits or doctors choose to withhold judgment on a product or service until patients complete their treatments. In addition, we periodically introduce new business and sales initiatives to meet customers’ needs and demands, which may not be successful and may involve short-term execution challenges. Should these initiatives fail, our business, financial condition and results of operations could be materially adversely impacted.

We may investnot inrealize orthe acquireanticipated otherbenefits businesses,of products,acquisitions, technologiesinvestments or other assetsstrategic whichtransactions, and they may require significant management attention, disrupt our business, dilute stockholder value or adversely affect our business, financial condition and results of operations.

•not realize a positive return on our investment or determine that investments have declined in value, which could potentially require recording impairments;

Our operatingquarterly and annual results of operations have and will continue to fluctuate in the future, whichand makeswe predictingmay not accurately predict the timing and amount of customer demand and our revenues, costs, and expenditures difficult.expenditures.

Our quarterly and annual operating results have and will continue to fluctuate for a variety of reasons. Some of the factors that have and could in the future cause our operating results to fluctuate include:

•changes in consumerconsumer, customer and doctorindustry demand;

•the timing of clear aligner treatment order submissions, acceptance, processing and fulfillment, which can cause fluctuations in our backlog; and

We may make business decisions that adversely affect our operating results such as modifications to our pricing policies and payment terms, promotions, development efforts, product releases, business structure or operations. The majority of our expenses, such as employee compensation and lease obligations, are relatively fixed in the short term. Moreover, our expense levels are based, in part, on expectations for future revenues. As a result, if our net revenues for a particular period are below expectations, we may be unable to timely or effectively reduce spending to offset any shortfalls. This variability and unpredictability could also result in our failing to meet the expectations of industry, financial analysts or investors.

We are subject to operating risks, including excess or constrained capacitycapacity, operational inefficiencies and operationalpressure inefficiencies,on our internal systems, personnel and suppliers, including as a result of our past and any future restructuring efforts, which could adversely affect our results of operations.

We are subject to operating risks, including excess or constrained capacity, operational inefficiencies and pressure on our internal systems, personnel and suppliers. To manage current and anticipated future operations effectively, we must continually implement and improve our operational, financial and management information systems, hire, train, motivate, manage and retain employees, and ensure our suppliers remain diverse and capable of meeting demand for the systems, raw materials, parts and components essential to product manufacturing and delivery. We may fail to balance near-term efforts to meet existing demand with future demand, including adding personnel, creating scalable, secure and robust systems and operations, and automating processes for long-term efficiencies. Production of the Invisalign System and iTero intraoral scanners could also be limited by capacity constraints due to a variety of factors, including labor shortages, shipping delays, our dependency on third-party vendors for key materials, parts, components and equipment, the quality of or changes in product components, and limited production yields. Any such failure could materially impact our business, financial condition and results of operations.

A discussion regarding our financial condition and results of operations for fiscal 2025 compared to fiscal 2024 is presented under Results of Operations of this Annual Report on Form 10-K. Discussions regarding our financial condition and results of operations for fiscal 2024 compared to fiscal 2023 is presented under Results of Operations of this Form 10-K. Discussions regarding our financial condition and results of operations for fiscal 2023 compared to 2022 have been omitted from this Annual Report on Form 10-K, but can be found in "“Item 7. Management'sManagement’s Discussion and Analysis of Financial Condition and Results of Operations"” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023,2024, filed with the SEC on February 28, 2024,2025, which is available without charge on the SEC’s website at www.sec.gov and on our investor relations website at investor.aligntech.com.

Macroeconomic ChallengesChallenges, Trade Impediments and MilitaryGeopolitical Conflicts in Ukraine and the Middle EastTensions

Additionally,More directly, we believe government actions in various countries relating to implementedactual or proposed tariffs,tariffs and retaliatory actions in key strategic countries or regions, particularly in the United States, China, Mexico,Europe, Brazil, Canada, Israel and EuropeMexico are expected tomay adversely impact our revenue and cost of goods soldsold. ifAdditionally, implemented.the trade war and geopolitical tensions between the United States and China may result in the limitation or prohibition of the availability of certain raw materials, components and parts necessary for our products or the products of our suppliers. The degree of our exposure is dependentdepends on, among other things, the type of goods subject to any tariffs or trade restrictions enacted, the tariff rates or limits imposed, the timing of the tariffs or restrictions and any other retaliatory measures enacted. The impact of declining demand may vary by time and region, making operational results uncertain and difficult to predict. These events may also cause a shift in public opinion about companies based in the United States and this may have an adverse impact on our reputation and business. We continue to closely monitor the foregoing issues, assess their potential impact on our operations and financial results, and implement plans to seek to mitigate the impact of any adverse events.

Additionally, a material amount of our revenues are derived internationally and many of our international operations are denominated in currencies other than the U.S. dollar. In 2024,2025, the U.S. dollar remained strongweakened against major currencies, which negativelypositively impacted our financial condition and results of operations for the year. Foreign exchange volatility and the subsequent strengthening or weakening of the U.SU.S. dollar against other currencies remains uncertain and unpredictable.

We continue to monitor the potential for violence and military actions that may directly or indirectly impact our personnel, manufacturing, supply chain, and sales. For instance, the ongoing conflictsconflict in Ukraine and unstable environment in the Middle EastEast, as well as increased geopolitical tensions involving Taiwan and the South China Sea may further exacerbate general and regional macroeconomic instability,instability. This is particularly true if fighting erupts, intensifies, spreads to other locations, creates shipping and logistical challenges or cost increases, leads to sanctions or boycotts, or otherwise may materially impactimpacts our operations.operations Foror instance,consumer ourspending. Our iTero business is headquartered in Israel and, although the sales, delivery times and cost of shipping our products have not been materially impacted andto wedate, the situation remains fluid. We have putimplemented contingency planning and business continuity measures in place to helpmitigate reduce the futurethese risks, but it remainsis uncertain ifwhether therefurther willescalation becould impacts ondisrupt our sales, delivery times or cost of shipping our products.operations. While there have been export and import restrictions imposed against products originating from and businesses operating in Israel, they have not materially impacted our sales or operations to date although we continue to monitor the risk.

As the markets for clear aligners and digital processes and workflows used to transform the practice of dentistry continue to mature, we continue to anticipate customer and patient expectations and demands will continue to evolve. We expect to meet customer demands with innovative treatment options that include more choices to address a wider scope of treatment goals and budgets based on our existing and new products. This may result in larger and unpredictable variations in geographic and product mix and selling pricesprices, withwhich could result in uncertain implicationsimpacts on our financial statements and business operations. For example, we have and may continue to experience a shift from certain products with higher ASPs to those with lower ASPs.

We strive to manage the challenges frompresented by the foregoing trends and uncertainties, including the macroeconomic conditions, tariffs and retaliatory measures, military conflicts and the evolution of our target markets, by focusing on improving our operations, further increasing flexibility and efficiencies in our processes, adjusting our business models to changing circumstances and offering products that meet market demand. Specifically, we are managing financial impacts throughby implementing strategic product innovations, introductions and pricing actions, implementing cost saving measures and evaluating hiring needs.

We measure our performance against thesethe foregoing strategic priorities by the achievement of key financial and operating metrics. For the year ended December 31, 2024,2025, our business operations reflect the following:

▪◦Clear Aligner case volume increase of 3.5%4.7% year-over-year and Clear Aligner volume increase for kidsteens and teensgrowing ofpatients 7.7%from 868.1 thousand shipments to 935.8 thousand or 7.8% year-over-year;

◦Capital expenditures of $115.6$102.4 million, primarily related to investments in our manufacturing capacity and facilities; and ◦Number of employees ofwas 20,94520,290 as of December 31, 2024,2025, a decrease of 3.1% year-over-year.

•TheFor the year ended 2025, the total number of Invisalign trainedInvisalign-trained doctors cases were shipped to (doctor submitters) in 2024 was 130.4130.0 thousand compared to 125.8130.4 thousand in 2023,2024, a 3.6%0.3% increase.decrease. GP and orthodontist doctor submitters decreased by approximately 2% and increased by approximately 3% and 4%,2%, respectively, in 20242025 compared to 2023.2024.

•OurThe total utilization rate in 20242025 ofwas 19.120.1 cases per doctor was flat compared to 202319.1 in both 2024 and slightly down from 19.3 cases per doctor in 2022.2023. Our utilization rates have been impacted by the macroeconomic conditions and other factors as described in the “Trends and Uncertainties” section above. In general, we expect utilization rates to rise over time although they are likely to fluctuate from period to period.

•Our Systems and Services segment consists of sales related to our iTero intraoral scanning systems, which includes a single hardware platform and restorative or orthodontic software options, scanner wand upgrades and non-system revenues from leases of scanner systems, sales of pre-owned scanner systems, subscription software, disposables, pay per scan services, as well as exocad’s CAD/CAM software solutions that integrate workflows to dental labs and dental practices.

Net revenues for our Clear Aligner and Systems and Services segments by region for the yearyears ended December 31, 2024,2025, 20232024 and 20222023 are as follows (in millions)1:

Case volume data which represents Clear Aligner case shipments for the yearyears ended December 31, 2024,2025, 20232024 and 20222023 is as follows (in thousands):

Total net revenues increased by $137$36 million in 20242025 as compared to 2023,the same period in 2024, primarily due to an increase in Clear Aligner volume, partially offset by a decrease in ASP and an increase in Systems and Services net revenues fromdriven higherby strong scanner ASP,wand increase in non-system sales and services revenue. Clear Aligner net revenues increased primarily from an increase in volume, partially offset by lower Clear Aligner ASP.sales.

AmericasSystems and Services net revenues decreasedincreased by $37$21 million in 20242025 as compared to 2023,the same period in 2024 primarily due to aan 3.0%increase decreaseof $26 million in ASP, resulting in a decreasesales of netscanner revenues of $44 million. The decrease in ASP was primarilywands, driven by astrong mixvolume shiftpartially tooffset by lower pricedscanner productswand ASP, a $19 million increase from non-system sales and countriesa which reduced net revenues by $88$1 million andpositive higherimpact promotionalfrom discounts which decreased net revenues by $66 million and unfavorablefavorable foreign exchange rates that decreased net revenues by $9 million.rates. These decreasesincreases were partially offset by lower netscanner deferralssystem whichsales increasedof net$25 revenuesmillion, driven by $94lower millionsystem volume and price changes which increased net revenues by $19 million. The decrease in ASP was partially offset by an increase in volume which increased net revenues by $7 million.ASP.

Macroeconomic conditions impact consumer confidence and discretionary spending, which can reduce or shift spending away from elective procedures, drive patients to pursue less costly orthodontic treatments, decrease the number of orthodontic case starts, reduce patient traffic in dental offices, or reduce demand for dental services generally. Consumer spending habits are affected by, among other things, fluctuations in foreign currency exchange rates, changes in consumer confidence and demand, inflation, elevated gasoline and other energy costs, general economic weakness, actual or potential slowdowns or recessions, employment levels, health insurance coverage, wages, debt obligations, discretionary income, interest rates, cultural and social influences, market volatility and perceptions of current and future economic conditions. For instance, decreased demand for dental services has and may in the future cause doctors and labs to revert to wires and brackets and postpone investments in capital equipment. Uncertain economic outlooks for, or declines in the economic outlooks of, the United States, Chinese, European and other economies have and could in the future materially adversely affect consumer demand and dental practice spending. Higher interest rates have and could in the future reduce consumers’ disposable income, which could cause a decrease in discretionary spending for our products.

Geopolitical events, wars, military actions, terrorism, or major public health crises have and could in the future harm or disrupt international commerce and the global economy, and could materially adversely affect our business. Such events have and could result in, among other things, supply chain and trade disruptions, changes in diplomatic and trade relationships, new and retaliatory tariffs, trade protection measures, quotas, embargoes, trade sanctions and countersanctions, customs investigations or restrictions, boycotts, reduced consumer spending, government shutdowns, cyberattacks, energy shortages or power outages, energy rationing that adversely impacts our manufacturing facilities, rising fuel or rising costs of producing, procuring, and shipping our products, constraints, volatility or disruption in the financial markets, employee deaths or injuries, restrictions and shortages of food, water, shelter and medical supplies, data or information exchange, disruptions, interruptions or limitations in telecommunication services, critical systems or applications reliant on a stable and uninterrupted communications infrastructure, and protests that may impact delivery of our products to customers or destruction of property. Such events may also cause a shift in public opinion about companies based in the United States or in the regions where we operate or plan to operate, which could adversely impact our reputation and business.

Tariffs or proposed tariffs, customs duties, or fees, and any retaliatory tariffs, international trade disputes, or protectionist trade measures taken in response to such tariffs may increase the cost of our products and the components or the raw materials used to make them, reduce demand for our products and adversely impact our gross margin and results of operations, limit our ability to sell to certain customers, limit or prohibit the availability of certain raw materials, components and parts necessary for our products or the products of our suppliers, or impede or slow the movement of our goods across borders. For example, the U.S. Department of Commerce has initiatedcompleted anits investigation under Section 232 of the Trade Expansion Act of 1962, as amended, to determine the effects on the national security of imports of personal protective equipment (PPE), medical consumables, and medical equipment including devices. ANo significantactions portionwith ofrespect to the productsinvestigation wehave sell,been announced to date, and the componentstiming, scope and raw materials used in our products are originally manufactured or sourced outside the United States. For example, we manufacture clear aligners in our facility in Mexico and ship them to the United States, primarily for our United States customers, with the remainder eventually shipped to other international locations. Tariffs have and could in the future result in additional costs for our products, which may reduce demand for our products and adversely impact our gross margin and results of operations, and we may not be able to fully or substantially mitigate the impactoutcome of any newresulting ortrade increasedmeasures tariffsremain or pass price increases on to our customers and to the extent we do, we may experience reduced demand for our products.uncertain.

On February 20, 2026, the U.S. Supreme Court ruled that certain of the tariffs imposed under the International Emergency Economic Powers Act (“IEEPA”) were unlawful,unlawful. and while we are no longer subject to such tariffs as a result ofFollowing that decision, wethe areUnited currentlyStates subjectimposed to new,a temporary tariffsimport surcharge on most imports under Section 122 of the Trade Act of 1974, effective February 24, 2026, which was subsequently held unlawful by the U.S. Court of International Trade in a decision that is currently stayed pending appeal, and which expired in accordance with its terms on July 24, 2026. Immediately following the expiration of the Section 122 surcharges, on July 24, 2026, the Office of the United States Trade Representative imposed additional duties under Section 301 of the Trade Act of 1974 on imports from the top 60 U.S. trade partners. Unlike the Section 122 surcharge, the Section 301 duties are not subject to a statutory rate cap or a fixed expiration date and may remain in effect indefinitely. The scope, rates, extent and duration of anytariffs tariffsunder these or other authorities, the outcome of pending litigation challenging them, and the resulting impact on general economic conditions and on our business, financial condition and results of operations are uncertain.

Military conflicts, wars, and escalation of terrorist or gang activities have and may in the future materially adversely impact the economies in which we operate. Our iTero operations, headquartered in Israel, are close to areas that have been affected by the conflict between Israel and Hamas. The outbreak ofongoing military conflictconflicts betweenin the Middle East, including the hostilities involving Israel, Iran, and the United States andthat Iranbegan onor Februaryescalated 28,in 20262025 and Israel’s2026, warwhich against Iran hashave resulted in instability aroundin the Middleregion Eastand region, particularly a disruption in shipment ofdisrupted global oil and gas flows,shipments, with cascading effects on energy prices and global economic conditions.conditions, including consumer discretionary spending. Additionally, our supply chains and demand for our products could be impaired as a result of political instability, drug trafficking, the continuation or escalation of terrorist or gang activities (particularly with respect to our manufacturing operations in Mexico), hostilities, export and import restrictions, sanctions or boycotts. These events could disrupt ongoing operations and may materially impact the logistics, timing and cost of shipping of our products and materials or our ability to operate out of impacted areas, and our ongoing contingency planning and business continuity measures to mitigate these risks may not be sufficient. Additionally, China’s territorial conflicts with other neighboring countries may impact our operations and sales in China. We cannot predict the progress or outcome of these events or the reactions by governments, businesses or consumers and each event could, individually or in the aggregate, materially adversely affect our business, financial condition and results of operations.

Our net revenues are primarily dependent on sales of the Invisalign SystemSystem, and iTero intraoral scanners.scanners and related services. Of the two, we expect the Invisalign System to continue to represent the majority of our net revenues and remain critical to our success.

Our cybersecurity risk management program and processes, including our policies, controls or procedures, may not be successfully implemented, complied with or effective in protecting our systems and information or any other information we maintain or otherwise process. Further, the frequency and sophistication of third-party cybersecurity attacks are increasing, particularly with the advancement of AI technologies. Significant service disruptions, breaches, incidents, interruptions or other disruptive events impacting our infrastructure and IT systems, or other cybersecurity incidents, or any belief or reporting that any of the foregoing has occurred, could expose us to regulatory investigations, private claims, demands, litigation or other proceedings, impair our reputation and competitive position, distract management and require significant time and resources to address. In addition, patient care could suffer, and we could be liable if our products, services or IT systems fail to timely deliver accurate and complete information.

We depend on commercial freight carriers, primarily United Parcel Service, Inc., to deliver our products. If the operations of commercial freight carriers are disrupted or we fail to mitigate any disruptions, we may be unable to timely deliver products to our customers who may choose alternative products, causing our net revenues and gross margin to decline, possibly materially. Moreover, when fuel costs increase, our freight costs generally do as well.well, including through carrier fuel surcharges applied in future periods. In addition, we earn an increasingly larger portion of our total revenues from international sales, which carry higher shipping costs that negatively impact our gross margin and results of operations. If freight costs materially increase and we are unable to successfully pass all or significant portions of the increases along to our customers, or we cannot otherwise offset such increases, our gross margin and financial results could be materially affected.

Seamless leadership transitions for key positions are critical to sustaining our culture and organizational success. If our succession planning is ineffective, it could adversely impact our business. Organizational changes,changes suchcould as our past and any future restructuring efforts, such as the restructuring plans we have implemented in each of the past three fiscal years, and most recently in the third quarter of 2025, mayalso increase attrition and adversely impact our ability to successfully attract, motivate, and retain key personnel. InFor example, in September, 2025, we required most of our employees to return to working five days per week in the office for most locations, which could impact our ability to attract and retain qualified personnel, particularly if companies that we compete with for talent have adopted work policies and arrangements that our employees may consider to be more appealing. We have experienced and may continue to experience difficulties attracting and retaining personnel that meet the qualifications, experience, compliance mindset and values we expect and share our core values of Agility, Customer and Accountability, which could impact our ability to achieve our strategic objectives and maintain compliance with obligations under our internal controls and other requirements. We provide significant training and experience to our personnel that, for certain roles, can make key personnel, such as our commercial and sales personnel, highly desirable to competitors and lead to increased attrition.

We currently are and may in the future be subject to antitrust, competition or unfair competition-related investigations, enforcement actions or claims by governmental agencies, competitors, consumers, customers and others which, even if unfounded, could cause us to incur substantial costs (including fines), enter into settlements or consent decrees, be subject to judgments, receive negative publicity, forego certain mergers, acquisitions, business combinations, investments or other transactions, divert management time and attention, or change our business in ways that could have a material adverse effect on our business practices, revenues and results of operations, such as limiting our ability to provide certain benefits to our customers and consumers, reducing the attractiveness of our products, services and the net revenue derived from them. Governments and regulators are actively developing new competition laws, regulations and actions aimed at the technology sector, AI and digital platforms, and global activities and expansion, including in large markets such as the United States, the EU, and China. For more information, see Note 6 “Legal Proceedings” of the Notes to Condensed Consolidated Financial Statements in Part I, Item 1 of this Quarterly Report on Form 10-Q.

Furthermore, we frequently must obtain regulatory clearance or approval before we can sell a new medical device or market a new use of, or claim for, an existing product. For instance, in the United States, FDA regulations are wide-ranging and govern, among other things, product design, product materials, development, manufacturing and testing, product labeling and product storage. It takes significant time, effort, and expense to obtain and maintain clearances and approvals of products and services, and there is no guarantee we will timely succeed, if at all, in the countries in which we do business. In other countries, the requirements, time, effort and expense to obtain and maintain clearances may differ materially. Moreover, these laws may change, resulting in additional time, expense or loss of market access. If the requirements to market our products or services are delayed, we may be unable to offer them in markets we deem important. Additionally, failure to comply with applicable regulatory requirements could result in enforcement actions with sanctions, including fines, civil penalties and criminal prosecution. Delays or failures to obtain or maintain regulatory approvals or clearances, or to comply with regulatory requirements, may materially adversely affect our domestic or international operations, and adversely impact our business. We and certain of our third-party vendors must also comply with and adhere to facility registration and product listing requirements forin the FDA’s Quality Management System regulations.Regulation (“QMSR”), which became effective on February 2, 2026 and incorporates by reference the international standard ISO 13485:2016, and analogous quality‑system requirements in other jurisdictions. The FDA enforces itsthe Quality System regulationsQMSR through periodicinspections, unannouncedwhich inspections.may be unannounced. Failure to satisfactorily correct an adverse inspection finding or comply with applicable regulations can result in enforcement actions, or require us to find alternative manufacturers, which could be a long and costly process and may cause reputational harm. Enforcement actions by regulators could have a material effect on our business, financial condition and results of operations.

We are or may become, or alleged to be or become, subject to stringent federal, state, and foreign laws and regulations, such as HIPAA, which regulates the security and privacy of patient healthcare information applicable to healthcare providers and their business associates, and the California Consumer ProtectionPrivacy Act, as amended by the California Privacy Rights Act, which regulates privacy, data security, content regulation and consumer protection. Numerous other states have enacted, or plan to enact, laws relating to privacy, data protection, data governance and cybersecurity, with such enacted laws either in operation or slated to go into operation over the next several years. Outside of the United States, relevant legal requirements continue to evolve. For example, the collection and use of health data and other personal information is governed in the EU by the EU GDPR, which imposes significant obligations upon companies and rights for individuals, with substantial penalties for noncompliance. Numerous other jurisdictions maintain similar legislation or other laws or regulations addressing privacy, data protection, data governance, or cybersecurity. Several jurisdictions, including the EU, United States, China, Australia, and Japan, have enacted data export restrictions and international transfer laws and regulations that established legal requirements for cross-border transfers of all or certain personal information and certain jurisdictions have also established legal requirements for data localization, which may require us to maintain separate servers located in those countries so that all or certain personal information areis maintained locally.

Our operations are subject to rapidly changing and varied expectations and requirements regarding Sustainability issues from a wide range of stakeholders, such as governmental and self-regulatory organizations, including U.S. federal and state governments, and the EU, as well as investor advocacy groups, institutional investors, investment funds, proxy advisory services, stockholders and customers. We are also requiredsubject to comply with disclosure obligations under the SEC’s long-standing climate change disclosure guidance and other SEC regulations,disclosure requirements applicable to climate-related matters, as well as the European Union’s Corporate Sustainability Reporting Directive (“CSRD”). If we fail to adopt Sustainability standards or practices as quickly as stakeholders desire, comply with or timely report on our Sustainability efforts or practices accurately, or satisfy the disclosure and other expectations of stakeholders, our brand, reputation, employee retention, business, financial performance, growth, and stock price may be adversely impacted.

Our compliance obligations span all aspects of our business and operations, including product design and development, materials sourcing and other procurement activities, product packaging, product safety, energy and natural resources usage, facilities design and utilization, recycling and collection, transportation, disposal activities, workers’workers welfare and human rights. U.S. and foreign regulators have or are considering enacting new or additional disclosure requirements or limits on the emissions of greenhouse gases from power generated by fossil fuels. Additionally, customers and consumers may demand our products, packaging and operations be more sustainable, which could affect how we manufacture and package our products, increase our costs and those of our suppliers, and result in manufacturing, transportation and supply chain disruptions if clean energy sources are unavailable in adequate amounts when required. Moreover, clean energy sources, coupled with reduced investments in traditional energy production and infrastructure, may not provide the predictable and reliable energy we, our suppliers and other business partners require.

Other restrictions apply to the substances incorporated into our products, including the chemical compounds in our clear aligners, electronics in our scanners and the packaging in which they are shipped. These laws and regulations are proliferatingproliferating, and newthe substances subjectthey to restrictionsrestrict are addedexpanded regularlyregularly, andwhich may require us to undertake additional reporting or phasingto phase out of certain chemicalssubstances and compoundsmaterials, such as per- and polyfluoroalkyl substances (PFAS) and, as regulation in this area develops, other substances and materials such as microplastics. We may be required to re-design our products or identify new suppliers to maintain compliance with these laws. Further, these laws and regulations may decrease the number of suppliers capable of supplying our needs, thereby negatively affecting our ability to manufacture products in sufficient quantities at competitive prices, leading customers to potentially choose competitive goods and services.

AI and machine learning technologies (including generative and agentic AI) in our products, services and IT systems may result in legal and regulatory risks, reputational harm or have other adverse consequences to our business.

AI is subject to a dynamic and rapidly evolving legal and regulatory environment, which, without appropriate review, governance and risk management, could expose us to unforeseen legal or regulatory scrutiny and liabilities. For example, the U.S. AI regulatory framework remains in development and has been introduced at the federal level through executive orders and legislation has been introduced and enacted at the state level. In Europe, the EU AI Act entered into force on August 1, 2024 which will become fully effective on August 2, 2026, with some provisions effective in February 2025. Other jurisdictions are considering similar legislation. Although we do not engage in developing or providing AI systems for which their placement on the market, putting into service, or use would qualify as “prohibited AI practices,” restrictions and obligations under this regulation, to the extent applicable to us, could have a negative impact on our business, global systems, financial condition and results of operations. Additionally, other jurisdictions have proposed, and in certain cases enacted, laws and regulations addressing aspects of the use and development of AI. The evolving AI regulatory environment may, among other impacts, result in inconsistencies among AI regulations and frameworks across jurisdictions; onerous compliance, governance, and research and development obligations that may require us to rework or reevaluate products or services to be compliant or result in the development of products that are unacceptable under new or revised regulatory frameworks; increased risk of exposure to investigations, proceedings and claims related to our AI models; increased liability related to the use of AI by our customers, consumers or suppliers beyond our control; delays in the deployment of new products and services; competitive and reputational harm; and increased cybersecurity risks.

Additionally, as we offer more third-party AI models in our solutions, we face risks inherent in how third-party AI models used in our solutions have been developed and deployed, including situations in which the third party may lack a proper license or consent for the training data used for their model. The use and availability of third-party AI models in our solutions could result in scrutiny and legal liability, including intellectual property infringement claims. In addition, access to third-party AI models may be suspended, restricted or offered on less favorable terms by providers or governments, including due to safety concerns, regulatory mandates or changing commercial priorities, which could disrupt, delay or increase the cost of AI-enabled features in our products and services. Such claims or scrutiny could cause reputational harm and loss of customers, and adversely impact our business and financial results. In addition, new competition regulations on AI development and deployment could impose new requirements on our markets that could impact our business and financial results.

In addition to historical information, this Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These statements include, among other things, our expectations and intentions regarding our strategic objectives, business strategy and growth drivers, and the means to achieve them; our beliefs and expectations regarding macroeconomic conditions, including fluctuations in currency exchange rates, higher interest rates, elevated gasoline and other energy costs, market volatility, uncertainty surrounding future United States trade policies, tariffs, customs duties and fees, and retaliatory actions by other nations in light of recent U.S. Supreme Court decision on the constitutionality of tariffs,nations, inflation, threats of or actual economic slowdowns or recessions and geopolitical tensions; our expectations and beliefs regarding customer and consumer confidence, purchasing behavior and demand for dental services and changes in consumer spending habits; our expectations regarding product mix, product launches, product pilots and product adoption; our expectations regarding competition and our ability to compete in our target markets; our expectations regarding the sales growth of our clear aligners, intraoral scanners and other products; our expectations regarding the impact of the military conflicts in the Middle East, Ukraine and China, on our employees, operations and assets; our marketing and efforts to build our brand awareness; our estimates regarding the size and opportunities of our target markets along with our expectations for growth in those markets and potential collaboration opportunities; our beliefs regarding the general impact of technological innovation and on our particular solutions and products; our beliefs regarding digital dentistry and its potential to impact our business and transform dentistry; our intentions regarding expansion of our business and any impacts on our operational flexibility and responsiveness to customer demand; our expectations regarding the timing and amount of future stock repurchases; our expectations regarding our tax positions and the judgments we make related to our tax obligationsobligations, including value-added tax positions and related contingent liabilities; our beliefs regarding the importance of our manufacturing operations on our success and our plans to open a manufacturing facility in Hyderabad, India in 2027; our beliefs regarding the need for and benefits of our technological development on Invisalign treatment, the areas of development in which we focus our efforts, and the advantages of our intellectual property portfolio; our expectations regarding the utilization rates for our products, including the impact of marketing on those rates and causes for periodic fluctuations of the rates; our expectations regarding the existence and impact of seasonality; our expectations regarding the continued expansion of our international markets and their growth; our expectations regarding impacts or staying in compliance with laws and regulations currently applicable to, or which may become applicable to, our business both in the United States and internationally; our beliefsexpectations regarding ourthe cultureoutcomes and commitmenttiming of ongoing litigation matters and itsregulatory impact on our financial and operational performance and its importance to our future successdevelopments; our expectations for future investments in and benefits from sales and marketing activities; our preparedness and our customers’ preparedness to react to changing circumstances and demand; our expectations for our expenses and capital obligations and expenditures in particular; our expectations regarding restructuring plans, workforce reductions, and related charges and savings; our expectations regarding acquisitions, dispositions, divestitures, held-for-sale classifications, and related fair-value estimates and measurement-period adjustments; our intentions to control spending and for investments, our intentions regarding the investment of and ability to repatriate foreign earnings; our belief regarding the sufficiency of our cash and investment balances and borrowing capacity; our judgments regarding the estimates used in our revenue recognition and assessment of goodwill and intangible assets; our predicted level of operating expenses and gross margins and other factors beyond our control, as well as other statements regarding our future operations, financial condition and prospects and business strategies.

Many of these factors may contribute to, among other things, higher raw material prices, increased transportation and labor costs, and interruptions in supply and distribution operations, each of which can also impact the availability of certain raw materials, parts and components used in our products as well as our costs and those of our suppliers. For example, we believe that in the beginning of the second quarter of 2025, sales of our products were adversely impacted compared to the same period in prior years by certain macroeconomic conditions, including global tariff volatility, inflation, and higher interest rates, which we believe may continue to impede dental patient demand. For example, patientPatient traffic growth has been uneven for many doctors, with orthodontic starts down for four consecutive years. We believe uncertainty not only impacts consumer purchasing decisions but also the decisions and recommendations that doctors make, especially doctors who offer both clear aligners and wires and brackets in their practices and have the additional time to treat patients with wires and brackets when orthodontic starts are slowing or diminishing. We believe this has resulted in an increase in orthodontic starts using wires and brackets in lieu of clear aligners that was more pronounced in the second quarter of 2025. However, weWe believe these trends are continuing and will impede future sales for so long as consumer economic uncertainty persists, particularly to the extent it impairs discretionary spending. WeAdditionally, we believe that the ongoing military conflicts in the firstMiddle quarterEast, of 2026,including the outbreakhostilities ofinvolving militaryIsrael, conflictIran, betweenand the United States that began or escalated in 2025 and Iran on February 28, 2026, together with elevated gasoline and energy costs and related market volatility, contributedhave and may continue to contribute to declines in widely reported measures of consumer confidence, and we anticipate these conditions will continue to add to market uncertainties and dampen consumer sentiment and demand.

Additionally, a material amount of our revenues are derived internationally and many of our international operations are denominated in currencies other than the U.S. dollar. In the firstsecond quarter of 2026, theforeign U.S.currency dollarmovements remained weakened against major currencies, which positivelyfavorably impacted our financialrevenues conditioncompared and results of operations forto the quarter.prior-year period. Foreign exchange volatility and the subsequent strengthening or weakening of the U.S. dollar against other currencies remains uncertain and unpredictable.

In the third quarter of 2025, we initiated a plan to realign certain business groups and reduce our global workforce as part of our continued effort to right size our labor force in response to the current macroeconomic environment. As of MarchJune 31,30, 2026, we incurred a total of approximately $42$40.2 million in restructuring charges under this plan, of which $6.3$2.5 million remained unpaid. These charges were primarily related to involuntary termination benefits, including employee severance and other post-employment benefits in connection with the 2025 restructuring plan, which washas substantiallybeen completedcompleted. We do not expect to incur additional restructuring expenses in connection with the fourth2025 quarterrestructuring of 2025.plan.

For more information, see Note 14. “Restructuring and Other Charges” of the Notes to Condensed Consolidated Financial StatementsStatements.

We measure our performance against the foregoing strategic priorities by the achievement of key financial and operating metrics. For the three months ended MarchJune 31,30, 2026, our business operations reflect the following:

•Imaging Systems and CAD/CAM services revenues of $184$185 million, ana increasedecrease of 0.9%10.8% year-over-year;

•Cash and cash equivalents of $1,060$1,103 million as of MarchJune 31,30, 2026;

•Number of employees was 20,27520,435 as of MarchJune 31,30, 2026, a decrease of 4.4%4.9% year-over-year.year-over-year primarily due to workforce reduction associated with the 2025 restructuring plan.

•As of MarchJune 31,30, 2026, approximately 23 million people worldwide have been treated with our Invisalign system.

•For the firstsecond quarter of 2026, the total number of Invisalign trainedInvisalign-trained doctors that submitted cases wereand shippedreceived toshipments (doctor submitters) was 88.189.2 thousand compared to 85.386.3 thousand in the firstsecond quarter of 2025, a 3.3%3.4% increase.

•The total utilization rate (case shipments divided by the number of doctor submitters) in the firstsecond quarter of 2026 increased to 7.8 cases per doctor compared to 7.5 cases per doctor in the firstsecond quarter of 2025.

•Clear aligner revenue per case shipment (clear aligner revenues divided by case shipments) increased from $1,240$1,250 in the firstsecond quarter of 2025 to $1,250$1,260 in the firstsecond quarter of 2026, a 0.8% increase.

Net revenues for our Clear Aligner and Systems and Services segments for the three and six months ended MarchJune 31,30, 2026 and 2025 are as follows (in millions):

Case volume data which represents Clear Aligner case shipments for the three and six months ended MarchJune 31,30, 2026 and 2025 is as follows (in thousands):

For the three and six months ended MarchJune 31,30, 2026, total net revenues increased by $61$44 million and $105 million compared to the same period in 2025, primarily due to an increase in Clear Aligner volume and increased ASPs.

For the three months ended MarchJune 31,30, 2026, Clear Aligner net revenues increased by $59$66 million compared to the same period in 2025, primarily due to an increase in volume and favorable foreign exchange rates,volume, which increased net revenues by $49$53 million and $38an million,increase respectively.of These$13 increasesmillion werefrom partiallyfavorable offsetforeign byexchange higher discountsrates and productprice mix shift to lower-priced countries and products resulting in a decrease in net revenues of $28 million.increases.

For the threesix months ended MarchJune 31,30, 2026, SystemsClear and ServicesAligner net revenues increased by $2$125 million compared to the same period in 2025, primarily due to $7an millionincrease fromin volume and favorable foreign exchange rates, $5which increased net revenues by $102 million from higher scanner system sales, driven by increased scanner system volume, and $3$49 millionmillion, from higher non-system sales.respectively. These increases were partially offset by ahigher decreasediscounts ofand $14 million fromproduct mix shift to lowerlower-priced pricedcountries and products andresulting lowerin salesa decrease in net revenues of scanner$26 wands.million.

For the three and six months ended MarchJune 31,30, 2026, our gross margin percentage increased as compared to the same periodperiods in 2025,2025 primarily due to lowertariff Costrefunds, roll-off of netaccelerated revenuesdepreciation fromand operationalhigher efficiencies,clear partially offset by loweraligner ASPs.

For the three months ended MarchJune 31,30, 2026, selling, general and administrative expense increased compared to the same period in 2025, primarily due to higher spend on outside services, higher employee costs, including salaries, fringe benefits and bonus, and higher equipment and softwaremaintenance costs, partially offset by lower advertising and marketing expense, commissions, and stock-based compensation.

For the three months ended MarchJune 31,30, 2026, research and development expense increased compared to the same period in 2025, primarily due to higher employee costs, including salaries, fringe benefits and bonus costs, partiallyoutside offsetservices, byand lowerdepreciation on capitalized labor costs related to internal-use software, partially offset by lower stock-based compensation, and reduced outside service provider spend.compensation.

Legal settlements and contingencies (in millions):

For the three months ended MarchJune 31,30, 2026, we recorded $31$1.2 million and $37.5 million related to legal settlements.settlements and UK VAT contingency loss, respectively. Refer to Note 6 “Legal Proceedings” and Note 7 “Commitments and Contingencies” of the Notes to Condensed Consolidated Financial Statements for more information.

For the three months ended MarchJune 31,30, 2026, our operating margin increased compared to the same period in 2025, primarily due to higher gross margin and lower advertising and marketing expense, partially offset by an increase in employee costs and credit card transaction fees.

For the threesix months ended MarchJune 31,30, 2026, our operating margin increased compared to the same period in 2025, primarily due to higher gross margin and alower decreaseadvertising and marketing expense, partially offset by an increase in operating expenses related to lower employee costs.costs and equipment.

For the three and six months ended MarchJune 31,30, 2026, interest income decreasedincreased compared to the same period in 2025, primarily due to lower interest rates earned on cash and cash equivalent balances.

For the three months ended MarchJune 31,30, 2026, other income (expense), net decreased compared to the same period in 2025, primarily due to an unfavorable impact from foreign exchange rates, partially offset by a gain recorded on our equity investment.rates.

Our effective tax rate differsdiffered from the U.S. statutory federal income tax rate of 21% for the three monthand six months period ended MarchJune 31,30, 2026 and 2025, primarily due to the recognition of additional tax expense resulting from U.S. taxes on foreign earnings, state income taxes, and non-deductible expense in the U.S., partially offset by the foreign income taxed at different rates.

The decrease in our effective tax rate for the three months ended MarchJune 31,30, 2026 compared to the same period in 2025 is primarily attributable to the change in our jurisdictional mix of income, and decreases in U.S. taxes on foreign earnings and state income taxes.income.

As of MarchJune 31,30, 2026 and December 31, 2025, we had cash and cash equivalents of $1,060$1,103 million and $1,095 million, respectively, of which approximately $853$861 million and $929 million, respectively, were held by our foreign subsidiaries. We continue to evaluate opportunities to repatriate our foreign earnings if or when needed. We do not expect to incur significant additional costs upon repatriation of these foreign earnings. We generate sufficient operating cash flow from our domestic operations and have access to $300 million under our revolving line of credit. We believe that our current cash balances and the borrowing capacity under our credit facility, if necessary, will be sufficient to fund our business for at least the next 12 months.

Our material cash requirements as of MarchJune 31,30, 2026 are as follows:

•Our purchase commitments consist primarily of open purchase orders for goods and services, including manufacturing inventory, supplies and services, sales and marketing, research and development services and technological services, issued in the normal course of business. There have been no material changes to our purchase commitments for goods and services during the threesix months ended MarchJune 31,30, 2026 as compared to the year ended December 31, 2025.

•There have been no material changes to our future operating lease payments, including leases that have not yet commenced, during the threesix months ended MarchJune 31,30, 2026 as compared to the year ended December 31, 2025.

•In April 2025, our Board of Directors authorized a plan to repurchase up to $1.0 billion of our common stock. The April 2025 Repurchase Program is expected to be completed over a period of up to three years. We continually evaluate opportunities to repurchase shares of our common stock depending on various factors including our share price and current liquidity requirements. We repurchased approximately $31$98 million during the first quarterhalf of 2026, leaving $800$733 million available for future repurchase under the April 2025 Repurchase Program. We expect to repurchase up to $200 million of our common stock over a six-month period beginning on May 1, 2026. Refer to Note 9 “Common Stock Repurchase ProgramPrograms” of the Notes to Condensed Consolidated Financial Statements for details on our stock repurchase programs.

•As of MarchJune 31,30, 2026, we had no material off-balance sheet arrangements that have or are reasonably likely to have a current or future material impact on our liquidity or capital resources.

The following table summarizes our Condensed Consolidated Statements of Cash Flows for the threesix months ended MarchJune 31,30, 2026 and 2025 (in thousands):

For the threesix months ended MarchJune 31,30, 2026, cash flows from operations of $151$344 million resulted primarily from our net income of approximately $113$221 million as well as the following:

•Net outflow of $41$72 million in accounts receivable due to timing of collections; and

•Net outflowinflow of $31$61 million in deferredaccrued revenue.and other long-term liabilities; and

Net cash used in investing activities was $132$214 million for the threesix months ended MarchJune 31,30, 2026, primarily driven by $31$66 million of purchases of property, plant and equipment, a $50$100 million additional investment in Heartland, $31$70 million for our investment in convertible notes, and $19 million related to an immaterial acquisition.acquisition, offset by $42 million of proceeds from the sale of property, plant and equipment.

Net cash used in financing activities was $48$116 million for the threesix months ended MarchJune 31,30, 2026, primarily driven by outflows of $31$98 million for share repurchases and $29 million for payroll taxes paid for vested equity awards, offset by $12 million of proceeds from the issuance of common stock under our employee stock purchase plan.