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 $13.7 billion as of June 30, 20172023 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, 80,135,22922, 2024, 75,104,132 shares of the registrant’s common stock were outstanding.

Invisalign, Align, the Invisalign logo, ClinCheck, Made to Move, Invisalign Assist, Invisalign Teen, Invisalign First, Invisalign Go, the Invisalign sonic logo, Vivera, SmartForce, SmartTrack, SmartStage, Power Ridge,SmileView, iTero, iTero Element, Orthocad, iCastiTero Lumina, exocad, Align Digital Platform, Smile Architect, iTero exocad Connector and iRecord,exocad Dental CAD, 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 anticipatedmeans 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 new productsexpectations and product enhancements will have on doctor utilizationbeliefs regarding customer and our market share,consumer purchasing behavior and changes in consumer spending habits, our expectations regarding product mix and product adoption, our expectations regarding competition and our ability to compete in our target markets, our expectations regarding the sales growth of our intraoral scanners, clear aligners and other products, our expectations regarding the impact of the military conflicts in the Middle East and Ukraine and our operations and assets in Israel and Russia, 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 importance of our manufacturing operations on our success, our beliefs regarding the need for and benefits of our 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 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 financialproductivity impact 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 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 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

Our operations and financial performance depend on global and regional economic conditions. Inflation, fluctuations in currency exchange rates, changes in consumer confidence and demand, and general economic weakness and threats, 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, our businessactual recessions, have and could be harmed. Increased competition has resulted in the past and may in the future result in volume discounting and price reductions, 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 our net revenues, volume growth, net income and stock price. 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 onmaterially affect our business, results of operations, and financial condition.

We are dependent on our international operations,Macroeconomic conditions impact consumer confidence and discretionary spending, which exposes us to foreign operational, political and other risks that may harm our business.

current and future economic conditions. A general slowdown in the U.S. economy and certain international economies or an uncertain economic outlook would adversely affect consumer spending habits which may,Macroeconomic conditions can, among other things, result in areduce or shift spending away from elective procedures, drive patients to pursue less costly orthodontic treatments, decrease in the number of overall orthodontic case starts, reducedreduce patient traffic in dentists’ offices reduction in consumer spending on elective or higher value procedures or a reduction in thereduce demand for dental services generally, each of which would have a material adverse effect on our salesgenerally. Further, decreased demand for dental services can cause dentists and operating results. Weakness in the global economy results in a challenging environment for selling dental technologies and dentists maylabs to postpone investments in capital equipment, such as intraoral scanners.scanners and CAD/CAM equipment and software. The declines in, or uncertain economic outlooks for, the U.S., Chinese, European and certain other international economies have and may continue to adversely affect consumer and dental practice spending. Increases in the cost of fuel and energy, food and other essential items as well as higher interest rates have and may continue to reduce consumers' disposable income, which could cause a decrease in discretionary spending for products like ours. Further, we cannot predict the impact of efforts by central banks and federal, state and local governments to combat inflation, which could result in an economic recession or have an adverse impact on consumer spending may for a prolonged period of time.

We have significant international operations and sales and we are exposed to fluctuations in foreign currencies that have adversely impacted our business or results of operations. Although the U.S. dollar is our reporting currency, a large portion of our expenses, net revenues and net income are generated in foreign currencies. While we utilize forward contracts to moderate the impact of exchange rate fluctuations on certain assets and liabilities, our hedging strategies may not be successful, and currency exchange rate fluctuations have and may continue to materially adversely effect our operating results and cash flows. In addition, our foreign currency exposure on assets, liabilities and cash flows that we do not hedge have and could in the future materially impact our financial results in periods when the U.S. dollar significantly fluctuates in relation to foreign currencies.

Our products require our customers to change from traditional treatment methods. For example, Invisalign treatment which currently accounts for the vast majority of our net revenues, representsis a significant change from traditional orthodontic treatment,metal wires and brackets, and customers and consumers may be reluctant to accept it or may not find it preferable to traditional treatment. We have generally received positive feedback from orthodontists, GPs and consumers regarding Invisalign treatment as both an alternative to braces and as a clinical method for the treatment of malocclusion, but acost-effective or preferable. A number of dental professionals believe that the Invisalign treatment is only appropriate for only a limited percentage of their patients. Additionally, our clear aligners and iTero products utilize digital technology and some dental professionals have been and may continue to resist moving to a digital platform. Increased market acceptance of all of our products will dependdepends in part uponon the recommendations of dental professionals, as well as other factors including effectiveness,efficacy, safety, ease of use, reliability, aesthetics and price compared to competing products.products and treatment methods. If demand for our products fails to increase, or decreases, our business, including our financial and operating results, may be harmed.

Our future success maynet revenues depend primarily on our ability to develop, successfully introduceInvisalign system and achieve market acceptance of new products.

To stimulate product and our net revenues, gross profit, gross marginservices demand, we have a history of offering volume discounts, price reductions and net income may be reduced.other promotions to targeted customers and consumers and releasing lower priced products. These promotional campaigns and lower

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

The dental industry is experiencing immense and rapid digital transformation. While solutions such as our Invisalign system, iTero scanners and CAD/CAM software facilitate this transition, we face competition from companies that also seek to cover some of our exposureintroduce new technologies and products and companies that remain dedicated to foreign currency exchange fluctuations. These transactions may not operate to fully or effectively hedge our exposure to currency fluctuations, and, under certain circumstances, these transactions could have an adverse effect on our financial condition.

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

Our success depends on our business, operations and prospects. We are establishing additional order acquisition, treatment planning and manufacturing facilities closer to our international customers in order to improve our operational efficiency and provide doctors with a better experience to further improve their confidence in using Invisalign to treat more patients, more often. Our ability to plan, constructsuccessfully develop, introduce, achieve market acceptance of, and equip additional order acquisition, treatment planningmanage new products and manufacturing facilities is subjectservices.

Our success depends on our ability to significant riskquickly and uncertainty, including risks inherent in the establishmentprofitably develop, manufacture, market, obtain and maintain regulatory approval or clearance of a facility, such as hiringnew products and retaining employeesservices along with improvements to existing products and delays and cost overruns as a result of a number of factors, any of which may be outservices. We cannot assure successful development, sales or acceptance of our control. If the transition into these additional facilities is significantly delayednew or demand for our product exceeds our current expectations, we may not be able to fulfill orders timely,improved products and services. The extent and rate at which may negatively impact our financial results and overall business. In addition, because we cannot immediately adapt our production capacity and related cost structures to changing market conditions, our facility capacity may at times exceednew products or fall short of our production requirements. In addition, if product demand decreases or we fail to forecast demand accurately, we could be required to write off inventory or record excess capacity charges, which would lower our gross margin. Production of our intraoral scanners may also be limited by capacity

If we fail to sustainaccurately predict the needs and preferences of customers and their patients, or increasefail to offer viable products or services, we may invest heavily in research and development that does not lead to significant revenues. Even if we successfully innovate and develop new products and product improvements, we may incur substantial costs doing so and our profitability may suffer. Introduction and acceptance of any products and services may take significant time and effort, particularly if they require doctor education and training to understand their benefits or revenue growth in future periods, the market price fordoctors choose to withhold judgment on a product until patients complete their treatments.

In addition, we periodically introduce new business and sales initiatives to meet customers’ needs and demands. In general, our common stock may decline.

We may invest in or acquire other businesses, products, technologies, or other assets which may require significant management attention, disrupt our future operatingbusiness, dilute stockholder value and adversely affect our results or levels of growth, andoperations.

Periodically, we have not in the past and may not in the future acquire, or make investments in, companies, technologies, or other assets. Alternatively, we may be ableunable to sustainfind suitable investment or acquisition opportunities or be unable to complete investments or acquisitions on favorable terms. If we make investments or complete acquisitions, we may not ultimately strengthen our historical growth rates. Ifcompetitive position or achieve desired synergies, and investments or acquisitions we complete could be viewed negatively by our customers, securities analysts and investors. Opposition to acquisitions may lead to negative ratings by analysts or investors, give rise to stockholder objections or result in stockholder activism, any of which could disrupt our operations or harm our stock price. Moreover, to the extent we make strategic investments, the companies in which we invest may fail or we may ultimately own less than a majority of the outstanding shares of the company and be unable to control or have significant influence over critical issues that could harm the value of our investment.

As an organization we do not increase profitabilityhave a history of significant acquisitions or revenue growthintegrating their operations and cultures with our own. As such, we are subject to various risks when making a strategic investment or otherwise meetacquisition which could materially impact our business or results of operations, including that we may:

Our financialoperating results have fluctuated in the past and maywill continue to fluctuate in the future, which may cause volatility inmakes predicting the timing and amount of customer demand, our stock price.revenues, costs and expenditures difficult.

Our operating results have fluctuated in the past and we expect our future quarterly and annual operating results have and will continue to fluctuate as we focus on increasing doctor and consumer demand for our products. These fluctuations could cause our stock price to decline or significantly fluctuate.a variety of reasons. Some of the factors that have historically, and could in the future, cause our operating results to fluctuate include:

If we underestimate product demand, it may exceed our manufacturing capacity or that of one or more of our suppliers, we may be understaffed and we may not have sufficient materials for production. Specifically, our manufacturing process relies on sophisticated computer software and requires new technicians to undergo a long training process, often 120 days or longer. As a result, if we fail to accurately predict demand, we may have an insufficient number of the introductiontrained technicians to timely manufacture and deliver products to meet customers’ expectations, which could damage our relationships with our existing customers or harm our ability to attract new customers. Specifically, production levels for our iTero scanners are generally set based on forecasts and historic product demand and we often place orders with suppliers for materials, components and sub-assemblies (“materials and components”) as well as finished products weeks or more in advance of newprojected customer orders.

Conversely, if we overestimate customer demand, we may have excessive staffing, materials, components and finished products, or promotions, modifications tocapacity. If we hire and train too many technicians in anticipation of demand that does not materialize or materializes slower than anticipated, our terms and conditions or as a result of changes to critical accounting estimates or new accounting pronouncements;

We may make business decisions that could adversely affect our operating results such as modifications to our pricing policy,policies and payment terms, promotions, development efforts, product releases, business structure or operations. Most of our expenses, such as employee compensation and lease payment obligations, are relatively fixed in the short term. Moreover, our expense levels are based, in part, on our expectations regardingfor future revenue levels.revenues. As a result, if our net revenues for a particular period fallare below our expectations, whether caused by changes in consumer spending, consumer preferences, weakness in the U.S. or global economies, changes in customer behavior related to advertising and prescribing our product or other factors, we may be unable to adjusttimely or effectively reduce spending quickly enough to offset any shortfall in net revenues. Due to these and other factors, we believe that quarter-to-quarter comparisons of our operating results may not be meaningful. You should not rely on our results for any one quarter as an indication of our future performance.

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 better experiences, create efficiencies, and provide redundancy should other natural disasters.facilities become unavailable. If a facility is temporarily, partially or fully shut down, we may be unable to timely fulfill orders, which may negatively impact our financial results, reputation and overall business.

Our digital dental modeling is primarily processed in our facility located in San Jose, Costa Rica. The operations team in Costa Rica creates ClinCheck treatment plans using sophisticated computer software. In addition, our customer facing operations are located in Costa Rica. Our aligner moldsproducts and finished aligners are fabricated in Juarez, Mexico. Both locations in Costa Rica and Mexico are in earthquake zones and may be subject to other natural disasters. If there is a major earthquake or any other natural

We rely on the efficient, uninterrupted and uninterruptedsecure operation of our 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, cybersecurity 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 cybersecurity threats, and changing customer preferences. We are in a multi-year, company-wide programUsage of online and hosted technology platforms by us, our customers and suppliers, including remote working, teledentistry and new or expanded use of online service platforms, products and solutions such as doctor, consumer and patient apps have increased the demands on and risks to our IT systems and personnel. Moreover, we continue to transform certain business processes, 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, ifFailure to adequately protect and maintain the integrity of our products and our IT systems and those of our suppliers and customers may materially impact our financial position, results of operations and cash flows.

We have a complex, global iTero scanner installed base of older and newer models. These models are continually updated to add, expand or improve features with new hardware, or to provide repair or replacement parts. We have experienced hardware issues in the past and may in the future, including issues relating to manufacturing, design, quality, or safety, of which we arebecome aware only after products or changes have been introduced into the market. We also have not ablebeen and may continue to accurately forecast expenses relatedbe unable to the project, this mayensure that third party components or changes to them will be compatible with, or will not have an adversea negative impact on the functionality of, our financial conditioniTero scanners. As a result, there have been and operating results.may be widespread failures of our iTero scanners or we may experience epidemic failures of our iTero scanners to perform as anticipated. Previously, we have not been and in the future may not be prepared for, or have the infrastructure to, timely and adequately remediate or implement corrective measures for such failures, including due to our dependency on third party providers or suppliers. Consequently, any remediation may be time-consuming and difficult to achieve, which may materially impact our customers and business partners, damage our reputation and result in lost business and revenue opportunities, and could be materially costly.

 IfA 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. Failures of all or any portion of our or third-party software or other components or systems to interoperate with iTero or third-party scanners, termination of interoperability with third-party scanners, malware or ransomware attacks, product or system vulnerabilities or defects, interference or disruptions for us, our customers, labs or other business partners in the information we rely upon to runuse of our businesses were to be found to be inaccurateproducts or unreliable, if we fail to properly maintainthe transmission or processing of data needed for the use or ordering of our information systemsproducts, or a system outage for any reason have harmed our operations previously and data integrity, or if we fail to develop new capabilities to meet our business needs in a timely manner, wethe future could have operational disruptions, have customer disputes, losematerially and adversely affect our ability to produce timelyaccept scans, manufacture clear aligners or restorative procedures or treatments and accurate reports, have regulatoryservices or other legal problems, have increases in operating and administrative expenses, lose existing customers, have difficulty in attracting new customersotherwise service our customers. Any of these events harm our sales, damage our reputation, adversely impact our strategic partners or in implementing our growth strategies, or suffer other adverse consequences. In addition, experienced computer programmers and hackers may be able to penetrate our network security or our cloud-based software servers hosted by third party and misappropriate our confidential information or that of third parties, create system disruptions or cause shutdowns. Furthermore, sophisticated hardware and operating system software and applications that we either internally develop or procure from third parties which we depend upon may contain defects in design and manufacture, including “bugs” 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.litigation.

Additionally, we continuously upgrade ourand issue new releases of software applications upon which customer facing softwaremanufacturing and treatment planning operations depend. Software applications specifically the ClinCheck and MyAligntech software. Software applicationsproducts 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 applications and models of our iTero scanners may be exposed to additional vulnerabilities, including increased security risks, errors and malfunctions that may be irreparable or difficult to repair. The discovery of a defect, 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.

We are highly dependent on third-party suppliers, some of whom are sole source suppliers, for certain key machines, components and materials, and our business and operating results could be harmed if supply is restricted or ends, or if the secure transmissionprice of confidential information over public networks. raw materials used in our manufacturing process increases.

Because of our dependence on our suppliers, changes in key relationships can materially disrupt our supply chain. For instance, we may be unable to quickly establish or qualify replacement suppliers creating production interruptions, delays and inefficiencies. Finding substitute manufacturers may be expensive, time-consuming or impossible and could result in significant interruptions in the confidential health information we store and transmit, security breaches could exposesupply of one or more products, product retesting or additional product registration causing us to lose revenues and damage customer relationships. Technology changes by our service providers, vendors, and other third parties could disrupt access to required manufacturing capacity or require expensive, time-consuming development efforts to adapt and integrate new equipment or processes. In the event of technology changes, delivery delays, labor stoppages or shortages, or shortages of, or increases in price for these items, sales may decrease and our business and prospects may be harmed.

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

In addition to our direct sales force, we have and expect to continue to use distributors to import, market, sell, service and support our products. Our distribution agreements are generally non-exclusive and terminable by either party with customary notice. If alternative distributors cannot be quickly found and trained in the use, marketing, sales and support of our products and services, our revenues and ability to sell or service our products in key markets could be adversely affected. These distributors may also choose to sell alternative or competing products or services. In addition, we may be held responsible for the actions of these distributors and their employees and agents for compliance with laws and regulations, including fair

competition, bribery and corruption, trade compliance, safety, data privacy and marketing and sales activities. The conduct of these distributors also impacts our reputation and our brand. If our distributors fail to satisfy customers, our reputation and brand loyalty could be harmed. A distributor may also affect our ability to effectively market our products in certain foreign countries or regulatory jurisdictions if it holds the regulatory authorization in such countries or within such regions and causes, by action litigation, possible liabilityor inaction, the suspension of such marketing authorization or sanctions for non-compliance or prevents us from taking control of any such authorization. It may be difficult, expensive, and loss.time-consuming for us to re-establish market access or regulatory compliance.

If the securityWe depend on our marketing activities to deepen our market penetration and raise awareness of our customerbrands and patientproducts, which may prove unsuccessful or may become less effective or more costly to maintain in the long term.

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

Security breaches, data breaches, cybersecurity attacks, other cybersecurity incidents or the failure to comply with privacy, security and data protection laws could materially impact our operations, patient care could suffer, 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 and our own proprietary information inand data essential to our processing centers. Therefore, itbusiness operations. We rely on the effectiveness of our IT systems, our policies and contracts and policies of our third-party vendors and the IT systems of our service providers and other third parties to safeguard the information and data. Additionally, our success depends on our healthcare providers, many of whom are individual or small operations with limited IT experience and inadequate or untested security protocols, to successfully manage data privacy and security requirements. It is critical that ourthe facilities, infrastructure and infrastructureIT systems on which we depend and the products we develop remain secure and are alsobe perceived by the marketplace and our customers to beas 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 may be vulnerableservice providers, third-party vendors, and other third parties are targeted by or subject to physical break-ins, computer viruses and other malicious code, unauthorized or fraudulent access, programming errors or other technical malfunctions, hacking or phishing attacks, by third parties,malware, ransomware, employee error or malfeasance, cybersecurity 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.

Further, the frequency and sophistication of third-party cybersecurity attacks is increasing. Significant service disruptions, breaches in our infrastructure and IT systems or other cybersecurity incidents could expose us to meet our customer and patient’s expectations regarding the security of healthcare information, we could be liable for damages andlitigation or regulatory investigations, impair our reputation and competitioncompetitive position, could be impaired. Affected parties could initiate legaldistracting to management, and require significant time and resources to address. Legal or regulatory action against us which could prevent us from resolving issues quickly or force us to resolve them in unanticipated ways, cause us to incur significant expense and liabilitydamages, or result in orders forcing us to cease operations or modify our business practices.practices in ways that materially limit or restrict the capabilities of our products and services. Concerns over our privacy practices could adversely affect others’ perception of us and deter customers advertisers and partnerspatients from using our products. In addition, patient care could suffer, and we could be liable if our products or IT systems fail to timely deliver correct informationaccurate and complete information. We have cybersecurity and other forms of insurance coverage related to a cyber attacks, breaches, and other incidents or security problems. However, damages and claims arising from specific incidents may not be covered, may exceed the amount of any coverage, and do not cover the time and effort we incur investigating and responding to any incidents, which may be material. The costs to eliminate, mitigate or recover from security problems and cybersecurity attacks and incidents could be material and, depending on the nature and extent of the problem and the networks or products impacted, may result in network or systems interruptions, decreased product sales, or data loss that may have a material impact on our operations, net revenues and operating results.

Additionally, our iTero scanners sold to customers globally, strategic business partners or other locations may be independently or collectively the target of cybersecurity incidents or attacks or subject to viruses, bugs, or other similar negative intruders. Due to the large and growing number of these decentralized devices, we may be unable, or not have the capacity, knowledge, or infrastructure, to respond to or remedy a cybersecurity issue in a timely manner. Our insurancemanner, which may not protectcause loss or damage to us, from this risk.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 onesrespecting the security and privacy of patient healthcare information applicable to healthcare providers and their business associates, such as HIPAA, as well as those relating to privacy, data protection,security, content regulation, and consumer protection. We are subject to various national and regional data localization or data residency laws, including U.S. state law, the EU General Data Protection Regulation and analogous laws in China which generally require certain types of data collected within a country be stored and processed only within that country or approved countries. Other countries are considering 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. These laws and regulations are constantly evolving and may be created, interpreted, applied, created or amended in a mannerways 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 propertyIP 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, maintain and maintainenforce further intellectual property protectionIP protections 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, our currently pending or future patent filingsthese patents may not result in the issuance of patents. Additionally, any 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 ours if they are invalidated, held unenforceable, circumvented, or otherwise limited in scope. Furthermore, our products. In addition, any protection afforded by foreign patentspatent protections may be more limited in geographic scope than that providedthose under U.S. patentspatent and intellectual propertyIP laws. Certain

Additionally, 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 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 timely apply for patent protection. We may not apply for a patent if our products. personnel fail to disclose or recognize new patentable ideas or innovations. Remote working can decrease opportunities for our personnel to collaborate, thereby reducing invention disclosures and patent application filings. We may

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 will 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 weredisclosures.

Enforcement of our IP rights is time-consuming and costly, and could ultimately prove to occur. be unsuccessful. In certain jurisdictions, enforcement of IP rights is more difficult due to legislation and geopolitical circumstances. As we launch our products in different regions at different times, our products may be acquired and reverse engineered by potential competitors in regions where infringement is more difficult to pursue.

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,

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

Under GAAP, we currentlyreview our goodwill at least annually, or more frequently, if we identify events or circumstances that indicate it is more likely than not that the fair value of a reporting unit has been reduced below its carrying value. We review finite-lived intangible assets and long-lived assets for impairment when events or changes in circumstances indicate the carrying value of the asset (asset group) may not be recoverable. The qualitative analysis performed by management to identify indicators of impairment or the quantitative analysis used to determine fair value requires management to exercise significant judgement in determining appropriate assumptions and estimates, including revenue growth rates, gross and operating margins, discount rates and future cash flows. Management is responsible for continually assessing qualitative factors that could negatively impact the fair value of goodwill and intangible and long-lived assets and if required, assesses the fair value of each to determine if they have adequate internal control overbecome impaired. Consequently, we may be required to record a material charge to earnings our financial reporting, westatements during the period in which any impairment of goodwill, intangible 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 adverse effect onadversely affect 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 reportingit 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 or migration away from 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, which could have an adverse effect on our stock price.

If we fail to manage our exposure to global financial and securities market riskrisks successfully, our operating results and financial statements could be materially impacted.

The primary objective of our investment activities is to preserve principal. To achieve this objective, aA majority of our marketable investments are investment grade, liquid, fixed-income securities and money market instruments denominated in U.S. dollars. If the carrying value of our investmentsan investment exceeds the fair value, and the decline in fair value is deemed to be other-than-temporary, we will beare required to write down the value of our investments,the investment, which could materially harm our results of operations and financial condition. Moreover, the performance of certain securities in our investment portfolio correlates with the credit condition of the U.S. 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 significantmaterial realized, unrealized or impairment losses associated with these investments.

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

We are subject to taxes in the U.S. and foreign countries. Various internal and external factors may have favorable or unfavorable effects onaffect our future effective tax rate. These factors include but are not limited to, changes in the global economic environment, our legal entity structure or activities performed within our entities, our business operations, in tax laws, regulations and/or rates, new or changes to existing accounting pronouncements, non-deductible goodwill impairments, changing interpretations of existing tax laws or regulations, changes in the relative proportions of revenues and income before taxes in the various jurisdictions in which we operate that have differing statutory tax rates, the futurein overall levels of tax benefits of stock-based compensation,pretax earnings, as well as the settlement of income tax audits and changesnon-deductible goodwill impairments. Furthermore, we may continue to experience variation in overall levels of pretax earnings. With the adoption of the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2016-09, we also anticipate our first quarter effective tax rate related to vary significantly due toexcess tax benefits or tax expense on stock-based compensation, particularly in the timingfirst quarter of each year when the majority of our equity compensation vests each year. Other quarters can also be impacted depending onawards vest.

New tax laws and practices, changes to existing tax laws and practices, or disputes regarding the timing of equity vests.

Compliance with tax laws requires significant judgment concerning our worldwide provision for income per share of $0.02, $0.23 and $0.40 in the year ended December 31, 2017, 2016 and 2015, respectively.

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 focused on a numbercomplex and evolving. U.S. states, local and foreign taxing jurisdictions have differing rules and regulations governing differing types of issues, including the shifting of profits between affiliated entities in different tax jurisdictions. In 2015, the OECD issuedtaxes, and is expectedthese rules and regulations are subject to continue to issue, guidelinesvarying interpretations and proposalsexemptions that may change various aspects of the existing framework under whichover 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 audited regarding our tax reporting and remissions by local and national governments, and may also be subject to audits in 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 liable for failing to collect or remit all 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 or may determine that such

During the year ended December 31, 2023, the Company received a notice and initial assessment from His Majesty’s Revenue and Customs (“HMRC”) for unpaid VAT related to certain clear aligner sales made during various periods beginning 2019 through 2023. While we assert that these sales are determinedexempt from VAT, that we have reasonably relied upon statements and guidance by HMRC and that our interpretation of relevant legislation is appropriate, and believe that a potential loss related to unpaid VAT is not probable, it is possible that we may be subject to a loss in manyconnection with unpaid VAT.

The application of existing and new tax laws, and the countriesresults of audits could harm our business. Furthermore, there have been and will continue to be substantial ongoing costs associated with complying with the various tax requirements and defending our positions in the numerous markets in which we doconduct or will conduct business.

Purchases of Equity Securities by the Issuer and desist orders and exclusion orders prohibitingAffiliated Purchasers