Align Technology, Inc.
Loading chart...
Item 1. Business.
Our Company
Align Technology, Inc. (“we,” “us,” “our,” “Align” or the “Company”) is a global medical device company primarily engaged in the design, manufacture and marketing of Invisalign® clear aligners for the treatment of malocclusions, or the misalignment of teeth, by orthodontists and general dental practitioners (“GPs”), ViveraTM retainers for retention, iTeroTM intraoral scanners and services for dentistry, and exocadTM computer-aided design and computer-aided manufacturing (“CAD/CAM”) software for dental laboratories and dental practitioners. Our vision and strategy is to revolutionize orthodontic and restorative dentistry through digital treatment planning and implementation using the AlignTM Digital Platform, an integrated suite of proprietary technologies and services designed to deliver a seamless, end-to-end solution for patients, consumers, orthodontists, GPs and lab partners. We strive to achieve our vision and strategy through key objectives made possible with the proprietary technologies and services of the AlignTM Digital Platform to establish: clear aligners as the principal solution for the treatment of malocclusions with the Invisalign System as the treatment solution of choice by orthodontists, GPs and patients
3
globally, our iTero intraoral scanners as the preferred scanning technology for digital dental scans and our exocad CAD/CAM software as the dental restorative solution of choice for dental labs.
Our corporate headquarters are located at 410 North Scottsdale Road, Suite 1300, Tempe, Arizona 85288. Our telephone number is 602-742-2000. Our internet address is www.aligntech.com. Our Americas regional headquarters is located in Raleigh, North Carolina, U.S.A.; our European, Middle East and Africa (“EMEA”) regional headquarters is located in Rotkreuz, Switzerland; and our Asia Pacific (“APAC”) regional headquarters is located in Singapore.
We have two operating segments: (1) Clear Aligner and (2) Imaging Systems and CAD/CAM Services (“Systems and Services”). For the year ended December 31, 2025, Clear Aligner net revenues represented approximately 80% of worldwide net revenues, while Systems and Services net revenues represented the remaining 20%. We sell the majority of our products and services directly through a dedicated and specialized sales force to our customers: orthodontists, GPs, including prosthodontists, periodontists, oral surgeons and dental laboratories. We also sell through sales agents and distributors in certain countries. In addition, we sell directly to dental support organizations (“DSOs”) who contract with dental practices to provide critical business management and support, including non-clinical operations. We also sell our products to dental laboratories who use our products to manufacture or customize their own products for licensed dentists. We furthermore market and sell doctor and consumer accessory products complementary to our doctor-prescribed principal products under the Invisalign® and other brand names, including retainers, dental supplies, clear aligner cases (clamshells), ultrasonic and UV electronic cleaning devices, teeth whitening products and cleaning solutions (collectively, “Invisalign Accessory Products”). Depending on the product, our Invisalign Accessory Products are sold through a variety of channels, including online through large e-commerce websites, our doctor portal and in-store through large retailers and pharmacy stores.
Our clear aligners are sold under the Invisalign® brand name. Our Invisalign System is intended mainly for the treatment of malocclusions and is designed to help dental professionals achieve the clinical outcomes they expect and the results patients desire. To date, over 22 million people worldwide have been treated with the Invisalign System. In order to provide Invisalign treatment to their patients, orthodontists and GPs must initially complete an Invisalign training course. Our iTero intraoral scanners are used by dental professionals, labs, and service providers for restorative and orthodontic digital procedures, Invisalign case submissions, and comprehensive digital dentistry diagnosis, treatment planning and treatment monitoring. Our exocad CAD/CAM software products provide restorative dentistry, implantology, guided surgery and smile design to dental labs and dental practices through fully integrated workflows, with the goal to provide cross-disciplinary dentistry in labs and at chairside.
Our Products, Services and Technologies
AlignTM Digital Platform
For nearly 30 years, Align has been transforming smiles and changing lives; driving innovation in digital orthodontics and dentistry, helping doctors transform their practices using digital tools and technology to deliver exceptional, modern treatment
4
experiences and outcomes to over 22 million people worldwide. The AlignTM Digital Platform is the foundation of our goal to lead the digital revolution in orthodontics, restorative dentistry and comprehensive digital dentistry by delivering seamless workflows in dental practices, on mobile devices, and through remote monitoring, as well as diagnostic and treatment solutions designed to improve all aspects of assessment and treatment, from initial consultations to final smiles with our doctor-centered treatment model.
The AlignTM Digital Platform is an end-to-end digital platform that combines software, systems and services designed to provide a seamless experience and end-to-end workflow that integrates and connects those critical to successful treatment outcomes – doctors, labs, patients and consumers. At the center of the AlignTM Digital Platform are Invisalign clear aligners, iTero intraoral scanners and exocad CAD/CAM software.
The AlignTM Digital Platform utilizes the AlignTM Digital Workflow to enable an end-to-end digital treatment experience and generate interconnected workflows and treatment solutions. The AlignTM Digital Workflow includes dedicated tools and capabilities for each stage of the Invisalign treatment journey:
•Connect: The initial stage of the platform drives consumer demand and connects potential patients to our websites and the websites of Invisalign providers. Some of the tools that support this stage are Invisalign.com, Invisalign® Doctor Locator, Invisalign SmileViewTM tool, Invisalign® Practice App, Invisalign® Virtual Appointment and My InvisalignTM app.
•Scan: During this stage, patient data is captured through intraoral scanning. Doctors and their staffs use intraoral scanning tools designed to support diagnosis of a patient’s oral conditions and health and support doctors to develop appropriate treatment pathways. Visualization of their potential smiles helps patients understand the benefits of treatment and increases patient conversion. The tools that support this stage include iTero intraoral scanners and exocad CAD/CAM imaging systems, Invisalign® Outcome Simulator Pro, iTero ElementTM 5D auto-upload feature, iTeroTM Near Infra-Red Imaging (NIRI) technology, iTeroTM Scan Report, iTeroTM TimeLapse Technology and iTero-exocad ConnectorTM.
•Diagnose: Doctors can access and use tools that support diagnosis of a patient’s oral health and develop an appropriate treatment pathway. The AlignTM Digital Platform facilitates the doctor-patient conversation, through education regarding clinical needs and setting expectations. Some of the tools that support this stage include AlignTM Oral Health Suite, Align X-ray Insights, iTeroTM intraoral scanners, including those with NIRI technology, iTeroTM TimeLapse technology and iTeroTM Occlusogram.
•Plan: Doctors digitally visualize and plan orthodontic and restorative treatments. Orthodontists and GPs can use our products to design, build and share their vision for treatment planning and agree on a customized plan with their patients to reach the desired outcomes. Some of the tools that support this stage are ClinCheck® Pro Software, 3D Controls in ClinCheck® Pro, ClinCheck® Plan Editor, Invisalign® Personalized Plan, CBCT integration for ClinCheck®, and Invisalign Smile Architect™.
5
•Treat: During this stage, doctors treat their patients with our Invisalign® clear aligners and may offer teeth whitening using the InvisalignTM Professional Whitening System. The Invisalign® Palatal Expander System and the Invisalign® System with mandibular advancement with occlusal blocks and enhanced precision wings, and SmartTrack™ material, SmartForce™ features and SmartStage™ technology are additional products that support patient treatment.
•Monitor: Doctors can remotely track their patients’ treatment between visits, and orthodontists and GPs can more easily track treatment progress and communicate issues, results and recommendations to their patients. Some of the tools that support this stage include Invisalign® Progress Assessment, Invisalign® Virtual Care AI and My InvisalignTM app.
•Retain: Following completion of their orthodontic treatment, patients can retain the final position of their teeth using ViveraTM retainers.
New Products/Feature Enhancement
Loading financial statements...
Financial statements
data from SEC XBRL filings. Values are as-reported; restatements supersede originals. Values reported in .
| Line item |
|---|
| Period ending |
26
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Forward-Looking Statements
In addition to historical information, this Quarterly Report on Form 10-Q 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, as amended (the “Exchange Act”). These statements include, among other things, our expectations and intentions regarding our strategic objectives, business strategy and growth drivers, and the means to achieve them; our beliefs and expectations regarding macroeconomic conditions, including fluctuations in currency exchange rates, higher interest rates, market volatility, uncertainty surrounding future United States trade policies, tariffs, customs duties and fees, and retaliatory actions by other nations in light of recent U.S. Supreme Court decision on the constitutionality of tariffs, inflation, threats of or actual economic slowdowns or recessions and geopolitical tensions; our expectations and beliefs regarding customer and consumer confidence, purchasing behavior and demand for dental services and changes in consumer spending habits; our expectations regarding product mix, product launches, product pilots and product adoption; our expectations regarding competition and our ability to compete in our target markets; our expectations regarding the sales growth of our clear aligners, intraoral scanners and other products; our expectations regarding the impact of the military conflicts in the Middle East, Ukraine and China, on our employees, operations and assets; our marketing and efforts to build our brand awareness; our estimates regarding the size and opportunities of our target markets along with our expectations for growth in those markets and potential collaboration opportunities; our beliefs regarding the general impact of technological innovation and on our particular solutions and products; our beliefs regarding digital dentistry and its potential to impact our business and transform dentistry; our intentions regarding expansion of our business and any impacts on our operational flexibility and responsiveness to customer demand; our expectations regarding our tax positions and the judgments we make related to our tax obligations; 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 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 continued expansion of our international markets and their growth; our expectations regarding impacts or 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 and ability to repatriate foreign earnings; our belief regarding the sufficiency of our cash and investment balances and borrowing capacity; our judgments regarding the estimates used in our revenue recognition and assessment of goodwill and intangible assets; our predicted level of 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 I, Item 2 “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and in particular, the risks discussed below in Part II, 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.
The following discussion and analysis of our financial condition and results of operations should be read together with our condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q and with our audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2025 as filed with the Securities and Exchange Commission (the “SEC”) on February 27, 2026.
Executive Overview of Results
Our Strategic Growth Drivers
We strive to help our doctor customers move their practices forward by connecting them with new patients, providing digital solutions to help increase practice efficiency and helping them deliver the best possible treatment outcomes and experiences to millions of people around the world. We strive to achieve this through our continued focus on, and execution of, our strategic growth drivers: (i) International Expansion; (ii) General Practitioner dentists (“GP”) treatment; (iii) Patient Demand; and (iv) Orthodontic Utilization. Our growth strategy depends on our ability to facilitate the digital transformation of
27
dentistry, our continuous focus on innovation, and expansion to meet and exceed evolving customer expectations as the array of products and services available to them increases.
Trends and Uncertainties
Below is a discussion of the significant trends and uncertainties that could impact our operations:
Macroeconomic Challenges, Trade Impediments and Geopolitical Tensions
Our revenues may fluctuate as a result of various events and circumstances impacting customer confidence, consumer sentiment, discretionary spending and ultimately demand for dental services and our products. These events and circumstances include, but are not limited to, macroeconomic conditions, fluctuations in foreign currency exchange rates, uncertainty surrounding the durability, scope, and enforceability of existing and future tariff measures, retaliatory tariffs or protectionist trade measures taken in response to such tariffs, inflation, elevated interest rates, actual or potential slowdowns or recessions, wages, employment levels and health insurance coverage, debt obligations, discretionary income, supply chain challenges, market volatility, geopolitical conditions, military actions, and other factors. For more information on events and circumstances that could impact our revenues, refer to Part II, Item 1A “Risk Factors—Macroeconomic and External Risks.”
Many of these factors may contribute to, among other things, higher raw material prices, increased transportation and labor costs, and interruptions in supply and distribution operations, each of which can also impact the availability of certain raw materials, parts and components used in our products as well as our costs and those of our suppliers. For example, we believe that in the beginning of the second quarter of 2025, sales of our products were adversely impacted compared to the same period in prior years by certain macroeconomic conditions, including global tariff volatility, inflation, and higher interest rates, which we believe may continue to impede dental patient demand. For example, patient traffic growth has been uneven for many doctors, with orthodontic starts down for four consecutive years. We believe uncertainty not only impacts consumer purchasing decisions but also the decisions and recommendations that doctors make, especially doctors who offer both clear aligners and wires and brackets in their practices and have the additional time to treat patients with wires and brackets when orthodontic starts are slowing or diminishing. We believe this has resulted in an increase in orthodontic starts using wires and brackets in lieu of clear aligners that was more pronounced in the second quarter of 2025. However, we believe these trends are continuing and will impede future sales for so long as consumer economic uncertainty persists, particularly to the extent it impairs discretionary spending. We believe that in the first quarter of 2026, the outbreak of military conflict between the United States and Iran on February 28, 2026, together with elevated gasoline and energy costs and related market volatility, contributed to declines in widely reported measures of consumer confidence, and we anticipate these conditions will continue to add to market uncertainties and dampen consumer sentiment and demand.
More directly, we believe government actions relating to actual or proposed tariffs and retaliatory actions in key strategic countries or regions, particularly in the United States, China, Europe, Brazil, Canada, Israel and Mexico may adversely impact our revenue and cost of goods sold. Additionally, the trade war and geopolitical tensions between the United States and China may result in the limitation or prohibition of the availability of certain raw materials, components and parts necessary for our products or the products of our suppliers. The degree of our exposure depends on, among other things, the type of goods subject to any tariffs or trade restrictions enacted, the tariff rates or limits imposed, the timing of the tariffs or restrictions and any other retaliatory measures enacted. The impact may vary by time and region, making operational results uncertain and difficult to predict. These events may also cause a shift in public opinion about companies based in the United States and this may have an adverse impact on our reputation and business. We continue to closely monitor the foregoing issues, assess their potential impact on our operations and financial results, and implement plans to seek to mitigate the impact of any adverse events.
Additionally, a material amount of our revenues are derived internationally and many of our international operations are denominated in currencies other than the U.S. dollar. In the first quarter of 2026, the U.S. dollar remained weakened against major currencies, which positively impacted our financial condition and results of operations for the quarter. Foreign exchange volatility and the subsequent strengthening or weakening of the U.S. dollar against other currencies remains uncertain and unpredictable.
We continue to monitor the potential for violence and military actions that may directly or indirectly impact our personnel, manufacturing, supply chain, and sales. For instance, the ongoing conflict in Ukraine and unstable environment in the Middle East, as well as increased geopolitical tensions involving Taiwan and the South China Sea may further exacerbate general and regional macroeconomic instability. This is particularly true if fighting erupts, intensifies, spreads to other locations, creates shipping and logistical challenges or cost increases, leads to sanctions or boycotts, or otherwise materially impacts our operations or consumer spending. Our iTero business is headquartered in Israel and, although the sales, delivery times and cost of shipping have not been materially impacted to date, the situation remains fluid. We have implemented contingency planning and business continuity measures to mitigate these risks, but it is uncertain whether further escalation
28
could disrupt our operations. While there have been export and import restrictions imposed against products originating from and businesses operating in Israel, they have not materially impacted our sales or operations to date although we continue to monitor the risk.
2025 Restructuring
In the third quarter of 2025, we initiated a plan to realign certain business groups and reduce our global workforce as part of our continued effort to right size our labor force in response to the current macroeconomic environment. As of March 31, 2026, we incurred a total of approximately $42 million in restructuring charges under this plan, of which $6.3 million remained unpaid. These charges were primarily related to involuntary termination benefits, including employee severance and other post-employment benefits in connection with the 2025 restructuring plan, which was substantially completed in the fourth quarter of 2025.
For more information, see Note 14. “Restructuring and Other Charges” of the Notes to Condensed Consolidated Financial Statements
Changing Product Preferences
As the markets for clear aligners and digital processes and workflows used to transform the practice of dentistry continue to mature, we anticipate customer and patient expectations and demands will continue to evolve. We expect to meet customer demands with innovative treatment options that include more choices to address a wider scope of treatment goals and budgets based on our existing and new products, such as streamlined Clear Aligner configurations with limited or no additional aligners. This may result in larger and unpredictable variations in geographic and product mix and selling prices with uncertain implications on our financial statements and business operations. For example, we have and may continue to experience a shift from certain products with higher average selling prices (“ASP”) to those with lower ASPs.
We strive to manage the challenges presented by the foregoing trends and uncertainties, including the macroeconomic conditions, tariffs and retaliatory measures, military conflicts and the evolution of our target markets, by focusing on improving our operations, further increasing flexibility and efficiencies in our processes, adjusting our business models to changing circumstances and offering products that meet market demand. Specifically, we are managing financial impacts by implementing strategic product innovations, introductions and pricing actions, implementing cost saving measures, and evaluating hiring needs.
Further discussion of the impact of these challenges on our business may be found in Part II, Item 1A “Risk Factors.”
Key Financial and Operating Metrics
We measure our performance against the foregoing strategic priorities by the achievement of key financial and operating metrics. For the three months ended March 31, 2026, our business operations reflect the following:
•Revenues of $1,040 million, an increase of 6.2% year-over-year;
•Clear Aligner revenues of $856 million, an increase of 7.4% year-over-year;
•Clear Aligner case volume increased 6.7% year-over-year and Clear Aligner case volume for teens and growing patients increased from 225.8 thousand shipments to 236.6 thousand or 4.8% year-over-year;
•Imaging Systems and CAD/CAM services revenues of $184 million, an increase of 0.9% year-over-year;
•Income from operations of $142 million and operating margin of 13.6%;
•Effective tax rate of 24.3%;
•Net income of $113 million with diluted net income per share of $1.57;
•Cash and cash equivalents of $1,060 million as of March 31, 2026;
•Cash provided by operating activities of $151 million;
•Capital expenditures of $31 million, primarily related to investments in our manufacturing capacity and facilities; and
•Number of employees was 20,275 as of March 31, 2026, a decrease of 4.4% year-over-year.
Other Statistical Data and Trends
•As of March 31, 2026, approximately 23 million people worldwide have been treated with our Invisalign system.
•For the first quarter of 2026, the total number of Invisalign trained doctors cases were shipped to (doctor submitters) was 88.1 thousand compared to 85.3 thousand in the first quarter of 2025, a 3.3% increase.
29
•The total utilization rate in the first quarter of 2026 increased to 7.8 cases per doctor compared to 7.5 cases per doctor in the first quarter of 2025.
•Clear aligner revenue per case shipment (clear aligner revenues divided by case shipments) increased from $1,240 in the first quarter of 2025 to $1,250 in the first quarter of 2026, a 0.8% increase.
Results of Operations
Net Revenues by Reportable Segment
We group our operations into two reportable segments: Clear Aligner segment and Systems and Services segment.
•Our Clear Aligner segment consists of Comprehensive Products, Non-Comprehensive Products and Non-Case revenues as defined below:
▪Comprehensive Products include, but are not limited to, Invisalign Comprehensive, Invisalign First and Invisalign Comprehensive 3in3.
▪Non-Comprehensive Products include, but are not limited to, Invisalign Moderate, Lite and Express packages, Invisalign Go and Invisalign Go Plus and Invisalign Palatal Expander.
▪In the United States, Canada and EMEA, we also offer a Doctor Subscription Program which is our monthly subscription-based clear aligner program. The program allows doctors the flexibility to order retainers and low-stage “touch-up” clear aligners within their subscribed tier and is designed for a segment of experienced Invisalign trained doctors who are currently not regularly using our retainers or low-stage aligners. The low-stage aligners, the Touch up product, are included as a Non-Comprehensive Product.
▪Non-Case revenues include, but are not limited to, retention products including retention aligners ordered through the Doctor Subscription Program, Invisalign training, adjusting tools used by dental professionals during the course of treatment and Invisalign Accessory Products that are complementary to our doctor-prescribed principal products such as aligner cases (clamshells), teeth whitening products, cleaning solutions (crystals, foam and other material) and other oral health products available in certain commerce channels in select markets.
▪Our Systems and Services segment consists of sales related to our iTero intraoral scanning systems, which includes a single hardware platform and restorative or orthodontic software options, scanner wand upgrades, and non-system revenues from leases of scanner systems, sales of pre-owned scanner systems, subscription software, disposables, pay per scan services, as well as exocad’s CAD/CAM software solutions that integrate workflows to dental labs and dental practices.
Net revenues for our Clear Aligner and Systems and Services segments for the three months ended March 31, 2026 and 2025 are as follows (in millions):
| Three Months Ended March 31, | ||||||||||||||||||||||||||||||||||||||||
| Net Revenues | 2026 | 2025 | Change | |||||||||||||||||||||||||||||||||||||
Clear Aligner net revenues | $ | 856.0 | $ | 796.8 | $ | 59.2 | 7.4 | % | ||||||||||||||||||||||||||||||||
| Systems and Services net revenues | 184.1 | 182.4 | 1.6 | 0.9 | % | |||||||||||||||||||||||||||||||||||
| Total net revenues | $ | 1,040.1 | $ | 979.3 | $ | 60.8 | 6.2 | % | ||||||||||||||||||||||||||||||||
Changes and percentages are based on actual values. Certain tables may not sum or recalculate due to rounding.
Clear Aligner Case Volume
30
Case volume data which represents Clear Aligner case shipments for the three months ended March 31, 2026 and 2025 is as follows (in thousands):
| Three Months Ended March 31, | ||||||||||||||||||||||||||||||||||||||||
| 2026 | 2025 | Change | ||||||||||||||||||||||||||||||||||||||
| Total case volume | 685.7 | 642.3 | 43.3 | 6.7 | % | |||||||||||||||||||||||||||||||||||
Changes and percentages are based on actual values. Certain tables may not sum or recalculate due to rounding.
For the three months ended March 31, 2026, total net revenues increased by $61 million compared to the same period in 2025, primarily due to an increase in Clear Aligner volume and increased ASPs.
Clear Aligner
For the three months ended March 31, 2026, Clear Aligner net revenues increased by $59 million compared to the same period in 2025, primarily due to an increase in volume and favorable foreign exchange rates, which increased net revenues by $49 million and $38 million, respectively. These increases were partially offset by higher discounts and product mix shift to lower-priced countries and products resulting in a decrease in net revenues of $28 million.
Systems and Services
For the three months ended March 31, 2026, Systems and Services net revenues increased by $2 million compared to the same period in 2025, primarily due to $7 million from favorable foreign exchange rates, $5 million from higher scanner system sales, driven by increased scanner system volume, and $3 million from higher non-system sales. These increases were partially offset by a decrease of $14 million from mix shift to lower priced products and lower sales of scanner wands.
Cost of net revenues and gross profit (in millions):
| Three Months Ended March 31, | ||||||||||||||||||||||||||||||
| 2026 | 2025 | Change | ||||||||||||||||||||||||||||
| Clear Aligner | ||||||||||||||||||||||||||||||
| Cost of net revenues | $ | 243.2 | $ | 234.8 | $ | 8.4 | ||||||||||||||||||||||||
| % of net segment revenues | 28.4 | % | 29.5 | % | ||||||||||||||||||||||||||
| Gross profit | $ | 612.9 | $ | 562.1 | $ | 50.8 | ||||||||||||||||||||||||
| Gross margin % | 71.6 | % | 70.5 | % | ||||||||||||||||||||||||||
| Systems and Services | ||||||||||||||||||||||||||||||
| Cost of net revenues | $ | 60.3 | $ | 64.4 | $ | (4.1) | ||||||||||||||||||||||||
| % of net segment revenues | 32.8 | % | 35.3 | % | ||||||||||||||||||||||||||
| Gross profit | $ | 123.7 | $ | 118.0 | $ | 5.7 | ||||||||||||||||||||||||
| Gross margin % | 67.2 | % | 64.7 | % | ||||||||||||||||||||||||||
| Total cost of net revenues | $ | 303.5 | $ | 299.2 | $ | 4.3 | ||||||||||||||||||||||||
| % of net revenues | 29.2 | % | 30.5 | % | ||||||||||||||||||||||||||
| Gross profit | $ | 736.6 | $ | 680.1 | $ | 56.5 | ||||||||||||||||||||||||
| Gross margin % | 70.8 | % | 69.5 | % | ||||||||||||||||||||||||||
Changes and percentages are based on actual values. Certain tables may not sum or recalculate due to rounding.
Cost of net revenues includes personnel-related costs including payroll and stock-based compensation for staff involved in the production process, the cost of materials, packaging, freight and shipping, depreciation on capital equipment and facilities used in the production process, amortization of acquired intangible assets and training costs.
Clear Aligner
For the three months ended March 31, 2026, our gross margin increased compared to the same period in 2025, primarily due to higher ASPs and operational efficiencies.
31
Systems and Services
For the three months ended March 31, 2026, our gross margin increased compared to the same period in 2025, primarily due to lower Cost of net revenues from operational efficiencies, partially offset by lower ASPs.
Selling, general and administrative (in millions):
| Three Months Ended March 31, | ||||||||||||||||||||||||||||||
| 2026 | 2025 | Change | ||||||||||||||||||||||||||||
| Selling, general and administrative | $ | 465.3 | $ | 447.6 | $ | 17.7 | ||||||||||||||||||||||||
| % of net revenues | 44.7 | % | 45.7 | % | ||||||||||||||||||||||||||
Changes and percentages are based on actual values. Certain tables may not sum or recalculate due to rounding.
Selling, general and administrative expense generally includes personnel-related costs, including payroll, stock-based compensation and commissions for our sales force, marketing and advertising expenses, including media, market research, marketing materials, clinical education, trade shows and industry events, legal and outside service costs, equipment, software and maintenance costs, depreciation and amortization expense and allocations of corporate overhead expenses including facilities and IT.
For the three months ended March 31, 2026, selling, general and administrative expense increased compared to the same period in 2025, primarily due to higher spend on outside services, higher employee costs, including salaries, fringe benefits and bonus, and higher equipment and software costs, partially offset by lower advertising and marketing expense, commissions, and stock-based compensation.
Research and development (in millions):
| Three Months Ended March 31, | ||||||||||||||||||||||||||||||
| 2026 | 2025 | Change | ||||||||||||||||||||||||||||
| Research and development | $ | 98.7 | $ | 97.2 | $ | 1.5 | ||||||||||||||||||||||||
| % of net revenues | 9.5 | % | 9.9 | % | ||||||||||||||||||||||||||
Changes and percentages are based on actual values. Certain tables may not sum or recalculate due to rounding.
Research and development expense generally includes personnel-related costs, including payroll and stock-based compensation, outside service costs associated with the research and development of new products and enhancements to existing products, software, equipment, material and maintenance costs, depreciation and amortization expense and allocations of corporate overhead expenses including facilities and IT.
For the three months ended March 31, 2026, research and development expense increased compared to the same period in 2025, primarily due to higher employee costs, including salaries, fringe benefits and bonus costs, partially offset by lower capitalized labor costs related to internal-use software, lower stock-based compensation, and reduced outside service provider spend.
Legal settlements (in millions):
| Three Months Ended March 31, | ||||||||||||||||||||||||||||||
| 2026 | 2025 | Change | ||||||||||||||||||||||||||||
Legal settlements | $ | 30.6 | $ | 4.2 | $ | 26.5 | ||||||||||||||||||||||||
| % of net revenues | 2.9 | % | 0.4 | % | ||||||||||||||||||||||||||
Changes and percentages are based on actual values. Certain tables may not sum or recalculate due to rounding.
For the three months ended March 31, 2026, we recorded $31 million related to legal settlements. Refer to Note 6 “Legal Proceedings” of the Notes to Condensed Consolidated Financial Statements for more information.
32
Income from operations (in millions):
| Three Months Ended March 31, | ||||||||||||||||||||||||||||||
| 2026 | 2025 | Change | ||||||||||||||||||||||||||||
| Clear Aligner | ||||||||||||||||||||||||||||||
| Income from operations | $ | 307.8 | $ | 260.2 | $ | 47.6 | ||||||||||||||||||||||||
| Operating margin % | 36.0 | % | 32.7 | % | ||||||||||||||||||||||||||
| Systems and Services | ||||||||||||||||||||||||||||||
| Income from operations | $ | 66.1 | $ | 58.5 | $ | 7.6 | ||||||||||||||||||||||||
| Operating margin % | 35.9 | % | 32.0 | % | ||||||||||||||||||||||||||
Total income from operations 1 | $ | 142.0 | $ | 131.1 | $ | 10.9 | ||||||||||||||||||||||||
| Operating margin % | 13.6 | % | 13.4 | % | ||||||||||||||||||||||||||
1 Refer to Note 13 “Segments and Geographical Information” of the Notes to Condensed Consolidated Financial Statements for details on unallocated corporate expenses and the reconciliation to Income from Operations.
Changes and percentages are based on actual values. Certain tables may not sum or recalculate due to rounding.
Clear Aligner
For the three months ended March 31, 2026, our operating margin increased compared to the same period in 2025, primarily due to higher gross margin and lower advertising and marketing expense, partially offset by an increase in employee costs and credit card transaction fees.
Systems and Services
For the three months ended March 31, 2026, our operating margin increased compared to the same period in 2025, primarily due to higher gross margin and a decrease in operating expenses related to lower employee costs.
Interest income (in millions):
| Three Months Ended March 31, | ||||||||||||||||||||||||||||||
| 2026 | 2025 | Change | ||||||||||||||||||||||||||||
| Interest income | $ | 3.9 | $ | 5.3 | $ | (1.4) | ||||||||||||||||||||||||
| % of net revenues | 0.4 | % | 0.5 | % | ||||||||||||||||||||||||||
Changes and percentages are based on actual values. Certain tables may not sum or recalculate due to rounding.
Interest income generally includes interest earned on cash, cash equivalents and investment balances.
For the three months ended March 31, 2026, interest income decreased compared to the same period in 2025, primarily due to lower interest rates earned on cash and cash equivalent balances.
Other income (expense), net (in millions):
| Three Months Ended March 31, | ||||||||||||||||||||||||||||||
| 2026 | 2025 | Change | ||||||||||||||||||||||||||||
| Other income (expense), net | $ | 3.0 | $ | 4.0 | $ | (1.0) | ||||||||||||||||||||||||
| % of net revenues | 0.3 | % | 0.4 | % | ||||||||||||||||||||||||||
Changes and percentages are based on actual values. Certain tables may not sum or recalculate due to rounding.
Other income (expense), net, generally includes foreign exchange gains and losses, gains and losses on foreign currency forward contracts, interest expense, gains and losses on equity investments and other miscellaneous charges.
For the three months ended March 31, 2026, other income (expense), net decreased compared to the same period in 2025, primarily due to an unfavorable impact from foreign exchange rates, partially offset by a gain recorded on our equity investment.
33
Provision for income taxes (in millions):
| Three Months Ended March 31, | ||||||||||||||||||||||||||||||
| 2026 | 2025 | Change | ||||||||||||||||||||||||||||
| Provision for income taxes | $ | 36.1 | $ | 47.2 | $ | (11.1) | ||||||||||||||||||||||||
| Effective tax rates | 24.3 | % | 33.6 | % | ||||||||||||||||||||||||||
Changes and percentages are based on actual values. Certain tables may not sum or recalculate due to rounding.
Our effective tax rate differs from the U.S. statutory federal income tax rate of 21% for the three month period ended March 31, 2026 and 2025, primarily due to the recognition of additional tax expense resulting from U.S. taxes on foreign earnings, state income taxes, and non-deductible expense in the U.S., partially offset by the foreign income taxed at different rates.
The decrease in our effective tax rate for the three months ended March 31, 2026 compared to the same period in 2025 is primarily attributable to the change in our jurisdictional mix of income, and decreases in U.S. taxes on foreign earnings and state income taxes.
Liquidity and Capital Resources
Liquidity and Trends
As of March 31, 2026 and December 31, 2025, we had cash and cash equivalents of $1,060 million and $1,095 million, respectively, of which approximately $853 million and $929 million, respectively, were held by our foreign subsidiaries. We continue to evaluate opportunities to repatriate our foreign earnings if or when needed. We do not expect to incur significant additional costs upon repatriation of these foreign earnings. We generate sufficient operating cash flow from our domestic operations and have access to $300 million under our revolving line of credit. We believe that our current cash balances and the borrowing capacity under our credit facility, if necessary, will be sufficient to fund our business for at least the next 12 months.
Our material cash requirements as of March 31, 2026 are as follows:
•Our purchase commitments consist primarily of open purchase orders for goods and services, including manufacturing inventory, supplies and services, sales and marketing, research and development services and technological services, issued in the normal course of business. There have been no material changes to our purchase commitments for goods and services during the three months ended March 31, 2026 as compared to the year ended December 31, 2025.
•There have been no material changes to our future operating lease payments, including leases that have not yet commenced, during the three months ended March 31, 2026 as compared to the year ended December 31, 2025.
•We expect our investments in capital expenditures for fiscal year 2026 to be $125 million to $150 million. Capital expenditures primarily relate to technology upgrades, additional manufacturing capacity as well as ongoing maintenance.
•In April 2025, our Board of Directors authorized a plan to repurchase up to $1.0 billion of our common stock. The April 2025 Repurchase Program is expected to be completed over a period of up to three years. We continually evaluate opportunities to repurchase shares of our common stock depending on various factors including our share price and current liquidity requirements. We repurchased approximately $31 million during the first quarter of 2026, leaving $800 million available for future repurchase under the April 2025 Repurchase Program. We expect to repurchase up to $200 million of our common stock over a six-month period beginning on May 1, 2026. Refer to Note 9 “Common Stock Repurchase Program” of the Notes to Condensed Consolidated Financial Statements for details on our stock repurchase programs.
•As of March 31, 2026, we had no material off-balance sheet arrangements that have or are reasonably likely to have a current or future material impact on our liquidity or capital resources.
34
Sources and Uses of Cash
The following table summarizes our Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2026 and 2025 (in thousands):
| Three Months Ended March 31, | |||||||||||||
| 2026 | 2025 | ||||||||||||
Net cash provided by (used in): | |||||||||||||
| Operating activities | $ | 151,042 | $ | 52,676 | |||||||||
| Investing activities | (131,581) | (25,289) | |||||||||||
| Financing activities | (48,128) | (206,756) | |||||||||||
Effect of foreign exchange rate changes on cash, cash equivalents and restricted cash | (6,387) | 8,480 | |||||||||||
Net decrease in cash, cash equivalents and restricted cash | $ | (35,054) | $ | (170,889) | |||||||||
Operating Activities
Next expected filings
- ~2026-08-06 10-Q expected by 2026-08-11 (in 28 days)
- ~2026-11-05 10-Q expected by 2026-11-10 (in 119 days)
- ~2027-02-27 10-K expected by 2027-03-01 (in 233 days)
- ~2027-05-06 10-Q expected by 2027-05-11 (in 301 days)
Predicted from historical filing cadence; not an SEC commitment.
Recent SEC filings
- 2026-07-09 8-K Officer/Director Change
- 2026-06-22 8-K Officer/Director Change; Regulation FD Disclosure; Financial Statements and Exhibits
- 2026-05-06 10-Q Quarterly Report
- 2026-04-29 8-K Earnings Release; Financial Statements and Exhibits
- 2026-04-07 DEF 14A Proxy Statement
- 2026-02-27 10-K Annual Report
- 2026-02-04 8-K Earnings Release; Financial Statements and Exhibits
- 2025-11-05 10-Q Quarterly Report
- 2025-10-29 8-K Earnings Release; Financial Statements and Exhibits
- 2025-09-18 8-K Officer/Director Change
- 2025-08-06 10-Q Quarterly Report
- 2025-07-30 8-K Earnings Release; Financial Statements and Exhibits
- 2025-07-02 8-K Officer/Director Change; Financial Statements and Exhibits
- 2025-05-21 8-K Officer/Director Change; Shareholder Vote Results; Financial Statements and Exhibits
- 2025-05-08 10-Q Quarterly Report