Financial Analysis

Business Combination On January 2, 2024 (the Cubicure Acquisition Date), we completed the acquisition of privately-held Cubicure GmbH (Cubicure) (the Cubicure Acquisition) . Cubicure is an Austrian company and specializes in direct 3D printing solutions for polymer additive manufacturing that develops, produces, and distributes innovative materials, equipment, and processes for 3D printing solutions. The Cubicure Acquisition is intended to support and scale our strategic innovation roadmap and strengthen the Align Digital Platform. In fiscal year 2021, we acquired a 9.04% equity interest in Cubicure. Subsequently, on the Cubicure Acquisition Date, we acquired the remaining equity of Cubicure. Prior to the acquisition, we also had technology license and joint development agreements with Cubicure. The fair value of consideration transferred in the acquisition is shown in the table below (in thousands): Cash paid to Cubicure stockholders $ 80,142 Fair value of pre-existing equity interest ownership 7,968 Settlement of pre-existing relationship - accounts payable (2,316) Total purchase consideration paid $ 85,794 The Cubicure Acquisition was accounted for as a business combination under ASC Topic 805, Business Combinations ( ASC 805) that was achieved in stages. As a result of the Cubicure Acquisition, we remeasured our pre-existing equity interest in Cubicure at fair value prior to the Cubicure Acquisition. Based on the fair value of this equity interest, derived from the purcha …

BusinessCombinationDisclosureTextBlock · excerpt; the full note is in the filing

Commitments and Contingencies Tax Matter Beginning in the third quarter of 2023 and continuing through the first quarter of 2024, we received cumulative assessments of approximately $100 million from His Majestys Revenue and Customs (HMRC) for unpaid value added tax (VAT) related to certain clear aligner sales made during the period of October 2019 through May 2023. We were required to pay these assessments prior to contesting or litigating the matter in statutory appeal. We have historically asserted and continue to assert that doctor prescribed clear aligners sold by dentists for the orthodontic treatment of patient malocclusions are exempt from VAT, that we have reasonably relied upon statements and guidance by HMRC and that our interpretation of United Kingdom legislation is appropriate. In October 2024, the Company and HMRC reached a settlement agreement regarding the unpaid VAT related to certain aligner sales made during the period of October 2019 through mid-October 2023. As part of the settlement, HMRC agreed to vacate the judicial review (before the Administrative Court) originally scheduled for October 9th and October 10th, 2024, refund to the Company all assessments paid for the period of October 2019 through May 2023 and withdraw any potential assessments for the period from June 2023 through mid-October 2023. HMRC has refunded to the Company the assessed amounts, approximately $100 million. A statutory appeal (before the First-tier Tribunal - Tax Tribunal) was h …

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Employee Benefit Plans We have a defined contribution retirement plan as defined in Section 401(k) of the Internal Revenue Code for our U.S. employees which covers substantially all U.S. employees who meet minimum age and service requirements and allows participants to defer a portion of their annual compensation on a pre-tax basis. We match 50% of our employees salary deferral contributions up to 6% of the employees eligible compensation. We contributed approximately $9.7 million, $10.0 million and $9.5 million to the 401(k) plan during the years ended December 31, 2025, 2024 and 2023, respectively. We also have defined contribution retirement plans outside of the U.S. to which we contributed $59.9 million, $57.4 million and $55.1 million during the years ended December 31, 2025, 2024 and 2023, respectively. …

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Credit Facility We maintain a credit facility, as amended in December 2022, that includes a $300.0 million unsecured revolving line of credit and a $50.0 million letter of credit sub-limit. The facility matures on December 23, 2027 and loans under the facility accrue interest, at our election, based on either the Secured Overnight Financing Rate (SOFR) for the applicable period or a base rate, in each case plus an applicable margin. The facility includes financial covenants and performance requirements. As of December 31, 2025, we had no outstanding borrowings under the facility and were in compliance with the terms and conditions of the facility in all material respects. …

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Goodwill and Intangible Assets Goodwill The change in the carrying value of goodwill for the years ended December 31, 2025 and 2024, categorized by reportable segment, is as follows (in thousands): Clear Aligner Systems and Services Total Balance as of December 31, 2023 $ 111,086 $ 308,444 $ 419,530 Additions from acquisition 47,576 47,576 Foreign currency translation adjustments (6,017) (18,459) (24,476) Balance as of December 31, 2024 152,645 289,985 442,630 Foreign currency translation adjustments 11,610 37,593 49,203 Balance as of December 31, 2025 $ 164,255 $ 327,578 $ 491,833 We completed our annual goodwill impairment assessment in 2025 and 2024 and determined there were no impairments. Finite-Lived Intangible Assets Acquired finite-lived intangible assets, excluding intangibles that were fully amortized, are as follows (in thousands): Weighted Average Amortization Period (in years) Gross Carrying Amount as of December 31, 2025 Accumulated Amortization Accumulated Impairment Loss Net Carrying Value as of December 31, 2025 Existing technology 11 $ 146,651 $ (67,138) $ $ 79,513 Customer relationships 10 21,500 (12,363) 9,137 Trademarks and tradenames 1 7 9,800 (8,050) 1,750 Patents 12 480 (320) 160 $ 178,431 $ (87,871) $ $ 90,560 Foreign currency translation adjustments 3,373 Total intangible assets, net $ 93,933 1 The Weighted Average Amortization Period decreased from 10 years to 7 years due to an intangible asset with a useful life of 15 years becoming fully amortized …

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Income Taxes Net income before provision for income taxes consists of the following (in thousands): Year Ended December 31, 2025 2024 2023 Domestic $ 280,926 $ 334,485 $ 315,643 Foreign 304,361 274,474 325,561 Net income before provision for income taxes $ 585,287 $ 608,959 $ 641,204 The provision for (benefit from) income taxes consists of the following (in thousands): Year Ended December 31, 2025 2024 2023 Federal Current $ 52,962 $ 95,027 $ 134,332 Deferred 14,385 1,578 (16,805) 67,347 96,605 117,527 State Current 13,977 13,702 28,535 Deferred 13,766 3,384 (3,157) 27,743 17,086 25,378 Foreign Current 74,689 56,653 51,306 Deferred 5,157 17,253 1,940 79,846 73,906 53,246 Provision for (benefit from) income taxes $ 174,936 $ 187,597 $ 196,151 The following table is a reconciliation of the U.S. federal statutory rate of 21% to the Companys effective rate for the year ended December 31, 2025 in accordance with the guidance in ASU No. 2023-09: Year Ended December 31, 2025 Amount Percent US federal statutory income tax rate $ 122,911 21.0 % State income taxes, net of federal tax benefit * 25,901 4.4 Foreign tax effects Switzerland Statutory tax rate difference between Switzerland and U.S. (11,536) (2.0) Canton tax 3,233 0.6 Swiss tax rate change - Remeasurement of deferred tax assets 15,136 2.6 Other 4,102 0.7 Mexico Impairment Loss 7,111 1.2 Other 1,303 0.2 Other Foreign Jurisdictions 14,135 2.4 Effect of cross-border tax laws: Subpart F 21,622 3.7 Foreign-derived intangible inc …

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Legal Proceedings Antitrust Class Actions On June 5, 2020, a dental practice, Simon and Simon, PC (doing business as City Smiles), brought an antitrust action in the U.S. District Court for the Northern District of California on behalf of itself and a putative class of similarly situated practices seeking treble monetary damages, interest, costs, attorneys fees, and injunctive relief relating to our alleged market activities in alleged clear aligner and intraoral scanner markets. Plaintiff filed an amended complaint and added VIP Dental Spas as a plaintiff on August 14, 2020. On December 18, 2023, the court certified a class of persons or entities that purchased Invisalign directly from us between January 1, 2019 and March 31, 2022. The court denied Plaintiffs motion to certify a class of purchasers of scanners. On February 21, 2024, the court granted our motion for summary judgment on all claims brought by the plaintiffs. Plaintiffs have appealed the district courts summary judgment ruling to the United States Court of Appeals for the Ninth Circuit. Oral argument was held on April 10, 2025. On May 3, 2021, an individual named Misty Snow brought an antitrust action in the U.S. District Court for the Northern District of California on behalf of herself and a putative class of similarly situated individuals seeking treble monetary damages, interest, costs, attorneys fees, and injunctive relief relating to our alleged market activities in alleged clear aligner and intraoral scan …

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Leases Lessee Information We have operating leases for our digital treatment planning and office facilities, retail spaces, vehicles and office equipment. The components of lease expense consist of following (in thousands): Year Ended December 31, Lease Cost 2025 2024 2023 Operating lease cost 1 $ 43,401 $ 42,299 $ 44,614 Variable lease cost 2 4,054 3,630 16,013 Total lease cost $ 47,455 $ 45,929 $ 60,627 1 Includes expense associated with short term leases, lease terms of 12 months or less, which is not material. 2 Includes payments related to agreements with embedded leases that are not otherwise reflected on the balance sheet. The following table provides a summary of our operating lease terms and discount rates: December 31, Remaining Lease Term and Discount Rate 2025 2024 Weighted average remaining lease term (in years) 5.1 5.4 Weighted average discount rate 4.1 % 3.8 % As of December 31, 2025, the future payments related to our operating lease liabilities are as follows (in thousands): Fiscal Year Ending December 31, Operating Leases 2026 $ 35,694 2027 29,595 2028 23,986 2029 15,564 2030 7,212 Thereafter 13,060 Total lease payments 125,111 Less: Imputed interest (10,665) Total lease liabilities $ 114,446 As of December 31, 2025, we had additional leases that had not commenced with future lease payments of $58.4 million. These leases will commence during 2026 with non-cancelable lease terms of two to fourteen years. Lessor Information We lease iTero intraoral scanners to …

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Recent Accounting Pronouncements (i) New Accounting Updates Recently Adopted On December 14, 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures. The amendments in this ASU require a public entity to disclose in tabular format, using both percentages and reporting currency amounts, specific categories in the rate reconciliation and to provide additional information for reconciling items that meet a quantitative threshold. The amendments in this ASU also require taxes paid (net of refunds received) to be disaggregated by federal, state, and foreign taxes and further disaggregated for specific jurisdictions to the extent the related amounts exceed a quantitative threshold. For public business entities, the provisions of ASU 2023-09 are effective for fiscal years beginning after December 15, 2024. We adopted this standard on a prospective basis for our annual report on Form 10-K effective for the year ended December 31, 2025. ASU 2023-09 impacts our accounting for income tax financial statement disclosures, but did not impact our Consolidated Balance Sheets, Statements of Operations or Statements of Cash Flows. On November 27, 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2023-07 (ASU 2023-07), Improvements to Reportable Segment Disclosures. The amendments in this update improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses and other segm …

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Restructuring and Other Charges 2023 Restructuring During 2023, we incurred approximately $14.0 million in restructuring expenses, of which $5.3 million remained unpaid and were included in Accrued liabilities as of December 31, 2023. As of December 31, 2024, we had no remaining restructuring liability related to the 2023 Restructuring. 2024 Restructuring During 2024, we incurred approximately $37.0 million in restructuring expenses, of which $13.0 million remained unpaid and were included in Accrued liabilities as of December 31, 2024. For the year ended December 31, 2025, we reduced our December 31, 2024 restructuring liability by approximately $14.6 million primarily due to cash payments, offset by approximately $2.1 million of additional restructuring expense recorded in Cost of net revenues. The 2023 and 2024 restructuring charges were primarily related to involuntary termination benefits, including employee severance and other post-employment benefits. 2025 Restructuring During the third quarter of 2025, we initiated a plan to realign certain business groups and reduce our global workforce. This plan represents our continued effort to right size our labor force with the current macroeconomic environment. We incurred $40.9 million in total restructuring expenses, primarily related to involuntary termination benefits, including employee severance and other post-employment benefits. We have recorded $5.5 million in Cost of net revenues and $35.4 million in Restructuring an …

RestructuringAndRelatedActivitiesDisclosureTextBlock · excerpt; the full note is in the filing

Segments and Geographical Information Segment Information We report segment information based on the management approach. The management approach designates the internal reporting used by our Chief Operating Decision Maker (CODM), our Chief Executive Officer, for decision making and performance assessment as the basis for determining our reportable segments. We group our operations into two reportable segments: Clear Aligner segment and Imaging Systems and CAD/CAM services (Systems and Services) segment, which are based on our predominant product lines. Our CODM uses gross profit and income from operations to assess each reportable segments performance, by reviewing each measure against internal forecasts and historical performance. Our CODM may also benchmark each segments performance against our competitors and external expectations. Summarized financial information by reportable segment is as follows (in thousands): Year Ended December 31, 2025 2024 2023 Net revenues Clear Aligner $ 3,245,404 $ 3,230,122 $ 3,199,329 Systems and Services 789,560 768,890 662,931 Total net revenues $ 4,034,964 $ 3,999,012 $ 3,862,260 Cost of net revenues 1 Clear Aligner $ 1,058,893 $ 952,136 $ 911,291 Systems and Services 265,058 247,717 244,106 Total cost of goods sold $ 1,323,951 $ 1,199,853 $ 1,155,397 Gross profit Clear Aligner $ 2,186,511 $ 2,277,986 $ 2,288,038 Systems and Services 524,502 521,173 418,825 Total gross profit $ 2,711,013 $ 2,799,159 $ 2,706,863 Other Segment expenses Clea …

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Stockholders Equity Common Stock The holders of common stock are entitled to receive dividends whenever funds are legally available and when and if declared by the Companys Board of Directors. We have not historically declared or paid dividends on our common stock. Stock-Based Compensation Plans Our Align Technology, Inc. 2005 Incentive Plan, as amended (the 2005 Incentive Plan), provides for the granting of incentive stock options, non-statutory stock options, restricted stock, stock appreciation rights, performance units and performance shares to employees, non-employee directors and consultants. Shares granted on or after May 16, 2013 as an award of restricted stock, restricted stock units, performance shares or performance units (full value awards) are counted against the authorized share reserve as one and nine-tenths (1 9/10 ) shares for every one (1) share subject to the award, and any shares canceled that were counted as one and nine-tenths shares against the plan reserve will be returned at the same ratio. As of December 31, 2025, the 2005 Incentive Plan has a total reserve of 34,668,895 shares of which 4,608,476 shares are available for issuance. We issue new shares from our pool of authorized but unissued shares to satisfy the exercise and vesting obligations of our stock-based compensation plans. Summary of Stock-Based Compensation Expense Stock-based compensation related to our stock-based awards and employee stock purchase plan for the years ended December 31, 2 …

StockholdersEquityNoteDisclosureTextBlock · excerpt; the full note is in the filing