What changed in this filing

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Item 1A. Risk Factors

2024-11-05 compared with 2024-08-02 · 120 added, 105 removed, 374 unchanged (38% of the section changed)

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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 any others.

These risk factors should be considered in connection with the forward-looking statements contained in this report because they could cause our actual results and conditions to differ materially from those statements.

These risk factors should be considered in connection with the forward-looking statements contained in this Quarterly Report on Form 10-Q because they could cause our actual results and conditions to differ materially from those statements.

Before you invest in Align, you should know that investing involves risks, including those described below.

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Our operations and financial performance depend on global and regional economic conditions.

Inflation, fluctuations in currency exchange rates, changes in consumer confidence and demand, general economic weakness, and actual or potential recessions have and could in the future materially affect our business, results of operations, and financial condition.

Inflation, fluctuations in foreign currency exchange rates, changes in consumer confidence and demand, general economic weakness, and actual or potential recessions have and could in the future materially affect our business, financial 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 currency exchange rates, general economic weakness, actual or potential 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.

Consumer spending habits are affected by, among other things, inflation, fluctuations in foreign currency exchange rates, consumer confidence and demand, general economic weakness, actual or potential 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’ offices, or reduce demand for dental services generally.

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Increases in the cost of fuel and energy, food, and other essential items as well as higher interest rates have and may continue to reduce consumers’ disposable income, which could cause a decrease in discretionary spending for products like ours.

Inflation continues to adversely impact spending and trade activities, causing unpredictable impacts on global and regional economies.

Further, we cannot predict the impact of efforts by central banks and federal, state and local governments to combat inflation, which could result in an economic recession or have an adverse impact on consumer spending for a prolonged period of time.

Higher inflation has increased domestic and international shipping costs, raw material prices, and labor rates, which has adversely impacted the costs of producing, procuring, and shipping our products.

Inflation has and may continue to adversely impact spending and trade activities, and may unpredictably impact global and regional economies.

Further, we cannot predict the impact of efforts by central banks and federal, state, and local governments to combat inflation, which could result in an economic recession or adversely impact consumer spending for a prolonged period of time.

Higher inflation has and may continue to increase domestic and international shipping costs, raw material prices, and labor rates, causing an adverse impact on the costs of producing, procuring, and shipping our products.

Our ability to recover these cost increases through price increases may continue to lag, resulting 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 operating results.

We have significant international operations and sales and we are exposed to fluctuations in foreign currencies that have and may continue to adversely impact our business, financial condition, or results of operations.

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 expenses, net revenues, and net income are generated in foreign currencies.

dollar is our reporting currency, a large portion of our net revenues, expenses, and net income are generated in foreign currencies.

While we utilize forward contracts to moderate the impact 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 affect our operating results and cash flows.

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Our business could be impacted by geopolitical events, trade and other international disputes, war and terrorism, or major public health crises .

Geopolitical events, trade and other international disputes, war and terrorism, or major public health crises have and could in the future harm or disrupt international commerce and the global economy and could materially affect our business with our customers, suppliers, contract manufacturers, distributors, and other business partners.

Such risks include supply chain and trade disruptions, tariffs, trade sanctions, customs inquiries, or restrictions, boycotts, reduced consumer spending, government shut downs, 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, deaths or injuries to our employees, restrictions and shortages of food, water, shelter, and medical supplies, telecommunications failures, and protests that may impact delivery of our products to customers or destruction of property.

Geopolitical events, trade and other international disputes, war and terrorism, or major public health crises have and could in the future harm or disrupt international commerce and the global economy, and could materially affect our business with our customers and consumers, suppliers, contract manufacturers, distributors, and other business partners.

Such events have and could result in, among other things, supply chain and trade disruptions, tariffs, trade sanctions, customs inquiries or restrictions, boycotts, reduced consumer spending, government shut downs, 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, deaths or injuries to our employees, restrictions and shortages of food, water, shelter, and medical supplies, telecommunications failures, and protests that may impact delivery of our products to customers or destruction of property.

Tariffs, such as those on Chinese goods, and retaliatory trade measures in response 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.

Countries may also adopt or rescind other measures, such as controls on the import or export of goods, technology, or data, including personal data, that could adversely impact our operations and supply chains or limit our ability to offer products and services.

Foreign countries may also adopt or rescind other measures, such as controls on the import or export of goods, technology, or data, including personal data, that could adversely impact our operations and supply chains or limit our ability to offer products and services.

These measures could require us to take various actions, including changing suppliers or restructuring business relationships.

Complying with new or revised trade restrictions is expensive, time-consuming, and disruptive to our operations.

Such restrictions can be announced with little or no advance notice and we may be unable to effectively mitigate any adverse impacts.

Political events, trade and other international disputes, war, terrorism, or major public health crises involving key commercial, development, or manufacturing markets such as China, Mexico, Israel, Poland, or other countries or regions have and could again materially impact our international operations.

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, or viral outbreaks disrupt our product development, data or information exchange, payroll or banking operations, product or materials distribution.

Complying with new or revised trade restrictions may be expensive, time-consuming, and disruptive to our operations.

Such 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.

Geopolitical events, trade and other international disputes, war, terrorism, or major public health crises involving key commercial, development, or manufacturing markets such as China, Mexico, Israel, Poland, or other countries or regions have and may continue to materially impact our international operations.

The impact to us, our employees, and our customers and consumers would be uncertain, particularly if emergency circumstances, armed conflicts, an escalation in political instability or violence, or viral outbreaks disrupt our product development, data or information exchange, payroll or banking operations, or our product or materials distribution.

Additionally, our international operations could be impacted if such an event resulted in disruptions, interruptions, and limitations in telecommunication services or critical systems or applications reliant on a stable and uninterrupted communications infrastructure.

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Our supply chains have been and may continue to be impaired as a result of hostilities, trade restrictions, sanctions, or boycotts.

These items could disrupt ongoing operations and may materially impact the timing and cost of shipping of our products or our ability to operate out of Israel.

These events could disrupt ongoing operations and may materially impact the timing and cost of shipping of our products or our ability to operate out of Israel.

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 operating results.

Our operations may be impacted by natural disasters, which may become more frequent or severe as a result of climate change, and may adversely impact our business, financial condition and operating results as well as those of our customers and suppliers.

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 operations may be impacted by natural disasters, which may become more frequent or severe as a result of climate change, and may adversely impact our business, financial condition, and results of operations as well as those of our customers and suppliers.

Natural disasters can impact our operations and those of our customers and suppliers.

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If a natural disaster occurs in a region where one of these facilities or those of our customers or suppliers are located, our employees could be impacted, we could lose valuable research, and our ability to create treatment plans, respond to customer inquiries, or manufacture and ship our aligners or intraoral scanners could be compromised, causing significant product and services delays and reputational harm.

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.

The effects of climate change 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.

Business and Industry Risks

Demand for our products may not increase or may decrease due to resistance to non-traditional treatment methods, which could have a material impact on our business, financial condition and operating results.

Our products require our customers to change from traditional treatment methods.

Demand for our products 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.

Our products require our customers to forego traditional treatment methods.

For example, Invisalign treatment is a significant change from traditional orthodontic wires and brackets, and 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 been and may continue to resist moving to a digital platform.

Increased 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 traditional treatment methods.

If demand for our products fails to increase, or decreases, our business, including our financial and operating results, may be harmed.

Our net revenues depend primarily on our Invisalign system and iTero scanners and declines in sales or average selling price of these products may adversely affect net revenues, gross margin, and net income.

Our net revenues are largely dependent on sales of our Invisalign system of clear aligners an d iTero intraoral scanners.

Of the two, we expect the Invisalign system will continue to account for the majority of our net revenues, making the widespread acceptance of the Invisalign system by orthodontists, GPs, and consumers critical to our success.

The average selling prices of our products, particularly the 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.

Our average selling prices for our Invisalign system and iTero scanners have been impacted in the past and may be adversely affected in the future if:

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 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, and price compared to competing products and traditional treatment methods.

If demand for our products fails to increase, or decreases, our business, financial condition, and results of operations may be harmed.

Our net revenues depend primarily on our Invisalign treatment plans and iTero scanners and declines in sales or average selling price of these products may adversely affect net revenues, gross profit, and net income.

Our net revenues are largely dependent on sales of our Invisalign treatment plans with clear aligners an d iTero intraoral scanners.

Of the two, we expect the Invisalign treatment plans will continue to account for the majority of our net revenues, making the widespread acceptance of the Invisalign system by orthodontists, GPs, and consumers critical to our success.

The average selling prices of our products, particularly the Invisalign treatment plans, are influenced by numerous factors, including the mix of product treatment packages 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 different products at different list prices which may differ by country.

Our average selling prices for our Invisalign treatment plans and iTero scanners have been impacted in the past and may be adversely affected in the future if:

• we introduce new promotions, change existing promotions, or offer general or volume-based discount programs, product or services bundles, large account sales, or consumer rebate programs;

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• governments impose pricing regulations such as volume-based procurement regulations in China;

• our critical accounting estimates materially differ from actual behavior or results.

• our critical accounting estimates materially differ from actual results.

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.

These promotional campaigns and lower priced products have had, and may in the future have, unexpected and unintended consequences, including reduced gross margins, operating margin, profitability and average selling prices, net revenues, volume growth, and net income.

These promotional campaigns and lower priced products have had, and may in the future have, unexpected and unintended consequences, including reduced net revenues, gross margins, operating margin, net income, average selling prices, and volume.

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.

The dental industry is experiencing immense and rapid digital transformation.

While solutions such as our Invisalign system, iTero scanners and CAD/CAM software facilitate this transition, we face competition from companies that also seek to introduce new technologies and products and companies that remain dedicated to conventional products.

While solutions such as our Invisalign treatment plans, iTero scanners and CAD/CAM software facilitate this transition, we face competition from companies that also seek to introduce new technologies and products and companies that remain dedicated to traditional products.

We may be unable to compete with these competitors or they may render our technology or products obsolete or economically unattractive, in particular as competitors incorporate artificial intelligence (“AI”) and machine learning into new or existing services and technologies that facilitate changes in doctor-patient interactions, expectations, and treatment workflows.

The number and types of competitors are diverse and growing rapidly.

The Invisalign system competes primarily with traditional 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”).

Invisalign aligners compete primarily with traditional wires and brackets and increasingly against clear aligners which are manufactured and distributed by new market entrants and existing competitors, including traditional medical device companies, laboratories, startups and, in some cases, doctors and dental support organizations (“DSOs”).

Our competitors also include direct-to-consumer companies that provide clear aligners using a business model requiring little or no in-office care from trained and licensed doctors, and doctors and DSOs who manufacture custom aligners in their offices using 3D printing technology.

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Our iTero scanners are also facing increased competition from new and existing competitors.

Our iTero scanners compete with polyvinyl siloxane impressions and numerous new or existing intraoral scanners, as well as traditional bite wing 2D dental x-rays for detecting interproximal caries.

Our iTero scanners compete with polyvinyl siloxane impressions and numerous new or existing intraoral scanners, as well as traditional bite wing 2D dental

x-rays for detecting interproximal caries.

We have and may continue to experience competition with our iTero scanners by competitors who introduce products at lower prices or with functionality that better meets customer demand.

If we are unable to compete effectively with existing products, existing competitors, new market entrants, or respond effectively to new technologies, our business, results of operations, and financial condition could be materially impacted.

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 successfully develop, introduce, achieve market acceptance of, and manage new products and services.

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The extent and rate at which new products or services achieve market acceptance and penetration is a function of many variables, including our ability to:

• successfully predict, timely innovate, develop and launch new technologies, applications, features and products to meet market needs and demands;

• successfully predict, timely innovate, develop, and launch new technologies, applications, features, and products to meet market needs and keep pace with changes in technology, customers ’ demands, and industry standards;

• successfully, and in a timely fashion, obtain regulatory approval or clearance of new and improved products or services from government agencies such as the FDA and analogous agencies in other countries ;

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In general, our internal resources support these initiatives without clear indications they will prove successful or be without short-term execution challenges.

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, technologies, or other assets which may require significant management attention, disrupt our business, dilute stockholder value, and adversely affect our results of operations.

Should these initiatives fail, our business, financial condition, and results of operations could be materially adversely impacted.

Periodically, we have and may in the future acquire, or make investments in, companies, technologies, or other assets.

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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 unable to control or have significant influence over critical issues that could harm the value of our investment.

We are subject to various risks when making a strategic investment or acquisition and integrating the operations and cultures of acquired businesses within our own, which could materially impact our business or results of operations, including that we may:

• fail to perform proper due diligence and inherit unexpected material issues or assets, including intellectual property (“IP”) or other litigation or ongoing investigations, accounting irregularities, or compliance liabilities;

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• changes in consumer and doctor demand;

• changes in manufacturing, delivery and inventory costs;

• changes in manufacturing, packaging, delivery, and inventory costs;

• the creditworthiness, liquidity, and solvency of our customers and their ability to timely make payments when due;

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• seasonal fluctuations;

• geographic, channel, or product mix shifts to lower priced products or to products with a higher percentage of deferred revenue;

• improvements to or changes in our 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;

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As a result, if we fail to accurately predict demand, we may have an insufficient number of trained technicians, or an inadequate amount of materials, components, space, or equipment to timely manufacture and deliver products to meet demand, which could damage our relationships with existing customers or harm our ability to attract new customers.

Conversely, if we overestimate customer demand, we may have excessive staffing, materials, components, finished products, or capacity.

Conversely, if we overestimate customer demand, we may have excess staffing, materials, components, finished products, or capacity.

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 revenues or revenue growth, harming our gross margin and financial results.

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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 net revenues shortfall.

This variability

and unpredictability could also result in our failing to meet the expectations of industry or financial analysts or investors for any period.

We are subject to operating risks, including excess or constrained capacity and operational inefficiencies, which could adversely affect our results of operations.

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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 our Invisalign system and iTero 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, operations and prospects.

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 our Invisalign aligners and iTero 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.

Additionally, we have established treatment planning and manufacturing facilities closer to our international customers to provide better experiences, create efficiencies, and provide redundancy should other facilities become unavailable.

If a facility is temporarily, partially or fully shut down, we may be unable to timely fulfill orders, which may negatively impact our financial results, reputation and overall business.

If one of these facilities is temporarily, partially, or fully shut down, 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.

Issues with product development or enhancements, IT system and software integration, implementation, updates and upgrades have previously and could again in the future disrupt our operations and have a material impact on our business, our reputation and operating results.

Issues with product development or enhancements, IT system and software integration, implementation, updates, and upgrades, or third-party software have previously and could again in the future disrupt our operations and have a material impact on our business, our reputation, and operating results.

We rely on the efficient, uninterrupted, and secure operation of our complex IT systems and are dependent on key third-party software embedded in our products and IT systems as well as third-party hosted IT systems to support our operations, including third-party cloud platforms.

All software and IT systems are vulnerable to damage, cybersecurity attacks, or interruption from a variety of sources.

All software and IT systems are vulnerable to damage, cybersecurity attacks, or interruption from a variety of sources, including rapidly developing AI technologies.

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 cybersecurity threats, and changing customer preferences.

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 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 our IT systems and those of our suppliers and customers may materially impact our business, financial position, and results of operations.

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 continue developing and updating products that are safe and secure, track orders and timely ship products, manage our supply chain, and aggregate financial and operational data.

We have a complex, global iTero scanner installed base of older and newer models.

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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.

We may not be fully 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.

Consequently, any remediation may be 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.

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Failures of all or any portion of our 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.

Any of these events harm our sales, damage our reputation, adversely impact our strategic partners or result in litigation.

Any of these events could harm our sales, damage our reputation, adversely impact our strategic partners, or result in litigation.

Additionally, we continuously upgrade and issue new releases of software applications upon which customer facing manufacturing and treatment planning operations depend.

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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 applications and 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.

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 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.

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, which we are unable to cure in a timely fashion, 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 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.

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 the price materially increases.

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By using single suppliers in limited locations for materials and manufacturing, we are exposed to multiple supply chain vulnerabilities.

We are reliant upon manufacturers that we contract with for quality and stability and any failures on their part may have an impact on our ability to supply our products.

Because of our dependence on our suppliers, changes in key relationships can materially disrupt our supply chain.

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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.

In the event of technology changes, delivery delays, labor stoppages or shortages, or shortages of, or increases in price for these items, sales may decrease and our business and prospects may be harmed.

In the event of technology changes, delivery delays, labor stoppages or shortages, or increases in price for these items, sales may decrease and our business and prospects may be harmed.

We use distributors for a portion of the importation, marketing, and sales of our products and services, which exposes us to risks to our sales, operations, and reputation, including the risk that these distributors do not comply with applicable laws or our internal procedures.

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These distributors may also choose to sell alternative or competing products or services.

In addition, we may be held responsible for the actions of these distributors and their employees and agents for compliance with laws and regulations, including fair competition, bribery and corruption, trade compliance, safety, data privacy and marketing and sales activities.

The conduct of these distributors also impacts our reputation and our brand.

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We are highly dependent on the talent and efforts of our personnel.

We strive to retain our personnel by providing competitive compensation and benefits, development opportunities and training, flexible work options, and an inclusive

corporate culture.

However, competition for highly-skilled personnel is intense, particularly technical and digital talent, and our competitors have and are likely to continue to recruit our personnel.

Our compensation and benefit arrangements may not successfully attract new employees, retain, or 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 .

We strive to retain our personnel by providing competitive compensation and benefits, development opportunities and training, flexible work options, and an inclusive corporate culture.

However, competition for highly-skilled personnel, particularly technical and digital talent, is intense, and our competitors have and are likely to continue to recruit our personnel.

Our compensation and benefit arrangements may not successfully attract new personnel or retain and motivate existing personnel.

In addition, other internal and external factors can impact our ability to hire and retain talent, including insufficient advancement or career opportunities, in-office or hybrid work policies, and restrictive immigration policies .

The loss of any key personnel, particularly executive management, research and development personnel, or sales personnel, could harm our business and prospects and impede the achievement of our research and development, operational or strategic objectives.

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It can take up to twelve months or more to train sales representatives to successfully market and sell our products and for them to establish strong customer relationships.

The loss of the services and knowledge of our highly-skilled employees may significantly delay or prevent the achievement of our development and business objectives.

The loss of the services and knowledge of our highly-skilled personnel may significantly delay or prevent the achievement of our development and business objectives.

Additionally, seamless leadership transitions for key positions are critical to sustaining our culture and organizational success.

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We continually assess key personnel that we believe are essential to our long-term success.

Moreover, future organizational changes may cause employee attrition rates to increase.

If we fail to effectively manage any organizational or strategic changes, our financial condition, results of operations, and reputation, as well as our ability to successfully attract, motivate and retain key employees, may be harmed.

Moreover, future organizational changes may cause attrition rates to increase.

We have adopted a hybrid work schedule in many of our offices, allowing employees to collaborate and connect with others several days each week while providing the option to work remotely other days.

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This could have a material adverse effect on our results of operations and our ability to maintain market share.

We have employees represented by works councils and trade unions in certain countries and others that may be or may become eligible to be represented by works councils, trade unions and other employee associations.

Labor disputes and work stoppages involving our employees may disrupt our operations and could materially impact our results or operations.

We have personnel represented by works councils and trade unions in certain countries and others that may be or may become eligible to be represented by works councils, trade unions and other employee associations.

Labor disputes and work stoppages involving our personnel may disrupt our operations and could materially impact our results or operations.

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.

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Resolving these matters may require us to change our business practices in materially adverse ways.

Governments and regulators are actively developing new competition laws and regulations aimed at the technology sector, AI and digital platforms, and global activities and expansion, including in large markets such as the EU, U.S., and China.

In Europe, the EU AI Act entered into force on August 1, 2024 and will become fully applicable on August 2, 2026, with some provisions already applying beginning in February 2025.

Although we do not engage in developing or providing AI systems that would qualify as “prohibited AI practices,” restrictions and obligations under this regulation, to the extent applicable to us, could increase costs and burdens to us and our customers, and delay or halt deployment of new products and services, which may have a negative impact on our business and financial results.

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.

These actions and decisions may also hinder our ability to pursue certain mergers, acquisitions, business combinations, or other transactions.

Failure to obtain or maintain approvals or comply with regulations regarding our products or services or those of our suppliers could materially harm our sales, result in substantial penalties and fines, and cause harm to our reputation.

We and many of our healthcare provider customers, suppliers, and distributors are subject to extensive and frequently changing regulations under numerous federal, state, local, and foreign laws, including those regulating:

• the storage, transmission, and disclosure of personal, financial, and medical information as well as healthcare records;

• the storage, transmission, processing, and disclosure of personal, financial, and medical information as well as healthcare records;

• processing and use of children’s personal and health data;

• websites and application advertising that collect and use personal data for marketing purposes;

• prohibitions against the offer, payment, or receipt of remuneration to induce referrals to entities providing healthcare services or goods or to induce the order, purchase, or recommendation of our products;

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Furthermore, before we can sell a new medical device or market a new use of, or claim for, an existing product, we frequently 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, product materials, development, manufacturing and testing, product labeling, and product storage.

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.

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If 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, among other things, fines, civil penalties.

and criminal prosecution.

Additionally, failure to comply with applicable regulatory requirements could result in enforcement actions with sanctions including, among other things, fines, civil penalties, and criminal prosecution.

Delays or failures to obtain or maintain regulatory approvals, clearances or to comply with regulatory requirements may materially harm our domestic or international operations, and adversely impact our business.

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The FDA enforces its Quality System regulations through periodic unannounced inspections.

Failure to satisfactorily correct an adverse inspection finding or to comply with applicable manufacturing 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.

Failure to satisfactorily correct an adverse inspection finding or to comply with applicable manufacturing

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.

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If our personnel or the personnel of our agents or suppliers fail to comply with any laws, regulations, policies, or procedures, or we fail to audit and enforce compliance, our reputation may be harmed, we may lose customers or revenues, or we may face regulatory investigations, actions, and fines.

Security breaches, data breaches, cybersecurity attacks, other cybersecurity incidents, or the failure to comply with privacy, security, and data protection laws could materially impact our operations, patient care could suffer, we could be liable for damages, and our business, operations, and reputation could be harmed.

We retain confidential employee, applicant, and customer personal and financial, patient health, and our own proprietary information and data essential to our business operations.

In June 2024, the U.S.

Supreme Court reversed its longstanding approach under the Chevron doctrine, which provided for judicial deference to regulatory agencies, including the FDA.

We cannot be sure whether there will be increased challenges to existing agency regulations or how lower courts will apply the decision in the context of other regulatory schemes without more specific guidance from the U.S.

Supreme Court as a result of this decision.

For example, this decision may result in more companies bringing lawsuits against the FDA to challenge longstanding decisions and policies of the FDA, which could undermine the FDA's authority, lead to uncertainties in the industry, and disrupt the FDA’s normal operations, which could impact the timely review of any regulatory filings or applications we submit to the FDA.

Security breaches, data breaches, cybersecurity attacks, other cybersecurity incidents, or the failure to comply with privacy, security, and data protection laws could materially adversely impact our operations and patient care, and we could be liable for damages, and our business, operations, and reputation could be harmed.

We retain confidential employee, applicant, and customer personal, health and financial, and our own proprietary information and data essential to our business operations.

We rely on the effectiveness of our IT systems, our policies and contracts and policies of our third-party vendors, and the IT systems of our service providers and other third parties to safeguard the information and data.

Additionally, our cyber controls depend on our healthcare providers, many of whom are individual or small operations with limited IT experience and inadequate or untested security protocols, to successfully manage data privacy and security requirements.

Additionally, our cybersecurity controls depend on our healthcare providers, many of whom are individual or small operations with limited IT experience and inadequate or untested security protocols, to successfully manage data privacy and security requirements.

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.

Despite the implementation of security features in our products and security measures in our IT systems, we and our service providers, third-party 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, cybersecurity attacks, malicious code from common open source code, and other breaches of IT systems or similar disruptive actions, including by organized groups and nation-state actors.

For example, we have experienced, and may again experience in the future, cybersecurity incidents and unauthorized internal employee exfiltration of company information.

Despite the implementation of security features in our products and security measures in our IT systems, we and our service providers, third-party vendors, and other third parties could be 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, cybersecurity attacks, malicious code from common open source code, and other breaches of IT systems or similar disruptive actions, including by organized groups and nation-state actors, which may limit the availability of our systems and result in the unauthorized disclosure of confidential information.

For example, we have experienced, and may again experience in the future, cybersecurity incidents, data incidents, and unauthorized internal employee exfiltration of company information.

This risk is exacerbated with the advancement of technologies like AI, which malicious third parties are using to create new, more sophisticated and more frequent attacks.

Further, the frequency and sophistication of third-party cybersecurity attacks is increasing.

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In addition, patient care could suffer, and we could be liable if our products or IT systems fail to timely deliver accurate and complete information.

We have cybersecurity and other forms of insurance coverage related to cyber attacks, breaches, and other incidents or security problems.

We have cybersecurity and other forms of insurance coverage related to cyberattacks, breaches, and other incidents or security problems.

However, damages and claims arising from specific incidents may not be covered, may exceed the amount of any coverage, and do not cover the time and effort we incur investigating and responding to any incidents, which may be material.

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Additionally, our iTero scanners sold to customers globally, strategic business partners, 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, 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, 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.

Due to the large and growing number of these decentralized devices, we may be unable, 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, 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.

We are also subject to federal, state, and foreign laws and regulations respecting the security and privacy of patient healthcare information applicable to healthcare providers and their business associates, such as the Health Insurance Portability and Accountability Act of 1996, as well as those relating to privacy, data security, content regulation, and consumer protection.

We are subject to various national and regional data localization or data residency laws, including U.S.

state law, the EU

General Data Protection Regulation and analogous laws in China which generally require certain types of data collected within a country be stored and processed only within that country or approved countries.

state law, the EU General Data Protection Regulation and analogous laws in China which generally require certain types of data collected within a country be stored and processed only within that country or approved countries.

Other countries are considering similar data localization or data residency laws.

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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, and adversely impact our reputation, employee retention, willingness of customers and suppliers to do business with us and willingness of investors to invest in us.

Our operations are subject to a variety of existing local, regional and global ESG laws and regulations, and we are and may be required to comply with new, broader, more complex and more costly ESG laws and regulations.

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.

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These laws are proliferating and new substances subject to restrictions are regularly being added each year.

We may be forced to re-design our products or identify new suppliers to maintain our compliance with these laws.

We may be forced to re-design

our products or identify new suppliers to maintain our 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.

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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.

There can be no assurance that we or our customers will realize the expected benefits from these investments.

AI innovation presents risks and challenges that could impact our business.

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Our datasets or AI training algorithms may be insufficient or contain biased information.

Additionally, many countries and regions, including the European Union ("EU"), have proposed new and evolving regulations related to the use of AI and machine learning technologies.

The regulations may impose onerous obligations and may require us to unexpectedly rework or reevaluate improvements to be compliant.

Additionally, many countries and regions, including the EU, have proposed new and evolving regulations related to the use of AI and machine learning technologies.

The regulations may impose onerous obligations and may require us to unexpectedly rework or reevaluate improvements to be compliant, which may result in the development of products that are subsequently unacceptable under new or revised regulatory frameworks.

Use of AI technologies may expose us to an increased risk of regulatory enforcement and litigation.

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Our inability to do so could harm our competitive position.

We rely on our portfolio of issued and pending patent applications in the U.S.

We rely on our portfolio of issued and pending patent applications in the United States.

and other countries to protect a large part of our IP and our competitive position;

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However, despite the existence of these protections, we have experienced incidents in which our proprietary information has been misappropriated and believe it will be misappropriated again in the future.

If these agreements do not provide meaningful protection against the unauthorized use or disclosure of our trade secrets or other confidential information, adequate remedies may not exist to prevent unauthorized uses or disclosures.

If these agreements

do not provide meaningful protection against the unauthorized use or disclosure of our trade secrets or other confidential information, adequate remedies may not exist to prevent unauthorized uses or disclosures.

Enforcement of our IP rights is time-consuming and costly, and could ultimately prove to be unsuccessful.

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If our goodwill, intangible, or long-lived assets become impaired, we may be required to record a material charge to income.

Under GAAP, we review our goodwill at least annually, or more frequently, if we identify events or circumstances that indicate it is more likely than not that the fair value of a reporting unit has been reduced below its carrying value.

GAAP, we review our goodwill at least annually, or more frequently, if we identify events or circumstances that indicate it is more likely than not that the fair value of a reporting unit has been reduced below its carrying value.

We review finite-lived intangible assets and long-lived assets for impairment when events or changes in circumstances indicate the carrying value of the asset (asset group) may not be recoverable.

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Management is responsible for continually assessing qualitative factors that could negatively impact the fair value of goodwill and intangible and long-lived assets and if required, assesses the fair value of each to determine if they have become impaired.

Consequently, we may be required to record a material charge to earnings on our financial statements during the period in which any impairment of goodwill, intangible, or long-lived asset group is determined.

Consequently, we may be required to record a material charge to earnings on our financial statements during the period in which any impairment of goodwill intangible assets or long-lived assets is determined.

Changes in, or interpretations of, accounting rules and regulations, could result in unfavorable accounting charges.

We prepare our consolidated financial statements in conformity with GAAP.

We prepare our consolidated financial statements in conformity with U.S.

These principles are subject to interpretation by the SEC and various bodies formed to interpret and create appropriate accounting policies.

A change in these policies or in the way these policies are interpreted by us or regulators could materially affect our reported results and may even retroactively affect previously reported financial statements.

A change in these policies or in the way these policies are interpreted by us or by our regulators could materially affect our current or previously issued financial statements.

We are required to annually assess our internal control over financial reporting and any adverse results from such assessment may result in a loss of investor confidence in our financial reports and adversely affect our stock price.

We are required to furnish in our Form 10-K a report by our management regarding the effectiveness of our internal control over financial reporting that includes, among other things, an assessment of the effectiveness of our internal control over financial reporting as of the end of our fiscal year, including a statement as to whether it is effective.

Our internal controls may become inadequate because of changes in personnel, updates and upgrades to or migration away from existing software, failure to maintain accurate books and records, changes in accounting standards or interpretations of existing standards, or changes to business models that may require adjustments to our financial reporting and, as a result, the degree of compliance of our internal control over financial reporting with the existing policies or procedures may become ineffective.

We are required to furnish in our Annual Report on Form 10-K a report by our management regarding the effectiveness of our internal control over financial reporting that includes, among other things, an assessment of the effectiveness of our internal control over financial reporting as of the end of our fiscal year, including an assertion by management that our internal control over financial reporting were effective as of our fiscal year end.

Our internal controls may become inadequate because of

changes in personnel, updates and upgrades to or migration away from existing software, failure to maintain accurate books and records, changes in accounting standards or interpretations of existing standards, or changes to business models that may require adjustments to our financial reporting and, as a result, the degree of compliance of our internal control over financial reporting with the existing policies or procedures may become ineffective.

Establishing, testing, and maintaining an effective system of internal control over financial reporting requires significant resources and time commitments on the part of our management and our finance staff, and may require additional staffing and infrastructure investments and increases our costs of doing business.

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A majority of our marketable investments are investment grade, liquid, fixed-income securities and money market instruments denominated in U.S.

If the carrying value of an investment exceeds the fair value, and the decline in fair value is deemed to be other-than-temporary, we are required to write down the value of the investment, which could materially harm our results of operations and financial condition.

Moreover, the performance of certain securities in our investment portfolio correlates with the credit condition of the U.S.

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These conditions could limit our access to capital or impair the value of assets we hold.

Our effective tax rate may vary significantly from period to period.

We are subject to taxes in the U.S.

and foreign countries.

Our effective tax rate may vary significantly from period to period, which could result in volatility of our operating results and adversely affect our financial results.

We are subject to taxes in the United States and foreign countries.

Various internal and external factors may affect our future effective tax rate.

These factors include changes in the global economic environment, our legal entity structure or activities performed within our entities, our business operations, in tax laws, regulations and/or rates, to existing accounting pronouncements, interpretations of existing tax laws or regulations, in relative proportions of revenues and income before taxes in the various jurisdictions in which we operate that have differing statutory tax rates, and in overall levels of pretax earnings, as well as the settlement of income tax audits and non-deductible goodwill impairments.

Furthermore, we may continue to experience variation in our effective tax rate related to excess tax benefits or tax expense on stock-based compensation, particularly in the first quarter of each year when the majority of our equity awards vest.

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The factors include:

• quarterly variations in our results of operations and liquidity or changes in our forecasts and guidance;

• quarterly variations in our results of operations and liquidity, our ability to meet or exceed our forecasts and guidance or changes to or withdrawal of our previous forecasts and guidance;

• our ability to regain or sustain our historical growth rates;

• changes in recommendations by the investment community or speculation in the press or investment community regarding estimates of our net revenues, operating results, or other performance indicators;

• changes in recommendations or valuation models for our stock by the investment community, or speculation in the press or investment community regarding estimates of our net revenues, results of operations, or other key performance indicators;

• announcements by us, our competitors, or new market entrants, including strategic actions, management changes, and material transactions or acquisitions;

• technical factors in the public trading markets for our stock that may produce price movements inconsistent with macro, industry, or company-specific fundamentals, including the sentiment of retail investors (as it may be expressed on financial trading and other social media sites), the amount and status of short interest in our securities, access to margin debt, trading in options and other derivatives on our common stock, fractional share trading, and other technical trading factors or strategies;

• technical factors in the public trading markets for our stock that may produce price movements inconsistent with macroeconomic, industry, or company-specific fundamentals, including the sentiment of retail investors (as it may be expressed on financial trading and other social media sites), the amount and status of short interest in our securities, access to margin debt, trading in options and other derivatives on our common stock, fractional share trading, and other technical trading factors or strategies;

• announcements regarding stock repurchases, sales or purchases of our common stock by us, our officers or directors, credit agreements, and debt issuances;

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In addition, the stock market in general, and the market for technology and medical device companies, in particular, often experience extreme price and volume fluctuations unrelated or disproportionate to corporate operating performance.

Any such fluctuations have and may continue to adversely affect the market price of our common stock.

These broad market and industry factors may include market expectations of, or actual changes in, monetary policies that have the goal of easing or tightening interest rates such as the U.S.

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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.

What changed 10-Q

Item 1A. Risk Factors