1 unchanged sentence
The following discusses some of the risks that may affect our business, results of operations, financial condition and the price of our stock.
−Removed: You should carefully review this section, as well as our condensed consolidated financial statements and notes thereto and other information appearing in this Quarterly Report on Form 10-Q, for important information regarding these and other risks that may affect us.
+Added: You should carefully review this section, as well as our condensed consolidated financial statements and
+Added: notes thereto and other information appearing in this Quarterly Report on Form 10-Q, for important information regarding these and other risks that may affect us.
The order we have chosen to list the risks below or the sections in which we have identified them should not be interpreted to mean we deem any risks to be more or less important or likely to occur or, if any do occur, that their impact may be any less significant than others.
31 unchanged sentences
Financial, Tax and Accounting Risks
−Removed: • Impairment of our goodwill
+Added: • Impairment of our goodwill, intangible or long-lived assets
• Compliance with accounting, financial reporting, and tax laws
6 unchanged sentences
Consumer spending habits are affected by, among other things, inflation, fluctuations in currency exchange rates, general economic weakness, threats or actual recessions, pandemics, wars and military actions, employment levels, wages, debt obligations, discretionary income, interest rates, volatility in capital, and consumer confidence and perceptions of current and future economic conditions.
−Removed: Changes and uncertainty can, among other things, reduce or shift spending away from elective procedures, drive patients to purchase orthodontic treatments that cost less than our Invisalign treatment options, decrease the number of orthodontic and dental case starts, reduce patient traffic in dentists’ offices or reduce demand for dental services generally.
−Removed: Further, decreased demand for dental services can cause dentists and labs to postpone investments in capital equipment, such as intraoral scanners and CAD/CAM equipment and software.
+Added: Changes and uncertainty 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’ offices or reduce demand for dental services generally.
+Added: Further, decreased demand for dental services can cause dentists and labs to postpone investments in capital equipment, such as intraoral scanners and CAD/CAM
+Added: equipment and software.
The recent declines in, or uncertain economic outlooks for, the U.S., Chinese, European and certain other international economies have and may continue to adversely affect consumer and dental practice spending.
−Removed: The increase in the cost of fuel and energy, food and other essential items along with higher interest rates could reduce consumers' disposable income, resulting in decreased discretionary spending for products like ours.
+Added: Increases in the cost of fuel and energy, food and other essential items along with higher interest rates have reduced consumers' disposable income, decreasing discretionary spending for products like ours.
Further, we cannot predict the impact of efforts by central banks and federal, state and local governments to combat higher inflation.
If their efforts are too aggressive, they may lead to a recession.
−Removed: Alternatively, if they are insufficient or are not sustained long enough to lower inflation to acceptable levels, consumer spending may be adversely impacted for a prolonged period of time.
−Removed: Decreases in disposable income and discretionary spending or changes in consumer confidence and spending habits has and may continue to adversely affect our revenues and operating results.
+Added: Alternatively, if they are insufficient or not sustained long enough to lower inflation acceptably, consumer spending may be adversely impacted for a prolonged period of time.
Inflation continues to adversely impact spending and trade activities, causing unpredictable impacts on global and regional economies.
3 unchanged sentences
Any of these events could materially affect our business and operating results.
−Removed: We have international operations and sales outside the U.S.
+Added: We have international operations and sales.
We earn a large portion of our total revenues from international sales generated through our foreign direct and indirect operations and we expect to increase our sales and presence outside the U.S., particularly in markets we believe have high-growth potential.
−Removed: Moreover, we perform most of our key production steps in locations outside of the U.S.
+Added: Moreover, most of our key production steps occur in locations outside of the U.S.
For instance, we perform our digital treatment planning and aligner fabrication in multiple international locations, including large-scale operations in Mexico, Costa Rica, Poland, Japan and China.
2 unchanged sentences
Although the U.S.
−Removed: dollar is our reporting currency, a growing portion of our net revenues and net income are generated in foreign currencies.
−Removed: While we utilize forward contracts to reduce the adverse earnings impact from the effect of exchange rate fluctuations on certain assets and liabilities, our hedging strategies may not be successful, and currency exchange rate fluctuations have and could continue to have a material adverse effect on our operating results and cash flows.
+Added: dollar is our reporting currency, a large portion of our net revenues and net income are generated in foreign currencies.
+Added: While we utilize forward contracts to reduce the adverse earnings impact from the effect of exchange rate fluctuations on certain assets and liabilities, our hedging strategies may not be successful, and currency exchange rate fluctuations have and may continue to materially adversely effect our operating results and cash flows.
In addition, our foreign currency exposure on assets, liabilities and cash flows that we do not hedge have and could continue to have a material impact on our financial results in periods when the U.S.
dollar significantly fluctuates in relation to foreign currencies.
−Removed: Our business could be impacted by political events, trade and other international disputes, war, and terrorism, including the military conflict between Russia and Ukraine.
−Removed: Political events, trade and other international disputes, war, and terrorism could harm or disrupt international commerce and the global economy and could have a material effect on our business as well as our customers, suppliers, contract manufacturers, distributors, and other business partners.
−Removed: Such risks include inflation, supply chain and trade disruptions, trade sanctions, reduced consumer spending, disruptions to our IT systems, including through network failures, malicious or
−Removed: disruptive software, or cyberattacks, energy shortages or rationing that adversely impacts our manufacturing facilities, rising fuel or rising costs of producing, procuring and shipping our products, fluctuations to foreign currency exchange rates, and constraints, volatility or disruption in the financial markets.
−Removed: Political events, trade and other international disputes, wars, and terrorism can lead to unexpected tariffs or trade restrictions, which may adversely impact our business.
−Removed: Tariffs, such as the tariffs on Chinese goods, and responses to the tariffs increase the cost of our products and the components and raw materials used to make them.
+Added: Our business could be impacted by political events, trade and other international disputes, war, and terrorism, including the military conflicts between Russia and Ukraine and in the Middle East.
+Added: Political events, trade and other international disputes, war, and terrorism could harm or disrupt international commerce and the global economy and could materially effect our business as well as our customers, suppliers, contract manufacturers, distributors, and other business partners.
+Added: Such risks include inflation, supply chain and trade disruptions, trade sanctions, reduced consumer spending, disruptions to our IT systems, including through network failures, malicious or disruptive software, or cyberattacks, energy shortages or rationing that adversely impacts our manufacturing facilities, rising fuel or rising costs of producing, procuring and shipping our products, fluctuations to foreign currency exchange rates, and constraints, volatility or disruption in the financial markets.
+Added: Political events, trade and other international disputes, wars, and terrorism can lead to unexpected tariffs or trade restrictions, that adversely impact our business.
+Added: Tariffs, such as those on Chinese goods, and responses to the tariffs may increase the cost of our products and the components and raw materials used to make them.
Increased costs could adversely impact our gross margin and reduce demand for our products.
−Removed: Countries may also adopt other measures, such as controls on imports or exports of goods, technology or data, that adversely impact our operations and supply chain, limit our ability to offer products and services or inhibit our ability to comply due to contradictions with other laws.
+Added: Countries may also adopt other measures, such as controls on the import or export of goods, technology or data, that adversely impact our operations and supply chains, limit our ability to offer products and services or inhibit our ability to comply due to contradictions with other laws.
These measures could require us to take various actions, including changing suppliers or restructuring business relationships.
Complying with new or changed trade restrictions is expensive, time-consuming and disruptive to our operations.
−Removed: Such restrictions can be announced with little or no advance notice and we may be unable to effectively mitigate their adverse impacts.
+Added: Such restrictions can be announced with little or no advance notice and we may be unable to effectively mitigate any adverse impacts.
If disputes and conflicts escalate in the future, the responses by governments may be significantly more restrictive and could materially affect our business.
−Removed: Political unrest, threats, tensions, actions and responses to any social, economic, business, geopolitical, military, terrorism, or acts of war involving key commercial, development or manufacturing markets such as China, Mexico, Israel, Europe, or other countries could materially impact our international operation.
−Removed: For example, our employees in Israel could be obligated to perform reserve duty in the Israeli military and be called for additional active duty under emergency circumstances .
−Removed: If this or any other events or conditions occur, the impact to us, our employees and customers would be uncertain, particularly if emergency circumstances, armed conflicts or an escalation in political instability or violence disrupts our product development, data or information exchange, payroll or banking operations, product or materials shipping by us or our suppliers and other unanticipated business disruptions, interruptions and limitations in telecommunication services or critical systems or applications reliant on a stable and uninterrupted communications infrastructure.
−Removed: The military conflict between Russia and Ukraine has materially adversely impacted global economies.
−Removed: Our commercial operations have been impacted by the conflict and if we fail to support existing customers, we may harm our reputation, and be subject to legal and regulatory actions in Russia.
−Removed: Additionally, although the majority of our research and development personnel formerly headquartered in Russia have relocated, some personnel remain.
−Removed: Whether those that are in Russia or those in their new locations remain with us over the long-term is unknown.
−Removed: If we are unable to retain key skilled personnel, or we are unable to quickly replace such personnel with individuals of equivalent technical expertise and qualifications, our business and financial condition could be materially effected.
−Removed: Moreover, production could be impaired as a result of the military conflict in other countries such as Poland and Israel, where our fabrication facilities are located.
−Removed: We have no way to predict the progress or outcome of the conflict in Ukraine or the reactions by governments, businesses or consumers but it could have a material effect on our business and operating results.
+Added: Political unrest, threats, tensions, actions and responses to any social, economic, business, geopolitical, military, terrorism, or acts of war involving key commercial, development or manufacturing markets such as China, Mexico, Israel, Europe, or other countries could materially impact our international operations.
+Added: The impact to us, our employees and customers would be uncertain, particularly if emergency circumstances, armed conflicts or an escalation in political instability or violence disrupts our product development, data or information exchange, payroll or banking operations, product or materials shipping by us or our suppliers and other unanticipated business disruptions, interruptions and limitations in telecommunication services or critical systems or applications reliant on a stable and uninterrupted communications infrastructure.
+Added: Military conflicts have materially adversely impacted global economies.
+Added: Our commercial operations in Russia have been impacted by the conflict in Ukraine and if we fail to support existing customers, we may harm our reputation, and be subject to legal and regulatory actions in Russia.
+Added: Additionally, the majority of our research and development personnel formerly headquartered in Russia have relocated.
+Added: Whether those still in Russia or those relocated remain with us over the long-term is unknown.
+Added: Additionally, our iTero operations are headquartered near Tel Aviv, Israel in Petach Tikv, which is close to areas affected by ongoing violence and military action.
+Added: If the latest conflict in the region continues, it may impact our employees and their families.
+Added: For instance, we have employees and consultants in Israel that have been called for service in the current conflict in the Middle East and such persons may be absent for an unknown period of time.
+Added: Furthermore, our facility may be damaged or supply chains impaired as a result of hostilities which could disrupt ongoing operations and impact our financial results.
+Added: We cannot predict the progress or outcome of these conflicts or the reactions by governments, businesses or consumers but they could materially adversely effect our business and operating results.
Our business could be impacted by major public health issues, including pandemics, and our business has been materially affected by the global and regional spread of COVID-19.
Major public health issues, including pandemics such as COVID-19, have adversely affected, and could in the future materially affect, our business due to their impact on the global and regional economies, demand for consumer products, and the imposition or removal of public safety measures.
−Removed: Public health concerns may also limit the movement of goods between regions, disrupt or delay supply chains and sales and distribution channels, resulting in interruptions of the supply of products.
−Removed: Insurance coverage, if available, may be insufficient to cover all losses that may arise.
+Added: Public health concerns may also limit the movement of goods between regions, disrupt or delay supply chains and sales and distribution channels, resulting in interruptions to the supply of products.
+Added: Insurance coverage, if available, may be insufficient to cover all losses that arise.
COVID-19 created significant, widespread and unprecedented volatility, uncertainty, and economic instability, disrupting broad aspects of global and regional economies, our operations and the businesses of our customers and suppliers.
3 unchanged sentences
Natural disasters can impact our operations as well as those of our customers and critical suppliers.
−Removed: Natural disasters include earthquakes, tsunamis, floods, droughts, hurricanes, wildfires, and other extreme weather conditions that can cause deaths, injuries, and critical health crises, power outages, restrictions and shortages of food, water, shelter, and medical supplies, telecommunications failures, materials scarcity, price volatility and other ramifications.
−Removed: Climate change is likely to increase both the frequency and severity of natural disasters and, consequently, risks to our business and operations.
−Removed: Our digital dental modeling and certain of our customer facing operations are primarily processed in our facilities located in Costa Rica.
−Removed: Our aligner molds and finished aligners are fabricated in China, Mexico and Poland.
−Removed: Our locations in Costa Rica and Mexico as well as others are in earthquake and hurricane zones and may be subject to other natural disasters.
−Removed: Moreover, a significant
−Removed: portion of our research and development activities are located in California, which suffers from earthquakes, periodic droughts, heat waves, flooding, power shortages and wildfires.
−Removed: If a natural disaster occurs in a region where one of these facilities is located, our employees could be impacted, our research lost, and our ability to create treatment plans, respond to customer inquiries or manufacture and ship our aligners or intraoral scanners could be compromised which could result in our customers experiencing significant product and services delays.
+Added: Natural disasters include earthquakes, tsunamis, floods, droughts, hurricanes, wildfires, and extreme weather conditions that cause deaths, injuries, and critical health crises, power outages, restrictions and shortages of food, water, shelter, and medical supplies, telecommunications failures, materials scarcity, price volatility and other ramifications.
+Added: Climate change is likely to increase the frequency and severity of natural disasters and, consequently, risks to our operations and financial results.
+Added: Our digital dental modeling and certain of our customer facing operations are primarily processed in our facilities located in Costa Rica, our iTero scanners are primarily manufactured in China and Israel, and our aligner molds and finished aligners are fabricated in China, Mexico and Poland.
+Added: These locations are in zones susceptible to natural disasters and their indirect effects.
+Added: If a natural disaster occurs in a region where one of these facilities is located, our employees could be impacted, our research lost, and our ability to create treatment plans, respond to customer inquiries or manufacture and ship our aligners or intraoral scanners could be compromised, causing our customers to experience significant product and services delays.
The effects of climate change on regional and global economies could change the supply, demand or availability of sources of energy or other resources material to our products and operations and affect the availability or cost of natural resources and goods and services on which we and our suppliers rely.
2 unchanged sentences
Our products require our customers to change from traditional treatment methods.
−Removed: For example, Invisalign treatment is a significant change from traditional metal wires and brackets orthodontic treatment, and customers and consumers may not find it cost-effective or preferable to traditional treatment.
−Removed: A number of dental professionals continue to believe Invisalign treatment is only appropriate for a limited percentage of patients or are reluctant to move from analog to digital.
−Removed: Additionally, our iTero products provide a digital alternative and some dental professionals have been and may continue to be resistant to move to a digital platform.
+Added: For example, Invisalign treatment is a significant change from traditional orthodontic metal wires and brackets, and customers and consumers may not find it cost-effective or preferable.
+Added: A number of dental professionals continue to believe Invisalign treatment is only appropriate for a limited percentage of patients.
+Added: Additionally, our clear aligners and iTero products provide a digital alternative and some dental professionals have been and may continue to be resistant to move to a digital platform.
Increased market acceptance of our products depends in part on the recommendations of dental professionals, as well as other factors including efficacy, safety, ease of use, reliability, aesthetics, and price compared to competing products and treatment methods.
−Removed: If demand for our products fails to increase, our business and operating results may be harmed.
+Added: If demand for our products fails to increase, our business, including our financial and operating results, may be harmed.
Our net revenues depend primarily on our Invisalign system and iTero scanners and any decline in sales or average selling price of these products may adversely affect net revenues, gross margin and net income.
Our net revenues remain largely dependent on sales of our Invisalign system of clear aligners an d iTero intraoral scanners.
−Removed: Of the two, we expect net revenues from the sale of the Invisalign system, primarily our comprehensive products, will continue to account for the majority of our net revenues, making the continued and widespread acceptance of the Invisalign system by orthodontists, GPs and consumers critical to our success.
−Removed: Our iTero business also contributes a material percentage of our overall net revenues.
+Added: Of the two, we expect net revenues from the sale of the Invisalign system will continue to account for the majority of our net revenues, making the continued and widespread acceptance of the Invisalign system by orthodontists, GPs and consumers critical to our success.
Our operating results could be harmed if:
• orthodontists and GPs experience a reduction in consumer demand for orthodontic services;
−Removed: • consumers are unwilling to adopt Invisalign system treatment as rapidly or in the volumes we anticipate and at the prices offered;
−Removed: • orthodontists or GPs choose to continue using wires and brackets or competitive products rather than the Invisalign system or the rates at which they utilize the Invisalign system fail to increase or increase as rapidly as anticipated;
+Added: • orthodontists, GPs or consumers are unwilling to adopt Invisalign system treatment as rapidly or in the volumes we anticipate and at the prices offered;
+Added: • orthodontists or GPs choose to continue using wires and brackets or competitive products rather than the Invisalign system or the rates at which they utilize the Invisalign system fail to increase;
• sales of our iTero scanners decline or fail to grow sufficiently or as anticipated;
1 unchanged sentence
• the average selling price of our products declines.
−Removed: The average selling prices of our products, particularly our Invisalign system, are influenced by numerous factors, including the type and timing of products sold (particularly the timing of orders for additional clear aligners for certain Invisalign products) and foreign exchange rates.
+Added: The average selling prices of our products, particularly our Invisalign system, are influenced by numerous factors, including the type and timing of products sold (particularly the timing of orders for additional clear aligners for certain Invisalign products) and foreign currency exchange rates.
In addition, we sell a number of products at different list prices which may differ based on country.
8 unchanged sentences
If our average selling prices decline, our net revenues, gross margin and net income may be adversely affected.
−Removed: Competition in the markets for our products is increasing and we expect aggressive competition from existing competitors, other companies that may introduce new technologies or products in the future and customers who alone or with others create orthodontic appliances and solutions or other products or services that compete with us.
−Removed: The dental industry is in a period of immense and rapid digital transformation involving products, technologies, distribution channels and business models.
−Removed: While solutions such as our Invisalign system, iTero scanners and CAD/CAM software facilitate this transition, whether our technologies will achieve market acceptance and, if adopted, whether and when they may become obsolete, remains unclear.
−Removed: In addition, we face competition from companies that introduce new technologies and products and we may be unable to compete with these competitors or they may render our technology or products obsolete or economically unattractive.
−Removed: If we are unable to compete effectively with existing products or respond effectively to any new technologies, our business could be harmed.
−Removed: Currently, the Invisalign system competes primarily against traditional metal wires and brackets and increasingly against clear aligners manufactured and distributed by new and existing market entrants and manufacturers of traditional wires and brackets, and from traditional medical device companies, laboratories, startups and, in some cases, doctors and Dental Support Organizations (“DSOs”) themselves.
+Added: Competition in the markets for our products is increasing and we expect aggressive competition from existing competitors, other companies that introduce new technologies or products in the future and customers who alone or with others create orthodontic appliances and solutions or other products or services that compete with us.
+Added: The dental industry is experiencing immense and rapid digital transformation, which is impacting products, technologies, distribution channels and business models.
+Added: While solutions such as our Invisalign system, iTero scanners and CAD/CAM software facilitate this transition, whether our technologies will achieve market acceptance and, if adopted, when they may become obsolete, remains unclear.
+Added: In addition, we face competition from companies that introduce new technologies and products.
+Added: We may be unable to compete with these competitors or they may render our technology or products obsolete or economically unattractive.
+Added: If we cannot compete effectively with existing products or respond effectively to any new technologies, our business could be harmed.
+Added: Currently, the Invisalign system competes primarily with traditional metal wires and brackets and increasingly against clear aligners which are manufactured and distributed by new and existing market entrants, including traditional medical device companies, laboratories, startups and, in some cases, doctors and Dental Support Organizations (“DSOs”) themselves.
The number and types of competitors are diverse and growing rapidly.
3 unchanged sentences
The manipulation and movement of teeth and bone is a complex and delicate process with potentially painful and debilitating results if improperly performed or monitored.
−Removed: Accordingly, we deliver our Invisalign system solutions primarily through trained and skilled doctors and are reliant on their recommendations and support of our products.
−Removed: The Invisalign system requires a doctor's prescription and an in-person physical examination of the patient’s dentition before beginning treatment;
+Added: Accordingly, we deliver our Invisalign system primarily through trained and skilled doctors and are reliant on their recommendations and support.
+Added: The Invisalign system requires a doctor's prescription and an in-person patient dental examination before beginning treatment;
however, with the advent of DTC providers, there has been a shift away from traditional dental practices that may impact our primary selling channels.
Doctors and DSOs are sampling alternative products and taking advantage of competitive promotions and sale opportunities.
−Removed: Our iTero intraoral scanner can be used to start clear aligner therapy, as well as other dental procedures, including restorative, implant planning and dentures, and also functions as a diagnostic tool.
−Removed: The iTero intraoral scanner competes with polyvinyl siloxane (“PVS”) impressions and new scanners in the market that doctors use for clear aligner therapy or other dental procedures.
+Added: Our iTero scanners can be used to start clear aligner therapy, as well as other dental procedures, including restorative, implant planning and dentures, and also functions as a diagnostic tool.
+Added: iTero scanners compete with polyvinyl siloxane (“PVS”) impressions and numerous new intraoral scanners.
It also competes with traditional bite wing 2D dental x-rays for detecting interproximal caries.
1 unchanged sentence
To stimulate product and services demand, we have a history of offering volume discounts, price reductions and other promotions to targeted customers and consumers and releasing lower priced products.
−Removed: Whether or not successful, these promotional campaigns and lower priced products have had and may in the future have unexpected and unintended consequences, including reduced gross margins, profitability and average selling prices, net revenues, volume growth, and net income.
+Added: These promotional campaigns and lower priced products have had, and may in the future have, unexpected and unintended consequences, including reduced gross margins, profitability and average selling prices, net revenues, volume growth, and net income.
We cannot be sure that we will be able to compete successfully against our current or future competitors or that competitive pressures will not have a material effect on our business, results of operations and financial condition.
Our success depends on our ability to successfully develop, introduce, achieve market acceptance of, and manage new products and services.
−Removed: Our success depends on our ability to profitably and quickly develop, manufacture, market, obtain and maintain regulatory approval or clearance of new products and services along with improvements to existing products and services.
+Added: Our success depends on our ability to quickly and profitably develop, manufacture, market, obtain and maintain regulatory approval or clearance of new products and services along with improvements to existing products and services.
There is no assurance we can successfully develop, sell and achieve market acceptance of our new or improved products and services.
12 unchanged sentences
• encourage customers to adopt new technologies and provide the needed technical, sales and marketing support to make new product and services launches successful;
−Removed: If we fail to accurately predict the needs and preferences of customers and their patients, or fail to produce viable technologies or products, we may invest heavily in research and development that does not lead to significant revenues.
+Added: • source and receive quality raw materials or parts from our suppliers.
+Added: 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 products and product improvements, we may incur substantial costs doing so and our profitability may suffer.
1 unchanged sentence
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 until patients complete their treatments.
−Removed: For instance, it can take up to 24 months or longer to complete treatment using our Invisalign system.
In addition, we periodically introduce new business and sales initiatives to meet customers’ needs and demands.
−Removed: In general, our internal resources support these initiatives without clear indications they will prove successful or be without short-term execution challenges.
−Removed: Should these initiatives be unsuccessful, our business, results of operations and financial condition could be materially impacted.
+Added: In general, our internal resources support these initiatives without clear indications they will prove successful or be without short-
+Added: term execution challenges.
+Added: Should these initiatives fail, our business, results of operations and financial condition could be materially impacted.
We may invest in or acquire other businesses, products or technologies which may require significant management attention, disrupt our business, dilute stockholder value and adversely affect our results of operations.
2 unchanged sentences
If we make investments or complete acquisitions, we may not ultimately strengthen our competitive position or achieve our goals or desired synergies, and investments or acquisitions we complete could be viewed negatively by our customers, securities analysts and investors.
+Added: Opposition to acquisitions may lead to negative ratings by analysts or investors, give rise to stockholder objections or result in stockholder activism, any of which could disrupt our operations or harm our stock price.
Moreover, to the extent we make strategic investments, the companies in which we invest may fail or we may ultimately own less than a majority of the outstanding shares of the company and be outvoted on critical issues that could harm us or the value of our investment.
14 unchanged sentences
• unsuccessfully evaluate or utilize the acquired technology or acquired company’s know-how or fail to successfully integrate the technologies acquired.
−Removed: Moreover, opposition to one or more acquisitions may lead to negative ratings by analysts or investors, give rise to stockholder objections or result in stockholder activism, any of which could disrupt our operations or harm our stock price.
Operational Risks
6 unchanged sentences
Our operating results have and will continue to fluctuate in the future, which makes predicting the timing and amount of customer demand, our revenues, costs and expenditures difficult.
−Removed: Our quarterly and annual operating results have and will continue to fluctuate for a variety of reasons, including as a result of changing doctor and consumer product demand.
+Added: Our quarterly and annual operating results have and will continue to fluctuate for a variety of reasons, including as a result of changing doctor and consumer demand.
In addition to the factors otherwise described herein, some of the other factors that have historically, and could in the future, cause our operating results to fluctuate include:
1 unchanged sentence
• the creditworthiness, liquidity and solvency of our customers and their ability to timely make payments when due;
−Removed: • changes in the timing of revenue recognition and our average selling prices, including as a result of the timing of receipt of product orders and shipments, product and services mix, geographic mix, product and services deferrals, the introduction of new products and software releases, product pricing, bundling and promotions, pricing for fees or expenses, modifications to our terms and conditions such as payment terms, or as a result of new accounting pronouncements or changes to critical accounting estimates including, without limitation, estimates based on matters such as our predicted usage of additional aligners;
+Added: • changes in the timing of revenue recognition and our average selling prices, including as a result of the timing of receipt of product orders and shipments, product and services mix, geographic mix, product and services deferrals, the introduction of new products and software releases, product pricing, bundling and promotions, pricing for fees or expenses, modifications to our terms and conditions such as payment terms, or as a result of new accounting pronouncements or changes to critical accounting estimates, including estimates such as our predicted usage of additional aligners;
• seasonal fluctuations, including those related to patient demographics or seasonality as well as the availability of doctors to take appointments;
2 unchanged sentences
• timing and fluctuation of spending around marketing and brand awareness campaigns and industry trade shows.
−Removed: If we underestimate product demand, demand may exceed our manufacturing capacity or that of one or more of our suppliers, we may be understaffed and we may not have sufficient materials needed for production.
−Removed: Specifically, our manufacturing process relies on sophisticated computer software and requires new technicians to undergo a relatively long training process, often 120 days or longer.
−Removed: As a result, if we are unable to accurately predict demand, we may have an insufficient number of trained technicians to ensure products are timely manufactured and delivered to meet customers’ expectations, which could damage our relationships with our existing customers or harm our ability to attract new customers.
−Removed: Specifically, production levels for our intraoral scanner are generally forecasted based on forecasts and historic product demand and we often place orders with suppliers for materials, components and sub-assemblies (“materials and components”) as well as finished products weeks or more in advance of projected customer orders.
+Added: If we underestimate product demand, it may exceed our manufacturing capacity or that of one or more of our suppliers, we may be understaffed and we may not have sufficient materials for production.
+Added: Specifically, our manufacturing process relies on sophisticated computer software and requires new technicians to undergo a long training process, often 120 days or longer.
+Added: As a result, if we fail to accurately predict demand, we may have an insufficient number of trained technicians to timely manufacture and deliver products to meet customers’ expectations, which could damage our relationships with our existing customers or harm our ability to attract new customers.
+Added: Specifically, production levels for our iTero scanners are generally set based on forecasts and historic product demand and we often place orders with suppliers for materials, components and sub-assemblies (“materials and components”) as well as finished products weeks or more in advance of projected customer orders.
Conversely, if we overestimate customer demand, we may lose opportunities to increase revenues and profits, we may have excessive staffing, materials, components and finished products, or capacity.
−Removed: If we hire and train too many technicians in anticipation of demand that does not materialize or materializes slower than anticipated, our costs and expenditures may
−Removed: outpace our revenues or revenue growth, harming our gross margin and financial results.
+Added: If we hire and train too many technicians in anticipation of demand that does not materialize or materializes slower than anticipated, our costs and expenditures may outpace our revenues or revenue growth, harming our gross margin and financial results.
Additionally, to secure supplies for production of products, we periodically enter into non-cancelable minimum purchase commitments with vendors, which could impact our ability to adjust inventory for declining demand.
−Removed: If product demand decreases or increases more than forecast, we may be required to purchase or lease additional or larger facilities and additional equipment, or we may be unable to fulfill customer demand in the time frames and with the quantities required.
−Removed: Responding to unanticipated changes in demand may take time to accomplish, lower our gross margin, inhibit sales or harm our reputation.
−Removed: Production of our Invisalign clear aligners and iTero intraoral scanners are also 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, and limited production yields.
+Added: If product demand decreases or increases more than forecast, we may be required to purchase or lease additional or larger facilities and additional equipment, or we may be unable to timely fulfill customer demand.
+Added: Responding to unanticipated changes in demand may take time, lower our gross margin, inhibit sales or harm our reputation.
+Added: Production of our Invisalign system and iTero scanners are also 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, and limited production yields.
+Added: We routinely review inventory for usage potential, including fulfillment of customer warranty obligations and spare part requirements, and write down to the lower of cost or net realized value the excess and obsolete inventory, which may materially affect our results of operations.
Any or all of these problems could result in the loss of customers, provide an opportunity for competing products to gain market acceptance and otherwise harm our business and financial results and those of our business partners.
Improvements to or changes in our products may affect the demand, making it less predictable.
−Removed: We routinely review inventory for usage potential, including fulfillment of customer warranty obligations and spare part requirements, and write down to the lower of cost or net realized value the excess and obsolete inventory, which may materially affect our results of operations.
For instance, periodically we announce new products, capabilities, or technologies that replace or shorten the life cycles of legacy products or cause customers to defer or stop purchasing legacy products until new products become available.
6 unchanged sentences
We are subject to operating risks, including excess or constrained capacity and pressure on our internal systems, personnel and suppliers.
−Removed: 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 the manufacture and delivery of our products.
−Removed: We may be unable 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 needed for long term efficiencies.
+Added: 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.
+Added: We may be unable 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.
Any such failure could have a material impact on our business, operations and prospects.
−Removed: Additionally, we have established treatment planning and manufacturing facilities closer to our international customers to provide them with better experiences, improve their confidence using our products to treat patients, create efficiencies, and provide redundancy should other facilities be temporarily or permanently unavailable.
−Removed: Our ability to equip facilities is subject to significant risk and uncertainty.
−Removed: If a facility is temporarily or permanently, partially or fully shut down, or if demand for our products outpaces our ability to hire qualified personnel and effectively implement systems and infrastructure, we may be unable to fulfill orders timely, or at all, which may negatively impact our financial results, reputation and overall business.
+Added: Additionally, we have established treatment planning and manufacturing facilities closer to our international customers to provide better experiences, improve confidence treating patients with our products, create efficiencies, and provide redundancy should other facilities become unavailable.
+Added: If a facility is temporarily, partially or fully, shut down or if demand for our products outpaces our ability to hire qualified personnel and effectively implement systems and infrastructure, we may be unable to timely fulfill orders, which may negatively impact our financial results, reputation and overall business.
Our products and IT systems are critical to our business.
3 unchanged sentences
To effectively manage and improve our operations, our IT systems and applications require an ongoing commitment of significant expenditures and resources to maintain, protect, upgrade, enhance and restore existing systems and develop new systems to keep pace with continuing changes in information processing technology, evolving industry and regulatory standards, increasingly sophisticated cyber threats, and changing customer preferences.
−Removed: Expanded remote working and increased usage of online and hosted technology platforms by us, our customers and suppliers, including teledentistry and new or expanded use of online service platforms, products and solutions such as video conferencing applications, doctor, consumer and patient apps have increased the demands on and risks to our IT systems and personnel.
+Added: Increased usage of online and hosted technology platforms by us, our customers and suppliers, including remote working, teledentistry and new or expanded use of online service platforms, products and solutions such as video conferencing applications, doctor, consumer and patient apps have increased the demands on and risks to our IT systems and personnel.
Moreover, we continue to transform certain business processes, extend established processes to new subsidiaries and/or implement additional functionality in our enterprise resource planning, product development, manufacturing, and other software and IT systems which entails certain risks, including disruption of our operations, such as our ability to develop and update products that are safe and secure, track orders and timely ship products, manage our supply chain and aggregate financial and operational data.
Failure to adequately protect and maintain the integrity of our products and IT systems may materially impact our financial position, results of operations and cash flows.
−Removed: We have a complex, global iTero intraoral scanner installed base of older and newer models.
−Removed: These models are continually updated to add, expand or improve features with new hardware from us or third parties, or to provide repair or replacement parts.
+Added: We have a complex, global iTero scanner installed base of older and newer models.
+Added: These models are continually updated to add, expand or improve features with new hardware, or to provide repair or replacement parts.
We have experienced hardware issues in the past and may in the future, including issues relating to manufacturing, design, quality, or safety, of which we become aware only after products or changes have been introduced into the market.
−Removed: We also have not been and may be unable to ensure that third party components or changes to them will be compatible with, or not have a negative impact on the functionality of, our iTero intraoral scanners.
−Removed: As a result, there have been and may be widespread failures of our iTero intraoral scanners or we may experience epidemic failures of our iTero intraoral scanner to perform as anticipated.
+Added: We also have not been and may be unable to ensure that third party components or changes to them will be compatible with, or not have a negative impact on the functionality of, our iTero scanners.
+Added: As a result, there have been and may be widespread failures of our iTero scanners or we may experience epidemic failures of our iTero scanners to perform as anticipated.
Previously, we have not been and in the future may not be prepared for, or have the infrastructure to, timely and adequately remediate or implement corrective measures for such failures, including due to our dependency on third party providers or suppliers.
−Removed: As a consequence, remediation has been and may be in the future time-consuming and difficult to achieve, which may materially impact our customers and our business partners, damage our reputation and result in lost business and revenue opportunities, and could be materially costly.
+Added: Consequently, remediation has been and may be in the future time-consuming and difficult to achieve, which may materially impact our customers and business partners, damage our reputation and result in lost business and revenue opportunities, and could be materially costly.
Additionally, we continuously upgrade and issue new releases of customer facing software applications upon which customer facing, manufacturing and treatment planning operations depend.
Software applications and products containing software frequently contain errors or defects, especially when first introduced or when new versions are released.
−Removed: Additionally, the third-party software integrated into or interoperable with our products and services will routinely reach end of life, and as a consequence, certain models of our iTero intraoral scanners may be exposed to additional vulnerabilities, including increased security risks, errors and malfunctions that may be irreparable or difficult to repair.
−Removed: The discovery of a defect, error or security vulnerability in our products, software applications or IT systems, incompatibility with customers’ computer operating systems and hardware configurations with a new release or upgraded version or the failure of our products or primary IT systems may cause adverse consequences, including:
−Removed: delay or loss of revenues, significant remediation costs, delay in market acceptance, loss of data, disclosure of financial, health or other personal information of our customers or their patients, product recalls, damage to our reputation, loss of market share or increased service costs, any of which could have a material effect on our business, financial condition or results of our operations and the operations of our customers or our business partners.
+Added: Additionally, the third-party software integrated into or interoperable with our products and services will routinely reach end of life, and as a consequence, certain models of our iTero scanners may be exposed to additional vulnerabilities, including increased security risks, errors and malfunctions that may be irreparable or difficult to repair.
+Added: The discovery of a defect, error or security vulnerability in our products, software applications or IT systems, incompatibility with customers’ computer operating systems and hardware configurations with a new release or upgraded version or the failure of our products or primary IT systems may cause adverse consequences, including delay or loss of revenues, significant remediation costs, delay in market acceptance, loss of data, disclosure of financial, health or other personal information of our customers or their patients, product recalls, damage
+Added: to our reputation, loss of market share or increased service costs, any of which could have a material effect on our business, financial condition or results of our operations and the operations of our customers or our business partners.
A significant portion of our clear aligner production is dependent on digital scans from our globally dispersed and decentralized installed base of iTero and third-party intraoral scanners.
−Removed: Failures of all or any portion of ours or third-party software or other components or systems to interoperate with iTero or third-party scanners, termination of interoperability with third-party scanners, malware or ransomware attacks, product or system vulnerabilities or defects, interference or disruptions for us, our customers, labs or other business partners in the use of our products or the transmission or processing of data needed for the use or ordering of our products, or a system outage for any reason have harmed our operations previously and in the future could affect materially and adversely our ability to accept scans, manufacture clear aligners or restorative procedures or treatments and services or otherwise service our customers which may, amongst other things, harm our sales, damage our reputation, adversely impact our strategic partners or result in litigation.
+Added: Failures of all or any portion of ours or third-party software or other components or systems to interoperate with iTero or third-party scanners, termination of interoperability with third-party scanners, malware or ransomware attacks, product or system vulnerabilities or defects, interference or disruptions for us, our customers, labs or other business partners in the use of our products or the transmission or processing of data needed for the use or ordering of our products, or a system outage for any reason have harmed our operations previously and in the future could materially and adversely affect our ability to accept scans, manufacture clear aligners or restorative procedures or treatments and services or otherwise service our customers which may, amongst other things, harm our sales, damage our reputation, adversely impact our strategic partners or result in litigation.
We are highly dependent on third-party suppliers, some of whom are sole source suppliers, for certain key machines, components and materials, and our business and operating results could be harmed if supply is restricted or ends, or if the price of raw materials used in our manufacturing process increases.
−Removed: We are highly dependent on our supply chain, particularly manufacturers of specialized scanning equipment, rapid prototyping machines, resin and other advanced materials, as well as the optics, electronic and other mechanical components of our intraoral scanners.
+Added: We are highly dependent on our supply chain, particularly manufacturers of specialized scanning equipment, rapid prototyping machines, resin and other advanced materials, as well as the optics, electronic and other mechanical components of our iTero scanners.
We maintain single supply relationships for many of these machines and materials such as our CT scanning and stereolithography equipment and resin and polymer used in clear aligner manufacturing.
By using single suppliers in limited locations for materials and manufacturing, we are exposed to multiple supply chain vulnerabilities.
−Removed: For example, damage to or destruction of a facility can materially disrupt the delivery of key parts, components and materials or products or a supplier could encounter financial, operating or other difficulties, be unable to hire or maintain personnel, fail to timely obtain supplies, or fail to maintain manufacturing standards or controls.
+Added: For example, damage to or destruction of a facility can disrupt the delivery of key parts, components and materials or products or a supplier could encounter financial, operating or other difficulties, be unable to hire or maintain personnel, fail to timely obtain supplies, or fail to maintain manufacturing standards or controls.
The occurrence of any of these may adversely impact our supply chain.
1 unchanged sentence
For instance, we may be unable to quickly establish or qualify replacement suppliers creating production interruptions, delays and inefficiencies.
−Removed: Finding substitute manufacturers may be expensive, time-consuming or impossible and could result in a significant interruption in the supply of one or more products causing us to lose revenues and suffer damage to our customer relationships.
+Added: Finding substitute manufacturers may be expensive, time-consuming or impossible and could result in significant interruption in the supply of one or more products, product retesting or additional product registration causing us to lose revenues and damage customer relationships.
Technology changes by our service providers, vendors, and other third parties could disrupt access to required manufacturing capacity or require expensive, time-consuming development efforts to adapt and integrate new equipment or processes.
2 unchanged sentences
In addition to our direct sales force, we have and expect to continue to use distributors to import, market, sell, service and support our products.
−Removed: Our agreements with these distributors are generally non-exclusive and terminable by either party with little notice.
−Removed: If alternative distributors must be quickly found and trained in the use, marketing, sales and support of our products and services, our revenues and ability to sell or service our products in markets key to our business could be adversely affected.
+Added: Our distribution agreements are generally non-exclusive and terminable by either party with little notice.
+Added: If alternative distributors cannot be quickly found and trained in the use, marketing, sales and support of our products and services, our revenues and ability to sell or service our products in key markets could be adversely affected.
These distributors may also choose to sell alternative or competing products or services.
4 unchanged sentences
It may be difficult, expensive, and time-consuming for us to re-establish market access or regulatory compliance.
−Removed: A disruption in the operations of a primary freight carrier, higher shipping costs or shipping delays could disrupt our supply chain and impact our revenues or gross margin.
+Added: A disruption in the operations of a primary freight carrier, higher shipping costs or shipping delays could disrupt our supply chain and impact operating and financial results.
We are dependent on commercial freight carriers, primarily UPS, to deliver our products.
1 unchanged sentence
Moreover, when fuel costs increase, our freight costs generally do so as well.
−Removed: In addition, we earn an increasingly larger portion of our total revenues from international sales, which carry higher shipping costs that could negatively impact our gross margin and results of operations.
+Added: 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
+Added: 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 in our cost of net revenues, our gross margin and financial results could be materially affected.
1 unchanged sentence
If we cannot attract, motivate, train or retain our personnel, it may be difficult to grow effectively and pursue our strategic priorities, materially effecting our results of operations.
−Removed: We are highly dependent on the talent and efforts of our personnel, including highly skilled personnel like orthodontists and production technicians in our treatment planning facilities, and employees on our clinical engineering, technology development and sales teams.
+Added: We are highly dependent on the talent and efforts of our personnel, including highly-skilled orthodontists and production technicians in our treatment planning facilities, and employees on our clinical engineering, technology development and sales teams.
We strive to retain our personnel by providing competitive compensation and benefits, development opportunities and training, flexible work options, and an inclusive corporate culture.
−Removed: However, there is substantial competition in our industry for highly-skilled personnel, in particular significantly higher demand for technical and digital talent, and our competitors have in the past and will likely continue in the future to recruit our personnel.
−Removed: Our compensation and benefit arrangements, such as our equity award programs, may not successfully attract new employees and retain and motivate existing employees.
+Added: However, there is substantial competition for highly-skilled personnel, in particular significantly higher demand for technical and digital talent, and our competitors have and will likely continue to recruit our personnel.
+Added: Our compensation and benefit arrangements may not successfully attract new employees and retain and motivate existing employees.
In addition, other internal and external factors can impact our ability to hire and retain talent, including insufficient advancement or career opportunities and restrictive immigration policies .
−Removed: The loss of any of our key personnel, particularly executive management, key research and development personnel or key sales team personnel, could harm our business and prospects and could impede the achievement of our research and development, operational or strategic objectives.
+Added: The loss of any key personnel, particularly executive management, research and development personnel or sales personnel, could harm our business and prospects and could impede the achievement of our research and development, operational or strategic objectives.
We provide significant training to our personnel and our business will be harmed if our training fails to properly prepare them to perform the work required, we are unable to successfully instill technical expertise in new and existing personnel or if our techniques prove unsuccessful or are not cost-effective.
19 unchanged sentences
Also, we believe a key to our success has been the culture we have created that emphasizes a shared vision and values focusing on agility, customer success and accountability.
−Removed: We believe this culture fosters an environment of integrity, innovation, creativity, and teamwork.
+Added: We believe this culture fosters integrity, innovation, creativity, and teamwork.
We have experienced and may continue to experience in the future, difficulties attracting and retaining employees that meet the qualifications, experience, compliance mindset and values we expect.
1 unchanged sentence
This could have a material adverse effect on our results of operations and our ability to maintain market share.
−Removed: We depend on our marketing activities to deepen our market penetration and raise awareness of our brands and products, which may not prove successful or may become less effective or more costly to maintain in the long term.
+Added: We depend on our marketing activities to deepen our market penetration and raise awareness of our brands and products, which may prove unsuccessful or may become less effective or more costly to maintain in the long term.
Our marketing efforts and costs are significant and include national and regional campaigns in multiple countries involving television, print and social media and alliances with professional sports teams, social media influencers and other strategic partners.
4 unchanged sentences
For example, some countries restrict direct to consumer advertising of medical devices.
−Removed: We have in the past and may again in the future be alleged to violate certain marketing restrictions and be ordered to stop certain marketing activities or prevented from selling our products.
−Removed: Moreover, competitors do not always follow these restrictions, creating an unfair advantage and making it more difficult and costly for us to compete.
+Added: We have in the past and may again in the future be alleged to violate marketing restrictions and be ordered to stop certain marketing activities or prevented from selling our products.
+Added: Moreover, competitors do not always follow these restrictions, creating an unfair advantage and making it more difficult and costly to compete.
Additionally, we rely heavily on data generated from our campaigns to target specific audiences and evaluate their effectiveness, particularly data generated from internet activities on mobile devices.
1 unchanged sentence
Changes in such systems that degrade or eliminate our ability to target or measure the results of ads or increase costs to target audiences could adversely affect the effectiveness of our campaigns.
−Removed: For example, Apple has released mobile operating systems that include significant data privacy changes that may limit our ability to interpret, target and measure ads effectively.
+Added: For example, Apple's operating systems include significant data privacy settings that may limit our ability to interpret, target and measure ads effectively.
+Added: We have been incorporating and continue to work to further incorporate artificial intelligence ( “ AI ” ) into our products, services, and internal operations.
+Added: Implementation of AI and machine learning technologies may result in legal and regulatory risks, reputational harm or have other adverse consequences to our business.
+Added: We have and are continuing to incorporate AI, including machine learning and independent algorithms, in certain of our products, services and internal operations, which is intended to enhance their operation and effectiveness internally and for our customers, suppliers and consumers.
+Added: Our research and development of such technology remains ongoing.
+Added: AI innovation presents risks and challenges that could impact our business.
+Added: AI algorithms may be flawed.
+Added: Datasets may be insufficient or contain biased information.
+Added: Additionally, many countries and regions, including the European Union, have proposed new and evolving regulations related to the use of AI and machine learning technologies.
+Added: The regulations may impose onerous obligations and may require us to unexpectedly rework or reevaluate improvements to be compliant.
+Added: Use of AI technologies may expose us to an increased risk of regulatory enforcement and litigation.
+Added: Moreover, some of the AI features involve the processing of personal data and may be subject to laws, policies, legal obligations, and codes of conduct related to privacy and data protection.
+Added: AI development and deployment practices could subject us to competitive harm, regulatory enforcement, increased cyber risks, reputational harm and legal liability.
Legal, Regulatory and Compliance Risks
1 unchanged sentence
We are and may in the future be subject to antitrust or competition related investigations, enforcement actions by governmental agencies, competitors, consumers, customers, and others which could cause us to incur substantial costs, enter into settlements, consents or be subject to judgments.
−Removed: Resolving these matters may require us to change our business practices in a manner materially adverse to our business.
−Removed: Governments and regulators are actively developing new competition laws and regulations aimed at the technology sector, artificial intelligence and digital platforms and coordinating their activities globally, including in large markets such as the EU, U.S., and China.
+Added: Resolving these matters may require us to change our business practices in ways materially adverse to our business.
+Added: Governments and regulators are actively developing new competition laws and regulations aimed at the technology sector, AI and digital platforms and coordinating their activities globally, including in large markets such as the EU, U.S., and China.
Government regulatory actions and court decisions may result in fines or hinder our ability to provide certain benefits to our consumers, reducing the attractiveness of our products and the revenue derived from them or our ability to pursue certain mergers, acquisitions, business combinations or other transactions.
Other companies and government agencies have in the past and may in the future allege that our actions violate antitrust or competition laws or otherwise constitute unfair competition.
−Removed: Such claims and investigations, even if unfounded, may be
−Removed: expensive to defend, involve negative publicity, and divert management time and attention, any of which may materially impact our results of operations.
+Added: Such claims and investigations, even if unfounded, may be expensive to defend, involve negative publicity, and divert management time and attention, any of which may materially impact our results of operations.
Obtaining approvals and complying with governmental regulations, particularly those related to personal healthcare and financial information, quality systems, anti-corruption and anti-bribery are expensive and time-consuming.
6 unchanged sentences
Global regulators are expanding and changing regulations and guidance for products, which can limit the potential benefits of products and cause protracted review timelines for new products.
−Removed: As we continue to incorporate artificial intelligence, including machine learning and independent algorithms, into our software to make it more effective for us, our customers, suppliers and consumers, it subjects us to risks of compliance with the expanding and changing regulations regarding the use and scope of artificial intelligence.
Our critical vendors and service providers are similarly subject to various regulations.
1 unchanged sentence
We are also subject to complex and changing environmental and health and safety regulations.
−Removed: Additionally, a large portion of our revenues are derived from international sales and we are dependent on our international operations, which exposes us to additional foreign regulations not otherwise described in these risk factors.
There can be no assurance we can adequately address the business risks associated with the implementation and compliance with such laws and our internal processes and procedures to comply with such laws or that we will be able to take advantage of any resulting business opportunities.
−Removed: Furthermore, before we can sell a new medical device or market a new use of or claim for an existing product, we must frequently obtain clearance or approval to do so.
+Added: Furthermore, frequently before we can sell a new medical device or market a new use of or claim for an existing product, we must obtain clearance or approval to do so.
For instance, in the U.S., FDA regulations are wide ranging and govern, among other things, product design, development, manufacturing and testing;
20 unchanged sentences
Additionally, our success is dependent on the success of healthcare providers, many of whom are individual or small operations with limited IT experience and inadequate or untested security protocols, to manage data privacy and security requirements.
−Removed: It is critical that the facilities, infrastructure and IT systems on which we depend and the products we develop remain secure and be perceived by the marketplace and our customers as secure.
+Added: is critical that the facilities, infrastructure and IT systems on which we depend and the products we develop remain secure and be perceived by the marketplace and our customers as secure.
Despite the implementation of security features in our products and security measures in our IT systems, we and our service providers, vendors, and other third parties are targeted by or subject to physical break-ins, computer viruses and other malicious code, unauthorized or fraudulent access, programming errors or other technical malfunctions, hacking or phishing attacks, malware, ransomware, employee error or malfeasance, cyber attacks, and other breaches of IT systems or similar disruptive actions, including by organized groups and nation-state actors.
−Removed: For example, we have experienced, and may again experience in the future, cybersecurity incidents and unauthorized internal employee ex filtration of company information.
+Added: For example, we have experienced, and may again experience in the future, cybersecurity incidents and unauthorized internal employee exfiltration of company information.
Further, the frequency and sophistication of third-party cyber-attacks is increasing.
−Removed: In 2022, to respond to potential increases in cyber-attacks due to the military conflict in Ukraine, we increased efforts to identify and respond to attacks, including placing our cybersecurity operations team on high alert.
Significant service disruptions, breaches in our infrastructure and IT systems or other cybersecurity incidents could expose us to litigation or regulatory investigations, impair our reputation and competitive position, be distracting to management, and require significant time and resources to address.
5 unchanged sentences
The costs to eliminate, mitigate or recover from security problems and cyber attacks and incidents could be material and depending on the nature and extent of the problem and the networks or products impacted, may result in network or systems interruptions, decreased product sales, or data loss that may have a material impact on our operations, net revenues and operating results.
−Removed: Additionally, our globally-dispersed installed base of iTero intraoral scanners at customer, strategic business partner or other locations may be independently or collectively the target of cybersecurity incidents or attacks or subject to viruses, bugs, or other similar negative intruders.
+Added: Additionally, our globally-dispersed installed base of iTero scanners at customer, strategic business partner or other locations may be independently or collectively the target of cybersecurity incidents or attacks or subject to viruses, bugs, or other similar negative intruders.
Due to the large and growing number of these decentralized devices, we may be unable to, or not have the capacity, knowledge, or infrastructure to, respond to or remedy a cybersecurity issue in a timely manner, which may cause loss or damage to us or our customers or strategic business partners or may cause further malfunctions in, or damage to, our servers, databases, systems or products and services, loss or damage of our data, interruption or temporary cessation of our operations, or an overall negative impact to our business or reputation.
6 unchanged sentences
Our business exposes us to potential liability for the quality and safety of our products and services, how we advertise and market those products and services and how and to whom we sell them, and we may incur substantial expenses or be found liable for substantial damages or penalties if we are subject to claims or litigation.
−Removed: Our products and services involve an inherent risk of claims concerning their design, materials, manufacture, safety and performance, how they are marketed and advertised in a complex framework of highly regulated domestic and international
−Removed: laws and regulations, how we package, bundle or sell them to individual customers or companies, including hospitals and clinics, and how we train and support doctors, their staffs and patients who use our products.
+Added: Our products and services involve an inherent risk of claims concerning their design, materials, manufacture, safety and performance, how they are marketed and advertised in a complex framework of highly regulated domestic and international laws and regulations, how we package, bundle or sell them to individual customers or companies, including hospitals and clinics, and how we train and support doctors, their staffs and patients who use our products.
Moreover, consumer products and services are routinely subject to claims of false, deceptive or misleading advertising, consumer fraud and unfair business practices.
2 unchanged sentences
Although we maintain insurance for product liability, business practices and other types of activities we make or offer, coverage may not be available on acceptable terms, if at all, and may be insufficient for actual liabilities.
−Removed: Any claim for product liability, sales, advertising and business practices, regardless of its merit or eventual outcome, could result in material legal defense costs and damage our reputation, increase our expenses and divert management’s attention.
+Added: Any claim for product liability, sales, advertising and business
+Added: practices, regardless of its merit or eventual outcome, could result in material legal defense costs and damage our reputation, increase our expenses and divert management’s attention.
Increased focus on current and anticipated environmental, social and governance (“ESG”) laws and scrutiny of our ESG policies and practices may materially increase our costs, expose us to liability, adversely impact our reputation, employee retention, willingness of customers and suppliers to do business with us and willingness of investors to invest in us.
−Removed: Our operations are subject to a variety of existing local, regional and global ESG laws and regulations, and we will likely be required to comply with new, broader, more complex and more costly laws and regulations that focus on ESG matters.
−Removed: Our compliance obligations will likely 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 and workers’ rights.
−Removed: Environmental regulations related to greenhouse gases, sustainability and reduction of waste are expected to have an increasingly larger impact on us or our suppliers.
+Added: Our operations are subject to a variety of existing local, regional and global ESG laws and regulations, and we will likely be required to comply with new, broader, more complex and more costly ESG laws and regulations.
+Added: 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 and workers’ rights.
+Added: Environmental regulations related to greenhouse gases, hazardous materials, sustainability and reduction of waste are expected to have an increasingly larger impact on us or our suppliers.
and foreign regulators have or are considering enacting new or additional disclosure requirements or limits on the emissions of greenhouse gases, including carbon dioxide and methane, from power generation units using fossil fuels.
2 unchanged sentences
Such regulations and consumer demands may affect how we manufacture and package our products, which may increase our costs and those of our suppliers and could result in manufacturing, transportation and supply chain disruptions if clean energy or sustainable alternatives are not readily available in adequate amounts when required.
−Removed: Moreover, alternative energy sources, coupled with reduced investments in traditional energy production and infrastructure, may not provide predictable, reliable, and consistent energy that we, our suppliers and other businesses require.
+Added: Moreover, alternative energy sources, coupled with reduced investments in traditional energy production and infrastructure, may not provide the predictable, reliable, and consistent energy that we, our suppliers and other businesses require.
Regulations related to the sourcing of certain metals may have an impact on our business.
For instance, the sourcing and availability of metals used in the manufacture of, or contained in, our products may be affected by laws and regulations regarding the use of minerals obtained from certain regions of the world like the Democratic Republic of Congo and adjoining countries.
−Removed: Although we do not believe we source minerals from this region, our expanding geographic operations may increase the risk of purchasing conflict minerals.
+Added: Although we do not believe we source minerals from this region, our expanding geographic operations may increase the risk of purchasing conflict minerals and our efforts to identify whether any of our products contain minerals impacted by these laws and regulations may not be adequate or complete.
Further, these laws and regulations may decrease the number of suppliers capable of supplying our needs for certain metals, thereby negatively affecting our ability to manufacture products in sufficient quantities at competitive prices, leading customers to potentially choose competitive goods and services.
−Removed: Meeting our obligations under existing ESG laws, rules, or regulations is costly to us and our suppliers, and we expect those costs to increase, possibly materially.
−Removed: Additionally, we expect regulators to perform investigations, inspections and periodically audits of our compliance with these laws and regulations, and we cannot provide assurance that our efforts or operations will be compliant.
−Removed: If we fail to comply with any requirements, we could be subject to significant penalties or liabilities and we may be required to implement new and materially more costly processes and procedures to come into compliance.
+Added: Meeting our obligations under existing ESG laws and regulations is costly for us and our suppliers, and we expect those costs to increase materially.
+Added: Additionally, we expect regulators to perform investigations, inspections and periodically audit our compliance with these laws and regulations, and we cannot be sure our efforts or operations will be compliant.
+Added: If we fail to comply with any requirements, we could be subject to significant penalties or liabilities and we may be required to implement new and materially more costly processes and procedures to be compliant.
Further these laws are subject to unpredictable changes.
Even if we successfully comply with these laws and regulations, our suppliers may not.
−Removed: We may also suffer financial and reputational harm if customers require, and we are unable to deliver, certification that our products are conflict free.
+Added: We may also suffer financial and reputational harm if customers require, and we are unable to deliver, certification that our products are complaint.
In all of these situations, customers may stop purchasing products from us, and may take legal action against us, which could harm our reputation, revenues and results of operations.
2 unchanged sentences
If our ESG practices fail to meet investor or other industry stakeholders’ frequently evolving expectations and standards, including environmental stewardship, support for local communities, board of director and employee diversity, human capital management, employee health and safety practices, product quality, supply chain management, corporate governance and transparency and employing ESG strategies in our operations, our brand, reputation and employee retention may be harmed, customers and suppliers may be unwilling to do business with us and investors may be unwilling to invest in us.
−Removed: We also expect to incur additional costs and require additional resources to monitor, report, and comply with our various ESG practices.
−Removed: If we fail to adopt ESG standards or practices as quickly as stakeholders
−Removed: desire, report on our ESG efforts or practices accurately, or satisfy the disclosure and other expectations of stakeholders, our reputation, business, financial performance, growth, and stock price may be adversely impacted.
+Added: If we fail to adopt ESG standards or practices as quickly as stakeholders desire, report on our ESG efforts or practices accurately, or satisfy the disclosure and other expectations of stakeholders, our reputation, business, financial performance, growth, and stock price may be adversely impacted.
Intellectual Property Risks
4 unchanged sentences
and other countries to protect a large part of our IP and our competitive position;
−Removed: however, these patents may be insufficient because our patents may be challenged, invalidated, held unenforceable, circumvented, or may not be broad enough to prevent third parties from producing competing products similar in design to ours and foreign patents protections may be more limited than those under U.S.
+Added: however, these patents may not prevent third parties from producing competing products similar in design to ours if they are invalidated, held unenforceable, circumvented, or otherwise limited in scope.
+Added: Furthermore, our foreign patent protections may be more limited in geographic scope than those under U.S.
patent and IP laws.
2 unchanged sentences
We may fail to apply for a patent if our personnel fail to disclose or recognize new patentable ideas or innovations.
−Removed: Remote working can decrease the opportunities for our personnel to collaborate, thereby reducing the opportunities for effective invention disclosures and patent application filings.
+Added: Remote working can decrease the opportunities for our personnel to collaborate, thereby reducing invention disclosures and patent application filings.
We may choose not to file a foreign patent application if the limited protections provided by a foreign patent do not outweigh the costs to obtain it.
+Added: Further, third parties may file patents or develop IP strategies that prevent or limit the effectiveness of our patents.
We also protect our IP through copyrights, trademarks, trade secrets, and confidentiality obligations.
20 unchanged sentences
Financial, Tax and Accounting Risks
−Removed: If our goodwill or long-lived assets become impaired, we may be required to record a material charge to earnings.
−Removed: Under GAAP, we review our goodwill and long-lived asset group for impairment when events or changes in circumstances indicate the carrying value may not be recoverable.
+Added: If our goodwill, intangible or long-lived assets become impaired, we may be required to record a material charge to earnings.
+Added: Under GAAP, we review our goodwill, intangible and long-lived asset group for impairment when events or changes in circumstances indicate the carrying value may not be recoverable.
Additionally, goodwill must be tested for impairment at least annually.
The qualitative and quantitative analysis used to test goodwill are dependent upon various assumptions and reflect management’s best estimates.
−Removed: Changes in certain assumptions, including revenue growth rates, discount rates, earnings multiples and future cash flows may cause a change in circumstances indicating that the carrying value of goodwill or the asset group may be impaired and assessing these assumptions and predicting and forecasting future events can be difficult.
−Removed: Goodwill and purchased assets require periodic fair value assessments to determine if they have become impaired.
−Removed: Consequently, we may be required to record a material charge to earnings in the financial statements during the period in which any impairment of goodwill or long-lived asset group is determined.
+Added: Changes in certain assumptions, including revenue growth rates, discount rates, earnings multiples and future cash flows may cause a change in circumstances indicating that the carrying value of goodwill, intangible or the asset group may be impaired and assessing these assumptions and predicting and forecasting future events can be difficult.
+Added: Goodwill, intangible and purchased assets require periodic fair value assessments to determine if they have become impaired.
+Added: Consequently, we may be required to record a material charge to earnings in the financial statements during the period in which any impairment of goodwill, intangible or long-lived asset group is determined.
Changes in, or interpretations of, accounting rules and regulations, could result in unfavorable accounting charges.
25 unchanged sentences
Changes in tax laws or changes to how those laws are applied to our business in practice, could affect the amount of tax to which we are subject and the manner in which we operate.
−Removed: Additionally, the Organization for Economic Cooperation and Development’s (“OECD”) Base Erosion and Profit Shifting (“BEPS”) project proposes changes to long-standing tax principles, including allocating greater taxing rights to countries where customers are located and establishing a global minimum tax rate of at least 15%.
−Removed: Numerous countries are evaluating their existing tax laws due in part to recommendations made by the OECD’s BEPS project.
−Removed: The changes proposed by the BEPS project, if adopted by specific countries, may increase tax uncertainty and adversely affect our provision for income taxes.
Moreover, the application of indirect taxes (such as sales and use tax (“SUT”), value-added tax (“VAT”), goods and services tax (“GST”), and other indirect taxes) to our operations is complex and evolving.
26 unchanged sentences
We have a history of recurring stock repurchase programs intended to return capital to our investors.
−Removed: Future stock repurchase programs are contingent on a variety of factors, including our financial condition, results of operations, business requirements, and our Board of Directors' continuing determination that stock repurchases are in the best interests of our stockholders and in compliance with all applicable laws and agreements.
+Added: Future stock repurchase programs are contingent on a variety of factors, including our financial condition, market conditions, results of operations, business requirements, and our Board of Directors' continuing determination that stock repurchases are in the best interests of our stockholders and in compliance with all applicable laws and agreements.
There is no assurance that we will continue repurchasing our common stock in the future at historical levels or at all, or that our stock repurchase programs will beneficially impact our stock price.
5 unchanged sentences
Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.