What changed in this filing

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Item 1A. Risk Factors

2026-08-05 compared with 2026-05-06 · 59 added, 41 removed, 415 unchanged (19% of the section changed)

9 unchanged sentences

Macroeconomic conditions impact consumer confidence and discretionary spending, which can reduce or shift spending away from elective procedures, drive patients to pursue less costly orthodontic treatments, decrease the number of orthodontic case starts, reduce patient traffic in dental offices, or reduce demand for dental services generally.

Consumer spending habits are affected by, among other things, fluctuations in foreign currency exchange rates, changes in consumer confidence and demand, inflation, general economic weakness, actual or potential slowdowns or recessions, employment levels, health insurance coverage, wages, debt obligations, discretionary income, interest rates, cultural and social influences, market volatility and perceptions of current and future economic conditions.

Consumer spending habits are affected by, among other things, fluctuations in foreign currency exchange rates, changes in consumer confidence and demand, inflation, elevated gasoline and other energy costs, general economic weakness, actual or potential slowdowns or

recessions, employment levels, health insurance coverage, wages, debt obligations, discretionary income, interest rates, cultural and social influences, market volatility and perceptions of current and future economic conditions.

For instance, decreased demand for dental services has and may in the future cause doctors and labs to revert to wires and brackets and postpone investments in capital equipment.

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For example, the U.S.

Department of Commerce has initiated an investigation under Section 232 of the Trade Expansion Act of 1962, as amended, to determine the effects on the national security of imports of personal protective equipment (PPE), medical consumables, and medical equipment including devices.

Department of Commerce has completed its investigation under Section 232 of the Trade Expansion Act of 1962, as amended, to determine the effects on the national security of imports of personal protective equipment (PPE), medical consumables, and medical equipment including devices.

No actions with respect to the investigation have been announced to date, and the timing, scope and outcome of any resulting trade measures remain uncertain.

A significant portion of the products we sell, and the components and raw materials used in our products are originally manufactured or sourced outside the United States.

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On February 20, 2026, the U.S.

Supreme Court ruled that certain of the tariffs imposed under the International Emergency Economic Powers Act were unlawful, and while we are no longer subject to such tariffs as a result of that decision, we are currently subject to new, temporary tariffs on imports under Section 122 of the Trade Act of 1974, effective February 24, 2026.

The extent and duration of any tariffs and the resulting impact on general economic conditions and on our business, financial condition and results of operations are uncertain.

Supreme Court ruled that certain tariffs imposed under the International Emergency Economic Powers Act (“IEEPA”) were unlawful.

Following that decision, the United States imposed a temporary import surcharge on most imports under Section 122 of the Trade Act of 1974, effective February 24, 2026, which was subsequently held unlawful by the U.S.

Court of International Trade in a decision that is currently stayed pending appeal, and which expired in accordance with its terms on July 24, 2026.

Immediately following the expiration of the Section 122 surcharges, on July 24, 2026, the Office of the United States Trade Representative imposed additional duties under Section 301 of the Trade Act of 1974 on imports from the top 60 U.S.

trade partners.

Unlike the Section 122 surcharge, the Section 301 duties are not subject to a statutory rate cap or a fixed expiration date and may remain in effect indefinitely.

The scope, rates, extent and duration of

tariffs under these or other authorities, the outcome of pending litigation challenging them, and the resulting impact on general economic conditions and on our business, financial condition and results of operations are uncertain.

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

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Military conflicts, wars, and escalation of terrorist or gang activities have and may in the future materially adversely impact the economies in which we operate.

Our iTero operations, headquartered in Israel, are close to areas that have been affected by the conflict between Israel and Hamas.

The outbreak of military conflict between the United States and Iran on February 28, 2026 and Israel’s war against Iran has resulted in instability around the Middle East region, particularly a disruption in shipment of global oil and gas flows, with cascading effects on energy prices and global economic conditions.

Our iTero operations, headquartered in Israel, are close to areas that have been affected by ongoing military conflicts in the Middle East, including the hostilities involving Israel, Iran, and the United States that began or escalated in 2025 and 2026, which have resulted in instability in the region and disrupted global oil and gas shipments, with cascading effects on energy prices and global economic conditions, including consumer discretionary spending.

Additionally, our supply chains and demand for our products could be impaired as a result of political instability, drug trafficking, the continuation or escalation of terrorist or gang activities (particularly with respect to our manufacturing operations in Mexico), hostilities, export and import restrictions, sanctions or boycotts.

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Additionally, our clear aligners and iTero products utilize digital technology and some dental professionals have and may continue to resist moving to a digital platform.

Increased acceptance of our products and

services depends in part on the recommendations of dental professionals, professional associations, societies and organizations, as well as other factors, including efficacy, safety, ease of use, reliability, aesthetics, third-party reimbursement, price compared to traditional treatment methods and competing products, and perceptions regarding single-use or non-recyclable plastics.

Increased acceptance of our products and services depends in part on the recommendations of dental professionals, professional associations, societies and organizations, as well as other factors, including efficacy, safety, ease of use, reliability, aesthetics, third-party reimbursement, price compared to traditional treatment methods and competing products, and perceptions regarding single-use or non-recyclable plastics.

Additionally, negative experiences with clear aligner products manufactured or distributed by competitors may adversely affect our reputation and demand for the Invisalign System if consumers or dental professionals attribute these negative experiences to clear aligner therapy generally, even if our products differ significantly in design, quality, and clinical effectiveness.

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

Our net revenues are primarily dependent on sales of the Invisalign System an d iTero intraoral scanners.

Our net revenues are primarily dependent on sales of the Invisalign System, an d iTero intraoral scanners and related services.

Of the two, we expect the Invisalign System to continue to represent the majority of our net revenues and remain critical to our success.

The ASPs of our products, particularly the Invisalign System, are influenced by numerous factors, including the mix of product treatment packages, geographical mix, channel mix and timing of products sold, promotions and discounts, inflation and foreign currency exchange rates.

In addition, we sell our products at different prices and with varying shipping and handling charges or processing fees that may differ by country.

In addition, we sell our products at different prices and with varying shipping and

handling charges or processing fees that may differ by country.

Our ASPs for the Invisalign System and iTero intraoral scanners have been and could in the future be adversely affected if:

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We have and may continue to experience competition with respect to our scanners and software solutions from competitors who introduce products at lower prices or with enhanced features or functionalities that better meets customer demand, including expansion of their portfolios in the digital ecosystem.

If we are unable to compete effectively with existing products, existing competitors, new market entrants, or

respond effectively to new technologies, our business, financial condition, and results of operations could be materially adversely impacted.

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

Our success depends on our ability to quickly and profitably develop, manufacture, market, and obtain and maintain regulatory approvals or clearances of new, improved or refurbished products and services.

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Further, the frequency and sophistication of third-party cybersecurity attacks are increasing, particularly with the advancement of AI technologies.

For example, threat actors are increasingly using AI technologies, including generative and agentic AI and frontier models, to identify previously unknown vulnerabilities, automate complex, multi-stage attacks and create more convincing social engineering campaigns, including fraud that relies on “deepfake”

impersonation, which has increased and may continue to increase the frequency, speed, scale and sophistication of cyber threats.

These developments may compress the time available for us and our vendors to detect, patch and remediate vulnerabilities before they are exploited and may require more frequent emergency remediation efforts, which could increase our costs and heighten the risk of operational disruption.

Significant service disruptions, breaches, incidents, interruptions or other disruptive events impacting our infrastructure and IT systems, or other cybersecurity incidents, or any belief or reporting that any of the foregoing has occurred, could expose us to regulatory investigations, private claims, demands, litigation or other proceedings, impair our reputation and competitive position, distract management and require significant time and resources to address.

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We may be unable to ensure that third-party components or changes to them will be completely compatible with our scanners, which could cause our scanners to fail to perform as anticipated.

Additionally, the third-party

software integrated into or interoperable with our scanners routinely reach end of life, and as a consequence, certain applications and models may be exposed to additional vulnerabilities, including security risks, errors, and malfunctions that may be irreparable or difficult to repair.

Additionally, the third-party software integrated into or interoperable with our scanners routinely reach end of life, and as a consequence, certain applications and models may be exposed to additional vulnerabilities, including security risks, errors, and malfunctions that may be irreparable or difficult to repair.

We may not timely and adequately remediate or implement corrective measures for such failures, including due to reliance on third-party providers or suppliers.

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A significant portion of our clear aligner production is dependent on digital scans from our globally dispersed and decentralized installed base of iTero and third-party intraoral scanners, and if we or third parties discontinue commercial availability or support for older versions of these scanners, our clear aligner revenues could be adversely impacted.

Failures of all or any portion of our or third-party software or other components or systems to interoperate with iTero or third-party scanners, termination of interoperability with third-party scanners, product or system vulnerabilities or defects, interference or disruptions for us, our customers, labs or other business partners in the use of our products or the transmission or processing of data needed for the use or ordering of our products, or system outages, regardless of cause, have harmed our operations previously and in the future could materially and adversely affect our ability to accept scans, manufacture clear aligners or restorative procedures or treatments and services, or otherwise service our customers.

all or any portion of our or third-party software or other components or systems to interoperate with iTero or third-party scanners, termination of interoperability with third-party scanners, product or system vulnerabilities or defects, interference or disruptions for us, our customers, labs or other business partners in the use of our products or the transmission or processing of data needed for the use or ordering of our products, or system outages, regardless of cause, have harmed our operations previously and in the future could materially and adversely affect our ability to accept scans, manufacture clear aligners or restorative procedures or treatments and services, or otherwise service our customers.

Any of these events could harm our sales, damage our reputation, adversely impact our strategic partners, or result in claims, demands, litigation, and liabilities, which could have a material effect on our reputation, business, financial condition or results of our operations and the operations of our customers or business partners.

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If the operations of commercial freight carriers are disrupted or we fail to mitigate any disruptions, we may be unable to timely deliver products to our customers who may choose alternative products, causing our net revenues and gross margin to decline, possibly materially.

Moreover, when fuel costs increase, our freight costs generally do as well.

Moreover, when fuel costs increase, our freight costs generally do as well, including through carrier fuel surcharges applied in future periods.

In addition, we earn an increasingly larger portion of our total revenues from international sales, which carry higher shipping costs that negatively impact our gross margin and results of operations.

If freight costs materially increase and we are unable to successfully pass all or significant

portions of the increases along to our customers, or we cannot otherwise offset such increases, our gross margin and financial results could be materially affected.

If freight costs materially increase and we are unable to successfully pass all or significant portions of the increases along to our customers, or we cannot otherwise offset such increases, our gross margin and financial results could be materially affected.

If we cannot attract, motivate, train or retain personnel, it will be difficult to achieve our strategic priorities, which could materially adversely affect our business, financial condition and results of operations.

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Various internal and external factors can impact our ability to hire and retain talent, including o ur compensation and benefit arrangements, advancement or career opportunities at our organization, and our past and any future restructuring efforts, such as the restructuring plans we have implemented in each of the past three fiscal years, and most recently in the third quarter of 2025.

Additionally, approximately 91% of our employees are located internationally, and restrictive immigration or travel policies or legal or regulatory developments relating to immigration in the United States and other countries may negatively affect our efforts to attract, motivate, train or retain qualified personnel.

Additionally, approximately 91% of our employees

are located internationally, and restrictive immigration or travel policies or legal or regulatory developments relating to immigration in the United States and other countries may negatively affect our efforts to attract, motivate, train or retain qualified personnel.

Seamless leadership transitions for key positions are critical to sustaining our culture and organizational success.

If our succession planning is ineffective, it could adversely impact our business.

Organizational changes, such as our past and any future restructuring efforts, such as the restructuring plans we have implemented in each of the past three fiscal years, and most recently in the third quarter of 2025, may increase attrition and adversely impact our ability to successfully attract, motivate, and retain key personnel.

In September, 2025, we required most of our employees to return to working five days per week in the office for most locations, which could impact our ability to attract and retain qualified personnel, particularly if companies that we compete with for talent have adopted work policies and arrangements that our employees may consider to be more appealing.

Organizational changes could also increase attrition and adversely impact our ability to successfully attract, motivate, and retain key personnel.

For example, in September, 2025, we required most of our employees to return to working five days per week in the office for most locations, which could impact our ability to attract and retain qualified personnel, particularly if companies that we compete with for talent have adopted work policies and arrangements that our employees may consider to be more appealing.

We have experienced and may continue to experience difficulties attracting and retaining personnel that meet the qualifications, experience, compliance mindset and values we expect and share our core values of Agility, Customer and Accountability, which could impact our ability to achieve our strategic objectives and maintain compliance with obligations under our internal controls and other requirements.

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

For more information, see Note 6 “ Legal Proceedings” of the Notes to Condensed Consolidated Financial Statements in Part I, Item 1 of this Quarterly Report on Form 10-Q.

On June 29, 2026, the European Commission announced a formal investigation to assess whether our practices relating to our Invisalign clear aligners and iTero intraoral scanners in the European Economic Area infringe EU competition rules prohibiting the abuse of a dominant market position.

We cannot predict the duration or outcome of the investigation, and an adverse outcome could subject us to substantial fines, require us to modify our business practices or accept binding commitments, and expose us to follow-on private litigation, any of which could materially affect our business, financial

condition and results of operations.

For more information, see Note 7 “ Commitments and Contingencies ” of the Notes to Condensed Consolidated Financial Statements in Part I, Item 1 of this Quarterly Report on Form 10-Q.

Antitrust considerations may also hinder our ability to settle such matters on favorable terms, as certain types of settlement agreements may be subject to heightened scrutiny by antitrust authorities.

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

We and certain of our third-party vendors must also comply with and adhere to facility registration and product listing requirements for Quality System regulations.

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

We and certain of our third-party vendors must also comply with and adhere to facility registration and product listing requirements in the FDA’s Quality Management System Regulation (“QMSR”), which became effective on February 2, 2026 and incorporates by reference the international standard ISO 13485:2016, and analogous quality‑system requirements in other jurisdictions.

The FDA enforces the QMSR through inspections, which may be unannounced.

Failure to satisfactorily correct an adverse inspection finding or comply with applicable regulations can result in enforcement actions, or require us to find alternative manufacturers, which could be a long and costly process and may cause reputational harm.

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Under the FCPA, we may be held liable for corruption by directors, officers, employees, agents, or other strategic or local partners, intermediaries or representatives acting on our behalf.

procedures or applicable laws or regulations, including the use of certain electronic communications and maintaining accurate books and records.

While we have policies and procedures requiring compliance with applicable laws and regulations and we provide training to foster compliance, our employees, third parties acting on our behalf, and customers may not adhere to our policies and procedures or applicable laws or regulations, including the use of certain electronic communications and maintaining accurate books and records.

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

We are subject to various laws relating to privacy, data protection, data governance and cybersecurity, and face risks related to the data we collect, process, and share.

We are or may become, or alleged to be or become, subject to stringent federal, state, and foreign laws and regulations, such as HIPAA, which regulates the security and privacy of patient healthcare information applicable to healthcare providers and their business associates, and the California Consumer Protection Act, as amended by the California Privacy Rights Act, which regulates privacy, data security, content regulation and consumer protection.

We are or may become, or alleged to be or become, subject to stringent federal, state, and foreign laws and regulations, such as HIPAA, which regulates the security and privacy of patient healthcare information applicable to healthcare providers and their business associates, and the California Consumer Privacy Act, as amended by the California Privacy Rights Act, which regulates privacy, data security, content regulation and consumer protection.

Numerous other states have enacted, or plan to enact, laws relating to privacy, data protection, data governance and cybersecurity, with such enacted laws either in operation or slated to go into operation over the next several years.

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Numerous other jurisdictions maintain similar legislation or other laws or regulations addressing privacy, data protection, data governance, or cybersecurity.

Several jurisdictions, including the EU, United States, China, Australia, and Japan, have enacted data export restrictions and international transfer laws and regulations that established legal requirements for cross-border transfers of all or certain personal information and certain jurisdictions have also established legal requirements for data localization, which may require us to maintain separate servers located in those countries so that all or certain personal information are maintained locally.

These laws, regulations and other obligations relating to privacy, data protection, data governance and cybersecurity are constantly evolving and may be created, interpreted or enforced in ways that could impose new, substantially uncertain, and relatively burdensome obligations on our global operations, restrict our activities and our ability to provide our products and services in certain jurisdictions, require us to cease operations or modify our policies and business practices in a materially limiting manner, prevent us from resolving issues quickly or force us to resolve them in unanticipated ways, require us to engage in additional contractual negotiations, increase our costs and obligations and limit our ability to efficiently transfer personal data across borders, cause us to incur significant costs, expenses and damages, and present challenges in adapting our policies and practices to address their requirements.

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federal and state governments, and the EU, as well as investor advocacy groups, institutional investors, investment funds, proxy advisory services, stockholders and customers.

We are also required to comply with disclosure obligations under the SEC’s long-standing climate change disclosure guidance and other SEC regulations, as well as the European Union’s Corporate Sustainability Reporting Directive (“CSRD”).

If we fail to adopt Sustainability standards or practices as quickly as stakeholders desire, comply with or timely report on our Sustainability efforts or practices accurately, or satisfy the disclosure and other expectations of stakeholders, our brand, reputation, employee retention, business, financial performance, growth, and stock price may be adversely impacted.

Our compliance obligations span all aspects of our business and operations, including product design and development, materials sourcing and other procurement activities, product packaging, product safety, energy and natural resources usage, facilities design and utilization, recycling and collection, transportation, disposal activities, workers’ and human rights.

We are also subject to the SEC’s long-standing climate change disclosure guidance and other SEC disclosure requirements applicable to climate-related matters, as well as the European Union’s Corporate Sustainability Reporting Directive (“CSRD”).

expectations of stakeholders, our brand, reputation, employee retention, business, financial performance, growth, and stock price may be adversely impacted.

and foreign regulators have or are considering enacting new or additional disclosure requirements or limits on the emissions of greenhouse gases from power generated by fossil fuels.

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Other restrictions apply to the substances incorporated into our products, including the chemical compounds in our clear aligners, electronics in our scanners and the packaging in which they are shipped.

These laws are proliferating and new substances subject to restrictions are added regularly and may require additional reporting or phasing out of certain chemicals and compounds such as per- and polyfluoroalkyl substances (PFAS) and microplastics.

These laws and regulations are proliferating, and the substances they restrict are expanded regularly, which may require us to undertake additional reporting or to phase out certain substances and materials, such as per- and polyfluoroalkyl substances (PFAS) and, as regulation in this area develops, other substances and materials such as microplastics.

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

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In all of these situations, customers may stop purchasing products from us, and may take legal action against us, which could harm our reputation, business, financial condition and results of operations.

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

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

We have and are continuing to incorporate AI and machine learning technologies into certain of our products, services and IT systems, while continuing to explore the opportunities that AI could bring to our company.

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AI regulatory framework remains in development and has been introduced at the federal level through executive orders and legislation has been introduced and enacted at the state level.

In Europe, the EU AI Act entered into force on August 1, 2024 which will become fully effective on August 2, 2026, with some provisions effective in February 2025.

In Europe, the EU AI Act entered into force on August 1, 2024, and its obligations apply in phases:

certain prohibitions have applied since February 2025, obligations for general-purpose AI models since August 2025, and certain transparency obligations from August 2026.

In 2026, the EU adopted targeted amendments to the EU AI Act that, among other things, defer the application of obligations for high-risk AI systems until December 2027 (for stand-alone high-risk systems) and August 2028 (for AI systems embedded in regulated products, such as medical devices), while introducing additional prohibited practices.

The scope, timing and interpretation of these requirements remain subject to change.

Other jurisdictions are considering similar legislation.

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The use and availability of third-party AI models in our solutions could result in scrutiny and legal liability, including intellectual property infringement claims.

Such claims or scrutiny could cause

reputational harm and loss of customers, and adversely impact our business and financial results.

In addition, access to third-party AI models may be suspended, restricted or offered on less favorable terms by providers or governments, including due to safety

concerns, regulatory mandates or changing commercial priorities, which could disrupt, delay or increase the cost of AI-enabled features in our products and services.

Such claims or scrutiny could cause reputational harm and loss of customers, and adversely impact our business and financial results.

In addition, new competition regulations on AI development and deployment could impose new requirements on our markets that could impact our business and financial results.

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Their outcomes may adversely affect our ability to manufacture and market our products and services, require us to seek licenses for infringing products or technologies, or result in the assessment of significant monetary damages.

Unfavorable rulings could also include monetary damages, injunctions prohibiting us from selling our products, or exclusion orders preventing us from importing our products in one or more countries.

Moreover, independent actions by competitors, customers, or others have alleged that our

efforts to enforce our IP rights constitute unfair competition or violations of antitrust laws.

Unfavorable rulings could also include monetary damages, injunctions prohibiting us from selling our products, or exclusion orders preventing us from importing our

products in one or more countries.

Moreover, independent actions by competitors, customers, or others have alleged that our efforts to enforce our IP rights constitute unfair competition or violations of antitrust laws.

Investigations and additional litigation based on the same or similar claims may be brought in the future.

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In addition, ongoing volatility due to international trade may prompt foreign governments to expand regulatory authority or adopt new measures, increasing compliance risks, taxes, and operational complexities.

We have and may continue to dispute rulings or positions taken by tax authorities, which have and may continue to incur significant expenses, time, and effort to defend our positions.

We have and may

continue to dispute rulings or positions taken by tax authorities, which have and may continue to incur significant expenses, time, and effort to defend our positions.

The application of existing and new tax laws, and the results of audits could harm our business.

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• key decisions in pending litigation, new litigation, settlements, judgments, or decrees;

• changes in investor sentiment or perceptions regarding the impact of evolving technologies, including AI, on our business, industry or competitors;

• short selling or other hedging activity in our stock;

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The corporate actions by shareholder activists may not align with our current business strategies and the best interests of all of our stakeholders.

The actions of activist shareholders may cause fluctuations in our stock price based on temporary or speculative market perceptions or other factors that do not necessarily reflect the underlying fundamentals or prospects of our business.

The actions of activist shareholders may cause fluctuations in our stock price based on temporary or speculative market perceptions or other factors that do not necessarily

reflect the underlying fundamentals or prospects of our business.

In addition, responding to the actions of activist shareholders can be costly and time-consuming, disrupting our business and diverting the attention of our board of directors and management from pursuing our business strategies.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1A. Risk Factors