ALIGN TECHNOLOGY INC

Note 1. Summary of Significant Accounting Policies

Basis of Presentation and Preparation

The accompanying unaudited Condensed Consolidated Financial Statements have been prepared by Align Technology, Inc. (“we”, “our”, the “Company” or “Align”) on a consistent basis with the audited Consolidated Financial Statements for the year ended December 31, 2025, and contain all adjustments, including normal recurring adjustments, necessary to fairly state the information set forth herein. These unaudited Condensed Consolidated Financial Statements have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”), and, therefore, omit certain information and footnote disclosures necessary to present the unaudited Condensed Consolidated Financial Statements in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”).

The information included in this Quarterly Report on Form 10-Q should be read in conjunction with the Consolidated Financial Statements and notes thereto included in Item 8 of our Annual Report on Form 10-K for the year ended December 31, 2025, as filed with the SEC on February 27, 2026. The results of operations for the three and nine months ended September 30, 2026, are not necessarily indicative of the results that may be expected for the year ending December 31, 2026, or any other future period, and we make no representations related thereto.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in our consolidated financial statements and accompanying notes. Actual results could differ materially from those estimates. On an ongoing basis, we evaluate our estimates, including those related to revenue recognition and deferred revenues, useful lives of intangible assets and property, plant and equipment, goodwill, income taxes, contingent liabilities, the fair values of financial instruments, stock-based compensation and the valuation of investments in privately held companies among others. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities.

In connection with the 2025 Restructuring activities discussed in Note 15 “Restructuring and Other Charges,”we committed to a plan to dispose of, other than by sale, specifically identified manufacturing assets prior to the end of their estimated useful lives during the third quarter of 2025. Accordingly, we have revised the estimated useful lives of these assets to reflect our use through the disposal date. For the nine months ended September 30, 2026, we recorded $15.6 million of accelerated depreciation expense related to these assets. The increase in depreciation expense negatively impacted Net income, net of tax, by $11.9 million or $0.17 per basic share and $0.17 per diluted share. We have materially completed the disposition of these assets as of March 31, 2026.

Certain Risks and Uncertainties

Financial instruments which potentially expose the Company to concentration of credit risk, consist principally of cash and cash equivalents. These instruments have minimal credit risk exposures. Management regularly monitors their compositions and maturities. The Company maintains its cash and cash equivalents in bank accounts that exceed federally insured FDIC limits. Through September 30, 2026, the Company has not experienced any material credit losses on such deposits.

We purchase certain inventory from sole suppliers. Additionally, we rely on a limited number of hardware manufacturers. The inability of any supplier or manufacturer to fulfill our supply requirements could materially and adversely impact our future operating results.

Recent Accounting Pronouncements

(i) New Accounting Pronouncements Recently Adopted

On July 30, 2025, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2025-05 (“ASU 2025-05”),“Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets.” The amendments in this update provide a practical expedient for entities estimating expected credit losses for current accounts receivable and current contract assets arising from transactions accounted for under ASC 606, Revenue from Contracts with Customers. Under this practical expedient, an entity is allowed to assume that the current conditions it has applied in determining credit loss allowances for current accounts receivable and current contract assets remain unchanged for the remaining life of those assets. The guidance is effective for fiscal years beginning after December 15, 2025, and interim reporting periods in those years. The Company adopted ASU 2025-05 effective January 1, 2026, on a prospective basis. The adoption of ASU 2025-05 did not have a material impact on the financial statements and related disclosures.

(ii) Recent Accounting Pronouncements Not Yet Effective

On September 29, 2025, the FASB issued ASU 2025-07, "Derivatives and Hedging (Topic 815) and Revenue from Contracts with Customers (Topic 606): Derivatives Scope Refinements and Scope Clarification for Share-Based Noncash Consideration from a Customer in a Revenue Contract," which applies to all entities that enter into non-exchange-traded contracts with underlyings based on operations or activities specific to one of the parties to the contract. The new guidance excludes from derivative accounting non-exchange-traded contracts with underlyings that are based on operations or activities specific to one of the parties to the contract. ASU 2025-07 is effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods within those periods. Early adoption is permitted. The Company does not believe the adoption of the standard will have a material effect on the Company’s consolidated financial position or results of operations.

On September 18, 2025, the FASB issued ASU 2025-06, “Intangibles-Goodwill and Other-Internal-Use Software.” The amendments in this ASU simplify the accounting for internal-use software by eliminating the existing project development stages and introducing new guidance for evaluating the probable-to-complete threshold for capitalization. The amendments in this ASU also require the application of ASC 360-10 disclosure requirements for all capitalized internal-use software costs, regardless of how those costs are presented in the financial statements. The provisions of ASU 2025-06 are effective for all entities for fiscal years beginning after December 15, 2027, and interim periods within those fiscal years. Early adoption is permitted. The Company is evaluating the effect of this pronouncement on its annual consolidated financial statements.

On November 4, 2024, the FASB issued ASU 2024-03, “Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures.” The amendments in this ASU require a public entity to disclose, in the notes to the financial statements, specified information about certain costs and expenses, including the amounts of inventory purchases, employee compensation, depreciation and intangible asset amortization. For public business entities, the provisions of ASU 2024-03 are effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted. There will be no impact on our consolidated balance sheets or statements of operations; however, the Company is evaluating the effect of this pronouncement on our consolidated financial statement disclosures.

Note 2. Financial Instruments

Cash and Cash Equivalents

The following tables summarize our cash and cash equivalents balances in our Condensed Consolidated Balance Sheets as of September 30, 2026, and December 31, 2025 (in thousands):

We had no short-term or long-term marketable securities as of September 30, 2026, or December 31, 2025.

Fair Value Measurements

Fair value is an exit price, representing the amount that would be received from selling an asset or paid to transfer a liability, in an orderly transaction between market participants at the measurement date. We use the U.S. GAAP fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. This hierarchy requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The three levels of inputs that may be used to measure fair value:

Level 1 — Inputs to the valuation techniques that are quoted prices in active markets for identical assets or liabilities.

Level 2 — Inputs to the valuation techniques that are other than quoted prices but are observable for the assets or liabilities, either directly or indirectly.

Level 3 — Inputs to the valuation techniques that are unobservable for the assets or liabilities.

The following tables summarize our financial assets measured at fair value as of September 30, 2026, and December 31, 2025 (in thousands):

We have investments in convertible notes of $84.7 million, including $2.9 million of accrued interest, which are classified as loans receivable and measured on an amortized cost basis, net of an allowance for credit losses and included in Other assets within our Condensed Consolidated Balance Sheets. The notes are unsecured, are not guaranteed, interest rates range up to 10%, and mature at various dates through August 2036. One borrower represented approximately 69% of the aggregate carrying amount as of September 30, 2026.

The allowance for credit losses is based on our estimate of lifetime expected credit losses, which we reassess at each reporting date on an individual note basis, considering the borrower's financial condition, liquidity, ability to obtain additional financing, and the probability and timing of conversion or repayment. Although these notes are not measured at fair value on a recurring basis, the estimated fair value of the instruments is classified within Level 3 of the fair value hierarchy as the fair value is derived from techniques in which one or more significant inputs are unobservable. As of September 30, 2026, the carrying value of our loans receivable approximated the fair value, and the credit losses are expected to be immaterial.

We had no Level 3 instruments measured at fair value on a recurring basis as of September 30, 2026, or December 31, 2025.

Accounts Receivable Factoring

We enter into factoring transactions on a non-recourse basis with financial institutions to sell certain of our non-U.S. accounts receivable. We account for these transactions as sales of financial assets as control over the transferred receivables is surrendered. Cash proceeds from the sale of receivable are included within cash flows from operations in the Condensed Consolidated Statements of Cash Flows. Total accounts receivable sold under factoring arrangements were $0.6 million and $10.0 million during the three months ended September 30, 2026 and 2025, respectively, and $18.8 million and $34.6 million during the nine months ended September 30, 2026 and 2025, respectively. Factoring fees on the sales of receivables were recorded in Other income (expense), net in our Condensed Consolidated Statements of Operations and were not material.

Investments in Privately Held Companies

We hold investments in equity securities of privately held companies in which we do not have a controlling interest or the ability to exercise significant influence. These investments do not have readily determinable fair values, and we have elected to account for them using the measurement alternative, which is cost, less any impairment, adjusted for changes in fair value resulting from observable transactions for identical or similar investments of the same issuer. These investments are reported in Other assets in our Condensed Consolidated Balance Sheets, and any adjustments to their carrying value, including impairments, are recorded in Other income (expense), net in our Condensed Consolidated Statements of Operations.

On April 24, 2023, and April 22, 2024, we entered into Subscription Agreements (the “Heartland Subscription Agreements”) with Heartland Dental Holding Corporation (“Heartland”). Pursuant to the Subscription Agreements, we acquired less than a 5% equity interest in total through the purchase of Class A Common Stock for $150.0 million ($75.0 million each in April 2023 and April 2024). In the fourth quarters of 2024 and 2025, we recorded a $6.0 million and $18.0 million increase to the carrying value of our Heartland investment, respectively. These adjustments increased the total carrying value of our investment in Heartland to $174.0 million as of December 31, 2025.

On March 19, 2026, we entered into a new Subscription Agreement with Heartland (the “March 2026 Subscription Agreement”). Pursuant to the March 2026 Subscription Agreement, we acquired additional Class A Common Stock for $50.0 million. Following this investment, our total equity interest in Heartland was still less than 5%. Based on a review of the relevant facts and circumstances, primarily observable transactions for identical investments, we recorded a $7.7 million increase to the carrying value of our Heartland investment in the first quarter of 2026. These adjustments increased the total carrying value of our investment in Heartland to $231.7 million as of March 31, 2026.

On May 15, 2026, we entered into a new Subscription Agreement with Heartland (the “May 2026 Subscription Agreement”). Pursuant to the May 2026 Subscription Agreement, we acquired additional Class A Common Stock for $50.0 million. Following this investment, our total equity interest in Heartland was still less than 5%. The total carrying value of our investment in Heartland was $281.7 million as of September 30, 2026.

On December 19, 2024, and June 5, 2025, we entered into Subscription Agreements (the “Smile Doctors Subscription Agreements”) with New SD Holding Company, L.P. (“SD Holding Company”). Pursuant to the Smile Doctors Subscription Agreements, we acquired less than a 3% equity interest through the purchase of Class A Common Units for $40 million. SD Holding Company owns a controlling interest, through intermediary entities, in Smile Doctors, LLC. Based on a review of the relevant facts and circumstances, primarily observable transactions for identical investments, we determined thatno adjustment to the carrying value of our investment was necessary for the three months ended September 30, 2026.

Our investments in privately held companies in which we can exercise significant influence are accounted for as equity method investments. We have elected to account for our equity method investments under the fair value option. As of September 30, 2026, we did not hold any material investments in which we exercised significant influence.

The carrying value of our investments in equity securities and equity method investments are reported in our Condensed Consolidated Balance Sheets as Other assets and any price adjustments or impairment, if any, are recorded in Other income (expense), net in our Condensed Consolidated Statements of Operations.

The following table shows the changes to the carrying amount of other investments without a readily determinable fair value for the nine months ended September 30, 2026:

The following table shows the changes to the carrying amount of other investments without a readily determinable fair value for the year ended December 31, 2025:

Derivatives Not Designated as Hedging Instruments

We enter into foreign currency forward contracts to minimize the short-term impact of foreign currency exchange rate fluctuations on certain assets and liabilities. These forward contracts are classified within Level 2 of the fair value hierarchy using observable market-based inputs, including foreign currency spot and forward rates. As a result of the settlement of foreign currency forward contracts, we recognized a net gain of $3.1 million and a net gain of $3.3 million during the three months ended September 30, 2026 and 2025, respectively, and a net gain of $11.5 million and a net loss of $35.3 million, during the nine months ended September 30, 2026 and 2025, respectively. Recognized gains and losses from the settlement of foreign currency forward contracts are recorded in Other income (expense), net in our Condensed Consolidated Statements of Operations. As of September 30, 2026 and December 31, 2025, the fair value of outstanding foreign exchange forward contracts wasnot material.

The following tables present the gross notional value of all our foreign exchange forward contracts outstanding as of September 30, 2026 and December 31, 2025 (in thousands):

Note 3. Balance Sheet Components

Inventories consist of the following (in thousands):

Prepaid expenses and other current assets consist of the following (in thousands):

1 Refer to Note 8 "Commitments and Contingencies" of the Notes to Condensed Consolidated Financial Statementsfor discussion of tax matter.

Accrued liabilities consist of the following (in thousands):

1 Refer to Note 8 "Commitments and Contingencies" of the Notes to Condensed Consolidated Financial Statementsfor discussion of tax matter.

Accrued warranty, which is included in the “Other accrued liabilities” category of the Total accrued liabilities table above, consists of the following activity (in thousands):

Deferred revenues consist of the following (in thousands):

1 Included in Other long-term liabilities within our Condensed Consolidated Balance Sheets.

During the three months ended September 30, 2026 and 2025, we recognized $1,014.8 million and $995.7 million of net revenues, respectively, of which $194.5 million and $200.0 million was included in the deferred revenues balance at December 31, 2025 and 2024, respectively.

During the nine months ended September 30, 2026 and 2025, we recognized $3,111.0 million and $2,987.4 million of net revenues, respectively of which $675.2 million and $675.3 million was included in the deferred revenues balance at December 31, 2025 and 2024, respectively.

Our unfulfilled performance obligations, including deferred revenues and backlog, as of September 30, 2026 were $1,251.1 million. These performance obligations are expected to be fulfilled over a period of up tofive years. Substantially all remaining performance obligations relate to clear aligner contracts and system and services arrangements, with the associated transaction price largely reflected in deferred revenue balances.

Note 4. 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 the following (in thousands):

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:

As of September 30, 2026, the future payments related to our operating lease liabilities are as follows (in thousands):

As of September 30, 2026, we had additional leases that had not commenced with future lease payments of $1 million. These leases will commence during 2026 with non-cancelable lease terms of 1 to 5 years.

Note 5. Goodwill and Intangible Assets

Goodwill

The change in the carrying value of goodwill for the nine months ended September 30, 2026, categorized by reportable segment, is as follows (in thousands):

1 We recorded $18.6 million of goodwill within the Systems and Services segment for an immaterial acquisition that was completed in the first quarter of 2026. The amount recorded is based on preliminary estimates of the fair values of assets acquired and liabilities assumed and is subject to adjustment during the measurement period.

Intangible Assets

Acquired intangible assets, excluding intangibles that were fully amortized, are as follows (in thousands):

1 In connection with the immaterial acquisition completed during the first quarter of 2026, the Company recorded $12.6 million in acquired in-process research and development within the Systems and Services segment. Acquired in-process research and development is considered an indefinite-lived intangible asset until completion of the associated research and development efforts at which time the asset will be amortized over its estimated useful life.

The total estimated future amortization expense for the acquired finite-lived intangible assets as of September 30, 2026 is as follows (in thousands):

Amortization expense for the three months ended September 30, 2026 and 2025 was $4.5 million and $4.8 million, respectively. Amortization expense for the nine months ended September 30, 2026 and 2025 was $14.2 million and $14.0 million, respectively.

Note 6. Credit Facility

We maintain a revolving credit facility, as amended in March 2026, which provides for a $300.0 million unsecured revolving commitment, including a $50.0 million letter of credit sub-limit. The amendment included certain modifications to non-financial and immaterial terms of the facility. 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 September 30, 2026, we hadno outstanding borrowings under the facility, the full $300.0 million revolving commitment remained available, and we were in compliance with the terms and conditions of the facility in all material respects.

Note 7. Legal Proceedings

Under Securities and Exchange Commission Regulation S-K, Item 103, we are required to briefly describe any material pending legal proceedings other than ordinary routine litigation incidental to our business, to which we or any of our subsidiaries are a party or of which any of our or our subsidiaries’ property is subject.

The descriptions below are intended to comply with such regulations based on information reasonably known to us as of the date of this Quarterly Report on Form 10-Q. These descriptions are not intended to imply or predict outcomes in any of the matters described or any other litigation or disputes to which we are or may hereafter be a party. We are currently unable to predict the outcome of these lawsuits or any future litigation, and therefore we cannot determine the likelihood of loss, if any, nor estimate a range of possible loss except as otherwise disclosed below.

As of September 30, 2026, we accrued $32.7 million for legal settlements, substantially all of which relates to the Section 2 and related state law claims brought by Misty Snow, which are described below under the heading “Antitrust Class Actions”.

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 appealed the district court’s summary judgment ruling to the United States Court of Appeals for the Ninth Circuit. On October 5, 2026, the Ninth Circuit issued a decision reversing the district court’s decision and remanding the matter for further proceedings. Align is evaluating its options with regard to the Ninth Circuit’s ruling.

On May 3, 2021, an individual named Misty Snow (“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 scanner markets based on Section 2 of the Sherman Act. After various procedural actions since the inception of the Snow matter, the Company decided to explore potential settlements. On August 10, 2026, the parties reached a settlement in principle and executed a binding term sheet that includes a $32 million cash payment by Align. The October 5, 2026, decision by the Ninth Circuit also reversed and remanded the Snow matter, but the effect of the settlement makes that ruling moot as to the Snow plaintiffs.

Straumann Litigation

On April 11, 2024, we filed a lawsuit in the U.S. District Court for the Western District of Texas against ClearCorrect Operating, LLC, ClearCorrect Holdings, Inc. and Institut Straumann AG, (collectively the “Defendants”). The complaint asserted infringement of our patents related to aligner material, treatment planning, and intraoral scanner technologies. Among other things, the complaint sought relief enjoining the Defendants’ infringement of multiple Align multilayer material patents through Defendants’ manufacture, sale and offer for sale of aligners made with Zendura FLX/ClearQuartz materials.

On July 9, 2024, Defendants filed counterclaims against us alleging antitrust violations and unfair competition. Among other things, the counterclaims sought injunctive relief and money damages. On August 29, 2025, Defendants filed amended counterclaims, which additionally alleged that Align procured certain materials patents by fraud.

A jury trial commenced on June 22, 2026, and concluded on July 2, 2026. On July 2, the jury returned a verdict in Align’s favor on the Defendants’ antitrust and unfair competition claims. The jury also rendered a verdict in Align’s favor on Defendants’ claim that Align procured certain patents by fraud.

The jury found that the Defendants infringed the asserted claims of four of Align’s patents (US Patent Nos. 10,973,613; 11,154,384, 11,648,090, and 11,648,091 or the “Asserted Materials Patents”) by the making, using, selling, and offering for sale of aligners made with Zendura FLX/ClearQuartz materials. The jury found that the asserted claims of the Asserted Materials Patents were invalid for lack of enablement.

Before trial, the District Court judge found that the asserted claims 1, 2, 11 and 39 of US Patent No. 8,038,444 (the treatment planning patent) were invalid under 35 U.S.C. § 101 and during the trial, granted Defendants’ motion for judgment as a matter of law on the asserted claims of US Patent No. 10,791,936 (the scanner patent).

On August 14, 2026, Align filed a post-trial motion seeking judgment as a matter of law that the asserted claims of the Asserted Materials Patents are not invalid for lack of enablement, or in the alternative, sought a new trial on enablement. Defendants filed a post-trial motion seeking judgment as a matter of law that the asserted claims of the Asserted Materials Patents are not infringed by the making, using, selling, and offering for sale of aligners made with Zendura FLX/ClearQuartz materials, or in the alternative, sought a new trial on infringement. Briefing on the post-trial motions is complete and pending decision. Align is evaluating a potential appeal relating to certain of the District Court judge’s and jury’s determinations relating to its patents. To the extent Defendants appeal the jury verdict in Align’s favor on the Defendants’ antitrust and unfair competition claims on Defendants’ claim that Align procured certain patents by fraud, or otherwise, Align intends to continue to vigorously defend itself.

On April 10, 12 and 14, 2025, Defendants filed eight inter partes review (“IPR”) petitions with the United States Patent Trial and Appeal Board (“PTAB”), alleging that eight of the patents asserted by Align to have been infringed by the Defendants are unpatentable. On October 23, 2025, the PTAB issued decisions denying institution oftwo of Defendants eight IPRs. On October 23, October 27, October 30, and November 6, 2025, the PTAB issued decisions instituting proceedings on the remainingsix IPRs. On September 29, 2026, the PTAB issued a decision concluding that the challenger had not established that any of the challenged claims of US Patent No. 10,791,936 were unpatentable. We anticipate final decisions from the PTAB on each of the remaining challenged claims will be issued no later than November 9, 2026. We believe the petitions are without merit and intend to defend ourselves vigorously.

Angelalign Litigation

On August 15, 2025, we initiatedtwo actions in the European Unified Patent Court against various Angelalign entities including Angelalign Technology, Inc.; Angelalign France Technology SASU; Europe Angelalign Technology B.V.; Angelalign Technology (Germany) GmbH; Italy Angelalign Technology S.R.L. and Shanghai EA Medical Instruments Co., Ltd. One of these actions, alleging infringement of a patent related to user interfaces for treatment planning, sought provisional measures (i.e., provisional remedies) including a preliminary injunction. The other action alleged infringement of a patent related to the “power ridge” feature of clear aligners. Subsequently, on November 27, 2025, we initiated a third action in the Unified Patent Court against the same entities seeking provisional measures for infringement of a patent related to treatments in complex cases. The accused entities challenged the validity of the asserted patent in each of these actions. On January 13, 2026, Angelalign Technology (Germany) GmbH filed an action in the European Patent Office challenging the validity of the treatment-planning patent referenced above and on May 11, 2026, it also filed an action in the European Patent Office challenging the validity of the patent related to treatments in complex cases referenced above.

On February 12, 2026, the Unified Patent Court issued its decision in the provisional-measures action related to treatment planning, entering a preliminary injunction in Align’s favor and against Angel that prohibits Angel from using its “Live Now” feature, a user interface for treatment planning. Angel must pay €20,000 EUR per day or cease offering this infringing software feature. Angel was also ordered to pay interim costs of €400,000 EUR to Align. Angel has appealed the decision issued in this provisional-measures action. On July 8, 2026, the Court of Appeal of the Unified Patent Court issued its decision, rejecting Angel’s appeal and maintaining the preliminary injunction, as well as ordering Angel to pay the costs of the proceedings. In parallel, on March 16, 2026, Align initiated a merits infringement action under the treatment-planning patent seeking a permanent injunction and damages. This merits action additionally named UK Angelalign Technology Ltd. and Angel Technology Spain, S.L. as defendants.

On May 12, 2026, the Unified Patent Court issued its decision in the provisional-measures action related to complex cases, declining to award a preliminary injunction on the basis that there was insufficient evidence in those accelerated proceedings to determine that the patent was infringed. The decision in the provisional-measures proceedings was not appealed, yet Align can still enforce that same patent through a merits infringement action before the Unified Patent Court.

The hearing in the merits action before the Unified Patent Court related to the “power ridge” feature referenced above took place on September 4, 2026. On October 16, 2026, the Unified Patent Court concluded that Align’s “power ridge” was both valid and infringed by Angel. The court ordered an injunction against Angel’s use of infringing products in the territory of the Unified Patent Court; that Angel recall, remove from commerce, or destroy infringing products; that Angel pay Align damages from the period July 12, 2023 onward; and that Angel pay Align’s legal expenses in prosecuting the claim. Subsequent proceedings to determine an appropriate damages award will occur at a date to be determined. The merits action related to the treatment-planning feature is currently pending.

On August 18, 2025, we initiated an action in the U.S. District Court for the Eastern District of Texas against Angelalign Technology Inc; Wuxi EA Medical Instruments Technologies Ltd.; Wuxi EA Bio-Tech Co., Ltd.; and Shanghai EA Medical Instruments Co., Ltd. This action alleges infringement of patents related to multilayer materials for clear aligners and “bite ramp” and “power ridge” features of clear aligners. On January 2, 2026, following institution of an investigation by the U.S. International Trade Commission, referenced below, this action was stayed pending further order of the court.

On August 18, 2025, we initiatedtwo actions in China’s Zhengzhou Intermediate People’s Court against Shanghai Angelalign Medical Devices Co., Ltd.; Wuxi Angelalign Medical Device Technology Co., Ltd.; and Wuxi Angelalign Biotechnology Co., Ltd. These actions allege infringement of patents related to tooth attachments and treatment planning. Separately, on September 10, 2025, we filed an action against the same entities in the Jinan Intermediate People’s Court alleging infringement of a patent related to extraction site closure. And on January 12, 2026, we filed an action against these entities in the Fuzhou Intermediate People’s Court alleging infringement of a patent related to extraction site closure. On April 4, 2026, we initiated an additional civil action against these entities alleging infringement of a patent related to treatment planning. These actions are currently pending. On June 26, 2026, the Zhengzhou Intermediate People’s Court issued first- instance judgments finding no infringement of Align’stwo patents relating to tooth attachments and treatment planning. Align disagrees with the court’s findings and filed appeals with the Supreme People’s Court of China (“SPC”) on July 23, 2026. On August 10, 2026, Jinan Intermediate People’s Court issued its first-instance judgment, granting an injunction against Angel’s premolar extraction solution and awarding damages of RMB 10 million. Angel filed an appeal with SPC on August 24, 2026.

On January 16, 2026 and March 11, 2026, Shanghai Angelalign Medical Devices Co., Ltd. filed a petition with the China National Intellectual Property Administration (“CNIPA”) challenging the validity of ourtwo patents related to extraction site closure, which patent is the subject of the above-referenced infringement action filed before Jinan Intermediate People’s Court and Fuzhou Intermediate People’s court. On January 22 and February 12, 2026, Shanghai Angelalign Medical Devices Co., Ltd. filed two separate petitions with the CNIPA challenging the validity of our patent related to tooth attachments and another patent related to treatment planning, both of which are the subject of the above-referenced infringement actions filed with Zhengzhou Intermediate People’s Court. On August 24, 2026, Shanghai Angelalign Medical Devices Co., Ltd. filed another petition with the CNIPA seeking invalidation of another Align patent related to treatment planning, which is the subject of the above-referenced infringement action pending before the Fuzhou Intermediate People’s Court. These invalidity actions are currently pending.

On August 22, 2025, Shanghai Angelalign Medical Devices Co., Ltd. and Wuxi Angelalign Medical Devices Technology Co., Ltd. initiated an action against us in the Beijing Intellectual Property Court. The complaint alleged that we infringe a patent relating to undercut detection for mold manufacturing. On September 29, 2026, Beijing IP court issued its ruling approving Angel's withdrawal of the infringement action. On January 19, 2026, we filed a petition with the CNIPA challenging the validity of the above-referenced Angel patent related to undercut detection for mold manufacturing. On July 31, 2026, CNIPA issued a decision invalidating all the claims of this patent.

On September 23, 2025, we filed a complaint at the U.S. International Trade Commission (“ITC”) against Angelalign Technology Inc., Wuxi EA Medical Instruments Technologies Ltd.; Wuxi EA Bio-Tech Co., Ltd.; Shanghai EA Medical Instruments Co., Ltd.; and USA Angelalign Technology Corp. (collectively, “the ITC Respondents”). This complaint alleges unlawful importation and sale of clear aligners that infringe patents related to multilayer materials for clear aligners and “bite ramp” and “power ridge” features of clear aligners, in violation of 19 U.S.C.§ 1337. Further, the complaint requests that the ITC institute an investigation and issue an exclusion order blocking the ITC Respondents’ importation of infringing products into the United States, and a cease-and-desist order prohibiting the ITC Respondents from selling, marketing, or transferring infringing products within the United States. On December 19, 2025, the ITC instituted the requested investigation, which is currently pending. On January 26, 2026, the Chief Administrative Law Judge (“CALJ”) presiding over the investigation set a 14.7-month target date of March 22, 2027, which is the date by which the ITC’s final determination is expected to be issued. On July 20-24, 2026, the CALJ presided over the evidentiary hearing in Washington, D.C. The CALJ’s initial determination on the merits is due by November 20, 2026.

On August 11, 2026, Wuxi Angelalign Medical Device Technology Co., Ltd. filed an administrative action against us in the Jiangsu Provincial IP Bureau contending that Align’s treatment planning workflow and aligners manufactured based on treatment planning in that workflow violate a patent Angel holds relating to the monitoring of tooth correction. This matter is in its early stages, with Align only having been served on October 9, 2026, but we believe that these allegations are without merit and intend to defend ourselves vigorously.

On August 17, 2026, Wuxi Angelalign Medical Device Technology Co., Ltd. and Shanghai Angelalign Medical Devices Co., Ltd. jointly filed a patent infringement action against Align Technology, Inc., Ziyang AFAB, Align Shanghai, and Wuxi Ziyuan Xidong Dental Clinic Co., Ltd. in the Wuxi Intermediate People’s Court seeking an injunction and damages for the alleged infringement of another patent regarding undercut processing. We believe that these allegations are without merit and intend to defend ourselves vigorously.

In addition to the above, in the ordinary course of our operations, we are involved in a variety of claims, suits, investigations, and proceedings, including actions with respect to intellectual property claims, patent infringement claims, government investigations, labor and employment claims, breach of contract claims, tax, and other matters. Regardless of the outcome, these proceedings can have an adverse impact on us because of defense costs, diversion of management resources, and other factors. Although the results of complex legal proceedings are difficult to predict and our view of these matters may change in the future as litigation and events related thereto unfold; we currently do not believe that these matters, individually or in the aggregate, will materially affect our financial position, results of operations or cash flows. However, in the event of unexpected further developments, it is possible that the ultimate resolution of these matters, or other similar matters, if unfavorable, may be materially adverse to our financial position, results of operations or cash flows.

Note 8. 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 Majesty’s 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 held on January 27th through January 30th, 2025. On April 24, 2025, the Tax Tribunal issued a ruling in our favor indicating that clear aligners are “dental prostheses for the purposes of VAT”, which is a key condition for the VAT exemption. On June 13, 2025, HMRC applied for permission to appeal the Tax Tribunal decision, which was granted on July 15, 2025. On August 1, 2025, HMRC lodged their grounds for appeal to the Upper Tribunal.

In August 2025, we stopped charging VAT to our United Kingdom (“UK”) customers.

A hearing in front of the Upper Tribunal was held on May 7, 2026. On July 7, 2026, the Upper Tribunal released its decision and held that aligners are not “dental prostheses” for the purposes of VAT and are therefore subject to VAT in the UK. We sought and obtained permission to appeal the Upper Tribunal’s decision to the Court of Appeal. A hearing date has not yet been set.

Based on the information available, we determined that a loss is probable and reasonably estimable and recorded an estimated liability of approximately $43.1 million, inclusive of estimated interest, related to UK VAT as Legal settlements and contingencies under Accrued liabilities in our Condensed Consolidated Balance Sheets as of September 30, 2026. The recorded amount reflects our best estimate of the obligation as of the reporting date. We intend to exhaust all available appeals and vigorously defend our position; however, the ultimate resolution of this matter remains subject to significant uncertainty.

Indemnification Provisions

In the normal course of business, to facilitate transactions in our services and products, we indemnify certain parties: customers, vendors, lessors and other parties with respect to certain matters, including, but not limited to, services to be provided by us and intellectual property infringement claims made by third parties. In addition, we have entered into indemnification agreements with our directors and our executive officers that will require us, among other things, to indemnify them against certain liabilities that may arise by reason of their status or service as directors or officers. Several of these agreements limit the time within which an indemnification claim can be made and the amount of the claim.

It is not possible to make a reasonable estimate of the maximum potential amount of future payments, if any, under these indemnification agreements due to the unique facts and circumstances involved in each particular agreement. Additionally, we have a limited history of prior indemnification claims and the payments we have made under such agreements have not had a material adverse effect on our results of operations, cash flows or financial position. However, to the extent that valid indemnification claims arise in the future, future payments by us could be significant and could have a material adverse effect on our results of operations or cash flows in a particular period. As of September 30, 2026, we did nothave any material indemnification claims that were probable or reasonably possible.

Note 9. Stockholders’ Equity

As of September 30, 2026, the Align Technology, Inc. 2005 Incentive Plan, as amended, has a total reserve of 34,668,895 shares, of which 2,998,800 shares are available for issuance.

Summary of Stock-Based Compensation Expense

Stock-based compensation related to our stock-based awards and employee stock purchase plan for the three and nine months ended September 30, 2026 and 2025 is as follows (in thousands):

Restricted Stock Units (“RSUs”)

The fair value of RSUs is based on the closing price of our stock on the date of grant. Generally, RSUs vest over a period offour years.

A summary for the nine months ended September 30, 2026 is as follows:

As of September 30, 2026, we expect to recognize $226.4 million of total unamortized compensation costs, net of estimated forfeitures, related to RSUs over a weighted average period of 2.6 years.

Market-Performance Based Restricted Stock Units (“MSUs”)

We grant MSUs to members of senior management. Each MSU represents the right to one share of our common stock. The actual number of MSUs which will be eligible to vest will be based on the performance of our stock price relative to the performance of a stock market index over the vesting period. The fair value of MSUs was estimated using a Monte Carlo model. Because the awards contain a market condition, the related compensation expense is recognized over the service period regardless of whether the market condition is ultimately achieved, provided the service condition is satisfied. MSUs vest over a period ofthree years and the maximum number of shares eligible to vest is 250% of the number of MSUs initially granted.

The following table summarizes the MSU performance activity for the nine months ended September 30, 2026:

1 Includes MSUs vested during the period below 100% of the original grant as actual shares released are based on our stock performance relative to a market index over the vesting period.

As of September 30, 2026, we expect to recognize $57.3 million of total unamortized compensation costs, net of estimated forfeitures, related to MSUs over a weighted average period of 1.69 years.

Employee Stock Purchase Plan (“ESPP”)

As of September 30, 2026, we have 1,556,905 shares available for future issuance under the Align Technology, Inc. 2010 Employee Stock Purchase Plan (as amended and restated, the “2010 Purchase Plan”).

The fair value of the option component of the 2010 Purchase Plan shares was estimated at the grant date using the Black-Scholes option pricing model with the following weighted average assumptions:

As of September 30, 2026, we expect to recognize $4.9 million of total unamortized compensation costs related to future employee stock purchases over a weighted average period of 1.0 years.

Note 10. Common Stock Repurchase Programs

In January 2023, our Board of Directors authorized a plan to repurchase up to $1.0 billion of our common stock (the “January 2023 Repurchase Program”). The January 2023 Repurchase Program was completed in its entirety in the second quarter of 2025.

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”). The April 2025 Repurchase Program is expected to be completed over a period of up tothree years. As of September 30, 2026, we have $630.0 million remaining available for repurchase under the April 2025 Repurchase Program.

The following tables summarize the total repurchases of our common stock pursuant to Accelerated Share Repurchase (“ASR”) agreements and Open Market Repurchase (“OMR”) programs under the January 2023 and April 2025 Repurchase Programs:

Accelerated Share Repurchase Agreements

Open Market Repurchases

1 In October 2026, we completed the open market repurchases under the Q2 2026 Agreement. In total we repurchased approximately 1.2 million shares of our common stock at an average price of $163 per share for an aggregate purchase price of approximately of $200.0 million.

During the three months ended September 30, 2026, we repurchased approximately 0.6 million shares of our common stock under the April 2025 Repurchase Program at an average price of $164.73 per share for an aggregate purchase price of approximately $103.3 million. At September 30, 2026, $630.0 million remained available for repurchase under the program.

In October 2026, we repurchased approximately 0.2 million shares of our common stock under the April 2025 Repurchase Program at an average price of $145.45 per share for an aggregate purchase price of approximately $30.0 million; completing the open market repurchases under the Q2 2026 Agreement and leaving $600.0 million available for future repurchase under the April 2025 Repurchase Program.

Note 11. Accounting for Income Taxes

Our provision for income taxes was $35.0 million and $38.0 million for the three months ended September 30, 2026 and 2025, respectively, representing effective tax rates of 20.6% and 40.1%, respectively. Our provision for income taxes was $111.5 million and $134.1 million for the nine months ended September 30, 2026 and 2025, respectively, representing effective tax rates of 23.9% and 32.8%. Our effective tax rate differs from the statutory federal income tax rate of 21% for the three months ended September 30, 2026, primarily due to foreign income taxed at different rates and U.S. tax on foreign earnings, partially offset by state income taxes and non-deductible expenses in the U.S. Our effective tax rate differs from the statutory federal income tax rate of 21% for the nine months ended September 30, 2026, primarily due to the recognition of additional tax expense resulting from U.S. taxes on foreign earnings, state income taxes, and non-deductible expenses in the U.S., partially offset by the foreign income taxed at different rates. Our effective tax rate differs from the statutory federal income tax rate of 21% for the three and nine months ended September 30, 2025, primarily due to the recognition of additional tax expense resulting from U.S. taxes on foreign earnings, state income taxes, and non-deductible expenses in the U.S., partially offset by the foreign income taxed at different rates.

We exercise significant judgment in regard to estimates of future market growth, forecasted earnings and projected taxable income in determining the provision for income taxes and for purposes of assessing our ability to utilize any future benefit from deferred tax assets. We continue to assess the realizability of the deferred tax assets as we take into account new information. We may be required to adjust the valuation allowance for deferred tax assets if we determine, based on available evidence at the time of the determination, that it is more likely than not that some portion or all of the deferred tax assets will not be realized. This assessment includes deferred tax assets associated with our Switzerland tax deductible basis created from our 2020 intra-entity transfer of intellectual property, which have a finite utilization period and depend on our ability to generate sufficient taxable income in that jurisdiction. If we are unable to generate sufficient taxable income in Switzerland within the applicable utilization period, we may be required to establish a valuation allowance against some portion of these deferred tax assets. Any changes to the valuation allowance, particularly those related to our Switzerland deferred tax assets, could have a material adverse effect on our results of operations.

Our total gross unrecognized tax benefits, excluding interest and penalties, were $121.8 million and $117.4 million as of September 30, 2026 and December 31, 2025, respectively, a material amount of which would impact our effective tax rate if recognized. The increase in our unrecognized tax benefits relates primarily to positions taken on income tax return calculations finalized during the three and nine months ended September 30, 2026.

Note 12. Net Income per Share

The following table sets forth the computation of basic and diluted net income per share attributable to common stock (in thousands, except per share amounts):

The number of common share equivalents excluded from the computation of diluted earnings per share because the effect would have been anti-dilutive were as follows (in thousands):

Note 13. Supplemental Cash Flow Information

The supplemental cash flow information consists of the following (in thousands):

Note 14. 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 intotwo 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 segment's performance, by reviewing each measure against internal forecasts and historical performance. Our CODM may also benchmark each segment's performance against our competitors and external expectations.

Summarized financial information by reportable segment is as follows (in thousands):

1 Management has identified Cost of net revenues as a significant expense for our Clear Aligner and Systems and Services reportable segments.

Other segment expenses typically include employee related costs, marketing and advertising costs and depreciation and amortization expense incurred by various functions including selling, marketing, general and administrative and research and development.

Income from operations for each segment includes all geographic revenues, related cost of net revenues and operating expenses directly attributable to the reportable segment. Certain operating expenses are not directly attributable to a reportable segment and must be allocated. Each allocation is measured differently based on the nature of the cost being allocated. Certain other operating expenses are not specifically allocated to segment income from operations and generally include various corporate expenses such as stock-based compensation and costs related to information technology (“IT”), facilities, human resources, accounting and finance, legal and regulatory, other separately managed general and administrative costs outside the reportable segments and restructuring costs.

The following table reconciles total segment income from operations in the table above to net income before provision for income taxes (in thousands):

The following table includes certain non-cash expenses for each reportable segment (in thousands):

1 Includes$15.6 million of accelerated depreciation for thenine months ended September 30, 2026 as disclosed in Note 1 “Summary of Significant Accounting Policies."

Our CODM does not regularly review total assets at the reportable segment level; however, we have provided geographical information related to our long-lived assets below.

Geographical Information

Net revenues are presented below by geographic area (in thousands):

1 Net revenues are attributed to countries based on the location of where revenues are recognized by our legal entities.

Long-lived assets, which includes Property, plant and equipment, net and Operating lease right-of-use assets, net, are presented below by geographic area (in thousands):

1 Long-lived assets are attributed to countries based on the location of our entity that owns or leases the assets.

Note 15. Restructuring and Other Charges

2024 Restructuring

In the fourth quarter of 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. During the year ended 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. As of September 30, 2026, we had no remaining restructuring liability related to the 2024 Restructuring.

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. In the third and fourth quarter of 2025, we incurred approximately $40.9 million in restructuring expenses, of which $17.1 million remained unpaid and were included in Accrued liabilities as of December 31, 2025. For the nine months ended September 30, 2026, we reduced our December 31, 2025 restructuring liability by approximately $15.4 million primarily due to cash payments and an adjustment of approximately $0.7 million, most of which was recorded in Selling, general and administrative expense in our Condensed Consolidated Statements of Operations. As of September 30, 2026, $1.1 million remained unpaid and was included in Accrued liabilities in our Condensed Consolidated Balance Sheets.

We have completed the 2025 restructuring plan and incurred approximately $40.2 million in total restructuring expenses. We do not expect to incur additional restructuring expenses in connection with the 2025 restructuring plan.

2026 Restructuring

During the third quarter of 2026, 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 anticipate incurring between $35.0 million and $37.0 million in total restructuring expenses, primarily related to involuntary termination benefits, including employee severance and other post- employment benefits. We recorded $11.2 million in Cost of net revenues and $17.2 million in Restructuring and other charges in our Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2026. All charges recorded to Cost of net revenues were allocated to our Clear Aligner reportable segment and all charges to Restructuring and other charges were unallocated corporate expenses. As of September 30, 2026, $20.7 million remained unpaid and was included in Accrued liabilities in our Condensed Consolidated Balance Sheets.

The 2024, 2025 and 2026 restructuring activities were primarily related to involuntary termination benefits, including employee severance and other post-employment benefits.

Activity related to the restructuring liabilities associated with our restructuring initiatives consists of the following (in thousands):

1 Included in “Accrued liabilities” within our Condensed Consolidated Balance Sheets.

2 2025 restructuring activities include an immaterial amount of charges not related to post-employment benefits.

Note 16. Assets Held for Sale

In connection with the 2025 restructuring activities discussed in Note 15 “Restructuring and Other Charges,” during the third quarter of 2025, we classified a disposal group associated with a manufacturing facility in Juarez, Mexico as held for sale and recognized an impairment loss of $23.1 million.

During the first quarter of 2026, we recognized a gain of $11.7 million resulting from an increase in fair value less costs to sell, driven by updated market‑based information. The gain did not exceed the cumulative impairment losses previously recognized on the disposal group. The gain was recorded within Cost of net revenues in our Condensed Consolidated Statements of Operations and was attributable to our Clear Aligner reportable segment.

During the second quarter of 2026, we completed the sale of the disposal group associated with the manufacturing facility in Juarez, Mexico and received net proceeds of approximately $42 million. The carrying value of the disposal group had been adjusted to fair value less cost to sell as of March 31, 2026 and accordingly, no material gain or loss was recognized upon sale.