ALIGN TECHNOLOGY INC

Previous wording

Macroeconomic conditions impact consumer confidence and discretionary spending, which can reduce or shift spending away from elective procedures, drive patients to pursue less costly orthodontic treatments, decrease the number of orthodontic case starts, reduce patient traffic in dental offices, or reduce demand for dental services generally. Consumer spending habits are affected by, among other things, fluctuations in foreign currency exchange rates, changes in consumer confidence and demand, inflation, general economic weakness, actual or potential slowdowns or recessions, employment levels, health insurance coverage, wages, debt obligations, discretionary income, interest rates, cultural and social influences, market volatility and perceptions of current and future economic conditions. For instance, decreased demand for dental services has and may in the future cause doctors and labs to revert to wires and brackets and postpone investments in capital equipment. Uncertain economic outlooks for, or declines in the economic outlooks of, the United States, Chinese, European and other economies have and could in the future materially adversely affect consumer demand and dental practice spending. Higher interest rates have and could in the future reduce consumers’ disposable income, which could cause a decrease in discretionary spending for our products.

Current wording

Macroeconomic conditions impact consumer confidence and discretionary spending, which can reduce or shift spending away from elective procedures, drive patients to pursue less costly orthodontic treatments, decrease the number of orthodontic case starts, reduce patient traffic in dental offices, or reduce demand for dental services generally. Consumer spending habits are affected by, among other things, fluctuations in foreign currency exchange rates, changes in consumer confidence and demand, inflation, elevated gasoline and other energy costs, general economic weakness, actual or potential slowdowns or recessions, employment levels, health insurance coverage, wages, debt obligations, discretionary income, interest rates, cultural and social influences, market volatility and perceptions of current and future economic conditions. For instance, decreased demand for dental services has and may in the future cause doctors and labs to revert to wires and brackets and postpone investments in capital equipment. Uncertain economic outlooks for, or declines in the economic outlooks of, the United States, Chinese, European and other economies have and could in the future materially adversely affect consumer demand and dental practice spending. Higher interest rates have and could in the future reduce consumers’ disposable income, which could cause a decrease in discretionary spending for our products.

Previous wording

Geopolitical events, wars, military actions, terrorism, or major public health crises have and could in the future harm or disrupt international commerce and the global economy, and could materially adversely affect our business. Such events have and could result in, among other things, supply chain and trade disruptions, changes in diplomatic and trade relationships, new and retaliatory tariffs, trade protection measures, quotas, embargoes, trade sanctions and countersanctions, customs investigations or restrictions, boycotts, reduced consumer spending, government shutdowns, cyberattacks, energy shortages or power outages, energy rationing that adversely impacts our manufacturing facilities, rising fuel or rising costs of producing, procuring, and shipping our products, constraints, volatility or disruption in the financial markets, employee deaths or injuries, restrictions and shortages of food, water, shelter and medical supplies, data or information exchange, disruptions, interruptions or limitations in telecommunication services, critical systems or applications reliant on a stable and uninterrupted communications infrastructure, and protests that may impact delivery of our products to customers or destruction of property.

Current wording

Geopolitical events, wars, military actions, terrorism, or major public health crises have and could in the future harm or disrupt international commerce and the global economy, and could materially adversely affect our business. Such events have and could result in, among other things, supply chain and trade disruptions, changes in diplomatic and trade relationships, new and retaliatory tariffs, trade protection measures, quotas, embargoes, trade sanctions and countersanctions, customs investigations or restrictions, boycotts, reduced consumer spending, government shutdowns, cyberattacks, energy shortages or power outages, energy rationing that adversely impacts our manufacturing facilities, rising fuel or rising costs of producing, procuring, and shipping our products, constraints, volatility or disruption in the financial markets, employee deaths or injuries, restrictions and shortages of food, water, shelter and medical supplies, data or information exchange, disruptions, interruptions or limitations in telecommunication services, critical systems or applications reliant on a stable and uninterrupted communications infrastructure, and protests that may impact delivery of our products to customers or destruction of property. Such events may also cause a shift in public opinion about companies based in the United States or in the regions where we operate or plan to operate, which could adversely impact our reputation and business.

Previous wording

Tariffs or proposed tariffs, customs duties, or fees, and any retaliatory tariffs, international trade disputes, or protectionist trade measures taken in response to such tariffs may increase the cost of our products and the components or the raw materials used to make them, reduce demand for our products and adversely impact our gross margin and results of operations, limit our ability to sell to certain customers, limit or prohibit the availability of certain raw materials, components and parts necessary for our products or the products of our suppliers, or impede or slow the movement of our goods across borders. For example, the U.S. Department of Commerce has initiated an investigation under Section 232 of the Trade Expansion Act of 1962, as amended, to determine the effects on the national security of imports of personal protective equipment (PPE), medical consumables, and medical equipment including devices. A significant portion of the products we sell, and the components and raw materials used in our products are originally manufactured or sourced outside the United States. For example, we manufacture clear aligners in our facility in Mexico and ship them to the United States, primarily for our United States customers, with the remainder eventually shipped to other international locations. Tariffs have and could in the future result in additional costs for our products, which may reduce demand for our products and adversely impact our gross margin and results of operations, and we may not be able to fully or substantially mitigate the impact of any new or increased tariffs or pass price increases on to our customers and to the extent we do, we may experience reduced demand for our products.

Current wording

Tariffs or proposed tariffs, customs duties, or fees, and any retaliatory tariffs, international trade disputes, or protectionist trade measures taken in response to such tariffs may increase the cost of our products and the components or the raw materials used to make them, reduce demand for our products and adversely impact our gross margin and results of operations, limit our ability to sell to certain customers, limit or prohibit the availability of certain raw materials, components and parts necessary for our products or the products of our suppliers, or impede or slow the movement of our goods across borders. For example, the U.S. Department of Commerce has completed its investigation under Section 232 of the Trade Expansion Act of 1962, as amended, to determine the effects on the national security of imports of personal protective equipment (PPE), medical consumables, and medical equipment including devices. No actions with respect to the investigation have been announced to date, and the timing, scope and outcome of any resulting trade measures remain uncertain.

Previous wording

On February 20, 2026, the U.S. Supreme Court ruled that certain of the tariffs imposed under the International Emergency Economic Powers Act were unlawful, and while we are no longer subject to such tariffs as a result of that decision, we are currently subject to new, temporary tariffs on imports under Section 122 of the Trade Act of 1974, effective February 24, 2026. The extent and duration of any tariffs and the resulting impact on general economic conditions and on our business, financial condition and results of operations are uncertain.

Current wording

On February 20, 2026, the U.S. Supreme Court ruled that certain tariffs imposed under the International Emergency Economic Powers Act (“IEEPA”) were unlawful. Following that decision, the United States imposed a temporary import surcharge on most imports under Section 122 of the Trade Act of 1974, effective February 24, 2026, which was subsequently held unlawful by the U.S. Court of International Trade in a decision that is currently stayed pending appeal, and which expired in accordance with its terms on July 24, 2026. Immediately following the expiration of the Section 122 surcharges, on July 24, 2026, the Office of the United States Trade Representative imposed additional duties under Section 301 of the Trade Act of 1974 on imports from the top 60 U.S. trade partners. Unlike the Section 122 surcharge, the Section 301 duties are not subject to a statutory rate cap or a fixed expiration date and may remain in effect indefinitely. The scope, rates, extent and duration of tariffs under these or other authorities, the outcome of pending litigation challenging them, and the resulting impact on general economic conditions and on our business, financial condition and results of operations are uncertain.

Previous wording

Military conflicts, wars, and escalation of terrorist or gang activities have and may in the future materially adversely impact the economies in which we operate. Our iTero operations, headquartered in Israel, are close to areas that have been affected by the conflict between Israel and Hamas. The outbreak of military conflict between the United States and Iran on February 28, 2026 and Israel’s war against Iran has resulted in instability around the Middle East region, particularly a disruption in shipment of global oil and gas flows, with cascading effects on energy prices and global economic conditions. Additionally, our supply chains and demand for our products could be impaired as a result of political instability, drug trafficking, the continuation or escalation of terrorist or gang activities (particularly with respect to our manufacturing operations in Mexico), hostilities, export and import restrictions, sanctions or boycotts. These events could disrupt ongoing operations and may materially impact the logistics, timing and cost of shipping of our products and materials or our ability to operate out of impacted areas, and our ongoing contingency planning and business continuity measures to mitigate these risks may not be sufficient. Additionally, China’s territorial conflicts with other neighboring countries may impact our operations and sales in China. We cannot predict the progress or outcome of these events or the reactions by governments, businesses or consumers and each event could, individually or in the aggregate, materially adversely affect our business, financial condition and results of operations.

Current wording

Military conflicts, wars, and escalation of terrorist or gang activities have and may in the future materially adversely impact the economies in which we operate. Our iTero operations, headquartered in Israel, are close to areas that have been affected by ongoing military conflicts in the Middle East, including the hostilities involving Israel, Iran, and the United States that began or escalated in 2025 and 2026, which have resulted in instability in the region and disrupted global oil and gas shipments, with cascading effects on energy prices and global economic conditions, including consumer discretionary spending. Additionally, our supply chains and demand for our products could be impaired as a result of political instability, drug trafficking, the continuation or escalation of terrorist or gang activities (particularly with respect to our manufacturing operations in Mexico), hostilities, export and import restrictions, sanctions or boycotts. These events could disrupt ongoing operations and may materially impact the logistics, timing and cost of shipping of our products and materials or our ability to operate out of impacted areas, and our ongoing contingency planning and business continuity measures to mitigate these risks may not be sufficient. Additionally, China’s territorial conflicts with other neighboring countries may impact our operations and sales in China. We cannot predict the progress or outcome of these events or the reactions by governments, businesses or consumers and each event could, individually or in the aggregate, materially adversely affect our business, financial condition and results of operations.

Previous wording

Our net revenues are primarily dependent on sales of the Invisalign System and iTero intraoral scanners. Of the two, we expect the Invisalign System to continue to represent the majority of our net revenues and remain critical to our success.

Current wording

Our net revenues are primarily dependent on sales of the Invisalign System, and iTero intraoral scanners and related services. Of the two, we expect the Invisalign System to continue to represent the majority of our net revenues and remain critical to our success.

Previous wording

Our cybersecurity risk management program and processes, including our policies, controls or procedures, may not be successfully implemented, complied with or effective in protecting our systems and information or any other information we maintain or otherwise process. Further, the frequency and sophistication of third-party cybersecurity attacks are increasing, particularly with the advancement of AI technologies. Significant service disruptions, breaches, incidents, interruptions or other disruptive events impacting our infrastructure and IT systems, or other cybersecurity incidents, or any belief or reporting that any of the foregoing has occurred, could expose us to regulatory investigations, private claims, demands, litigation or other proceedings, impair our reputation and competitive position, distract management and require significant time and resources to address. In addition, patient care could suffer, and we could be liable if our products, services or IT systems fail to timely deliver accurate and complete information.

Current wording

Significant service disruptions, breaches, incidents, interruptions or other disruptive events impacting our infrastructure and IT systems, or other cybersecurity incidents, or any belief or reporting that any of the foregoing has occurred, could expose us to regulatory investigations, private claims, demands, litigation or other proceedings, impair our reputation and competitive position, distract management and require significant time and resources to address. In addition, patient care could suffer, and we could be liable if our products, services or IT systems fail to timely deliver accurate and complete information.

Previous wording

We depend on commercial freight carriers, primarily United Parcel Service, Inc., to deliver our products. If the operations of commercial freight carriers are disrupted or we fail to mitigate any disruptions, we may be unable to timely deliver products to our customers who may choose alternative products, causing our net revenues and gross margin to decline, possibly materially. Moreover, when fuel costs increase, our freight costs generally do as well. In addition, we earn an increasingly larger portion of our total revenues from international sales, which carry higher shipping costs that negatively impact our gross margin and results of operations. If freight costs materially increase and we are unable to successfully pass all or significant portions of the increases along to our customers, or we cannot otherwise offset such increases, our gross margin and financial results could be materially affected.

Current wording

We depend on commercial freight carriers, primarily United Parcel Service, Inc., to deliver our products. If the operations of commercial freight carriers are disrupted or we fail to mitigate any disruptions, we may be unable to timely deliver products to our customers who may choose alternative products, causing our net revenues and gross margin to decline, possibly materially. Moreover, when fuel costs increase, our freight costs generally do as well, including through carrier fuel surcharges applied in future periods. In addition, we earn an increasingly larger portion of our total revenues from international sales, which carry higher shipping costs that negatively impact our gross margin and results of operations. If freight costs materially increase and we are unable to successfully pass all or significant portions of the increases along to our customers, or we cannot otherwise offset such increases, our gross margin and financial results could be materially affected.

Previous wording

Seamless leadership transitions for key positions are critical to sustaining our culture and organizational success. If our succession planning is ineffective, it could adversely impact our business. Organizational changes, such as our past and any future restructuring efforts, such as the restructuring plans we have implemented in each of the past three fiscal years, and most recently in the third quarter of 2025, may increase attrition and adversely impact our ability to successfully attract, motivate, and retain key personnel. In September, 2025, we required most of our employees to return to working five days per week in the office for most locations, which could impact our ability to attract and retain qualified personnel, particularly if companies that we compete with for talent have adopted work policies and arrangements that our employees may consider to be more appealing. We have experienced and may continue to experience difficulties attracting and retaining personnel that meet the qualifications, experience, compliance mindset and values we expect and share our core values of Agility, Customer and Accountability, which could impact our ability to achieve our strategic objectives and maintain compliance with obligations under our internal controls and other requirements. We provide significant training and experience to our personnel that, for certain roles, can make key personnel, such as our commercial and sales personnel, highly desirable to competitors and lead to increased attrition.

Current wording

Seamless leadership transitions for key positions are critical to sustaining our culture and organizational success. If our succession planning is ineffective, it could adversely impact our business. Organizational changes could also increase attrition and adversely impact our ability to successfully attract, motivate, and retain key personnel. For example, in September, 2025, we required most of our employees to return to working five days per week in the office for most locations, which could impact our ability to attract and retain qualified personnel, particularly if companies that we compete with for talent have adopted work policies and arrangements that our employees may consider to be more appealing. We have experienced and may continue to experience difficulties attracting and retaining personnel that meet the qualifications, experience, compliance mindset and values we expect and share our core values of Agility, Customer and Accountability, which could impact our ability to achieve our strategic objectives and maintain compliance with obligations under our internal controls and other requirements. We provide significant training and experience to our personnel that, for certain roles, can make key personnel, such as our commercial and sales personnel, highly desirable to competitors and lead to increased attrition.

Previous wording

We currently are and may in the future be subject to antitrust, competition or unfair competition-related investigations, enforcement actions or claims by governmental agencies, competitors, consumers, customers and others which, even if unfounded, could cause us to incur substantial costs (including fines), enter into settlements or consent decrees, be subject to judgments, receive negative publicity, forego certain mergers, acquisitions, business combinations, investments or other transactions, divert management time and attention, or change our business in ways that could have a material adverse effect on our business practices, revenues and results of operations, such as limiting our ability to provide certain benefits to our customers and consumers, reducing the attractiveness of our products, services and the net revenue derived from them. Governments and regulators are actively developing new competition laws, regulations and actions aimed at the technology sector, AI and digital platforms, and global activities and expansion, including in large markets such as the United States, the EU, and China. For more information, see Note 6 “Legal Proceedings” of the Notes to Condensed Consolidated Financial Statements in Part I, Item 1 of this Quarterly Report on Form 10-Q.

Current wording

We currently are and may in the future be subject to antitrust, competition or unfair competition-related investigations, enforcement actions or claims by governmental agencies, competitors, consumers, customers and others which, even if unfounded, could cause us to incur substantial costs (including fines), enter into settlements or consent decrees, be subject to judgments, receive negative publicity, forego certain mergers, acquisitions, business combinations, investments or other transactions, divert management time and attention, or change our business in ways that could have a material adverse effect on our business practices, revenues and results of operations, such as limiting our ability to provide certain benefits to our customers and consumers, reducing the attractiveness of our products, services and the net revenue derived from them. Governments and regulators are actively developing new competition laws, regulations and actions aimed at the technology sector, AI and digital platforms, and global activities and expansion, including in large markets such as the United States, the EU, and China.

Previous wording

Furthermore, we frequently must obtain regulatory clearance or approval before we can sell a new medical device or market a new use of, or claim for, an existing product. For instance, in the United States, 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 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. Moreover, these laws may change, resulting in additional time, expense or loss of market access. If the 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 fines, civil penalties and criminal prosecution. Delays or failures to obtain or maintain regulatory approvals or clearances, or to comply with regulatory requirements, may materially adversely affect our domestic or international operations, and adversely impact our business. We and certain of our third-party vendors must also comply with and adhere to facility registration and product listing requirements for Quality System regulations. The FDA enforces its Quality System regulations through periodic unannounced inspections. Failure to satisfactorily correct an adverse inspection finding or comply with applicable regulations can result in enforcement actions, or require us to find alternative manufacturers, which could be a long and costly process and may cause reputational harm. Enforcement actions by regulators could have a material effect on our business, financial condition and results of operations.

Current wording

Furthermore, we frequently must obtain regulatory clearance or approval before we can sell a new medical device or market a new use of, or claim for, an existing product. For instance, in the United States, 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 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. Moreover, these laws may change, resulting in additional time, expense or loss of market access. If the 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 fines, civil penalties and criminal prosecution. Delays or failures to obtain or maintain regulatory approvals or clearances, or to comply with regulatory requirements, may materially adversely affect our domestic or international operations, and adversely impact our business. We and certain of our third-party vendors must also comply with and adhere to facility registration and product listing requirements in the FDA’s Quality Management System Regulation (“QMSR”), which became effective on February 2, 2026 and incorporates by reference the international standard ISO 13485:2016, and analogous quality‑system requirements in other jurisdictions. The FDA enforces the QMSR through inspections, which may be unannounced. Failure to satisfactorily correct an adverse inspection finding or comply with applicable regulations can result in enforcement actions, or require us to find alternative manufacturers, which could be a long and costly process and may cause reputational harm. Enforcement actions by regulators could have a material effect on our business, financial condition and results of operations.

Previous wording

We are or may become, or alleged to be or become, subject to stringent federal, state, and foreign laws and regulations, such as HIPAA, which regulates the security and privacy of patient healthcare information applicable to healthcare providers and their business associates, and the California Consumer Protection Act, as amended by the California Privacy Rights Act, which regulates privacy, data security, content regulation and consumer protection. Numerous other states have enacted, or plan to enact, laws relating to privacy, data protection, data governance and cybersecurity, with such enacted laws either in operation or slated to go into operation over the next several years. Outside of the United States, relevant legal requirements continue to evolve. For example, the collection and use of health data and other personal information is governed in the EU by the EU GDPR, which imposes significant obligations upon companies and rights for individuals, with substantial penalties for noncompliance. Numerous other jurisdictions maintain similar legislation or other laws or regulations addressing privacy, data protection, data governance, or cybersecurity. Several jurisdictions, including the EU, United States, China, Australia, and Japan, have enacted data export restrictions and international transfer laws and regulations that established legal requirements for cross-border transfers of all or certain personal information and certain jurisdictions have also established legal requirements for data localization, which may require us to maintain separate servers located in those countries so that all or certain personal information are maintained locally.

Current wording

We are or may become, or alleged to be or become, subject to stringent federal, state, and foreign laws and regulations, such as HIPAA, which regulates the security and privacy of patient healthcare information applicable to healthcare providers and their business associates, and the California Consumer Privacy Act, as amended by the California Privacy Rights Act, which regulates privacy, data security, content regulation and consumer protection. Numerous other states have enacted, or plan to enact, laws relating to privacy, data protection, data governance and cybersecurity, with such enacted laws either in operation or slated to go into operation over the next several years. Outside of the United States, relevant legal requirements continue to evolve. For example, the collection and use of health data and other personal information is governed in the EU by the EU GDPR, which imposes significant obligations upon companies and rights for individuals, with substantial penalties for noncompliance. Numerous other jurisdictions maintain similar legislation or other laws or regulations addressing privacy, data protection, data governance, or cybersecurity. Several jurisdictions, including the EU, United States, China, Australia, and Japan, have enacted data export restrictions and international transfer laws and regulations that established legal requirements for cross-border transfers of all or certain personal information and certain jurisdictions have also established legal requirements for data localization, which may require us to maintain separate servers located in those countries so that all or certain personal information is maintained locally.

Previous wording

Our operations are subject to rapidly changing and varied expectations and requirements regarding Sustainability issues from a wide range of stakeholders, such as governmental and self-regulatory organizations, including U.S. federal and state governments, and the EU, as well as investor advocacy groups, institutional investors, investment funds, proxy advisory services, stockholders and customers. We are also required to comply with disclosure obligations under the SEC’s long-standing climate change disclosure guidance and other SEC regulations, as well as the European Union’s Corporate Sustainability Reporting Directive (“CSRD”). If we fail to adopt Sustainability standards or practices as quickly as stakeholders desire, comply with or timely report on our Sustainability efforts or practices accurately, or satisfy the disclosure and other expectations of stakeholders, our brand, reputation, employee retention, business, financial performance, growth, and stock price may be adversely impacted.

Current wording

Our operations are subject to rapidly changing and varied expectations and requirements regarding Sustainability issues from a wide range of stakeholders, such as governmental and self-regulatory organizations, including U.S. federal and state governments, and the EU, as well as investor advocacy groups, institutional investors, investment funds, proxy advisory services, stockholders and customers. We are also subject to the SEC’s long-standing climate change disclosure guidance and other SEC disclosure requirements applicable to climate-related matters, as well as the European Union’s Corporate Sustainability Reporting Directive (“CSRD”). If we fail to adopt Sustainability standards or practices as quickly as stakeholders desire, comply with or timely report on our Sustainability efforts or practices accurately, or satisfy the disclosure and other expectations of stakeholders, our brand, reputation, employee retention, business, financial performance, growth, and stock price may be adversely impacted.

Previous wording

Our compliance obligations span all aspects of our business and operations, including product design and development, materials sourcing and other procurement activities, product packaging, product safety, energy and natural resources usage, facilities design and utilization, recycling and collection, transportation, disposal activities, workers’ and human rights. U.S. and foreign regulators have or are considering enacting new or additional disclosure requirements or limits on the emissions of greenhouse gases from power generated by fossil fuels. Additionally, customers and consumers may demand our products, packaging and operations be more sustainable, which could affect how we manufacture and package our products, increase our costs and those of our suppliers, and result in manufacturing, transportation and supply chain disruptions if clean energy sources are unavailable in adequate amounts when required. Moreover, clean energy sources, coupled with reduced investments in traditional energy production and infrastructure, may not provide the predictable and reliable energy we, our suppliers and other business partners require.

Current wording

Our compliance obligations span all aspects of our business and operations, including product design and development, materials sourcing and other procurement activities, product packaging, product safety, energy and natural resources usage, facilities design and utilization, recycling and collection, transportation, disposal activities, workers welfare and human rights. U.S. and foreign regulators have or are considering enacting new or additional disclosure requirements or limits on the emissions of greenhouse gases from power generated by fossil fuels. Additionally, customers and consumers may demand our products, packaging and operations be more sustainable, which could affect how we manufacture and package our products, increase our costs and those of our suppliers, and result in manufacturing, transportation and supply chain disruptions if clean energy sources are unavailable in adequate amounts when required. Moreover, clean energy sources, coupled with reduced investments in traditional energy production and infrastructure, may not provide the predictable and reliable energy we, our suppliers and other business partners require.

Previous wording

Other restrictions apply to the substances incorporated into our products, including the chemical compounds in our clear aligners, electronics in our scanners and the packaging in which they are shipped. These laws are proliferating and new substances subject to restrictions are added regularly and may require additional reporting or phasing out of certain chemicals and compounds such as per- and polyfluoroalkyl substances (PFAS) and microplastics. We may be required to re-design our products or identify new suppliers to maintain compliance with these laws. Further, these laws and regulations may decrease the number of suppliers capable of supplying our needs, thereby negatively affecting our ability to manufacture products in sufficient quantities at competitive prices, leading customers to potentially choose competitive goods and services.

Current wording

Other restrictions apply to the substances incorporated into our products, including the chemical compounds in our clear aligners, electronics in our scanners and the packaging in which they are shipped. These laws and regulations are proliferating, and the substances they restrict are expanded regularly, which may require us to undertake additional reporting or to phase out certain substances and materials, such as per- and polyfluoroalkyl substances (PFAS) and, as regulation in this area develops, other substances and materials such as microplastics. We may be required to re-design our products or identify new suppliers to maintain compliance with these laws. Further, these laws and regulations may decrease the number of suppliers capable of supplying our needs, thereby negatively affecting our ability to manufacture products in sufficient quantities at competitive prices, leading customers to potentially choose competitive goods and services.

Previous wording

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

Current wording

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

Previous wording

AI is subject to a dynamic and rapidly evolving legal and regulatory environment, which, without appropriate review, governance and risk management, could expose us to unforeseen legal or regulatory scrutiny and liabilities. For example, the U.S. AI regulatory framework remains in development and has been introduced at the federal level through executive orders and legislation has been introduced and enacted at the state level. In Europe, the EU AI Act entered into force on August 1, 2024 which will become fully effective on August 2, 2026, with some provisions effective in February 2025. Other jurisdictions are considering similar legislation. Although we do not engage in developing or providing AI systems for which their placement on the market, putting into service, or use would qualify as “prohibited AI practices,” restrictions and obligations under this regulation, to the extent applicable to us, could have a negative impact on our business, global systems, financial condition and results of operations. Additionally, other jurisdictions have proposed, and in certain cases enacted, laws and regulations addressing aspects of the use and development of AI. The evolving AI regulatory environment may, among other impacts, result in inconsistencies among AI regulations and frameworks across jurisdictions; onerous compliance, governance, and research and development obligations that may require us to rework or reevaluate products or services to be compliant or result in the development of products that are unacceptable under new or revised regulatory frameworks; increased risk of exposure to investigations, proceedings and claims related to our AI models; increased liability related to the use of AI by our customers, consumers or suppliers beyond our control; delays in the deployment of new products and services; competitive and reputational harm; and increased cybersecurity risks.

Current wording

Other jurisdictions are considering similar legislation. Although we do not engage in developing or providing AI systems for which their placement on the market, putting into service, or use would qualify as “prohibited AI practices,” restrictions and obligations under this regulation, to the extent applicable to us, could have a negative impact on our business, global systems, financial condition and results of operations. Additionally, other jurisdictions have proposed, and in certain cases enacted, laws and regulations addressing aspects of the use and development of AI. The evolving AI regulatory environment may, among other impacts, result in inconsistencies among AI regulations and frameworks across jurisdictions; onerous compliance, governance, and research and development obligations that may require us to rework or reevaluate products or services to be compliant or result in the development of products that are unacceptable under new or revised regulatory frameworks; increased risk of exposure to investigations, proceedings and claims related to our AI models; increased liability related to the use of AI by our customers, consumers or suppliers beyond our control; delays in the deployment of new products and services; competitive and reputational harm; and increased cybersecurity risks.

Previous wording

Additionally, as we offer more third-party AI models in our solutions, we face risks inherent in how third-party AI models used in our solutions have been developed and deployed, including situations in which the third party may lack a proper license or consent for the training data used for their model. The use and availability of third-party AI models in our solutions could result in scrutiny and legal liability, including intellectual property infringement claims. Such claims or scrutiny could cause reputational harm and loss of customers, and adversely impact our business and financial results. In addition, new competition regulations on AI development and deployment could impose new requirements on our markets that could impact our business and financial results.

Current wording

Additionally, as we offer more third-party AI models in our solutions, we face risks inherent in how third-party AI models used in our solutions have been developed and deployed, including situations in which the third party may lack a proper license or consent for the training data used for their model. The use and availability of third-party AI models in our solutions could result in scrutiny and legal liability, including intellectual property infringement claims. In addition, access to third-party AI models may be suspended, restricted or offered on less favorable terms by providers or governments, including due to safety concerns, regulatory mandates or changing commercial priorities, which could disrupt, delay or increase the cost of AI-enabled features in our products and services. Such claims or scrutiny could cause reputational harm and loss of customers, and adversely impact our business and financial results. In addition, new competition regulations on AI development and deployment could impose new requirements on our markets that could impact our business and financial results.