UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

 ________________________________________________________________________

ALIGN TECHNOLOGY, INC.

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

The aggregate market value of the registrant’s common stock held by non-affiliates of the registrant was $9,773,962,344approximately $13.3 billion as of June 30, 20172022 based on the closing sale price of the registrant’s common stock on the NASDAQ Global Market on such date. Shares held by persons who may be deemed affiliates have been excluded. This determination of affiliate status is not necessarily a conclusive determination for other purposes.

On February 23, 2018, 80,135,22920, 2023, 76,610,319 shares of the registrant’s common stock were outstanding.

Invisalign, Align, the Invisalign logo, ClinCheck, Made to Move, Invisalign Assist, Invisalign Teen, Invisalign Go, Vivera, SmartForce, SmartTrack, SmartStage, Power Ridge,SmileView, iTero, iTero Element, Orthocad, iCast, iRecord and iRecord,exocad, among others, are trademarks and/or service marks of Align Technology, Inc. or one of its subsidiaries or affiliated companies and may be registered in the United States and/or other countries.

In addition to historical information, this annual report on Form 10-K contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These statements include, among other things, our expectations and intentions regarding our strategic objectives and the means to achieve them, our beliefs and expectations regarding macroeconomic conditions, including inflation, fluctuations in currency exchange rates, rising interest rates, market volatility, weakness in general economic conditions and recessions and the impact of efforts by central banks and federal, state and local governments to combat inflation and recession, our expectations and beliefs regarding customer and consumer purchasing behavior and changes in consumer spending habits, our expectations regarding the anticipated impact of the military conflict in Ukraine generally and specifically regarding our newoperations and assets in Russia, including the impact on our workforce located in Russia, our expectations regarding the near and long-term implications of the COVID-19 pandemic on the global and regional economies, our marketing and efforts to build our brand awareness, our estimates regarding the size and opportunities of the markets we are targeting along with our expectations for growth in those markets, our beliefs regarding the impact of technological innovation in general, and in our solutions and products in particular, on target markets and patient care, our beliefs regarding digital dentistry and its potential to impact our business, our intentions regarding expanding our business, including its impact on our operational flexibility and responsiveness to customer demand, our beliefs regarding the potential for clinical solutions and their utilization to increase sales of our Invisalign system as well as the complementary products and product enhancements will havesolutions themselves, our beliefs regarding doctor training and its impact on doctorInvisalign system utilization, our beliefs regarding the importance of our manufacturing operations on our success, our beliefs regarding the need for and benefits of our market share,technological development on Invisalign treatment, the areas of development in which we focus our efforts, and the advantages of our intellectual property portfolio, our beliefs regarding our business strategy and growth drivers, our expectations regarding product mix and product adoption, our expectations regarding the utilization rates for our products, including the impact of marketing on those rates and causes for periodic fluctuations of the rates, our expectations regarding the existence and impact of seasonality, our expectations regarding the financialsales growth of our intraoral scanner sales in international markets, our expectations regarding the productivity impact additional sales representatives will have on our sales and strategic benefitsthe impact of establishing regional order acquisition, treatment planning and manufacturing facilities, as well as the anticipated timingspecialization of such facilities being operational,those representatives in sales channels, our expectations regarding the continued expansion of our international markets and their growth, our expectations regarding competition and our ability to compete in our target markets, our expectations regarding staying in compliance with laws and regulations currently applicable to, or which may become applicable to, our business both in the United States and internationally, our beliefs regarding our culture and commitment and its impact on our financial and operational performance and its importance to our future success, our expectations for future investments in and benefits from consumer demand sales and marketing activities, our preparedness and our customers’ preparedness to react to changing circumstances and demand, our expectations for our expenses and capital obligations and expenditures in particular, our intentions to control spending and for investments, our intentions regarding the investment of our international earnings from operations, our belief regarding the U.S. Tax Cutssufficiency of our cash and Jobs Act,investment balances and borrowing capacity, our judgments regarding the estimates used in our revenue recognition and assessment of goodwill and intangible assets, our expectations regarding our tax positions and the judgements we make related to our tax obligations, our predicted level of our operating expenses and gross margins and other factors beyond our control, as well as other statements regarding our future operations, financial condition and prospects and business strategies. These statements may contain words such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “estimates,” or other words indicating future results. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those reflected in the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed in Part II, Item 27 “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and in particular, the risks discussed below in Part I, Item 1A “Risk Factors.” We undertake no obligation to revise or update these forward-looking statements. Given these risks and uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements.

PART I

Our Company

Information about our Executive Officers of the Registrant

The following table sets forth certain information regarding our executive officers as of February 28, 2018:27, 2023:

Our net revenues depend primarily on our Invisalign system and iTero scanners and any decline in sales of Invisalign treatment for any reason, or a decline in average selling prices wouldprice of these products may adversely affect net revenues, gross margin and net income.

Competition in the markets for our products is intenseincreasing and we expect aggressive competition from existing competitors, and other companies that may introduce new technologies or products in the future.future and customers who alone or with others create orthodontic appliances and solutions or other products or services that compete with us.

Currently, our products compete directlythe Invisalign system competes primarily against productstraditional metal wires and brackets and increasingly against clear aligners manufactured and distributed by various companies,new market entrants and manufacturers of traditional wires and brackets, both within and outside the U.S. In addition, as a result, and from traditional medical device companies, laboratories, startups and, in some cases, doctors and DSOs themselves. The number and types of the expiration of certain key patents ownedcompetitors are diverse and growing rapidly. They vary by us, which begansegment, geography, and size, and include new and well-established regional competitors in 2017, we expect that existing competitors such as Danaher Corporation, Dentsply Sirona Inc., Straumann AG, 3M, 3Shape and Angel Aligndental markets, as well as new entrants into the clear aligner market such as start-ups will begin offering an orthodontic system more similar to ours in the near future. Severallarger companies or divisions of these competitors will likely have greater resources as well as the ability to leverage their existing channels in the dental market to compete directlylarger companies with us, and therefore our share of the clear aligner market could decline which would likely have a material adverse effect on our business, results of operationsubstantial sales, marketing, research and financial condition. In addition, corresponding foreign patents will start to expirecapabilities. Our competitors also include direct-to-consumer (“DTC”) companies that provide clear aligners using a remote business model requiring little or no in-office care from trained and licensed doctors, and doctors and DSOs who can manufacture custom aligners in 2018 which will likely result in increased competition in some of the markets outside the U.S.their offices using 3D printing technology. Large consumer product companies may also enterstart supplying orthodontic products.

The manipulation and movement of teeth and bone is a complex and delicate process with potentially painful and debilitating results if improperly performed or monitored. Accordingly, we deliver our Invisalign system solutions primarily through trained and skilled doctors. The Invisalign system requires a doctor's prescription and an in-person physical examination of the orthodontic supply market. Furthermore,patient’s dentition before beginning treatment; however, with the advent of DTC providers, there has been a shift away from traditional dental practices that may impact our primary selling channels. Doctors and DSOs are sampling alternative products and taking advantage of competitive promotions and sale opportunities. In addition, we also face competition from companies that now offer clear aligner therapy directly to the consumer eliminating the need for the consumer to visit a dental office. In addition, we may also face competition in the future from new companies that may introduce new technologies. Wetechnologies and we may be unable to compete with these competitors and one or more of these competitorsthey may render our technology obsolete or economically unattractive. If we are unable to compete effectively with existing products or respond effectively to any products developed by new or existing competitors,technologies, our business could be harmed. Increased competition has resulted in the past

To stimulate product and services demand, we have a history of offering volume discounts, price reductions and other promotions to targeted customers and consumers. Whether or not successful, these promotional campaigns have had and may in the future result in volume discountinghave unexpected and price reductions,unintended consequences, including reduced gross margins, reduced profitability and loss of market share, and reduce dental professionals’ efforts and commitment to expand their use of our products, any of which could have a material adverse effect on ouraverage selling prices, net revenues, volume growth, and net income and stock price. income.

We cannot assure that we will be able to compete successfully against our current or future competitors or that competitive pressures will not have a material adverse effect on our business, results of operations and financial condition.

Our key production steps are performed in operations located outside of the U.S. In San Jose, Costa Rica, technicians use a sophisticated, internally developed computer-modeling program to prepare digital treatment plans, which are then transmitted electronically to Juarez, Mexico. These digital files form the basis of the ClinCheck treatment plan and are used to manufacture aligner molds. In 2017, we opened new treatment planning facilities in Chengdu, China and Cologne, Germany to support our customers within these regions. Our order acquisition, aligner fabrication and shipping operations are conducted in Juarez, Mexico, and we also have order acquisition for the EMEA region in Amsterdam, the Netherlands. We will continue to establish additional order acquisition and treatment planning facilities closer to our international customers in order to improve our operational efficiency. In addition to the research and development efforts conducted in our North America facilities, we also carry out research and development in Moscow, Russia. We also have customer-care, accounts receivable, customer event registration and accounts payable organizations located in San Jose, Costa Rica. In addition, we have operations in Israel where the design and wand are assembled and our intraoral scanner is manufactured. Our reliance on international operations exposes us to risks and uncertainties that may affect our business or results of operation, including:

Our future success may dependdepends on our ability to develop, successfully introduceprofitably and achieve market acceptance of new products.

If we fail to accurately predict customer needs and preferences or fail to produce viable technologies, we may invest heavily in research and development of products that dodoes not lead to significant revenue.revenues. Even if we successfully innovate and develop new products and produce enhancements,product improvements, we may incur substantial costs in doing so and our profitability may suffer. In addition, even if our new products are successfully introduced, it is unlikely that they will rapidlyIt may be difficult to gain market share and acceptance primarily duefor new or improved products. Introduction and acceptance of any products and services may take significant time and effort, particularly if they require doctor education and training to the relatively long period of timeunderstand their benefits or doctors choose to withhold judgment on a product until patients complete their treatments. For instance, it takes to successfully treat a patient with Invisalign. Since it typically takes approximately 12can take up to 24 months or longer to treat a patient,complete treatment using our Invisalign system.

Periodically, we may acquire, or make investments in, companies, products or technologies. Alternatively, we may be unable to find suitable investment or acquisition targets and we may be unable to complete investments or acquisitions on favorable terms, if at all. If we make investments or complete acquisitions, we may not ultimately strengthen our competitive position or achieve our goals or desired synergies, and investments or acquisitions we complete could be viewed negatively by our customers, securities analysts and investors. Moreover, to the extent we make strategic investments, the companies in which we invest may fail or we may ultimately own less than a majority of the outstanding shares of the company and be outvoted on critical issues that could harm us or the value of our investment.

Our global operations have been disrupted in the past and introducewill likely be disrupted and harmed again in the future. The occurrence of any material or achieve market acceptanceprolonged business disruptions, whether internal or at key suppliers, could harm our business and results of operations, result in material losses, seriously harm our newrevenues, profitability and financial condition, adversely affect our competitive position, increase our costs and expenses, and require substantial expenditures and recovery time in order to fully resume operations.

When business disruptions occur, they may, individually or in the aggregate, affect our ability to provide products, or enhanced versions of existing products could have a material adverse effect onservices and solutions to our operating resultscustomers, and could cause our net revenuesproduction delays or limitations, create adverse effects on distributors, disrupt supply chains, result in shipping and distribution disruptions and reduce the availability of or access to decline.

AlthoughOur operating results have and will continue to fluctuate in the U.S. dollar isfuture, which makes predicting the timing and amount of customer demand, our reporting currency,revenues, costs and expenditures difficult.

Our quarterly and annual operating results have and will continue to fluctuate for a portionvariety of reasons, including as a result of changing doctor and consumer product demand. In addition to the factors otherwise described herein, some of the other factors that have historically and could cause our operating results to fluctuate in the future include:

Failing to accurately predict customer demand may cause us to have inadequate staffing, materials or storage required to manufacture our products to meet demand. If we underestimate demand, it may exceed our manufacturing capacity or that of one or more of our suppliers, we may be understaffed and we may not have sufficient materials needed for production. Specifically, our manufacturing process relies on sophisticated computer software and requires new technicians to undergo a relatively long training process, often 120 days or longer. As a result, negative movementsif we are unable to accurately predict demand, we may have an insufficient number of trained technicians to ensure products are timely manufactured and delivered to meet customers’ expectations, which could damage our relationships with our existing customers or harm our ability to attract new customers. Specifically, production levels for our intraoral scanner are generally forecasted based on forecasts and historic product demand and we often place orders with suppliers for materials, components and sub-assemblies (“materials and components”) as well as finished products weeks or more in currency exchange rates against the U.S. dollar will adversely affect our netadvance of projected customer orders.

Conversely, if we overestimate customer demand, we may lose opportunities to increase revenues and net incomeprofits, we may have excessive staffing, materials, components and finished products, or capacity. If we hire and train too many technicians in anticipation of demand that does not materialize or materializes slower than anticipated, our consolidatedcosts and expenditures may outpace our revenues or revenue growth, harming our gross margin and financial statements. The exchange rate between the U.S. dollar and foreign currencies has fluctuated substantiallyresults. Additionally, in recent years and may continueorder to fluctuate substantially in the future. We have in the past and may in the futuresecure supplies for production of products, we sometimes enter into currency hedging transactions in an effortnon-cancelable minimum purchase commitments with vendors, which could impact our ability to cover some ofadjust our exposureinventory to foreign currency exchange fluctuations. These transactionsreflect declining market demands. If product demand decreases or increases more than forecast, we may not operatebe required to fullypurchase or effectively hedge our exposure to currency fluctuations,lease additional or larger facilities and under certain circumstances, these transactions could have an adverse effect on our financial condition.

accomplish, lower our gross margin.margin, inhibit sales or harm our reputation. Production of our Invisalign clear aligners and iTero intraoral scanners mayare also be limited by capacity

Improvements to predictor changes in our future operating results or levelsproducts may affect the demand and make demand less predictable. We routinely review inventory for usage potential, including fulfillment of growth,customer warranty obligations and spare part requirements, and we have not inwrite down to the pastlower of cost or net realized value the excess and may not in the future be able to sustain our historical growth rates. If we do not increase profitability or revenue growth or otherwise meet the expectations of securities analysts or investors, the market price of our common stock will likely decline.

We are dependent on commercial freight carriers, primarily UPS,subject to deliver our products to our customers. If the operations of these carriers are disrupted for any reason, we may be unable to deliver our products to our customers on a timely basis. If we cannot deliver our products in an efficientoperating risks, including excess or constrained capacity and timely manner, our customers may reduce their orders from us and our net revenues and gross margin could materially decline. In a rising fuel cost environment, our freight costs will increase. If freight costs materially increase and we are unable to pass that increase along to our customers for any reason or otherwise offset such increases in our cost of net revenues, our gross margin and financial results could be adversely affected.

Additionally, we have established treatment planning and manufacturing facilities closer to our international customers to provide them with better experiences, improve their confidence using our products to treat patients, create efficiencies, and provide redundancy should other facilities be temporarily or permanently unavailable. Our ability to obtain and maintain regulatory clearance and certifications and equip facilities is subject to other natural disasters.significant risk and uncertainty. If therea facility is a major earthquaketemporarily or any other natural

Our products and information technology systems are critical to our business. SystemIssues with product development or enhancements, IT system integration, implementation, updates and implementation issuesupgrades have previously and system security risks could again in the future disrupt our operations which couldand have a material adverse impact on our business and operating results.

We rely on the efficient, uninterrupted and uninterruptedsecure operation of our own complex information technology systems.IT systems and are dependent on key third party software embedded in our products and IT systems as well as third-party hosted IT systems to support our operations. All information technologysoftware and IT systems are vulnerable to damage, cyber attacks or interruption from a variety of sources. As our business has grown in size and complexity, the growth has placed, and will continue to place, significant demands on our information technology systems. To effectively manage this growth,and improve our informationoperations, our IT systems and applications require an ongoing commitment of significant expenditures and resources to maintain, protect, upgrade, enhance and enhancerestore existing systems and develop new systems to keep pace with continuing changes in information processing technology, evolving industry and regulatory standards, increasingly sophisticated cyber threats, and changing customer preferences. We are in a multi-year, company-wide programExpanded remote working and increased usage of online and hosted technology platforms by us, our customers and suppliers, including teledentistry and new or expanded use of online service platforms, products and solutions such as video conferencing applications, doctor, consumer and patient apps have increased the demands on and risks to our IT systems and personnel. Moreover, we continue to transform certain business processes, or extend established processes which includes the transition to a new subsidiaries and/or implement additional functionality in our enterprise resource planning, ("ERP")product development, manufacturing, and other software system. We implemented the first phase of our ERP on July 1, 2016 and while we believe we are past any potential significant business disruption, we are still monitoring and troubleshooting potential issues. The implementation of additional functionality in the ERP systemIT systems which entails certain risks, including difficulties with changes in business processes that could disruptdisruption of our operations, such as our ability to develop and update products that are safe and secure, track orders and timely ship products, manage our supply chain and aggregate financial and operational data. Additionally, if we are not ableFailure to accurately forecast expenses related toadequately protect and maintain the project, thisintegrity of our products and IT systems may have an adverse impactresult in a material effect on our financial conditionposition, results of operations and operating results.cash flows.

components, or part repair or replacement. We have experienced hardware issues in the informationpast and may in the future, including issues relating to manufacturing, design, quality, or safety, of which we rely upon to run our businesses were to be found to be inaccuratebecome aware only after products or unreliable, if we fail to properly maintain our information systemschanges have been introduced into the market. We also have not been and data integrity, or if we fail to develop new capabilities to meet our business needs in a timely manner, we could have operational disruptions, have customer disputes, lose our ability to produce timely and accurate reports, have regulatory or other legal problems, have increases in operating and administrative expenses, lose existing customers, have difficulty in attracting new customers or in implementing our growth strategies, or suffer other adverse consequences. In addition, experienced computer programmers and hackers may not be able to penetrate our network security or our cloud-based software servers hosted byensure that third party components or any changes to the foregoing will not be incompatible with, or have a negative impact on the functionality of our iTero intraoral scanners. As a result, there have been and misappropriatemay be widespread failures of our confidential informationiTero intraoral scanners or thatwe may experience epidemic failures of our iTero intraoral scanner to perform as anticipated. Previously, we have not been and in the future may not be prepared for, or have the infrastructure to, timely and adequately remediate or implement corrective measures for such failures, including due to our dependency on third parties, create system disruptionsparty providers or cause shutdowns. Furthermore, sophisticated hardwaresuppliers. As a consequence, remediation has been and operating system softwaremay be in the future time-consuming and applications that we either internally develop or procure from third partiesdifficult to achieve, which we depend upon may contain defectsmaterially impact our customers and our business partners, damage our reputation and result in designlost business and manufacture, including “bugs”revenue opportunities, and other problems that can unexpectedly interfere with the operation of the system. The costs to eliminate or alleviate security problems, viruses and bugs could be significant, and the efforts to address these problems could result in interruptions that may have a material adverse impact on our operations, net revenues and operating results.materially costly.

Additionally, we continuously upgrade and issue new releases of our products and customer facing software applications, specifically the ClinCheckupon which customer facing, manufacturing and MyAligntech software.treatment planning operations depend. Software applications and products containing software frequently contain errors or defects, especially when they are first introduced or when new versions are released. Additionally, the third-party software integrated into or interoperable with our products and services will routinely reach end of life, and as a consequence, certain models of our iTero intraoral scanners may be exposed to additional vulnerabilities, including increased security risks, errors and malfunctions that may be irreparable or difficult to repair. The discovery of a defect, or error or thesecurity vulnerability in our products, software applications or IT systems, incompatibility with thecustomers’ computer operating systemsystems and hardware configurations of customers inwith a new release or upgraded version or the failure of our products or primary informationIT systems may result in the followingcause adverse consequences, among others:including: delay or loss of revenue orrevenues, significant remediation costs, delay in market acceptance, loss of data, disclosure of financial, health or other personal information of our customers or their patients, product recalls, damage to our reputation, loss of market share or increased service costs, any of which could have a material adverse effect on our business, financial condition or results of operations.our operations and the operations of our customers or our business partners.

We provide significant training to our personnel and our business will be impacted if our training fails to properly prepare our personnel to perform the work required, we are unable to successfully instill technical expertise in new and existing personnel or if our techniques prove unsuccessful or not cost-effective. Moreover, for certain roles, this training and experience can make key personnel, such as our sales personnel, highly desirable to competitors and lead to increased attrition. The loss of the confidential health informationservices and knowledge from our highly-skilled employees may significantly delay or prevent the achievement of our development and business objectives and could harm our business. For example, it can take up to twelve months or more to train sales representatives to successfully market and sell our products and for them to establish strong customer relationships.

Additionally, facilitating seamless leadership transitions for key positions is a critical factor in sustaining the culture and maintaining the success of our organization. If our succession planning efforts are not effective, it could adversely impact our business. We continue to assess the key personnel that we storebelieve are essential to our long-term success, as future organizational changes could also cause our employee attrition rate to increase. If we fail to effectively manage any organizational or strategic changes, our financial condition, results of operations, and transmit, security breachesreputation, as well as our ability to successfully attract, motivate and retain key employees, could expose usbe harmed.

In 2022, we gradually reopened many of our offices that had been substantially closed to employees during the COVID-19 pandemic. Where our offices have reopened, we have adopted a riskhybrid work schedule that allows many of regulatory action, litigation, possible liabilityour employees the opportunity to collaborate and loss.connect with others in our offices for some days of the week while having the

Additionally, we rely heavily on data generated from our campaigns to target specific audiences and evaluate their effectiveness, particularly data generated from internet activities on mobile devices. To obtain this data, we are dependent on third parties and popular mobile operating systems, networks, technologies, products, and standards that we do not control, such breachesas the Android and iOS operating systems and mobile browsers. Any changes in such systems that degrade, reduce or eliminate our ability to target or measure the results of ads or increase costs to target audiences could adversely affect the effectiveness of our campaigns. For example, Apple has released mobile operating systems that include significant data privacy changes that may limit our ability to interpret, target and measure ads effectively.

authorities and other legislative bodies are actively developing new competition laws and regulations aimed at the technology sector, artificial intelligence and digital platforms, coordinating globally, and enforcing competition laws and regulations, and this includes scrutiny in potentially large markets such as the EU, U.S., and China. Government regulatory actions and court decisions may result in fines or hinder our ability to provide certain benefits to our consumers, reducing the attractiveness of our products and the revenue that comes from them. Other companies and government agencies have in the past and may in the future allege that our security measuresactions violate the antitrust or competition laws or otherwise constitute unfair competition. Such claims and investigations, even if without foundation, may be inadequatevery expensive to prevent security breaches,defend, involve negative publicity and substantial diversion of management time and effort and could result in significant judgments against us or require us to change our business practices, any of which may materially impact our results of operations.

The healthcare and technology markets are also highly regulated and subject to changing political, economic and regulatory influences. Global regulators are expanding and changing the regulations and guidance for products, which can limit the potential benefits of products and result in protracted review timelines for new product introductions. We are also incorporating artificial intelligence into our software to make it more effective for us, our customers, suppliers and consumers; however, this subjects us to risks of compliance with the expanding and changing regulations regarding the use artificial intelligence. Our critical vendors and service providers are similarly subject to various regulations. Our failure or the failure of our suppliers, customers, advertisers and influencers to strictly adhere to clearances or approvals in the labeling, marketing and sales of our products and services could subject us to claims or litigation, including actions alleging false or misleading advertising or other violations of laws or regulations, which may result in costly investigations, fines, penalties, as well as material judgments, settlements or decrees. We are also subject to complex and changing environmental and health and safety regulations. Additionally, a large portion of our revenues are derived from international sales and we are dependent on our international operations, and profitability would be adversely affectedwhich exposes us to additional foreign regulations not otherwise described herein, including without limitation, pricing regulations imposed by among other things, loss of customers and potential criminal and civil sanctions if they are not prevented.

Furthermore, in general before we can sell a new medical device or market a new use of or claim for an existing product, we must obtain clearance or approval before marketing the product unless an exemption applies. For instance, in the future.U.S., FDA regulations are wide ranging and govern, among other things, product design, development, manufacturing and testing; product labeling and product storage. It takes significant time, effort and expense to obtain and maintain clearances or approvals of products and services from governmental regulators such as the FDA, and there is no guarantee we will successfully or timely obtain or maintain approvals in all or any of the countries in which we do business. In other countries, the requirements, time, effort and expense to obtain and maintain similar marketing authorizations may differ materially from those of the FDA. Moreover, these laws may change, resulting in additional time and expense or loss of market access. If approvals to market our products or services are delayed, we may be unable to offer them in markets we deem important to our business. Additionally, failure to comply with applicable regulatory requirements could result in enforcement actions with sanctions including, among other things, fines, civil penalties and criminal prosecution. Failure or delays to obtain or maintain regulatory approvals or to comply with regulatory requirements may materially harm our domestic or international operations, and adversely impact our business.

We and certain of our vendors must also comply with facility registration and product listing requirements of regulators and adhere to applicable Quality System regulations. The FDA enforces its Quality System regulations through periodic unannounced inspections. Failure to adequately protect and maintain the integrity of our information systems and data maysatisfactorily correct an adverse inspection finding or to comply with applicable manufacturing regulations can result in enforcement actions, we may be required to find alternative manufacturers, which could be a long and costly process and may cause reputational harm. Enforcement actions by regulators could have a material adverse effect on our financial position, resultsbusiness.

We are also subject to anti-corruption and anti-bribery (“ABAC”) laws such as the Foreign Corrupt Practices Act ("FCPA") and the U.K. Bribery Act of operations2010, which generally prohibit corrupt payments to foreign officials for the purpose of obtaining or keeping business, securing an advantage and cash flows.directing business to another. To comply with ABAC laws, regulators require the maintenance of accurate books and records and a system of internal accounting controls. Under the FCPA, we may be held liable for any corrupt actions taken by directors, officers, employees, agents, or other strategic or local partners or representatives.

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

We retain confidential customer personal and financial, patient health information and our own proprietary information and data essential to our business operations. We rely upon the effective operation of our IT systems, and those of our service providers, vendors, and other third parties to safeguard the information and data. Additionally, our success may be dependent on the success of healthcare providers, many of whom are comprised of individual or small operations with limited IT experience and inadequate or untested security protocols, in our processing centers. Therefore, itmanaging data privacy and data security requirements. It is critical that the facilities, infrastructure and IT systems on which we depend to run our facilitiesbusiness and infrastructurethe products we develop remain secure and are alsobe perceived by the marketplace and our customers to be secure. Despite the implementation of security features in our products and security measures we have experienced such breaches in the pastour IT systems, we and our infrastructure mayservice providers, vendors, and other third parties continue to be vulnerabletargeted by or subject to physical break-ins, computer viruses or other malicious code, unauthorized or fraudulent access, programming errors or other technical malfunctions, hacking or phishing attacks, by third parties,malware, ransomware, employee error or malfeasance, cyber attacks, and other breaches of IT systems or similar disruptive problems. Ifactions, including by organized groups and nation-state actors. For example, we failhave experienced, and may again experience in the future, cybersecurity incidents and unauthorized internal employee exfiltration of company information.

Additionally, our globally-dispersed installed base of iTero intraoral scanners at customer, strategic business partner or other locations may be independently or collectively the target of a cybersecurity incident or attack or subject to the intrusion of a virus, bug, or other similar negative intruder. Due to the large and growing number of these decentralized locations, we may not be able to, or not have the capacity, knowledge, or infrastructure to, respond to or remedy a cybersecurity issue in a timely manner, which may cause loss or damage to us from this risk.or our customers or strategic business partners or may cause further malfunctions in, or damage to, our servers, databases, systems or products and services, loss or damage of our data, interruption or temporary cessation of our operations, or an overall negative impact to our business or reputation.

We are also subject to several federal, state and foreign laws and regulations, including regulations affecting the security and privacy of patient healthcare information applicable to healthcare providers and their business associates, such as HIPAA, ones relating to privacy, data security and protection, content regulation, and consumer protection.protection, among others. We are subject to various national and regional data localization or data residency laws such as the General Data Protection Regulation in the EU and analogous laws in China which generally require that certain types of data collected within a country be stored and processed only within that country or approved countries and other countries are considering enacting similar data localization or data residency laws. We have and likely will again in the future be required to implement new or expand existing data storage protocols, build new storage facilities, and/or devote additional resources to comply with such laws, any of which could be costly. We are also subject to data export restrictions and international transfer laws which prohibit or impose conditions upon the transfer of such data from one country to another. These laws and regulations are constantly evolving and may be interpreted, applied, created or amended in a manner that could adversely affect our business.

Our success depends in part on our proprietary technology, and if we are unablefail to successfully obtain or enforce our intellectual property (“IP”) rights, our competitive position may be harmed. Litigating claims of this type is costly and could distract our management and cause a decline in our results of operations and stock price.

Our success will dependdepends in part on our ability to maintain existing intellectual propertyIP rights and to obtain and maintain further intellectual propertyIP protection for our products, both in the U.S. and in other countries.products. Our inability to do so could harm our competitive position. As of December 31, 2017, we had 420 active U.S. patents, 456 active foreign patents, and 416 pending global patent applications.

We intend to rely on our portfolio of issued and pending patent applications in the U.S. and in other countries to protect a large part of our intellectual propertyIP and our competitive position; however, these patents may be insufficient to protect our currently pending or future patent filings may not result in the issuance of patents. Additionally, anyIP rights because our patents issued to us may be challenged, invalidated, held unenforceable, circumvented, or may not be sufficiently broad to prevent third parties from producing competing products similar in design to our products. In addition, any protection afforded byproducts and foreign patents protections may be more limited than thatthose provided under U.S. patents and intellectual propertyIP laws. CertainAdditionally, international IP rights laws are typically less protective than the protections afforded under the laws of the U.S.

Additionally, we may fail to timely file a patent application, or any of our key patents began to expire in 2017, whichpatent applications may not result in increased competitionan issued patent or less expensive alternativesthe scope of the patent ultimately issued may be narrower than we initially sought. We may not be afforded the protection of a patent if our currently pending or future patent filings do not result in the issuance of patents or we fail to apply for patent protection. We may fail to apply for a patent if our products. personnel fail to disclose or recognize new patentable ideas or innovations. Remote working can decrease the opportunities for our personnel to collaborate, thereby reducing the opportunities for effective invention disclosures and patent application filings. We may choose not to file a foreign patent application if the limited protections provided by a foreign patent do not outweigh the costs to obtain it.

We also rely on protection ofprotect our IP through copyrights, trademarks, trade secrets, know-how and proprietary information.confidentiality obligations. We generally enter into confidentiality agreements with our employees, consultants and our collaborative partners upon commencement of a relationship with us; however,us. However, despite the existence of these protections, we have experienced incidents in which our proprietary information has been misappropriated and believe it could be misappropriated again in the future. If these agreements maydo not provide meaningful protection against the unauthorized use or disclosure of our trade secrets or other confidential information, and adequate remedies may not exist ifto prevent unauthorized useuses or disclosure were to occur. disclosures.

Our inability to maintain the proprietary nature of our technology through patents, copyrights or trade secrets would impair our competitive advantages and could have a material adverse effect on our operating results, financial condition and future growth prospects. In particular, a failure to protect our proprietaryIP rights might allow competitors to copy our technology or create counterfeit or pirated versions of our products, which could adversely affect our reputation, pricing and market share. In addition, in an effort

Litigation regarding our IP rights, rights claimed by third parties, or IP litigation by any vendors on whose products or services we rely for our products and services may impact our ability to protect our intellectual property we have in the past been and may in the future be involved in litigation. The potential effects ongrow our business, adversely impact our results of operations resulting fromand adversely impact our reputation.

WhileIf our goodwill or long-lived assets become impaired, we believemay be required to record a material charge to earnings.

Under U.S. Generally Accepted Accounting Practices (“GAAP”), we currentlyreview our goodwill and long-lived asset group for impairment when events or changes in circumstances indicate the carrying value may not be recoverable. Additionally, goodwill must be tested for impairment at least annually. The qualitative and quantitative analysis used to test goodwill are dependent upon various assumptions and reflect management’s best estimates. Changes in certain assumptions, including revenue growth rates, discount rates, earnings multiples and future cash flows may cause a change in circumstances indicating that the carrying value of goodwill or the asset group may be impaired and assessing these assumptions and predicting and forecasting future events can be difficult. Goodwill and purchased assets require periodic fair value assessments to determine if they have adequate internal control overbecome impaired. Consequently, we may be required to record a material charge to earnings in the financial reporting, westatements during the period in which any impairment of goodwill or long-lived asset group is determined.

We are required to annually assess our internal control over financial reporting on an annual basis and any future adverse results from such assessment couldmay result in a loss of investor confidence in our financial reports and have an adverseadversely effect on our stock price.

Pursuant to the Sarbanes-Oxley Act of 2002 and the rules and regulations promulgated by the SEC, weWe are required to furnish in our Form 10-K a report by our management regarding the effectiveness of our internal control over financial reporting. The reportreporting that includes, among other things, an assessment of the effectiveness of our internal control over financial reporting as of the end of our fiscal year, including a statement as to whether or not our internal control over financial reporting is effective. This assessment must include disclosure of any material weaknesses in ourOur internal control over financial reporting identified by management. While we believe our internal control over financial reporting is currently effective, the effectiveness of our internal controls in future periods is subject to the risk that our controls may become inadequate because of changes in conditions including our transitionpersonnel, updates and upgrades to existing software, failure to maintain accurate books and records, changes in accounting standards or interpretations of further business operations into our ERP software system,existing standards, and, as a result, the degree of compliance of our internal control over financial reporting with the existing policies or procedures may become ineffective. Establishing, testing and maintaining an effective system of internal control over financial reporting requires significant resources and time commitments on the part of our management and our finance staff, may require additional staffing and infrastructure investments and would increaseincreases our costs of doing business. If we are unable to assert that our internal control over financial reporting is effective in any future period (or if our auditors are unable to express an opinion on the effectiveness of our internal controls or conclude that our internal controls are ineffective), the timely filing of our financial reports could be delayed or we could be required to restate past reports, and cause us to lose investor confidence in the accuracy and completeness of our financial reports in the future, which could have an adverse effect on our stock price.

If we losefail to manage our key personnelexposure to global financial and securities market risks successfully, our operating results and financial statements could be materially impacted.

portfolio correlates with the credit condition of the U.S. financial sector. In an unstable credit or economic environment, it is necessary to assess the value of our investments more frequently and we might incur material realized, unrealized or impairment losses associated with these investments.

We are unablesubject to attracttax laws both within and retain key personnel,outside of the U.S. requiring significant judgment in determining our worldwide provision for income taxes. Changes in tax laws or changes to how those laws are applied to our business in practice, could affect the amount of tax to which we are subject and the manner in which we operate. Additionally, the Organization for Economic Cooperation and Development’s (“OECD”) Base Erosion and Profit Shifting (“BEPS”) project has resulted in considerable new reporting obligations worldwide as OECD member countries have implemented its guidance. The OECD continues to publish guidance pursuant to the BEPS and other projects which, if adopted by member countries, may affect our tax positions in many of the countries in which we do business.

Moreover, the application of indirect taxes (such as sales and use tax (“SUT”), value-added tax (“VAT”), goods and services tax (“GST”), and other indirect taxes) to our operations is complex and evolving. U.S. states, local and foreign taxing jurisdictions have differing rules and regulations governing differing types of taxes, and these rules and regulations are subject to varying interpretations and exemptions that may change over time. We collect and remit SUT, VAT, GST and other taxes in many jurisdictions and we are routinely subject to audits. We are also routinely subject to audits regarding our tax reporting and remissions by local and national government, and we may also be subject to audits in U.S. states, local and foreign jurisdictions for which we have not accrued tax liabilities. The positions we take regarding taxes as well as the amounts we collect or remit may be challenged and we may be unableliable for failing to pursuecollect or remit all or any portion of taxes deemed owed or the taxes could exceed our estimates. One or more U.S. states or countries may seek to impose incremental or new sales, use, or other tax collection obligations on us or may determine that such taxes should have but have not been paid by us. If we dispute rulings or positions taken by tax authorities, we may incur expenses and expend significant time and effort to defend our positions, which may be costly.

On August 16, 2022, the Inflation Reduction Act of 2022 (“IRA”) was enacted. It contains numerous new U.S. federal tax law provisions, including a corporate alternative minimum tax on adjusted financial statement income and an excise tax on corporate stock repurchases, both effective after December 31, 2022. We continue to evaluate the IRA’s impact to our business, opportunitieswhich may be material.

The application of existing, new, or develop our products.

Historically, the market price for our common stock has been volatile.

In addition, the stock market in general, and the market for technology and medical device companies, in particular, have experienced extreme price and volume fluctuations that have often been unrelated to or disproportionate to thecorporate operating performance of those companies.performance. These broad market and industry factors may seriously harminclude market expectations of, or actual changes in, monetary policies that have the market pricegoal of our common stock, regardlesseasing or tightening interest rates such as the U.S. federal funds rate and austerity measures of our operating performance.governments intended to control budget deficits. Historically, securities litigation, including securities class action litigationlawsuits and securities derivative lawsuits, is often brought against an issuing companyissuer following periods of volatility in the market price of its securities and we have not been exempt from such litigation.

We have a company’s securities.history of recurring stock repurchase programs intended to return capital to our investors. Future stock repurchase programs are contingent on a variety of factors, including our financial condition, results of operations, business requirements, and our Board of Directors' continuing determination that stock repurchases are in the best interests of our stockholders and in compliance with all applicable laws and agreements. There is no assurance that we will continue repurchasing our common stock in the future, consistent with historical levels or at all, or that our stock repurchase programs will have a beneficial impact on our stock price. Additionally, the IRA, among other things, imposes a 1% excise tax on any domestic corporation that repurchases its stock after December 31, 2022, which will increase our cost to make repurchases and may impact if and how much stock we choose to repurchase in the future.

Future sales of significant amounts of our common stock may depress our stock price.

A largesignificant percentage of our outstanding common stock is currently owned by a small number of significant stockholders. These stockholders have sold in the past, and may sell in the future, large amounts of commonour stock over relatively short periods of time. Sales of substantial amounts of our common stock in the public market by our existing stockholders may adversely affect the market price of our common stock. Such sales could create publicstock by creating the perception of difficulties or problems with our business andthat may depress our stock price.