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Item 8. Financial Statements and Supplementary Data

2026-02-27 compared with 2025-02-28 · 348 added, 247 removed, 1058 unchanged (36% of the section changed)

32 unchanged sentences

We have audited the accompanying consolidated balance sheets of Align Technology, Inc.

and its subsidiaries (the "Company") as of December 31, 2024 and 2023, and the related consolidated statements of operations, of comprehensive income, of stockholders’ equity and of cash flows for each of the three years in the period ended December 31, 2024, including the related notes and schedule of Valuation and Qualifying Accounts and Reserves for each of the three years in the period ended December 31, 2024 appearing under Item 15(a)(2) (collectively referred to as the "consolidated financial statements").

and its subsidiaries (the “Company”) as of December 31, 2025 and 2024, and the related consolidated statements of operations, of comprehensive income, of shareholders’ equity and of cash flows for each of the three years in the period ended December 31, 2025, including the related notes and financial statement schedule of Valuation and Qualifying Accounts and Reserves for each of the three years listed in the period ended in December 31, 2025 appearing under Item 15(a)(2) (collectively referred to as the “consolidated financial statements”).

We also have audited the Company's internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

57 unchanged sentences

Legal settlement loss

4,178 30,968 —

Total operating expenses 2,165,258 2,191,531 2,063,525

23 unchanged sentences

Change in foreign currency translation adjustment, net of tax 69,410 ( 15,786 ) 28,419

Change in unrealized gains (losses) on investments, net of tax 596 3,033 ( 3,130 )

Change in unrealized gains on investments, net of tax

Other comprehensive income (loss) 69,410 ( 15,190 ) 31,452

7 unchanged sentences

Cash and cash equivalents $ 1,094,908 $ 1,043,887

Marketable securities, short-term — 35,304

Accounts receivable, net of allowance for doubtful accounts of $ 34,213 and $ 19,131 , respectively

2 unchanged sentences

Prepaid expenses and other current assets 165,571 198,582

Assets held for sale

Total current assets 2,616,562 2,492,441

Marketable securities, long-term — 8,022

Property, plant and equipment, net 1,131,453 1,271,134

59 unchanged sentences

Net income — — — — 410,351 410,351

Net change in unrealized gains (losses) from investments — — — 596 — 596

Net change in foreign currency translation adjustment — — — 69,410 — 69,410

2 unchanged sentences

Common stock repurchased and retired ( 2,875 ) — ( 39,868 ) — ( 429,960 ) ( 469,828 )

Equity forward contract related to accelerated stock repurchase — — 49,527 — ( 49,527 ) —

Stock-based compensation — — 185,870 — — 185,870

1 unchanged sentence

71,364 $ 7 $ 1,509,595 $ 75,388 $ 2,464,157 $ 4,049,147

1 Includes tax withholding shares related to net share settlements of equity awards.

The accompanying notes are an integral part of these consolidated financial statements.

13 unchanged sentences

Non-cash operating lease cost 39,742 38,438 33,107

Impairments and fair value adjustments for equity investments

Impairment loss on Assets held for sale

Impairment and fair value adjustments for equity investments

( 18,074 ) ( 5,885 ) 4,990

20 unchanged sentences

Proceeds from issuance of common stock 21,749 25,281 26,595

Common stock repurchases ( 352,878 ) ( 592,360 ) ( 435,036 )

Common stock repurchases, net of excise tax

( 465,939 ) ( 352,878 ) ( 592,360 )

Activity for equity forward contracts related to accelerated stock repurchase agreements, net — — ( 10,000 )

23 unchanged sentences

Basis of Presentation and Preparation

The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America, (“GAAP”) and include the accounts of Align and our wholly-owned subsidiaries after elimination of intercompany transactions and balances.

The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S.

GAAP”) and include the accounts of Align and our wholly-owned subsidiaries after elimination of intercompany transactions and balances.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in our consolidated financial statements and accompanying notes.

The preparation of financial statements in conformity with U.S.

GAAP requires management to make estimates and assumptions that affect the amounts reported in our consolidated financial statements and accompanying notes.

Actual results could differ materially from those estimates.

3 unchanged sentences

Fair value is an exit price, representing the amount that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

We use the GAAP fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value.

We use the U.S.

GAAP fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value.

This hierarchy requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.

The three levels of inputs that may be used to measure fair value:

Level 1 - Quoted (unadjusted) prices in active markets for identical assets or liabilities.

Level 2 - Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the asset or liability.

Level 1 - Inputs to the valuation techniques that are quoted prices in active markets for identical assets or liabilities.

Level 2 - Inputs to the valuation techniques that are other than quoted prices but are observable for the assets or liabilities, either directly or indirectly, such as quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the asset or liability.

We obtain fair values for our Level 2 investments.

1 unchanged sentence

We are ultimately responsible for these underlying estimates.

Level 3 - Unobservable inputs to the valuation methodology that are supported by little or no market activity and that are significant to the measurement of the fair value of the assets or liabilities.

Level 3 - Unobservable inputs to the valuation techniques that are supported by little or no market activity and are significant to the measurement of the fair value of the assets or liabilities.

Level 3 assets and liabilities include those whose fair value measurements are determined using pricing models, discounted cash flow methodologies or similar valuation techniques, as well as significant management judgment or estimation.

7 unchanged sentences

Marketable Securities

Our marketable securities balance consists of marketable debt securities which are classified as available-for-sale and are carried at fair value.

Marketable securities consist of marketable debt securities which are classified as available-for-sale and are carried at fair value.

Our fixed-income securities investment portfolio allows for investments with a maximum effective maturity of up to 40 months on any individual security.

2 unchanged sentences

Realized gains and losses from sales and maturities of marketable securities are reported in earnings and computed using the specific identification cost method.

All of our marketable securities are subject to a periodic impairment review.

Marketable securities are subject to a periodic impairment review.

We evaluate if an allowance for credit loss is necessary by considering available information relevant to the collectability of the security and information about credit rating changes, past events, current conditions, and reasonable and supportable forecasts.

1 unchanged sentence

If we have an intent to sell, or if it is more likely than not that we will be required to sell a security in an unrealized loss position before recovery of its amortized cost basis, we will write down the security to its fair value and record the corresponding charge as a component of Other income (expense), net in our Consolidated Statements of Operations.

As of December 31, 2024 we have no short term or long term marketable securities.

As of December 31, 2025 and 2024, we had no marketable securities.

Variable Interest Entities

3 unchanged sentences

Our evaluation includes identification of activities that are significant to the VIE and an assessment of our ability to direct those activities.

Our assessment of whether we are the primary beneficiary of a VIE requires management to exercise significant judgement and utilize assumptions.

Our assessment of whether we are the primary beneficiary of a VIE requires management to exercise significant judgment and utilize assumptions.

We have concluded that we are not the primary beneficiary of our VIE investments;

7 unchanged sentences

Pursuant to the Heartland Subscription Agreements we acquired less than a 5 % equity interest in total, through the purchase of Class A Common Stock for $ 150 million ($ 75 million in each April 2023 and April 2024).

On December 19, 2024, we entered into a Subscription Agreement (the “Smile Doctors Subscription Agreement”) with New SD Holding Company, L.P.

On December 19, 2024 and June 5, 2025, we entered into Subscription Agreements (the “Smile Doctors Subscription Agreements”) with New SD Holding Company, L.P.

(“SD Holding Company”).

Pursuant to the Smile Doctors Subscription Agreement we acquired less than a 3 % equity interest through the purchase of Class A Common Units for $ 30 million.

Pursuant to the Smile Doctors Subscription Agreements, we acquired less than a 3 % equity interest through the purchase of Class A Common Units for $ 40 million.

SD Holding Company owns a controlling interest, through intermediary entities, in Smile Doctors, LLC.

We account for our investments in Heartland and SD Holding Company as investments in equity securities, utilizing the measurement alternative.

Based on a review of the relevant facts and circumstances, primarily observable transactions for identical investments, we recorded a $ 6 million increase to the carrying value of our investment in Heartland for the year ended December 31, 2024.

We did no t record an adjustment for the year ended December 31, 2023.

Based on a review of the relevant facts and circumstances, primarily observable transactions for identical investments, we recorded a $ 18.0 million and 6.0 million increase to the carrying value of our Heartland investment in 2025 and 2024, respectively.

This increased the total carrying value of our investment in Heartland to $ 174.0 million for the year ended December 31, 2025.

Our investments in privately held companies in which we can exercise significant influence are accounted for as equity method investments.

We have elected to account for our equity method investments under the fair value option.

The carrying value of our investments in equity securities and equity method investments are reported in our Consolidated Balance Sheets as other assets and any fair value adjustments or impairment, if any, are recorded in other income (expense), net in our Consolidated Statements of Operations.

Derivative Financial Instruments

We enter into foreign currency forward contracts to minimize the short-term impact of foreign currency exchange rate fluctuations associated with certain assets and liabilities.

These forward contracts are not designated as hedging instruments.

For the years ended December 31, 2025 and 2024, we did not hold any material investments in which we exercised significant influence.

The carrying value of our investments in equity securities and equity method investments are reported in our Consolidated Balance Sheets as Other assets and any price adjustments or impairment, if any, are recorded in Other income (expense), net in our Consolidated Statements of Operations.

Derivatives Not Designated as Hedging Instruments

We enter into foreign currency forward contracts to minimize the short-term impact of foreign currency exchange rate fluctuations on certain assets and liabilities.

These forward contracts are classified within Level 2 of the fair value hierarchy.

The gains and losses on these forward contracts are intended to offset the gains and losses in the underlying foreign currency denominated monetary assets and liabilities being economically hedged.

1 unchanged sentence

The net gain or loss from the settlement of these foreign currency forward contracts is recorded in Other income (expense), net in the Consolidated Statements of Operations.

As of December 31, 2025 and 2024, the fair value of outstanding foreign exchange forward contracts was not material.

Foreign Currency

4 unchanged sentences

Foreign currency remeasurement gains and losses that are derived from monetary assets and liabilities stated in a currency other than the international subsidiaries functional currency are included in Other income (expense), net.

For the year ended December 31, 2024, 2023 and 2022, we had foreign currency transaction losses of $ 21.0 million, $ 7.0 million and $ 43.8 million, respectively.

For the years ended December 31, 2025, 2024 and 2023, we had foreign currency transaction gains of $ 11.3 million and losses of $ 21.0 million and $ 7.0 million, respectively.

Certain Risks and Uncertainties

Our cash and investments are held primarily by five financial institutions.

Financial instruments which potentially expose us to concentrations of credit risk consist primarily of cash equivalents and marketable securities.

We invest excess cash primarily in money market funds, corporate bonds, asset-backed securities, municipal and U.S.

government agency bonds and treasury bonds and periodically evaluate them for credit losses.

Financial instruments which potentially expose the Company to concentration of credit risk consist principally of cash and cash equivalents.

These instruments have minimal credit risk exposures.

Management regularly monitors their compositions and maturities.

The Company maintains its cash and cash equivalents in bank accounts that exceed federally insured FDIC limits.

Through December 31, 2025, the Company has not experienced any material credit losses on such deposits.

We invest excess cash primarily in money market funds and certificates of deposit and periodically evaluate them for credit losses.

Such credit losses have not been material to our financial statements.

5 unchanged sentences

Accounts receivable, net includes allowances for doubtful accounts for any potentially uncollectible amounts.

We periodically assess the adequacy of the allowance for doubtful accounts by reviewing the accounts receivable on a collective basis and giving consideration to various factors including the aging of the receivables and a customers’ expected ability to pay.

For specific customer accounts receivable balances, we consider known disputes and collection history.

1 unchanged sentence

Actual write-offs have not materially differed from the estimated allowances.

No individual customer accounted for 10% or more of our accounts receivable, net balance at December 31, 2024 or 2023 nor net revenues for the year ended December 31, 2024, 2023 or 2022.

For the year ended December 31, 2024 and 2023, we entered into factoring transactions on a non-recourse basis with financial institutions to sell certain of our non-U.S.

No individual customer accounted for 10% or more of our accounts receivable, net balance at December 31, 2025 or 2024 nor net revenues for the years ended December 31, 2025, 2024 or 2023.

Accounts Receivable Factoring

We enter into factoring transactions on a non-recourse basis with financial institutions to sell certain of our non-U.S.

accounts receivable.

We account for these transactions as sales of financial assets and include the cash proceeds as a part of our Cash flows from operations in the Consolidated Statements of Cash Flows.

Total accounts receivable sold under factoring arrangements was $ 52.1 million and $ 51.2 million during the year ended December 31, 2024, and 2023, respectively.

Total accounts receivable sold under factoring arrangements was $ 47.9 million and $ 52.1 million during the years ended December 31, 2025, and 2024, respectively.

Factoring fees incurred on the sales of accounts receivable were recorded in Other income (expense), net in our Consolidated Statements of Operations and were not material.

34 unchanged sentences

These assets are amortized using the straight-line method over their estimated useful lives.

The average amortization period by intangible asset class ranges from ten to twelve years .

The average amortization period by intangible asset class ranges from seven to twelve years .

This amortization period reflects the period in which the economic benefits of the assets are expected to be realized.

8 unchanged sentences

If the carrying amount of the reporting unit exceeds its fair value, an impairment loss would be recorded in our Consolidated Statements of Operations for the amount of the excess.

Management is required to exercise significant judgement when identifying the relevant assumptions and estimates used in determining the fair value and carrying value of our reporting units.

Management is required to exercise significant judgment when identifying the relevant assumptions and estimates used in determining the fair value and carrying value of our reporting units.

Long-Lived Assets and Finite-Lived Intangible Assets

5 unchanged sentences

Our estimates of future cash flows attributable to our assets (asset groups) require significant judgment based on our historical and anticipated results and are subject to many assumptions.

In the third quarter of 2025, we committed to a plan to dispose of, other than by sale, specifically identified manufacturing assets prior to the end of their estimated useful lives.

We have materially completed the disposition of these assets as of

December 31, 2025.

Accordingly, we have revised the estimated useful lives of these assets to reflect our use through the disposal date.

In the year ended December 31, 2025, we recorded $ 76.9 million of accelerated depreciation expense related to these assets.

The increase in depreciation expense negatively impacted Net income, net of tax, by $ 53.9 million or $ 0.74 per basic and diluted share.

Development Costs for Internal Use Software

1 unchanged sentence

Such capitalized costs include external direct costs utilized in developing or obtaining the applications and payroll and payroll-related costs for employees, who are directly associated with the development of the applications.

Capitalized internally developed software costs were not material as of December 31, 2024 or 2023.

For the years ended December 31, 2025 and 2024, capitalized internally developed software costs were $ 38.5 million and $ 23.1 million, respectively.

Development Costs for Software to be Marketed

25 unchanged sentences

While changes in the allocation of the SSP between performance obligations will not affect the amount of total revenues recognized for a particular contract, any material changes could impact the timing of revenue recognition, which would have a material effect on our financial position and result of operations.

This is because the contract consideration is allocated to each performance obligation, delivered or undelivered, at the inception of the contract based on the SSP of each distinct performance obligation.

This is because the contract consideration is

allocated to each performance obligation, delivered or undelivered, at the inception of the contract based on the SSP of each distinct performance obligation.

Clear Aligner

36 unchanged sentences

Costs to Obtain a Contract

We offer a variety of commission plans to our salesforce;

We offer a variety of commission plans to our sales force;

each plan has multiple components.

1 unchanged sentence

The capitalized costs to obtain contracts were $ 29.2 million and $ 25.8 million as of December 31, 2025 and 2024, respectively, and are included in Other assets in our Consolidated Balance Sheets.

We recognized amortization on our costs to obtain a contract of $ 18.7 million, $ 12.5 million, and $ 20.8 million during the year ended December 31, 2024, 2023, and 2022, respectively, which is included in selling, general and administrative expenses in our Consolidated Statements of Operations.

We recognized amortization on our costs to obtain a contract of $ 15.6 million, $ 18.7 million, and $ 12.5 million during the years ended December 31, 2025, 2024, and 2023, respectively, which is included in Selling, general and administrative expenses in our Consolidated Statements of Operations.

Unfulfilled Performance Obligations for Clear Aligners and Scanners

18 unchanged sentences

Research and development costs are expensed as incurred and include costs associated with the research and development of new products and enhancements to existing products.

These costs primarily include employee related costs, including payroll, benefits and stock-based compensation, equipment, material and maintenance costs, outside consulting expenses, depreciation and amortization expense and allocations of corporate overhead expenses including facilities and information technology (“IT”).

Advertising Costs

The cost of advertising and media is expensed as incurred.

For the year ended December 31, 2024, 2023 and 2022, we incurred advertising costs of $ 185.0 million, $ 201.2 million and $ 222.0 million, respectively.

For the years ended December 31, 2025, 2024 and 2023, we incurred advertising costs of $ 188.7 million, $ 185.0 million and $ 201.2 million, respectively.

Stock-Based Compensation

1 unchanged sentence

We use the Black-Scholes option pricing model to determine the fair value of employee stock purchase plan shares.

We use a Monte Carlo simulation model to estimate the fair value of awards with a market based condition which requires the input of assumptions, including expected term, stock price volatility and the risk-free rate of return.

rate of return.

For restricted stock units that include a performance condition, we use the stock price on the grant date to estimate the fair value and stock-based compensation cost is recorded based on expected attainment of performance targets.

7 unchanged sentences

The first step is to determine if the weight of available evidence indicates that it is more likely than not that the tax position will be sustained on audit based on its technical merits, including resolution of any related appeals or litigation processes.

The second step is to measure the tax benefit as the

largest amount that is more than 50% likely to be realized upon ultimate settlement.

The second step is to measure the tax benefit as the largest amount that is more than 50% likely to be realized upon ultimate settlement.

We adjust reserves for our uncertain tax positions due to changing facts and circumstances, such as the closing of a tax audit or refinement of estimates due to new information.

To the extent that the final outcome of these matters is different than the amounts recorded, such differences will impact our tax provision in our Consolidated Statements of Operations in the period in which such determination is made.

We assess the likelihood that we will be able to realize our deferred tax assets.

Should there be a change in our ability to realize our deferred tax assets, our tax provision would increase in the period in which we determine that it is more likely than not that we cannot realize our deferred tax assets.

We assess the likelihood that we will be able to realize our deferred tax assets, including those related to our Switzerland deferred tax assets, which have a finite utilization period.

We consider all available evidence, both positive and negative, including historical levels of income, expectations and risks associated with estimates of future taxable income and ongoing prudent and feasible tax planning strategies in assessing the need for a valuation allowance.

If it is more likely than not that we will not realize our deferred tax assets, we will increase our provision for taxes by recording a valuation allowance against the deferred tax assets that we estimate will not ultimately be realizable.

If it is more likely than not that we will not realize our deferred tax assets, we will record a valuation allowance against the deferred tax assets that we estimate will not ultimately be realizable.

The determination of whether a valuation allowance is required involves significant judgment and reflects our evaluation of changes in our operational performance, taxable income forecasts, and other relevant factors,

Common Stock Repurchase

4 unchanged sentences

(i) New Accounting Updates Recently Adopted

On November 27, 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-07 (“ASU 2023-07”), “Improvements to Reportable Segment Disclosures.

” The amendments in this update improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses and other segment expenses.

For public business entities, the provisions of ASU 2023-07 are effective for fiscal years beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024.

We adopted this standard in the fiscal year ended December 31, 2024.

Note 16 “Segments and Geographical Information" of the Notes of Consolidated Financial Statements

(ii) Recent Accounting Pronouncements Not Yet Effective

On December 14, 2023, the FASB issued ASU 2023-09, “Improvements to Income Tax Disclosures.

2 unchanged sentences

For public business entities, the provisions of ASU 2023-09 are effective for fiscal years beginning after December 15, 2024.

We adopted this standard on a prospective basis for our annual report on Form 10-K effective for the year ended December 31, 2025.

ASU 2023-09 impacts our accounting for income tax financial statement disclosures, but did not impact our Consolidated Balance Sheets, Statements of Operations or Statements of Cash Flows.

” The amendments in this update improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses and other segment expenses.

For public business entities, the provisions of ASU 2023-07 were effective for fiscal years beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024.

We adopted this standard for the fiscal year ended December 31, 2024 and for interim periods within the fiscal year ended December 31, 2025 .

See Note 14 “ Segments and Geographical Information.”

(ii) Recent Accounting Pronouncements Not Yet Effective

On September 18, 2025, the FASB issued ASU 2025-06, “Intangibles-Goodwill and Other-Internal-Use Software.” The amendments in this ASU simplify the accounting for internal-use software by eliminating the existing project development stages and introducing new guidance for evaluating the probable-to-complete threshold for capitalization.

The amendments in this ASU also require the application of ASC 360-10 disclosure requirements for all capitalized internal-use software costs, regardless of how those costs are presented in the financial statements.

The provisions of ASU 2025-06 are effective for all entities for fiscal years beginning after December 15, 2027, and interim periods within those fiscal years.

Early adoption is permitted.

There will be no impact to our consolidated balance sheets or statements of operations;

however, the Company is evaluating the effect of this pronouncement on our consolidated financial statement disclosures.

The Company is evaluating the effect of this pronouncement on its annual consolidated financial statements.

On November 4, 2024, the FASB issued ASU 2024-03, “Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures.

6 unchanged sentences

Cash, Cash Equivalents and Marketable Securities

The following tables summarize our cash and cash equivalents, and marketable securities recorded in our Consolidated Balance Sheets as of December 31, 2024 and 2023 (in thousands):

The following tables summarize our cash and cash equivalents, and marketable securities balances recorded in our Consolidated Balance Sheets as of December 31, 2025 and 2024 (in thousands):

December 31, 2025 Amortized

Losses Fair Value Cash and cash equivalents Marketable securities, short-term Marketable securities, long-term

Losses Fair Value Cash and cash equivalents

Cash $ 770,051 $ — $ — $ 770,051 $ 770,051

Money market funds 308,940 — — 308,940 308,940

Certificates of deposit 15,917 — — 15,917 15,917

Total $ 1,094,908 $ — $ — $ 1,094,908 $ 1,094,908

We have no short-term or long-term marketable securities as of December 31, 2024.

December 31, 2024 Amortized

Losses Fair Value Cash and cash equivalents Marketable securities, short-term Marketable securities, long-term

Losses Fair Value Cash and cash equivalents

Cash $ 752,423 $ — $ — $ 752,423 $ 752,423

Money market funds 291,464 — — 291,464 291,464

Corporate bonds 31,943 5 ( 676 ) 31,272 — 28,704 2,568

government treasury bonds

4,855 — ( 99 ) 4,756 — — 4,756

Asset-backed securities 1,416 2 ( 1 ) 1,417 — 719 698

Municipal bonds 702 — ( 2 ) 700 — 700 —

government agency bonds 5,215 — ( 34 ) 5,181 — 5,181 —

Total $ 1,043,887 $ — $ — $ 1,043,887 $ 1,043,887

The following table summarizes the fair value of our available-for-sale marketable securities classified by contractual maturity as of December 31, 2023 (in thousands):

December 31, 2023

Due in 1 year or less $ 34,617

Due in 1 year through 5 years 8,709

Total $ 43,326

The securities that we invest in are generally deemed to be low risk based on their credit ratings from the major rating agencies.

The longer the duration of these securities, the more susceptible they are to changes in market interest rates and bond yields.

As interest rates increase, those securities purchased at a lower yield show a mark-to-market unrealized loss.

Our unrealized losses as of December 31, 2023 are primarily due to changes in interest rates and credit spreads.

The following table summarizes the gross unrealized losses as of December 31, 2023, aggregated by investment category and length of time that individual securities have been in a continuous loss position (in thousands):

As of December 31, 2023

Less than 12 months 12 Months or Greater Total

December 31, 2023 Fair Value Unrealized Loss Fair Value Unrealized Loss Fair Value Unrealized Loss

Corporate bonds $ — $ — $ 27,939 $ ( 676 ) $ 27,939 $ ( 676 )

government treasury bonds

2,044 ( 11 ) 2,712 ( 88 ) 4,756 ( 99 )

Asset-backed securities 1,018 ( 1 ) 83 — 1,101 ( 1 )

Municipal bonds — — 700 ( 2 ) 700 ( 2 )

government agency bonds 4,003 ( 11 ) 1,178 ( 23 ) 5,181 ( 34 )

Total $ 7,065 $ ( 23 ) $ 32,612 $ ( 789 ) $ 39,677 $ ( 812 )

We had no short-term or long-term marketable securities as of December 31, 2025 or 2024.

Fair Value Measurements

The following tables summarize our financial assets measured at fair value and categorized by fair value hierarchy as of December 31, 2024 and 2023 (in thousands):

The following tables summarize our financial assets measured at fair value as of December 31, 2025 and 2024 (in thousands):

Description Balance as of December 31, 2025

1 unchanged sentence

Money market funds $ 308,940 $ 308,940

Certificate of deposits 15,917 15,917

$ 324,857 $ 324,857

2 unchanged sentences

Money market funds $ 291,464 $ 291,464

Short-term investments:

Corporate bonds 28,704 — 28,704

Municipal bonds 700 — 700

government agency bonds 5,181 — 5,181

Asset-backed securities 719 — 719

Long-term investments:

government treasury bonds 4,756 — 4,756

Corporate bonds 2,568 — 2,568

Asset-backed securities 698 — 698

$ 291,464 $ 291,464

We had no financial assets that were categorized as level 3 in the fair value hierarchy for the year ended December 31, 2024 or 2023.

We had no financial assets that were categorized as level 2 or level 3 in the fair value hierarchy for the years ended December 31, 2025 or 2024.

Derivatives Not Designated as Hedging Instruments

2 unchanged sentences

These forward contracts are classified within Level 2 of the fair value hierarchy.

As a result of the settlement of foreign currency forward contracts, we recognized a net gain of $ 35.2 million during the year ended December 31, 2024.

We recognized a net loss of $ 15.9 million during the year ended December 31, 2023 and the net gain recognized during the year ended December 31, 2022 was not material.

As a result of the settlement of foreign currency forward contracts, we recognized a net loss of $ 34.2 million during the year ended December 31, 2025, a net gain of $ 35.2 million during the year ended December 31, 2024 and a net loss of $ 15.9 million during the year ended December 31, 2023.

Recognized gains and losses from the settlement of foreign currency forward contracts are recorded in Other income (expense), net in our Consolidated Statements of Operations.

As of December 31, 2025 and 2024, the fair value of foreign exchange forward contracts outstanding was not material.

3 unchanged sentences

Euro € 183,700 $ 215,895

Polish Zloty PLN 283,000 68,633

Canadian Dollar C$ 90,000 65,802

British Pound £ 38,500 51,782

Polish Zloty PLN 174,800 48,605

Israeli Shekel ILS 80,500 25,283

Chinese Yuan ¥ 164,500 22,417

Brazilian Real R$ 83,100 13,327

Japanese Yen ¥ 3,200,000 20,447

Brazilian Real R$ 63,500 11,440

Chinese Yuan ¥ 52,000 7,461

Swiss Franc CHF 4,200 5,316

New Zealand Dollar NZ$ 7,000 3,924

Czech Koruna Kč 72,800 3,004

Australian Dollar A$ 3,800 2,355

New Taiwan Dollar NT$ 121,500 3,851

New Zealand Dollar NZ$ 6,020 3,474

Korean Won ₩ 4,600,000 3,207

Australian Dollar A$ 3,500 2,337

Czech Koruna Kč 26,000 1,262

Total notional contract amount $ 466,162

December 31, 2024

1 unchanged sentence

Euro € 176,080 $ 183,172

Canadian Dollar C$ 108,900 82,166

Polish Zloty PLN 283,000 68,633

Canadian Dollar C$ 97,000 67,446

British Pound £ 37,600 47,090

Chinese Yuan ¥ 244,500 34,361

Swiss Franc CHF 28,600 34,132

Japanese Yen ¥ 3,577,000 25,347

Israeli Shekel ILS 90,055 24,740

Chinese Yuan ¥ 164,500 22,417

Brazilian Real R$ 83,100 13,327

Mexican Peso M$ 230,000 13,593

Japanese Yen ¥ 2,000,000 12,778

Swiss Franc CHF 5,700 6,314

New Zealand Dollar NZ$ 7,000 3,924

Czech Koruna Kč 72,800 3,004

Australian Dollar A$ 3,800 2,355

New Taiwan Dollar NT$ 58,700 1,786

Czech Koruna Kč 60,200 2,687

Korean Won ₩ 2,000,000 1,361

Total notional contract amount $ 458,347

Balance Sheet Components

1 unchanged sentence

Raw materials $ 107,296 $ 124,377

Work in progress 73,660 91,259

Work in process

65,679 73,660

Finished goods 53,368 56,250

Total inventories $ 226,343 $ 254,287

During the year ended December 31, 2025, we recognized an impairment loss on inventory of $ 14.9 million to adjust our inventory balance to its net realizable value.

This loss was recorded in Cost of net revenues in our Consolidated Statements of Operations.

Prepaid expenses and other current assets consist of the following (in thousands):

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1 Shorter of the remaining lease term or the estimated useful lives of the assets.

Depreciation was $ 126.2 million, $ 126.0 million and $ 109.8 million for the year ended December 31, 2024, 2023 and 2022, respectively.

Depreciation was $ 218.6 million, $ 126.2 million and $ 126.0 million for the years ended December 31, 2025, 2024 and 2023, respectively.

Depreciation expense in 2025 includes $ 76.9 million of accelerated depreciation, as discussed in Note 1 “Summary of Significant Accounting Policies."

Accrued liabilities consist of the following (in thousands):

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Accrued income taxes 44,049 48,808

Accrued sales and marketing expenses 37,617 34,035

Current operating lease liabilities 31,939 31,063

Accrued sales and marketing expenses

29,941 37,617

Accrued property, plant and equipment 10,469 13,462

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Total accrued liabilities $ 536,749 $ 598,188

Accrued warranty as of December 31, 2024 and 2023, which is included in the “Other accrued liabilities” category in the accrued liabilities table above, consists of the following activity (in thousands):

Accrued warranty as of December 31, 2022

Accrued warranty, which is included in the “Other accrued liabilities” category of the Total accrued liabilities table above, consists of the following activity (in thousands):

Balance as of December 31, 2023

Charged to cost of net revenues 21,962

Actual warranty expenditures ( 13,177 )

Accrued warranty as of December 31, 2023

Balance as of December 31, 2024

Charged to cost of net revenues 5,333

Actual warranty expenditures ( 12,133 )

Accrued warranty as of December 31, 2024

Balance as of December 31, 2025

Deferred revenues consist of the following (in thousands):

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1 Included in Other long-term liabilities within our Consolidated Balance Sheets.

During the year ended December 31, 2024 and 2023, we recognized $ 3,999.0 million and $ 3,862.3 million of net revenues, respectively, of which $ 819.0 million and $ 732.4 million was included in the deferred revenues balance at December 31, 2023 and December 31, 2022, respectively.

During the years ended December 31, 2025 and 2024, we recognized $ 4,035.0 million and $ 3,999.0 million of net revenues, respectively, of which $ 840.5 million and $ 819.0 million was included in the deferred revenues balance at December 31, 2024 and 2023, respectively.

Lessee Information

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As of December 31, 2025, we had additional leases that had not commenced with future lease payments of $ 58.4 million.

These leases will commence during 2025 with non-cancelable lease terms of two to five years .

These leases will commence during 2026 with non-cancelable lease terms of two to fourteen years .

Lessor Information

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Total lease payments $ 72,301

For the year ended December 31, 2024, 2023 and 2022, operating lease income was $ 21.7 million, $ 16.6 million and $ 12.3 million, respectively.

For the years ended December 31, 2025, 2024 and 2023, operating lease income was $ 28.8 million, $ 21.7 million and $ 16.6 million, respectively.

Operating lease income is recorded in Net revenues in our Consolidated Statements of Operations.

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The acquired developed technology had an estimated fair value of $ 47.0 million as of the Cubicure Acquisition Date and will be amortized over a useful life of thirteen years .

The fair value of developed technology was estimated under the Multi-Period Excess Earnings Method and the fair value estimates for developed technology include significant assumptions in the prospective financial information which include, but are not limited to, the projected future cash flows associated with the technology, asset's life cycle and the present value factor.

Acquisition related costs are recognized separately from the business combination and are expensed as incurred.

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Goodwill and Intangible Assets

The change in the carrying value of goodwill for the year ended December 31, 2024 and 2023, categorized by reportable segment, is as follows (in thousands):

The change in the carrying value of goodwill for the years ended December 31, 2025 and 2024, categorized by reportable segment, is as follows (in thousands):

Clear Aligner Systems and Services Total

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$ 111,086 $ 308,444 $ 419,530

Additions from acquisition 47,576 — 47,576

Foreign currency translation adjustments ( 6,017 ) ( 18,459 ) ( 24,476 )

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152,645 289,985 442,630

Additions from acquisition 47,576 — 47,576

Foreign currency translation adjustments 11,610 37,593 49,203

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Finite-Lived Intangible Assets

Acquired finite-lived intangible assets were as follows, excluding intangible assets that were fully amortized (in thousands):

Acquired finite-lived intangible assets, excluding intangibles that were fully amortized, are as follows (in thousands):

Weighted Average Amortization Period (in years) Gross Carrying Amount as of

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Trademarks and tradenames 1

7 9,800 ( 8,050 ) — 1,750

Patents 12 480 ( 320 ) — 160

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Total intangible assets, net $ 93,933

1 The Weighted Average Amortization Period decreased from 10 years to 7 years due to an intangible asset with a useful life of 15 years becoming fully amortized in 2025.

Weighted Average Amortization Period (in years) Gross Carrying

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The existing technology acquired in the Cubicure Acquisition had an estimated useful life of 13 years, which had the effect of increasing the weighted average amortization period from approximately 10 years as of December 31, 2023 to approximately 11 years as of December 31, 2024.

Refer to Note 5.

“Business Combination” .

For the year ended December 31, 2024 and 2023, we did not identify any impairment triggering events that would indicate that the carrying value of our finite-lived intangible assets was not recoverable.

Refer to Note 5 “Business Combination” .

For the years ended December 31, 2025 and 2024, we did not identify any impairment triggering events that would indicate that the carrying value of our finite-lived intangible assets was not recoverable.

The total estimated future amortization expense for these acquired finite-lived intangible assets as of December 31, 2025 is as follows (in thousands):

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Thereafter 21,693

Total amortization

Amortization expense was $ 18.9 million, $ 16.4 million and $ 16.0 million for the year ended December 31, 2024, 2023 and 2022, respectively.

Amortization expense was $ 18.8 million, $ 18.9 million and $ 16.4 million for the years ended December 31, 2025, 2024 and 2023, respectively.

Credit Facility

We have a credit facility that provides for a $ 300.0 million unsecured revolving line of credit, along with a $ 50.0 million letter of credit.

On December 23, 2022, we amended certain provisions in our credit facility which included extending the maturity date on the facility to December 23, 2027 and replacing the interest rate from the existing LIBOR with SOFR (“2022 Credit Facility”).

The 2022 Credit Facility requires us to comply with specific financial conditions and performance requirements.

Loans under the 2022 Credit Facility bear interest, at our option, at either a rate based on the SOFR for the applicable interest period or a base rate, in each case plus a margin.

As of December 31, 2024, we had no outstanding borrowings under the 2022 Credit Facility and were in compliance with the conditions and performance requirements in all material respects.

We maintain a credit facility, as amended in December 2022, that includes a $ 300.0 million unsecured revolving line of credit and a $ 50.0 million letter of credit sub-limit.

The facility matures on December 23, 2027 and loans under the facility accrue interest, at our election, based on either the Secured Overnight Financing Rate (“SOFR”) for the applicable period or a base rate, in each case plus an applicable margin.

The facility includes financial covenants and performance requirements.

As of December 31, 2025, we had no outstanding borrowings under the facility and were in compliance with the terms and conditions of the facility in all material respects.

Legal Proceedings

2019 Shareholder Derivative Lawsuit

In January 2019, three derivative lawsuits were filed in the U.S.

District Court for the Northern District of California which were later consolidated, purportedly on our behalf, naming as defendants the then current members of our Board of Directors along with certain of our executive officers.

The complaints assert various state law causes of action, including for breaches of fiduciary duty, insider trading, and unjust enrichment.

The consolidated action has been resolved per the settlement discussed below.

On April 12, 2019, a derivative lawsuit was also filed in California Superior Court for Santa Clara County, purportedly on our behalf, naming as defendants the then-current members of our Board of Directors along with certain of our executive officers.

The allegations in the complaint were similar to those in the derivative suits described above.

The matter has been resolved per the settlement discussed below.

In the first quarter of 2024, the parties to these actions entered into a settlement agreement whereby, plaintiffs dismissed the lawsuits and released their claims.

In the settlement agreement, Align and the defendants deny any wrongdoing and are not making any monetary payments, other than an award of $ 575,000 in attorney’s fees to plaintiffs’ counsel, covered by insurance.

On February 4, 2025, the court granted final approval of the settlement and closed the case.

Antitrust Class Actions

On June 5, 2020, a dental practice named Simon and Simon, PC doing business as City Smiles, brought an antitrust action in the U.S.

On June 5, 2020, a dental practice, Simon and Simon, PC (doing business as City Smiles), brought an antitrust action in the U.S.

District Court for the Northern District of California on behalf of itself and a putative class of similarly situated practices seeking treble monetary damages, interest, costs, attorneys’ fees, and injunctive relief relating to our alleged market activities in alleged clear aligner and intraoral scanner markets.

Plaintiff filed an amended complaint and added VIP Dental Spas as a plaintiff on August 14, 2020.

On December 18, 2023, the court certified a class of persons or entities that purchased Invisalign directly from Align between January 1, 2019 and March 31, 2022.

On December 18, 2023, the court certified a class of persons or entities that purchased Invisalign directly from us between January 1, 2019 and March 31, 2022.

The court denied Plaintiffs’ motion to certify a class of purchasers of scanners.

On February 21, 2024, the court granted Align’s motion for summary judgment on all claims brought by the plaintiffs.

On February 21, 2024, the court granted our motion for summary judgment on all claims brought by the plaintiffs.

Plaintiffs have appealed the district court’s summary judgment ruling to the United States Court of Appeals for the Ninth Circuit.

Oral argument is scheduled for April 10, 2025.

Oral argument was held on April 10, 2025.

On May 3, 2021, an individual named Misty Snow brought an antitrust action in the U.S.

District Court for the Northern District of California on behalf of herself and a putative class of similarly situated individuals seeking treble monetary damages, interest, costs, attorneys’ fees, and injunctive relief relating to our alleged market activities in alleged clear aligner and intraoral scanner markets based on Section 2 of the Sherman Act.

Plaintiffs have filed several amended complaints adding new plaintiffs, various state law claims, and allegations based on Section 1 of the Sherman Act.

Plaintiffs have since filed several amended complaints adding new plaintiffs and various state law claims.

On November 29, 2023, the court certified a class of indirect purchasers of Invisalign between July 1, 2018 and December 31, 2023 and a class of indirect purchasers of Invisalign seeking injunctive relief.

On February 21, 2024, the court granted Align’s motion for summary judgment on the claims related to Section 2 allegations.

On February 21, 2024, the court granted our motion for summary judgment on the claims related to Section 2 allegations.

The court entered judgment for the Section 2 and related state law claims on March 22, 2024.

Plaintiffs have appealed the district court’s summary judgment ruling to the United States Court of Appeals for the Ninth Circuit.

Oral argument is scheduled for April 10, 2025.

Oral argument was held on April 10, 2025.

We are currently unable to predict the outcome of these lawsuits and therefore we cannot determine the likelihood of loss, if any, nor estimate a range of possible loss.

In June 2024, Align and the Section 1 plaintiffs reached a settlement in principle that would resolve all remaining claims in the Section 1 lawsuit.

The settlement terms included a $ 27.5 million cash payment and coupons for class members.

We agreed to settle the lawsuit to avoid the distraction and uncertainty of litigation.

The plaintiffs have filed a motion requesting the Court approve the settlement.

We are unable to predict the timeline or outcome of the motion to approve the settlement.

We continue to believe that plaintiffs’ Section 1 claims are without merit and remain ready to vigorously defend ourselves against those claims.

For the year ended December 31, 2024 Align accrued a loss of $ 27.5 million for the settlement of the Section 1 claims described above.

During the course of the Misty Snow lawsuit, some additional plaintiffs joined and filed allegations based on Section 1 of the Sherman Act.

In June 2024, we reached a settlement in principle with the Section 1 plaintiffs to resolve all remaining claims in the Section 1 lawsuit.

In March 2025, Align and plaintiffs agreed to a revised settlement to resolve all Section 1 claims for a

$ 31.75 million cash payment.

On November 21, 2025, the court granted final approval of the settlement and dismissed the case with prejudice.

In 2025, Align issued a payment for the full settlement amount, $ 31.75 million, consisting of $ 27.5 million accrued as of December 31, 2024 and an additional loss accrual of $ 4.25 million in the first quarter of 2025, to an escrow agency in accordance with the court's approval.

Straumann Litigation

On April 11, 2024, we filed a lawsuit in the U.S.

District Court for the Western District of Texas against ClearCorrect Operating, LLC, ClearCorrect Holdings, Inc., and Institut Straumann AG.

The complaint asserts claims of false advertising, unfair competition, civil conspiracy, and infringement of Align patents related to aligner material, treatment planning, and intraoral scanner technologies.

District Court for the Western District of Texas against ClearCorrect Operating, LLC, ClearCorrect Holdings, Inc.

and Institut Straumann AG, (collectively the “Defendants”).

The complaint asserted infringement of our patents related to aligner material, treatment planning, and intraoral scanner technologies.

Among other things, the complaint seeks relief enjoining the Defendants’ infringement of multiple Align multilayer material patents through Defendants’ manufacture, sale and offer for sale of aligners made with Zendura FLX/ClearQuartz materials.

On June 20, 2024, Defendants filed motions to dismiss the Complaint, which are pending.

On July 9, 2024, ClearCorrect Operating, LLC, ClearCorrect Holdings, Inc.

and Straumann USA LLC filed counterclaims against Align for alleged antitrust violations, false advertising, unfair competition, and breach of contract.

Among other things, the counterclaims seek relief enjoining Align’s accused business practices, invalidating Align’s asserted patents, and money damages.

On September 13, 2024, we filed a motion to dismiss defendants’ counterclaims.

On February 7, 2025, the magistrate judge recommended denial of the motion to dismiss.

On February 21, 2025, we filed objections to the recommendation, which are pending before the district court judge.

The District Court has scheduled a trial for February 16, 2026.

Align believes these claims are without merit and intends to vigorously defend itself.

Align is currently unable to predict the outcome of this lawsuit and cannot determine the likelihood of loss nor estimate a range of possible loss.

On September 12, 2025, Defendants filed a motion to dismiss the amended complaint.

That motion to dismiss remains pending.

Defendants are also seeking to invalidate all of our asserted patents at the district court.

On July 9, 2024, Defendants filed counterclaims against us alleging antitrust violations and unfair competition.

Among other things, the counterclaims seek injunctive relief and money damages.

On August 29, 2025, Defendants filed amended counterclaims, which additionally allege that Align procured certain materials patents by fraud.

On September 26, 2025, Align filed a motion to dismiss the amended counterclaims.

That motion is still pending.

A trial in the case is set for June 22, 2026.

On April 10, 12 and 14, 2025, Defendants filed eight inter partes review (“IPR”) petitions with the United States Patent Trial and Appeal Board (“PTAB”), alleging that eight of the patents asserted by Align against the Defendants are unpatentable.

On October 23, 2025, the PTAB issued decisions denying institution of two of Defendants eight IPRs.

On October 23, October 27, October 30, and November 6, 2025, the PTAB issued decisions instituting proceedings on the remaining six IPRs.

We believe the petitions are without merit and intend to defend ourselves vigorously.

We believe Defendants’ counterclaims are without merit and intend to vigorously defend ourselves.

We are currently unable to predict the outcome of this lawsuit and cannot determine the likelihood of loss, if any, nor estimate a range of possible loss.

Angelalign Litigation

On August 15, 2025, we initiated two actions in the European Unified Patent Court against Angelalign Technology, Inc.;

Angelalign France Technology SASU;

Europe Angelalign Technology B.V.;

Angelalign Technology (Germany) GmbH;

Italy Angelalign Technology S.R.L.

and Shanghai EA Medical Instruments Co., Ltd.

These actions allege infringement of patents related to user interfaces for treatment planning and to the “power ridge” feature of clear aligners.

Subsequently, on November 27, 2025, we initiated a third action in the Unified Patent Court against the same entities for infringement of a patent related to treatments in complex cases.

The accused entities have challenged the validity of the asserted patent in each of these actions.

On January 13, 2026, Angelalign Technology (Germany) GMBH filed an action in the European Patent Office challenging the validity of the treatment-planning patent referenced above.

These actions are currently pending.

On February 12, 2026, the Unified Patent Court issued a preliminary injunction in Align’s favor and against Angel, enjoining Angel from using its “Live Now” feature, a user interface for treatment planning.

Angel must pay € 20,000 EUR per day or cease offering its infringing software feature.

On August 18, 2025, we initiated an action in the U.S.

District Court for the Eastern District of Texas against Angelalign Technology Inc;

Wuxi EA Medical Instruments Technologies Ltd.;

Wuxi EA Bio-Tech Co., Ltd.;

and Shanghai EA Medical Instruments Co., Ltd.

This action alleges infringement of patents related to multilayer materials for clear aligners and “bite ramp” and “power ridge” features of clear aligners.

On January 2, 2026, following institution of an investigation by the U.S.

International Trade Commission, referenced below, this action was stayed pending further order of the court.

On August 18, 2025, we initiated two actions in China’s Zhengzhou Intermediate People’s Court against Shanghai Angelalign Medical Devices Co., Ltd.;

Wuxi Angelalign Medical Device Technology Co., Ltd.;

and Wuxi Angelalign Biotechnology Co., Ltd.

These actions allege infringement of patents related to tooth attachments and treatment planning.

Separately, on September 10, 2025, we filed an action against the same entities in the Jinan Intermediate People’s Court alleging infringement of a patent related to extraction site closure.

And on January 12, 2026, we filed an action against these entities in the Fuzhou Intermediate People’s Court alleging infringement of a patent related to extraction site closure.

These actions are currently pending.

On January 16, 2026, Shanghai Angelalign Medical Devices Co., Ltd.

filed a petition with the China National Intellectual Property Administration (“CNIPA”) challenging the validity of our patent related to extraction site closure, which patent is the subject of an infringement action referenced above.

On January 22, 2026, Shanghai Angelalign Medical Devices Co., Ltd.

filed a petition with the CNIPA challenging the validity of our patent related to tooth attachments, which patent likewise is the subject of an infringement action referenced above.

And on January 19, 2026, we filed a petition with the CNIPA challenging the validity of a patent held by Wuxi Angelalign Medical Device Technology Co., Ltd.

regarding undercut detection and filling.

These invalidity actions are currently pending.

On September 23, 2025, we filed a complaint at the U.S.

International Trade Commission (“ITC”) against Angelalign Technology Inc., Wuxi EA Medical Instruments Technologies Ltd.;

Wuxi EA Bio-Tech Co., Ltd.;

Shanghai EA Medical Instruments Co., Ltd.;

and USA Angelalign Technology Corp.

(collectively, “the ITC Respondents”).

This complaint alleges unlawful importation and sale of clear aligners that infringe patents related to multilayer materials for clear aligners, in violation of 19 U.S.C.§ 1337.

Further, the complaint requests that the ITC institute an investigation and issue an exclusion order blocking the ITC Respondents’ importation of infringing products into the United States, and a cease-and-desist order prohibiting the ITC Respondents from selling, marketing, or transferring infringing products within the United States.

On December 19, 2025, the ITC instituted the requested investigation, which is currently pending.

On August 22, 2025, Shanghai Angelalign Medical Devices Co., Ltd.

and Wuxi Angelalign Medical Devices Technology Co., Ltd.

initiated an action against us in China’s the Beijing Intellectual Property Court.

The complaint alleges that we infringe a patent relating to undercut detection for mold manufacturing.

We believe that these allegations are without merit and intend to defend ourselves vigorously.

We are currently unable to predict the outcome of these lawsuits or any future litigation, and therefore we cannot determine the likelihood of loss, if any, nor estimate a range of possible loss.

In addition to the above, in the ordinary course of our operations, we are involved in a variety of claims, suits, investigations, and proceedings, including actions with respect to intellectual property claims, patent infringement claims, government investigations, labor and employment claims, breach of contract claims, tax, and other matters.

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Commitments and Contingencies

Beginning in the third quarter of 2023 and continuing through the first quarter of 2024, the Company received cumulative assessments of approximately $ 100 million from His Majesty’s Revenue and Customs (“HMRC”) for unpaid value added tax (“VAT”) related to certain clear aligner sales made during the period of October 2019 through May 2023.

Beginning in the third quarter of 2023 and continuing through the first quarter of 2024, we received cumulative assessments of approximately $ 100 million from His Majesty’s Revenue and Customs (“HMRC”) for unpaid value added tax (“VAT”) related to certain clear aligner sales made during the period of October 2019 through May 2023.

We were required to pay these assessments prior to contesting or litigating the matter in statutory appeal.

The Company has historically asserted and continues to assert that doctor prescribed clear aligners sold by dentists for the orthodontic treatment of patient malocclusions

are exempt from VAT, that the Company has reasonably relied upon statements and guidance by HMRC and that the Company’s interpretation of United Kingdom legislation is appropriate.

We have historically asserted and continue to assert that doctor prescribed clear aligners sold by dentists for the orthodontic treatment of patient malocclusions are exempt from VAT, that we have reasonably relied upon statements and guidance by HMRC and that our interpretation of United Kingdom legislation is appropriate.

In October 2024, the Company and HMRC reached a settlement agreement regarding the unpaid VAT related to certain aligner sales made during the period of October 2019 through mid-October 2023.

As part of the settlement, HMRC agreed to vacate the judicial review (before the Administrative Court) originally scheduled for October 9th and October 10th, 2024, refund to the Company all assessments paid for the period of October 2019 through May 2023 and withdraw any potential assessments for the period from June 2023 through mid-October 2023.

HMRC has refunded to the Company all assessed amounts, approximately $ 100 million.

The Company has remaining exposure in the amount of approximately $ 7.0 million for periods up to December 2023.

HMRC has refunded to the Company the assessed amounts, approximately $ 100 million.

A statutory appeal (before the First-tier Tribunal - “Tax Tribunal”) was held on January 27th through January 30th, 2025.

We anticipate that the Tax Tribunal will determine whether clear aligners are exempt from VAT as a matter of law and whether the Company has any liability as a matter of principle in the first half of 2025.

It is not possible at this stage to accurately evaluate the likelihood of an unfavorable outcome from the Tax Tribunal statutory appeal.

The Company has determined that a potential loss related to VAT accounted for in the periods up to December 2023 is not probable.

On April 24, 2025, the Tax Tribunal issued a ruling in our favor indicating that clear aligners are “dental prostheses for the purposes of VAT”, which is a key condition for the VAT exemption.

On June 13, 2025, HMRC applied for permission to appeal the Tax Tribunal decision, which was granted on July 15, 2025.

On August 1, 2025, HMRC lodged their grounds for appeal to the Upper Tribunal.

A hearing in front of the Upper Tribunal has been scheduled for May 2026.

In August 2025, we stopped charging VAT to our United Kingdom customers.

It is not possible at this stage to accurately evaluate the likelihood of an unfavorable outcome from the Upper Tribunal statutory appeal, nor estimate a range of possible loss.

Indemnification Provisions

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Stock-Based Compensation Plans

Our 2005 Incentive Plan, as amended, provides for the granting of incentive stock options, non-statutory stock options, restricted stock, stock appreciation rights, performance units and performance shares to employees, non-employee directors and consultants.

Our Align Technology, Inc.

2005 Incentive Plan, as amended (the “2005 Incentive Plan”), provides for the granting of incentive stock options, non-statutory stock options, restricted stock, stock appreciation rights, performance units and performance shares to employees, non-employee directors and consultants.

Shares granted on or after May 16, 2013 as an award of restricted stock, restricted stock units, performance shares or performance units (“full value awards”) are counted against the authorized share reserve as one and nine-tenths (1 9/10 ) shares for every one (1) share subject to the award, and any shares canceled that were counted as one and nine-tenths shares against the plan reserve will be returned at the same ratio.

As of December 31, 2024, the 2005 Incentive Plan, as amended, has a total reserve of 32,168,895 shares for issuance of which 3,530,580 shares are available for issuance.

As of December 31, 2025, the 2005 Incentive Plan has a total reserve of 34,668,895 shares of which 4,608,476 shares are available for issuance.

We issue new shares from our pool of authorized but unissued shares to satisfy the exercise and vesting obligations of our stock-based compensation plans.

Summary of Stock-Based Compensation Expense

Stock-based compensation related to our stock-based awards and employee stock purchase plan for the year ended December 31, 2024, 2023 and 2022 is as follows (in thousands):

Stock-based compensation related to our stock-based awards and employee stock purchase plan for the years ended December 31, 2025, 2024 and 2023 is as follows (in thousands):

Year Ended December 31,

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Total stock-based compensation $ 185,870 $ 173,703 $ 154,026

The income tax benefit related to stock-based compensation was $ 19.0 million, $ 17.1 million and $ 14.9 million for the year ended December 31, 2024, 2023 and 2022, respectively.

The income tax benefit related to stock-based compensation was $ 20.0 million, $ 19.0 million and $ 17.1 million for the years ended December 31, 2025, 2024 and 2023, respectively.

Restricted Stock Units (“RSUs”)

The fair value of RSUs is based on our closing stock price on the date of grant.

RSUs granted generally vest over a period of four years .

A summary for the year ended December 31, 2024 is as follows:

The fair value of RSUs is based on the closing price of our stock on the date of grant.

Generally, RSUs vest over a period of four years .

The following table summarizes RSU activity for the year ended December 31, 2025:

Number of Shares

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Unvested as of December 31, 2024

1,019 $ 331.10

Granted 692 195.43

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As of December 31, 2025, we expect to recognize $ 191.9 million of total unamortized compensation costs, net of estimated forfeitures, related to RSUs over a weighted average period of 2.3 years.

Market Based Restricted Stock Units (“MSUs”)

Market-Performance Based Restricted Stock Units (“MSUs”)

We grant MSUs to members of senior management.

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The actual number of MSUs which will be eligible to vest will be based on the performance of our stock price relative to the performance of a stock market index over the vesting period.

MSUs vest over a period of three years and the maximum number eligible to vest in the future is 250 % of the MSUs initially granted.

MSUs vest over a period of three years and the maximum number of shares eligible to vest is 250 % of the MSUs initially granted.

The following table summarizes MSU activity for the year ended December 31, 2025:

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The aggregate intrinsic value in the table above represents the total pre-tax intrinsic value (calculated by multiplying our closing stock price on the last trading day of 2025 by the number of unvested MSUs) that would have been received by the unit holders had all MSUs been vested and released as of the last trading day of 2025.

This amount will fluctuate based on the fair

market value of our stock.

During 2024, of the 32,369 shares vested and released, 13,388 shares were withheld for employee statutory tax obligations, resulting in a net issuance of 18,981 shares.

This amount will fluctuate based on the fair market value of our stock.

During 2025, of the 29,995 shares that vested and released, 11,091 shares were withheld for employee statutory tax obligations, resulting in a net issuance of 18,904 shares.

The total fair value of MSUs vested as of their respective vesting dates during 2025, 2024 and 2023 was $ 5.7 million, $ 10.1 million and $ 7.8 million, respectively.

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We recognize share-based compensation expense for PSUs if it is probable that the performance condition will be achieved.

The following table summarizes the PSU performance activity for the year ended December 31, 2024:

The following table summarizes PSU activity for the year ended December 31, 2025:

Number of Shares

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Unvested as of December 31, 2024

Granted 6 206.36

Vested and released ( 5 ) 201.63

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6 $ 206.36 1.0 $ 984

As of December 31, 2024, we expect to recognize $ 1.0 million of total unamortized compensation costs, net of estimated forfeitures, related to PSUs over a weighted average period of 1.2 years.

During 2025, of the 4,728 shares vested and released, 1,923 shares were withheld for employee statutory tax obligations, resulting in a net issuance of 2,805 shares.

As of December 31, 2025, we expect to recognize $ 0.5 million of total unamortized compensation costs, net of estimated forfeitures, related to PSUs over a weighted average period of 1.0 year.

Employee Stock Purchase Plan ( “ ESPP ” )

In May 2010, our stockholders approved the 2010 Employee Stock Purchase Plan (the “2010 Purchase Plan”) which consists of consecutive overlapping twenty-four month offering periods with four six-month purchase periods in each offering period.

In May 2010, our stockholders approved the 2010 Employee Stock Purchase Plan (as amended and restated, the “2010 Purchase Plan”) which consists of consecutive overlapping twenty-four month offering periods with four six-month purchase periods in each offering period.

Employees purchase shares at 85 % of the lower of the fair market value of the common stock at either the beginning of the offering period (grant date) or the end of the purchase period.

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Weighted average fair value at grant date $ 64.94 $ 94.75 $ 132.94

We recognized stock-based compensation related to our employee stock purchase plan of $ 14.0 million, $ 20.5 million and $ 23.5 million for the year ended December 31, 2024, 2023 and 2022, respectively.

We recognized stock-based compensation related to our employee stock purchase plan of $ 15.1 million, $ 14.0 million and $ 20.5 million for the years ended December 31, 2025, 2024 and 2023, respectively.

As of December 31, 2025, we expect to recognize $ 10.6 million of total unamortized compensation costs related to future employee stock purchases over a weighted average period of 0.6 years.

Common Stock Repurchase Programs

In May 2021, our Board of Directors authorized a plan to repurchase up to $ 1.0 billion of our common stock (“May 2021 Repurchase Program”), which was completed in March 2023.

In January 2023, our Board of Directors authorized a new plan to repurchase up to $ 1.0 billion of our common stock (“January 2023 Repurchase Program”).

The January 2023 Repurchase Program does not have an expiration date.

Accelerated Share Repurchase Agreements ( “ ASRs ” )

We entered into ASRs providing for the repurchase of our common stock based on the volume-weighted average price during the term of the agreement, less an agreed upon discount.

We enter into Accelerated Share Repurchase (“ASR”) agreements and Open Market Repurchase (“OMR”) programs providing for the repurchase of our common stock based on the volume-weighted average price during the term of the agreement, less an agreed upon discount.

Under the terms of each ASR, the financial institution may be required to deliver additional shares of common stock at final settlement or, under certain circumstances, we may be required at our election, to either deliver shares or make a cash payment to the financial institution.

The ASRs limit the number of shares we would be required to deliver.

The following table summarizes the information regarding repurchases of our common stock under ASRs for the year ended December 31, 2024 and 2023:

In January 2023, our Board of Directors authorized a plan to repurchase up to $ 1.0 billion of our common stock (“January 2023 Repurchase Program”).

The January 2023 Repurchase Program was completed in its entirety in the second quarter of 2025.

In April 2025, our Board of Directors authorized a plan to repurchase up to $ 1.0 billion of our common stock (the “April 2025 Repurchase Program”).

The April 2025 Repurchase Program is expected to be completed over a period of up to three years .

As of December 31, 2025, we have $ 831.2 million remaining available for repurchase under the April 2025 Repurchase Program.

The following tables summarize the total repurchases of our common stock pursuant to ASR agreements and OMR programs under the January 2023 and April 2025 Repurchase Programs for the years ended December 31, 2025 and 2024:

Accelerated Share Repurchases

Date Repurchase

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Received Average Price per Share

Q4 2022 May 2021 $ 200.0 Q1 2023 984,714 $ 203.10

Q1 2023 May 2021 $ 250.0 Q1 2023 805,908 $ 310.21

Q4 2023 January 2023 $ 250.0 Q1 2024 1,086,334 $ 230.13

Open Market Common Stock Repurchases

Open Market Repurchases

Date Repurchase

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Q2 2024 January 2023 $ 150.0 Q2 2024 598,302 $ 250.73

Q4 2024 January 2023 $ 202.9 N/A 1

Q4 2024 January 2023 $ 275.0 Q1 2025 1,241,509 $ 221.50

Q1 2025 January 2023 $ 225.0 Q2 2025 1,339,124 $ 168.02

Q3 2025 April 2025 $ 168.8 N/A 1

1,203,883 $ 140.22

1 In January 2025, we completed the open market repurchase program initiated in Q4 2024.

In total we repurchased approximately 1.2 million shares of our common stock at an average price of $ 221.50 per share, including commissions and fees, for an aggregate purchase price of approximately $ 275.0 million.

As of December 31, 2024 we had $ 297.1 million available for repurchases under the January 2023 Repurchase Program.

1 On August 5, 2025, we initiated a $ 200 million open market repurchase program, which was completed in January 2026.

The amount paid, total shares received and average price per share per the table above are determined as of December 31, 2025.

As of December 31, 2025, we had $ 831.2 million available for repurchases under the April 2025 Repurchase Program.

In January 2026, we repurchased $ 31.2 million of our common stock initiated in the Q3 2025 open market repurchase program.

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We match 50 % of our employee’s salary deferral contributions up to 6 % of the employee’s eligible compensation.

We contributed approximately $ 10.0 million, $ 9.5 million and $ 10.0 million to the 401(k) plan during the year ended December 31, 2024, 2023 and 2022, respectively.

We contributed approximately $ 9.7 million, $ 10.0 million and $ 9.5 million to the 401(k) plan during the years ended December 31, 2025, 2024 and 2023, respectively.

We also have defined contribution retirement plans outside of the U.S.

to which we contributed $ 57.4 million, $ 55.1 million and $ 54.5 million during the year ended December 31, 2024, 2023 and 2022, respectively.

to which we contributed $ 59.9 million, $ 57.4 million and $ 55.1 million during the years ended December 31, 2025, 2024 and 2023, respectively.

Net income before provision for income taxes consists of the following (in thousands):

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Provision for (benefit from) income taxes $ 174,936 $ 187,597 $ 196,151

The differences between income taxes using the federal statutory income tax rate for the year ended December 31, 2024, 2023 and 2022 and our effective tax rates are as follows:

The following table is a reconciliation of the U.S.

federal statutory rate of 21% to the Company’s effective rate for the year ended December 31, 2025 in accordance with the guidance in ASU No.

Year Ended December 31, 2025

US federal statutory income tax rate

$ 122,911 21.0 %

State income taxes, net of federal tax benefit *

Foreign tax effects

Statutory tax rate difference between Switzerland and U.S.

( 11,536 ) ( 2.0 )

Swiss tax rate change - Remeasurement of deferred tax assets

Impairment Loss

Other Foreign Jurisdictions

Effect of cross-border tax laws:

Foreign-derived intangible income

( 13,611 ) ( 2.3 )

Research and development tax credits

( 7,840 ) ( 1.3 )

Nontaxable or Nondeductible Items

Share-based payment awards

Changes in Unrecognized Tax Benefits

( 29,673 ) ( 5.1 )

Other Adjustments

Income Tax expense

$ 174,936 29.9 %

*State and local taxes in California, New York, Minnesota and New York City made up the majority (greater than 50%) of the tax effect in this category.

The following table is a reconciliation of the U.S.

federal statutory rate of 21% to the Company’s effective rate for the years ended December 31, 2024 and 2023 in accordance with the guidance prior to the adoption of ASU 2023-09:

Year Ended December 31

federal statutory income tax rate 21.0 % 21.0 %

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Effective tax rate 30.8 % 30.6 %

Certain countries in which we operate, including Switzerland, have adopted legislation to implement the OECD/G20 Framework’s Pillar Two 15% global minimum tax (“Pillar Two”).

The adoption of legislation to implement Pillar Two did not have a material effect on our provision for income taxes for the year ended December 31, 2024.

We continue to evaluate opportunities to repatriate our foreign earnings if or when needed.

We do not expect to incur significant additional costs upon repatriation of these foreign earnings.

As of December 31, 2025 and 2024, the significant components of our deferred tax assets and liabilities are (in thousands):

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The total valuation allowance as of December 31, 2025 was $ 11.5 million.

During the year ended December 31, 2024, the valuation allowance increased by $ 4.4 million primarily due to the change in deferred tax assets associated with certain interest expense, net operating loss carryovers, and unrealized translation losses from our German subsidiaries.

During the year ended December 31, 2025, the valuation allowance decreased by $ 7.9 million primarily due to the change in deferred tax assets on certain interest expense and unrealized translation losses from our German subsidiaries.

We may be required to adjust the valuation allowance for deferred tax assets if we determine, based on available evidence at the time of the determination, that it is more likely than not that some portion or all of the deferred tax assets will not be realized.

Changes to the valuation allowance could have a material adverse effect on our results of operations.

As of December 31, 2024, we have foreign net operating loss carryforwards of approximately $ 8.7 million, attributed mainly to losses in Austria, Russia, and Germany.

The losses in Austria and Germany can be carried forward indefinitely.

This assessment includes deferred tax assets associated with our Switzerland tax deductible basis created from our 2020 intra-entity transfer of intellectual property, which have a finite utilization period and depend on our ability to generate sufficient taxable income in that jurisdiction.

Any changes to the valuation allowance, particularly those related to our Switzerland deferred tax assets, could have a material adverse effect on our results of operations.

As of December 31, 2025, we have foreign net operating loss carryforwards of approximately $ 4.7 million, attributed mainly to losses in Russia and Germany.

The losses in Germany can be carried forward indefinitely.

The operating loss carryforwards in Russia, if not utilized, will expire beginning 2033.

The changes in the balance of gross unrecognized tax benefits, which exclude interest and penalties, for the year ended December 31, 2024, 2023 and 2022, are as follows (in thousands):

The changes in the balance of gross unrecognized tax benefits, which exclude interest and penalties, for the years ended December 31, 2025, 2024 and 2023, are as follows (in thousands):

Year Ended December 31,

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We have elected to recognize interest and penalties related to unrecognized tax benefits as a component of income taxes.

Interest and penalties included in tax expense for the year ended December 31, 2024, 2023 and 2022 as well as accrued as of December 31, 2024 and 2023 were not material.

While we defend income tax audits in various jurisdictions and the results of such audits may differ materially from the amounts accrued for each year, we cannot currently ascertain the bases on which any given audit will be ultimately resolved.

Accordingly, we are unable to estimate the range of possible adjustments to our balance of gross unrecognized tax benefits in the next 12 months.

Interest and penalties included in tax expense for the years ended December 31, 2025, 2024 and 2023 as well as accrued as of December 31, 2025 and 2024 were not material.

Disclosed below is a summary of income taxes paid by jurisdiction pursuant to the disclosure requirement of ASU 2023-09 for the year ended December 31, 2025:

December 31, 2025

United States - Federal

United States - State and local

Other foreign jurisdictions

Total income taxes paid

Net Income per Share

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Anti-dilutive potential common shares 1

1 Represents approximately 685 thousand RSU for the year ended December 31, 2024, approximately 263 thousand RSU and 30 thousand ESPP weighted-average outstanding common stock equivalent shares for the year ended December 31, 2023 and approximately 320 thousand RSU for the year ended December 31, 2022 that are excluded from the calculation of diluted net income per share as the effect would have been anti-dilutive.

1,239 685 293

1 Represents approximately 1,238 thousand RSU and 1 thousand ESPP weighted-average outstanding common stock equivalent shares for the year ended December 31, 2025, approximately 685 thousand RSU shares for the year ended December 31, 2024, and approximately 263 thousand RSU and 30 thousand ESPP weighted-average outstanding common stock equivalent shares for the year ended December 31, 2023 that are excluded from the calculation of diluted net income per share as the effect would have been anti-dilutive.

Supplemental Cash Flow Information

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Clear Aligner segment and Imaging Systems and CAD/CAM services (“Systems and Services”) segment, which are based on our predominant product lines.

Our CODM uses gross profit and income from operations to assess each reportable segments performance, by reviewing each measure against internal forecasts and historical performance.

Our CODM may also benchmark each segments performance against our competitors and external expectations.

Our CODM uses gross profit and income from operations to assess each reportable segment’s performance, by reviewing each measure against internal forecasts and historical performance.

Our CODM may also benchmark each segment’s performance against our competitors and external expectations.

Summarized financial information by reportable segment is as follows (in thousands):

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2025 2024 2023

Segment income from operations

Total segment income from operations

$ 1,340,881 $ 1,411,426 $ 1,373,612

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2023 Restructuring

During the fourth quarter of 2023, we incurred approximately $ 14.0 million in restructuring expenses, of which $ 0.7 million was recorded in Cost of net revenues and $ 13.3 million was recorded in Restructuring and other charges .

Our fourth quarter 2023 restructuring activities were substantially complete by the third quarter of 2024.

During 2023, we incurred approximately $ 14.0 million in restructuring expenses, of which $ 5.3 million remained unpaid and were included in Accrued liabilities as of December 31, 2023.

As of December 31, 2024, we had no remaining restructuring liability related to the 2023 Restructuring.

2024 Restructuring

During the fourth quarter of 2024, we initiated a restructuring plan to increase efficiencies across the organization which is expected to be completed in 2025.

We incurred approximately $ 37.0 million in restructuring expenses, of which $ 3.8 million

was recorded in Cost of net revenues and $ 33.2 million was recorded in Restructuring and other charges .

These restructuring activities were primarily related to employee severance and other one-time post-employment benefits.

During 2024, we incurred approximately $ 37.0 million in restructuring expenses, of which $ 13.0 million remained unpaid and were included in Accrued liabilities as of December 31, 2024.

For the year ended December 31, 2025, we reduced our

December 31, 2024 restructuring liability by approximately $ 14.6 million primarily due to cash payments, offset by approximately $ 2.1 million of additional restructuring expense recorded in Cost of net revenues.

The 2023 and 2024 restructuring charges were primarily related to involuntary termination benefits, including employee severance and other post-employment benefits.

2025 Restructuring

During the third quarter of 2025, we initiated a plan to realign certain business groups and reduce our global workforce.

This plan represents our continued effort to right size our labor force with the current macroeconomic environment.

We incurred $ 40.9 million in total restructuring expenses, primarily related to involuntary termination benefits, including employee severance and other post-employment benefits.

We have recorded $ 5.5 million in Cost of net revenues and $ 35.4 million in Restructuring and other charges in our Consolidated Statements of Operations as of December 31, 2025.

All charges recorded to Cost of net revenues were allocated to our Clear Aligner reportable segment and all charges recorded to Restructuring and other charges were unallocated corporate expenses.

As of December 31, 2025, $ 17.1 million remained unpaid and was included in Accrued liabilities in our Consolidated Balance Sheets.

Activity related to the restructuring liabilities associated with our restructuring initiatives consist of the following (in thousands):

For the twelve months ended December 31, 2024

2023 Restructuring 2024 Restructuring Total

Balance at beginning of period 1

$ 5,299 $ — $ 5,299

Restructuring and other charges

Balance as of December 31, 2022 1

Restructuring charges 13,989

( 598 ) 36,991 36,393

Cash payments and adjustments

Balance as of December 31, 2023 1

Restructuring charges 2

( 4,701 ) ( 23,990 ) ( 28,691 )

Balance at end of period 1

$ — $ 13,001 $ 13,001

For the twelve months ended December 31, 2025

2024 Restructuring 2025 Restructuring 2

Balance at beginning of period 1

$ 13,001 $ — $ 13,001

Restructuring and other charges

2,056 40,888 42,944

Cash payments and adjustments

Balance as of December 31, 2024 1

( 14,569 ) ( 23,776 ) ( 38,345 )

Balance at end of period 1

$ 488 $ 17,112 $ 17,600

1 Included in “Accrued liabilities” within our Consolidated Balance Sheets.

2 Includes approximately $ 0.6 million of restructuring expense decreases related to the 2023 restructuring.

Subsequent Events

On February 25, 2025, we announced a plan to repurchase $ 225.0 million of our common stock through open market repurchases.

We expect these repurchases to be completed by the beginning of May 2025.

The number of shares to be repurchased and the average price per share are not determinable as of the filing of this Annual Report on Form 10-K.

Upon completion of these open market repurchases the Company will have exhausted all funds available under the January 2023 Repurchase Program.

2 2025 restructuring activities include an immaterial amount of charges for non post-employment benefit related restructuring expense.

Assets Held for Sale

In connection with the 2025 Restructuring activities, refer to Note 17 “Restructuring and Other Charges” , we have undertaken additional actions to optimize our manufacturing footprint.

These actions include disposing, either by sale or other than by sale, of certain capital assets, including various manufacturing assets and facilities.

For discussion of assets disposed of other than by sale refer to Note 1 “Summary of Significant Accounting Policies."

ASC Topic 360-10, Property, Plant and Equipment - Overall, requires a long-lived asset to be classified as “held for sale” in the period in which certain criteria are met.

The Company classifies real estate assets as held for sale after the following conditions have been satisfied:

(1) management, having the appropriate authority, commits to a plan to sell the asset, (2) the asset is available for immediate sale in its present condition, (3) the Company has initiated an active program to sell the asset, (4) it is probable the sale of the asset will be completed within one year, (5) the asset is being actively marketed for a reasonable price, and (6) it is unlikely the plan to sell the asset will significantly change.

At the time the Company classifies a property as held for sale, the Company ceases recording depreciation.

An asset classified as held for sale is measured and reported at the lower of its carrying amount or its estimated fair value less cost to sell.

Upon classification as held for sale, the Company assesses fair value less costs to sell at each reporting period until the asset is no longer classified as held for sale.

During the third quarter of 2025, the Company committed to a plan to sell a manufacturing facility, including land, building and building improvements (collectively the “disposal group”), located in Juarez, Mexico and determined the disposal group met the criteria for classification as held for sale.

The Company classified the disposal group as held for sale for $ 27.9 million, which represents the disposal group’s fair value less estimated costs to sell.

Fair value of the disposal group was

determined utilizing two equally weighted valuation techniques, the Direct Capitalization and Direct Comparison methods.

The Direct Capitalization method utilizes various inputs, including estimated market rents, vacancy rates and operating expenses, to determine an estimated net operating income, and a capitalization rate.

The Direct Comparison method utilizes sales of comparable properties, adjusted for property differences such as location, physical characteristics and market conditions.

For the year ended December 31, 2025, we recognized an impairment loss of $ 23.1 million on assets held for sale, which was recorded within Cost of net revenues in our Consolidated Statements of Operations.

The entire impairment loss was attributable to our Clear Aligner reportable segment.

As of December 31, 2025, we had adjusted assets held for sale of $ 28.0 million, which are presented separately as Assets held for sale in our Consolidated Balance Sheets.

We had no assets held for sale as of December 31, 2024.

Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.

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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-K

Item 8. Financial Statements and Supplementary Data