ALGN

Earnings results often indicate what direction a company will take in the months ahead. With Q2 behind us, let’s have a look at Align Technology (NASDAQ:ALGN) and its peers. The dental equipment and technology industry encompasses companies that manufacture orthodontic products, dental implants, imaging systems, and digital tools for dental professionals. These companies benefit from recurring revenue streams tied to consumables, ongoing maintenance, and growing demand for aesthetic and restorative dentistry. However, high R&D costs, significant capital investment requirements, and reliance on discretionary spending make them vulnerable to economic cycles. Over the next few years, tailwinds for the sector include innovation in digital workflows, such as 3D printing and AI-driven diagnostics, which enhance the efficiency and precision of dental care. However, headwinds include economic uncertainty, which could reduce patient spending on elective procedures, regulatory challenges, and potential pricing pressures from consolidated dental service organizations (DSOs). The 4 dental equipment & technology stocks we track reported a strong Q2. As a group, revenues beat analysts’ consensus estimates by 1.4% while next quarter’s revenue guidance was 1.3% below. Amidst this news, share prices of the companies have had a rough stretch. On average, they are down 6.7% since the latest earnings results. Pioneering an alternative to traditional metal braces with nearly invisible plastic aligners, Align Technology (NASDAQ:ALGN) designs and manufactures Invisalign clear aligners, iTero intraoral scanners, and dental CAD/CAM software for orthodontic and restorative treatments. Align Technology reported revenues of $1.06 billion, up 4.3% year on year. This print was in line with analysts’ expectations, but overall, it was a mixed quarter for the company with a beat of analysts’ EPS estimates but revenue guidance for next quarter slightly missing analysts’ expectations. Align Technology delivered the weakest performance against analyst estimates in the group. The market seems disappointed with the results as the stock is down 12.2% since reporting and currently trades at $158.04. Read our full report on Align Technology here, it’s free. Uniting more than 30 trusted brands including Nobel Biocare, Ormco, and DEXIS under one corporate umbrella, Envista Holdings (NYSE:NVST) is a global dental products company that provides equipment, consumables, and specialized technologies for dental professionals. Envista reported revenues of $730.5 million, up 7.1% year on year, outperforming analysts’ expectations by 2%. The business had an exceptional quarter with a solid beat of analysts’ full-year EPS guidance estimates and a beat of analysts’ EPS estimates. Envista pulled off the fastest revenue growth among its peers. Although it had a fine quarter compared to its peers, the market seems unhappy with the results as the stock is down 4.8% since reporting. It currently trades at $27.27. Is now the time to buy Envista? Access our full analysis of the earnings results here, it’s free. With roots dating back to 1877 when it introduced the first dental electric drill, Dentsply Sirona (NASDAQ:XRAY) manufactures and sells professional dental equipment, technologies, and consumable products used by dentists and specialists worldwide. Dentsply Sirona reported revenues of $898 million, down 4.1% year on year, exceeding analysts’ expectations by 0.6%. It may have had the worst quarter among its peers, but its results were still good as it also locked in a beat of analysts’ EPS estimates and an impressive beat of analysts’ full-year EPS guidance estimates. Dentsply Sirona delivered the slowest revenue growth of the whole group. As expected, the stock is down 14.2% since the results and currently trades at $11.30. Read our full analysis of Dentsply Sirona’s results here. With a vast inventory of over 300,000 products stocked in distribution centers spanning more than 5.3 million square feet worldwide, Henry Schein (NASDAQ:HSIC) is a global distributor of healthcare products and services primarily to dental practices, medical offices, and other healthcare facilities. Henry Schein reported revenues of $3.46 billion, up 6.7% year on year. This print surpassed analysts’ expectations by 2.6%. Overall, it was a strong quarter as it also put up a solid beat of analysts’ organic revenue estimates and a beat of analysts’ EPS estimates. Henry Schein pulled off the biggest analyst estimate beat in the group. The stock is up 4.3% since reporting and currently trades at $90.27. Read our full, actionable report on Henry Schein here, it’s free. Over the past year, investors have been forced to repeatedly answer the same question: what is the market’s biggest risk? The answer has changed several times, and each shift has reshaped market leadership. Late in 2025 and early 2026, artificial intelligence became the market’s primary uncertainty. Investors questioned whether AI would erode software pricing power and weaken competitive moats as AI made it easier to replicate once-differentiated products. By the spring, technology took a back seat to geopolitics. The U.S. conflict with Iran briefly became the market’s dominant narrative, raising concerns about oil prices, inflation, and global growth. But as energy markets remained orderly and fears of a prolonged supply disruption faded, investors quickly turned their focus back to fundamentals. Want to invest in winners with rock-solid fundamentals? Check out our Top 6 Stocks and add them to your watchlist. These companies are poised for growth regardless of the political or macroeconomic climate.

It has been about a month since the last earnings report for Align Technology (ALGN). Shares have lost about 8.4% in that time frame, underperforming the S&P 500. But investors have to be wondering, will the recent negative trend continue leading up to its next earnings release, or is Align Technology due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its latest earnings report in order to get a better handle on the important catalysts. Align Technology reported second-quarter 2026 non-GAAP earnings of $2.64 per share, up 6.0% year over year. The figure beat the Zacks Consensus Estimate by 3.1%. Revenues increased 4.3% to $1.06 billion and topped the consensus mark by 0.4%. Clear Aligner revenues increased 8.2% year over year to $870.9 million. This growth reflected higher shipment volumes, price increases, lower net deferrals and favorable foreign exchange. These gains were partly offset by higher discounts and a mix shift toward lower-priced products and countries. Shipments to orthodontists and general practitioner dentists rose 7.8% and 6.6%, respectively. A record 89,200 doctors submitted Invisalign cases, while doctor utilization increased 3.8% year over year. International momentum was led by double-digit growth across EMEA and APAC, along with record second-quarter shipments in Latin America. Imaging Systems and CAD/CAM Services revenues declined 10.8% year over year to $185.3 million. Persistent softness in the capital equipment market and a shift toward lower-priced scanners, rentals and leasing programs weighed on reported revenues. However, scanner unit placements increased by double digits, with placements to new doctors reaching a record. The active scanner installed base grew approximately 11%, while restorative, wellness and orthodontic scans increased 16% to more than 12.4 million. Exocad revenues also posted double-digit growth. The second-quarter gross margin expanded 180 basis points year over year to 71.7%, driven by operational efficiencies, a tariff refund and higher Clear Aligner average selling prices. Non-GAAP gross margin also increased 180 basis points to 72.3%. Operating expenses rose 10.7% to $603.4 million, mainly due to a U.K. value-added tax accrual and higher employee compensation. GAAP operating margin contracted 150 basis points to 14.6%, while non-GAAP operating margin expanded 160 basis points to 22.9%. Align ended the second quarter with $1.10 billion in cash and cash equivalents, up from $1.06 billion at the end of the first quarter. Operating cash flow totaled $192.8 million, while free cash flow amounted to $157.1 million after capital expenditures of $35.7 million. The company repurchased roughly 393,400 shares for $67 million during the quarter. Management increased its 2026 repurchase commitment to $400-$500 million. ALGN had $733.3 million remaining under its existing $1 billion authorization at quarter-end. For the third quarter of 2026, Align expects worldwide revenues of $1.00-$1.02 billion. The Zacks Consensus Estimate for revenues is currently pegged at $1.01 billion, implying 1.4% growth. For 2026, management continues to expect worldwide revenue growth of 3-4%. Clear Aligner volume is now projected to increase approximately 6%, while average selling prices are expected to be flat to slightly lower year over year. The Zacks Consensus Estimate for 2026 revenues is currently pinned at $4.17 billion, projecting 3.3% growth. In the past month, investors have witnessed a downward trend in fresh estimates. Currently, Align Technology has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. However, the stock has a score of B on the value side, putting it in the second quintile for this investment strategy. Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in. Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Interestingly, Align Technology has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months. Align Technology belongs to the Zacks Medical - Dental Supplies industry. Another stock from the same industry, West Pharmaceutical Services (WST), has gained 1.9% over the past month. More than a month has passed since the company reported results for the quarter ended June 2026. West Pharmaceutical reported revenues of $872.3 million in the last reported quarter, representing a year-over-year change of +13.8%. EPS of $2.37 for the same period compares with $1.84 a year ago. For the current quarter, West Pharmaceutical is expected to post earnings of $2.18 per share, indicating a change of +11.2% from the year-ago quarter. The Zacks Consensus Estimate has changed -0.4% over the last 30 days. The overall direction and magnitude of estimate revisions translate into a Zacks Rank #2 (Buy) for West Pharmaceutical. Also, the stock has a VGM Score of F. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Align Technology, Inc. (ALGN) : Free Stock Analysis Report West Pharmaceutical Services, Inc. (WST) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Align Technology ALGN is dealing with a new U.K. tax issue in 2026. A July Upper Tribunal decision overturned the prior value-added tax exemption for clear aligners, adding a fresh earnings and pricing variable. The ruling arrives as international Clear Aligner demand remains healthy but foreign exchange, softer retail demand and scanner mix continue to complicate the margin picture. Align recorded an estimated $37.5 million liability, including interest, after the U.K. Upper Tribunal reversed the earlier VAT-exemption ruling. The charge makes the dispute an immediate earnings matter rather than a legal issue with only future consequences. The accrual also contributed to higher second-quarter operating expenses. Those expenses rose 10.7% year over year to $603.4 million, with the U.K. VAT accrual and higher employee compensation among the main drivers. In the past year, ALHC shares have risen 25.1% compared with the industry’s 21.5% growth. Image Source: Zacks Investment Research From Sept. 7, 2026, Align plans to charge 20% VAT on applicable U.K. Invisalign aligners and Vivera retainers while keeping list prices unchanged. That changes the economics of an established product line without changing published list prices. The development adds another pricing variable in the U.K. Align already expects 2026 Clear Aligner average selling prices to be flat to slightly down from 2025, reflecting broader mix pressure across countries and products. Per the Zacks Consensus Estimate, the company’s 2026 revenues are pegged at $4.17 billion, indicating 3.3% year over year growth. Image Source: Zacks Investment Research Align plans to appeal the tribunal decision, so the final financial outcome remains unresolved. The $37.5 million liability is already recorded, but the longer-term cost and operating consequences will depend on how the appeal process develops. That distinction matters for investors. The current accrual is visible in 2026 results, while the durability of the VAT treatment remains uncertain and could continue to influence how Align manages the U.K. business. Foreign exchange was already weighing on profitability before the VAT issue became more prominent. In the second quarter, currency movements reduced gross margin by about 0.8 percentage points and operating margin by about 1.4 points year over year. The broader dental market provides useful context. DENTSPLY SIRONA Inc. XRAY manufactures professional dental products and technologies across equipment, consumables and specialty products. Henry Schein, Inc. HSIC supplies office-based dental practitioners with merchandise, equipment and technology solutions, making both relevant industry reference points even though Align’s VAT dispute is company-specific. International Clear Aligner growth remains a counterweight. Second-quarter volume increased at double-digit rates in both EMEA and APAC, while Latin America delivered record second-quarter shipments. That geographic momentum supports Align’s broader 2026 volume outlook. Management now expects Clear Aligner volume growth of approximately 6%, leaving investors to weigh expanding international demand against the incremental cost and uncertainty concentrated in the U.K. The VAT ruling has already created a measurable charge, while the appeal leaves the longer-term impact unsettled. For 2026, the issue adds to currency and mix pressures rather than standing alone as the only driver of Align’s earnings outlook. ALGN currently carries a Zacks Rank #3 (Hold), with a Value Score of B, Growth Score of B, VGM Score of B and Momentum Score of F. The B scores are favorable within the Style Score framework, but the F Momentum Score signals weak timing support. That combination is consistent with monitoring the appeal and operating impact rather than treating the VAT ruling by itself as a decisive bullish or bearish catalyst. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Align Technology, Inc. (ALGN) : Free Stock Analysis Report DENTSPLY SIRONA Inc. (XRAY) : Free Stock Analysis Report Henry Schein, Inc. (HSIC) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Image source: The Motley Fool. Wednesday, July 29, 2026 at 4:30 p.m. ET Vice President of Corporate Communications and Investor Relations - Shirley Stacy President and Chief Executive Officer - Joseph Hogan Executive Vice President and Chief Financial Officer - John Morici Operator: Greetings. Welcome to the Align Second Quarter 2026 Earnings Call. Please note, this conference is being recorded. I will now turn the conference over to your host, Shirley Stacy, with Align Technology. You may begin. Shirley Stacy: Good afternoon, and thank you for joining us. I'm Shirley Stacy, Vice President of Corporate Communications and Investor Relations. Joining me for today's call is Joe Hogan, President and CEO; and John Morici, CFO. We issued second quarter 2026 financial results today via Business Wire, which is available on our website at investor.aligntech.com. Today's conference call is being audio webcast and will be archived on our website for approximately 1 month. As a reminder, the information provided and discussed today will include forward-looking statements, including statements about Align's future events, product outlook and financial expectations. These forward-looking statements are only predictions and involve risks and uncertainties that are described in more detail in our most recent periodic reports filed with the Securities and Exchange Commission available on our website and at sec.gov. Actual results may vary significantly, and Align expressly assumes no obligation to update any forward-looking statements. We have posted historical financial statements with corresponding reconciliations, including our GAAP to non-GAAP reconciliation, if applicable, and our second quarter 2026 conference call slides on our website under Quarterly Results. Please refer to these files for more detailed information. With that, I'll turn the call over to Align Technology's President and CEO, Joe Hogan. Joe? Joseph Hogan: Thanks, Shirley. Good afternoon, and thank you for joining us today. On today's call, I'll start with an overview of our second quarter 2026 results, discuss performance across our 2 operating segments, Clear Aligners and Systems and Services. John will then walk you through our financial results and outlook for Q3 and 2026. And after that, I'll come back and highlight a few key takeaways before we open the call for questions. We delivered a solid second quarter with record revenues of $1.06 billion, up 4.3% year-over-year, driven by record Clear Aligner volumes of 692,000 cases and 8.2% Clear Aligner revenue growth. Q2 '26 revenues and Clear Aligner volumes were in line with our outlook, while Clear Aligner ASPs and non-GAAP operating margin of 22.9% exceeded our expectations. Q2 '26 year-over-year Clear Aligner volume growth of 7.4% was driven by continued double-digit expansion across APAC, EMEA and Latin America, together with stable performance in North America. Growth reflected continuing adoption across orthodontists and GP dentist channels and across adult, teen and growing patient segments as well as continued double-digit growth from our DSOs. Investments in patient financing, clinical support programs, doctor subscription offerings and practice productivity solutions supported adoption and utilization across our global Invisalign business. In Systems and Services, Q2 '26 revenue performance reflected persistent softness in the capital equipment market as well as a shift toward lower-priced scanners and flexible acquisition models, including leasing and rental programs, which generate lower upfront revenue than traditional scanner purchases. Overall, second quarter results reflect continued execution against a volatile macroeconomic backdrop. While the environment created some noise in the quarter, the underlying momentum in business driven by ongoing investments in innovation, customer engagement and digital workflows continue to support improvements in practice productivity, patient conversion and treatment adoption. For Imaging Systems and CAD/CAM Systems and Services, including iTero, exocad and X-ray Insight software, Q2 revenue of $185.3 million was down 11% year-over-year as a result of lower scanner ASPs, partially offset by double-digit growth in unit placements, driven by continued challenges in the capital equipment market with higher interest rates and increased macro uncertainty. We continue to lower the total acquisition cost of and expand access to intraoral scanning by offering doctors a range of purchasing options for iTero Lumina scanner that best fits the needs, budgets and cash flows of our customers, including low-cost configurations such as iTero Lumina PC and certified preowned scanners and rental and lease programs. Importantly, while growing adoption of these purchasing options creates a near-term headwind to reported revenue and profitability, this is an intentionally and strategically attractive evolution of the business. By lowering the upfront cost of adoption, we can expand access to care, grow recurring revenue and strengthen the Align Digital Platform. We're already seeing the benefits of this strategy. During Q2, scanner placements to new doctors reached a record level and increased double digits year-over-year, driven by continued adoption of iTero Lumina. Active scanner units also grew double digits year-over-year, while more than 12.4 million restorative, wellness and orthodontic scans were performed during the quarter, an increase of 16% year-over-year. Healthy scanner placements, growth in active units and increasing digital workflow utilization support communications between doctors and patients to improve patient oral health and aesthetics and strengthen the connection between diagnostics, treatment planning, restorative workflows, orthodontic treatments, including Clear Aligner adoption. Our exocad CAD/CAM business delivered double-digit year-over-year revenue growth in Q2, reinforcing our strategy to expand access to care by seamlessly integrating orthodontics and restorative dentistry across the Align Digital Platform. During the quarter, exocad hosted its flagship Insights 2026 event, bringing together more than 850 dental professionals from over 44 countries and launched exocad ART, which means Advanced Restorative Treatment, which combines tooth alignment and restorative treatments within the exocad software to offer more doctors and patients more comprehensive treatment options. Q2 '26 Clear Aligner shipments reached a record 692,000 cases, increasing 7.4% year-over-year. Growth was broad-based across customer channels, patient segments and geographies, reflecting continued adoption of the Invisalign System and Benefits of our strategic initiatives to improve affordability, patient conversion, clinical confidence and practice productivity. Growth was supported by both increased doctor adoption and higher utilization. During the quarter, a record 89,200 doctors submitted Invisalign cases, up globally 3.4% year-over-year, while doctor utilization increased 3.8%, reflecting growth across all regions. Shipments to orthodontists increased 7.8% year-over-year and shipments to GP dentists increased 6.6%, demonstrating ongoing momentum across both customer channels. Regionally, growth was led by our international markets, EMEA and APAC, both delivered double-digit volume growth, driven by increased utilization across doctor channels and patient segments, while Latin America delivered record second quarter shipments supported by increased submitters and higher utilization. North America remained relatively stable overall with continued strength in orthodontic and DSO channels, helping to offset slower retail demand. Our growth initiatives continue to gain traction across orthodontists, GP dentists and DSO investments in financing, clinical support, workflow solutions and practice productivity tools are helping doctors increase utilization, improve patient conversion and expand access to treatment. Adoption of programs such as DSP, patient financing solutions and Comp Zero AA, which are designed to support practice growth while improving affordability and access to patients remain encouraging. For teens and growing patients, treatment starts increased 7.2% year-over-year to 240,000 Invisalign cases led by China, Japan, Turkey, India and Brazil. Continued adoption of Invisalign First, the Invisalign Palatal Expander and Invisalign MOAB, Mandibular Advancement with Occlusal Blocks, reflects greater doctor confidence in our growing patient portfolio and reinforces the significant long-term opportunity we see in these categories. We recently introduced 2 new capabilities across the Align Digital Platform designed to improve patient engagement, treatment planning and workflow efficiency. Together with the Invisalign Palatal Expander platform, integrated buttons, custom trim lines and specific 3D-printed attachments, these capabilities strengthen the connection between imaging, diagnostics, treatment planning and treatment delivery through a more integrated digital workflow. We featured these innovations this past weekend at the 2026 Invisalign Ortho Summit, our premier peer-to-peer clinical education event, where we brought together our innovations to life, demonstrating how we leverage software, visualization, digital treatment planning and 3D printing and workflow connectivity to explain clinical applicability, enhance practice productivity and strengthen customer engagement. Before turning to John, I'd like to briefly address the Strategic Initiatives press release we issued today regarding Elliott Management. As we've discussed over the past several quarters, we remain focused on strengthening execution, expanding profitability, advancing innovation and positioning Align to capitalize on the significant long-term opportunity we see in digital orthodontics and restorative dentistry. The initiatives announced today follow constructive discussions with Elliott are consistent with our objectives and build on work underway across the company. First, as part of our ongoing approach to Board refreshment and governance, we intend to add 3 new independent directors whose backgrounds will further strengthen the Board's expertise in areas, including health care technology, innovations, operations and scaling global businesses. We regularly evaluate these skills and experiences represented on the Board to ensure that they align with the evolving needs of our business, and these planned additions reflect that ongoing process. Second, we have initiated a comprehensive strategic and operating model review, supported by a leading global consulting firm to help us further enhance commercial execution, organizational effectiveness, scalability and optimizing resources as we enter our next phase of growth. Importantly, this work is focused on ensuring that we are positioned to capture the significant opportunities ahead while continuing to improve profitability and long-term value creation. Third, we increased our 2026 share repurchase commitment, reflecting both the Board's and management's confidence in Align's long-term strategy, competitive position and future cash-generating potential. Finally, we appreciate our discussions with Elliott and look forward to continuing our productive dialogue as we execute the initiatives outlined in the separate press release. The Board and management team remain fully aligned around our strategy, our growth opportunities and our commitment to creating long-term value for shareholders. Our strategy remains focused on digital orthodontics and restorative dentistry. We're excited for the opportunity to sharpen execution, improve operating leverage and enhance governance as we continue to pursue the significant growth opportunities. With that, I'll now turn it over to John. John Morici: Thanks, Joe. Now for more details on our Q2 results. Total revenues for the second quarter were $1,056.2 million, up 4.3% from the corresponding quarter a year ago, in line with our Q2 expectations. On a constant currency basis, Q2 revenues were favorably impacted by approximately $12.5 million year-over-year or approximately 1.2%. Q2 Clear Aligner revenues were $870.9 million, up 8.2% year-over-year, primarily due to higher volume, price increases, lower net deferrals and favorable foreign exchange, partially offset by mix shift to lower-priced countries and products and higher discounts. Favorable foreign exchange impacted Q2 Clear Aligner revenues by approximately $10.6 million or approximately 1.2% year-over-year. Q2 Clear Aligner average per case shipment price of $1,260 increased 0.8% or $10 per case on a year-over-year basis, primarily due to price increases, lower net deferrals, favorable foreign exchange, partially offset by mix shift to lower-priced countries and products and higher discounts. Q2 Systems and Services revenues of $185.3 million were down 10.8% year-over-year. As Joe discussed, reported revenue was meaningfully affected by the ongoing and strategic evolution of our scanner business model, including greater adoption of lower-cost system configurations and a growing mix of leases and rentals relative to upfront purchases. These options lower the initial cost for customers and are helping us expand patient access to digital diagnostic, restorative and orthodontic treatment through iTero scanners, Invisalign Clear Aligners and the Align Digital Platform. During the quarter, placements to new doctors reached a record level and increased double digits year-over-year, while our active scanner installed base grew approximately 11% year-over-year. The growing adoption of lower-priced scanner configurations, including leasing and rental programs, reflects our commitment to expanding customer choice and increasing access to digital dental workflows. By offering a broader range of acquisition options, we are enabling more practices to participate in digital orthodontic and restorative care. This is intentional. As the installed base grows, we create opportunities to expand the funnel for orthodontic and restorative treatment, which is better for patients and doctors and carries higher margin and recurring revenue. We are giving up certain economics at the point of sale to expand patient access to treatment, giving doctors the tools they need to provide the treatment and increase volumes and revenues on the back end. Q2 Systems and Services revenues reflected lower system ASPs, driven in part by increased adoption of lower-cost configurations and lower scanner wand sales, partially offset by higher systems volume, higher nonsystem sales and favorable foreign exchange. Foreign exchange favorably impacted Q2 Systems and Services revenues by approximately $1.9 million year-over-year or approximately 1%. Moving on to gross margin. Second quarter overall gross margin was 71.7%, up 1.8 points year-over-year, primarily due to operational efficiencies, tariff refund and higher Clear Aligner ASPs. Q2 overall gross margin was unfavorably impacted by foreign exchange of 0.8 points year-over-year. On a non-GAAP basis, which excludes stock-based compensation, amortization of intangibles related to certain acquisitions, depreciation expense on assets disposed of other than by sale, restructuring and other non-GAAP charges, gross margin for the second quarter was 72.3%, up 1.8 points year-over-year or up approximately 2.6 points at constant currency. Clear Aligner gross margin for the second quarter was 71.4%, up 1.3 points year-over-year, primarily due to higher ASPs and operational efficiencies, partially offset by higher freight costs. Q2 Clear Aligner gross margin was impacted by unfavorable foreign exchange of approximately 0.8 points year-over-year. Margin expansion is increasingly driven by lower refinement rates, improved treatment predictability and higher manufacturing throughput. The result of Align's intentional investment in a data, software and manufacturing-driven flywheel that compounds with scale. Many of our lower-priced product configurations, such as Comp 3-in-3 and DSP Touch-Up, include fewer or no additional aligners and require less manufacturing costs, supporting gross margins and improving cash conversion despite lower upfront pricing. The clinical versatility of the Invisalign System allows us to offer configurations such as Zero AA products, enabling doctors to expand Invisalign adoption while meeting patient expectations. These offerings enhance our ability to compete against traditional wires and brackets and lower-priced Clear Aligner alternatives while allowing us to address a broader range of case complexity and price points without compromising long-term unit economics. Systems and Services gross margin for the second quarter was 73.3%, up 3.9 points year-over-year, primarily due to operational efficiencies and tariff refund, partially offset by lower ASPs. On a year-over-year basis, Q2 Systems and Services gross margin was unfavorably impacted from foreign exchange by approximately 0.6 points year-over-year. Q2 operating expenses were $603.4 million, up 10.7% year-over-year. Year-over-year operating expenses increased by $58.3 million, primarily due to U.K. VAT accrual and higher employee compensation. On a non-GAAP basis, excluding stock-based compensation, legal settlements and contingencies, restructuring and other charges and amortization of acquired intangibles related to certain acquisitions, Q2 '26 non-GAAP operating expenses were $521.5 million, up 4.8% year-over-year. Our second quarter operating income of $154 million resulted in an operating margin of 14.6%, down approximately 1.5 points year-over-year. Operating margin was unfavorably impacted from foreign exchange by approximately 1.4 points year-over-year. On a non-GAAP basis, which excludes stock-based compensation, legal settlements and contingencies, restructuring and other charges and amortization of acquired intangibles related to certain acquisitions, operating margin for the second quarter was 22.9%, up 1.6 points year-over-year or approximately 3.1 points at constant currency. The Q2 '26 GAAP effective tax rate was 27.2% compared to 28.2% in the second quarter of 2025. The second quarter GAAP effective tax rate was lower than the second quarter effective tax rate of the prior year primarily due to increased earnings in low tax jurisdictions. Our Q2 '26 non-GAAP effective tax rate was 20%, which reflects our long-term projected tax rate. Second quarter net income per diluted share was $1.51, down $0.20 compared to the prior year. On a non-GAAP basis, net income per diluted share was $2.64 for the second quarter, up 6% year-over-year. Our GAAP and non-GAAP EPS was unfavorably impacted by $0.23 on a year-over-year basis due to foreign exchange. We continue to maintain a strong balance sheet and healthy free cash flow, providing flexibility to invest in innovation, support customers and return capital to shareholders. As of June 30, 2026, cash and cash equivalents were $1,102.6 million, up $201.4 million year-over-year. Of the $1,102.6 million balance, $241.1 million was held in the U.S. and $861.5 million was held by our international entities. Align maintains a disciplined capital return program. During Q2 '26, we repurchased approximately 393,400 shares of our common stock at an average price of $169.45 per share for a total of $67 million. These purchases were made pursuant to the $200 million open market repurchase plan announced on April 29, 2026, which we expect to be completed in October of 2026. In connection with the expanded value creation initiatives announced today, we now intend to repurchase an aggregate of approximately $400 million to $500 million of our common stock during full year 2026, inclusive of the repurchase under the $200 million plan. As of June 30, 2026, $733.3 million remains available for repurchase of our common stock under our $1 billion stock repurchase program announced in April of 2025. Q2 accounts receivable balance was $1,148.4 million. Our overall days sales outstanding was 98 days, down 1 day as compared to Q2 of 2025. Cash flow from operations for the second quarter was $192.8 million. Capital expenditures for the second quarter were $35.7 million, primarily related to investments in our manufacturing capacity and facilities. Free cash flow, defined as cash flow from operations minus capital expenditures, amounted to $157.1 million. We continue to maintain a strong balance sheet and generate healthy cash flow, providing flexibility to invest in innovation, support customers and return value to shareholders. We remain focused on disciplined capital allocation and long-term value creation. In summary, our second quarter results reflect continued execution across the business. Solid Clear Aligner performance, disciplined expense management and operational improvements supported revenue growth in line with our outlook and non-GAAP operating margin above our expectations. Our growth initiatives continue to drive doctor adoption, utilization and patient conversion. While Q2 '26 Systems and Services revenue was below our original expectations, underlying scanner adoption remained healthy. And the reported lower revenues reflects lower price scanners and the transition toward lease and rental models that increased patient access to care by offering a broader range of purchasing options and increasing adoption of our digital scanning technology. This is a deliberate trade-off on our part. While this model may impact upfront economics and timing of revenue recognition, it enables us to serve more customers and to drive for higher margin treatment revenue and durable long-term growth. Stronger Clear Aligner revenue growth and ASP performance helped offset the near-term impact. Before I turn to our outlook, I want to provide an update on the U.K. VAT situation. Following the First-tier Tribunal's 2025 decision that Clear Aligners qualify as VAT-exempt dental prostheses, we stopped charging VAT to U.K. customers effective August 1, 2025. On July 7, 2026, the U.K. Upper Tribunal overturned that decision, determining that Clear Aligners do not qualify as VAT-exempt dental prostheses. We acknowledge the ruling and will comply with applicable law. Effective September 7, 2026, invoices will include U.K. VAT at 20% on applicable Invisalign aligners and Vivera retainers. Our list price remain unchanged. As a result of the ruling, we have recorded an estimated liability of approximately $37.5 million, inclusive of interest. We intend to appeal, though the ultimate resolution remains subject to uncertainty. Now turning to Q3 and fiscal '26 business outlook. Assuming no circumstances occur beyond our control, such as foreign exchange, macroeconomic condition, an extended war and changes to currently applicable duties, including tariffs or other fees that could impact our business. We expect Q3 '26 worldwide revenues to be in the range of $1 billion to $1.020 billion, down sequentially from Q2 of '26. We expect Q3 '26 Clear Aligner volume to be up mid-single digits year-over-year and Q3 '26 Clear Aligner ASPs to be down sequentially from geographic mix and foreign exchange. We expect Q3 '26 Systems and Services revenue to be down sequentially and year-over-year because of Q3 seasonality, alongside a continued mix shift towards lower-priced scanners and flexible acquisition models, including leasing and rental units and certified preowned offerings. We expect Q3 '26 worldwide GAAP gross margin to be 67.5% to 68.5%, down sequentially approximately by 3 to 4 points due to the incurrence of onetime charges expected to be approximately $20 million to $30 million, primarily for accelerated depreciation and restructuring and other charges in Q3 of '26. We expect Q3 non-GAAP gross margin to be approximately 71%, down sequentially from lower ASPs, consistent with typical Q3 quarter-over-quarter trends. We expect Q3 '26 GAAP operating margin to be between 13.5% and 15% due to the incurrence of onetime charges expected to be approximately $35 million to $50 million primarily for restructuring and other charges and accelerated depreciation in Q3 of '26. We expect Q3 '26 non-GAAP operating margin to be approximately 24%. For fiscal 2026, we continue to expect 2026 worldwide revenue growth to be up 3% to 4% year-over-year. Our full year 2026 revenue guidance continues to assume a benefit from foreign exchange that is consistent with the assumptions underlying our initial full year outlook. We expect the effect of foreign exchange to moderate in the remaining quarters, trending towards the full year assumption of approximately 100 basis points. We now expect 2026 Clear Aligner volume growth to be up approximately 6% year-over-year and 2026 Clear Aligner ASP to be flat to slightly down from 2025. We now expect 2026 Systems and Services revenue growth to be down 6% to 8% year-over-year as we anticipate a continued mix shift towards lower-priced scanners and more flexible acquisition models in the second half of '26. We expect our 2026 iTero scanner shipments to be up double digits year-over-year, reflecting continued customer adoption and scanner placements and helping to underpin our second half outlook for Invisalign volumes. We expect 2026 GAAP gross margin to be approximately 70.2% to 70.5%, up year-over-year by approximately 3 points due to the incurrence of onetime charges expected to be approximately $30 million to $40 million, primarily for accelerated depreciation, restructuring and other charges, partially offset by a gain on assets held for sale. We expect 2026 non-GAAP gross margin to be up approximately 100 basis points over 2025 non-GAAP gross margin. We expect 2026 GAAP operating margin to be approximately 15.1% to 15.6%, up year-over-year by approximately 2 points due to the incurrence of onetime charges expected to be approximately $90 million to $100 million, primarily related to restructuring and other charges, accelerated depreciation, legal settlements, partially offset by gain on assets held for sale. In Q2 '26, we recorded $38 million for Clear Aligner U.K. VAT liability. We expect 2026 non-GAAP operating margin to be approximately 23%, a 100 basis point improvement year-over-year, consistent with our previous guidance. We expect our investments in capital expenditures for fiscal 2026 to be $125 million to $150 million. Capital expenditures primarily relate to technology upgrades, additional manufacturing capacity as well as maintenance. We now expect to repurchase $400 million to $500 million of our common stock in 2026, reflecting the conviction of the Board and management in Align's long-term value. This includes the approximately $133 million of our common stock we expect to repurchase through October 2026. Before I hand it back to Joe, I want to provide some preliminary high-level framing for 2027, especially given the work we are doing to drive growth, cost discipline and margin expansion. To be clear, we are not issuing formal guidance for next year. It's too early, and our strategic and operating model review is still underway. However, we remain laser-focused on executing our strategic plan for profitable revenue growth across our 2 operating segments. Based on our continued progress and the initiatives we outlined in the Strategic Initiative press release today, we are comfortable targeting at least the same level of improvement in operating margin in fiscal 2027 on top of the approximately 100 basis points of operating margin improvement we reiterated for fiscal 2026. For fiscal 2027, we currently expect GAAP and non-GAAP operating margins to increase at least approximately 100 basis points year-over-year. We'll share more details after our strategic and operating model review is complete and in conjunction with formal 2027 guidance. With that, I'll turn it back over to Joe for closing comments. Joe? Joseph Hogan: Thanks, John. As we look at the first half of 2026, we're encouraged by the progress across the business. Through the first 6 months of the year, we delivered record Clear Aligner volumes, expanded doctor adoption and utilization, increased scanner placements, improved margins and continued to execute against our strategic priorities. Importantly, we achieved these results in an environment that remains uneven across markets and customer segments, reinforcing the strength of our global business. We saw strong momentum across APAC, EMEA and Latin America, despite the macroeconomic headwinds. North America remained relatively stable overall with continued strength in the DSO channel, helping to offset softer retail demand. That said, returning North America retail to consistent growth remains a top priority, and we're working to make that happen. The customer-focused initiatives we have been pursuing, financing solutions, DSP, clinical education and support and DSO collaboration are gaining traction and we're encouraged by the early results. As we enter the second half of 2026, we believe we are well positioned to build on this momentum. We are entering the important teen treatment season with one of the industry's most comprehensive digital treatment portfolios for growing patients and teens. At the same time, we continue to expand opportunities in adult treatment through innovations that connect oral health, restorative workflows and digital orthodontics, helping doctors incorporate Invisalign treatment into broader patient care discussion. Our innovation engine remains a key differentiator and has been central to our growth strategy. Business model innovation, patient financing, subscription programs such as DSP, no-AA offerings and digital workflow innovation are helping doctors improve patient conversion, increase utilization and grow their practices. Every digital workflow begins with a scan, making scanner adoption an important driver to increasing patient access to orthodontic care and long-term platform growth. As we continue to advance our innovation road map and direct fabrication technologies, we are creating more effective and personalized treatment solutions that improve clinical outcomes, enhance operating efficiency and strengthen the customer experience across orthodontics and restorative dentistry. Our focus remains unchanged: helping doctors treat more patients, expanding patient access to care and advancing digital orthodontics and digital dentistry globally. We remain realistic about the environment, but encouraged by our results and ability to address the significant opportunities ahead. Importantly, the combination of our global scale, strong international momentum, continued innovation and an increasing integrated digital platform uniquely positions Align to drive adoption of the Invisalign Clear Aligner and iTero Systems and Services, while creating long-term value for customers, partners, employees and shareholders. With that, I want to thank you for your time today. Now I'll turn the call back over to the operator for questions. Operator? Operator: And our first question comes from Michael Cherny with Leerink Partners. Michael Cherny: Maybe if I can just ask a question about the case starts number. Obviously, very strong in the quarter, seemingly talking up your expectations for the rest of the year. As you think about the push and pull of macro/micro and what you're seeing in your different customer bases, what's the biggest level of confidence that's allowing you to get to this higher number given obvious questions broadly in the market about whether or not the consumer is at risk? It seems like a really good number. So just trying to put the pieces together about how do you keep the momentum going. Joseph Hogan: Michael, even when I look at it, we felt really good, obviously, about the Invisalign numbers overall, and that's your inquiry. As we talked about, we have a good mix around the world. It's a strong global business. We see APAC at double-digit growth. We're seeing double-digit growth that we have in Europe in different sections and areas. Our DSO businesses are very strong in North America overall. And so with that kind of a mix, it gives me a lot of confidence in the sense that with macroeconomic headwinds and different things that we can help to compensate that because it's never the same all over the world. So I think the quarter reflects pretty well that dexterity we've shown in the marketplace. Operator: Our next question comes from Jon Block with Stifel. Jonathan Block: Maybe I'll pick up where you left off a little bit, Joe. Any signs at the North American, call it, independent sluggishness that is starting to thaw? So I'm excluding the DSOs. What are the green shoots you're looking for? And is there a secret sauce? In other words, can the additional financing options that we're hearing more about of this no-comp AA,sort of help turn the tide in coming quarters, again, specific to that North American independent bucket? Joseph Hogan: Yes, Jon, a great question. Look, we just got back from the orthodontic conference that I referenced overall, too. And here is just a -- there's a lot of enthusiasm by that group. Obviously, there are best doctors in North America overall. And John and I have known these doctors for a long period of time. There's a lot of enthusiasm there, but I don't think anyone's counting on the macro to help us one way or another. What they feel good about is the innovations that we have here, how we can extend. In my script, I talked about the growing patients piece, when you think about Mandibular Advancement with Occlusal Blocks, IPE, there's a huge amount of enthusiasm about that and help us our market share, too. So obviously, DSP has been a big winner, and we continue to try to expand that. The no-AA product that you just referenced is just a good fighter out there in the sense of trying to meet a consumer where they are sometimes. So overall, I feel good about our portfolio. I feel good about the innovation that we have and how it's being accepted in the marketplace. Our forecast that we just gave here are not reflective of any kind of improvement in macro. We're not that smart. We just keep executing in those specific areas of new products and new types of systems to drive that volume. John Morici: And I would add that patient financing, expanding that patient financing, we are seeing some traction there. We want to continue that. But that helps that potential patient decide if they want to go into treatment. Jonathan Block: That's helpful. And the second one is a little bit long. John, I'll sort of go to you. Systems and Services now expected to be down 7% year-over-year at the midpoint. I think prior, at least I was flattish. So like that difference of $55 million seems to be made up all Clear Aligner revenues. What somewhat split between a higher volume assumption and a slightly higher ASP. I guess, one, is that a fair way to sort of define that or categorize that? And then maybe you can talk on it. The higher ASP surprised at least me for the quarter. It was a little bit above where you were talking, $1,260 versus $1,250. And arguably, FX went against you a bit intra-quarter. So what led to that better ASP result that seemingly you feel comfortable about extrapolating going forward? John Morici: Yes, you're right on your first question. The Systems and Services being down 7% at the midpoint for the year is being offset by the Invisalign volume and stronger ASPs from what we've talked about where you see some stability that continues in North America, but then growth outside of that to be able to take our volumes and up. When we look at the ASPs, we see some of the benefit in terms of some of the products that coming through where you're seeing some of the products maybe at a slightly higher price, a higher list price, which helps us, that helps our overall ASP. We also get some of the benefit where we're recognizing still a significant amount of revenue even on those 3-in-3, which is our most popular product as well as the no-AA product. So we're seeing that ASP come through, and that showed up in our numbers. And I would also say that maybe when we look at our ortho business in total, when we look at that, we saw some strength there overall, which usually comes with a higher list price as well. So those are the offsets that we see. We're pleased with the ASPs being able to hold to where we're at. And you're right, that does help us as we go into the second half of the year. Operator: Our next question comes from Brandon Vazquez with William Blair. Brandon Vazquez: Maybe I'll ask 2 because they're kind of -- it's a little bit of a 2-parter connected. One, I want to ask a little more granular on North America. Can you guys just talk about like -- because we don't know the relative trends, U.S. versus outside of the U.S. Did things get worse within the quarter within North America? I know there's been a lot of noise, rising gas prices, et cetera. Some channel checks have suggested maybe there were some pockets of weakness. So curious like what are you seeing in the U.S. specifically? And then the follow-up question that -- maybe for John, how do you think about as you -- with an updated guidance here for Clear Aligners, how do you think about what's baked into that? Like are you taking the exit rate from Q2 and pushing that forward? Just help us understand. The seasonality in the business has been a little lumpy, of course, over the past couple of years. So it's hard to know what Q2 to Q3 usually is. So how are you guys thinking of framing the guidance relative to macro today? Joseph Hogan: Brandon, it's Joe. I would just start off by saying stable from a North America standpoint. There is a lot of fluctuation when you look at different regions, if you look at the Northeast versus Florida, California, whatever. And I don't want to go into specificity of that. But overall, I would call it stable. The DSOs continue to grow, as I mentioned in my script, overall. But I would say basically, what we've seen is no better and no worse than what we've seen before. And obviously, we just keep working on our portfolio, working with the DSOs, all the things we've been having success to try to extend that. John Morici: And I would build on that, that stability or those numbers that we see coming out of Q2 when we take guidance. We're looking at the most recent information. We have a good understanding of flow, and that's the best information that we can use for prediction of the next quarter. So we take what we see, like Joe said, it's relatively stable. There's pockets that are better or worse, but that's to be expected. But that's what we use to inform us for our guidance. Operator: Our next question comes from Jason Bednar with Piper Sandler. Jason Bednar: I'll actually start first on the operating model review. I know it's super early. But are there any obvious areas of optimization that you have in mind? Is everything under consideration across your expense line when we think about like R&D, sales, marketing? Or maybe asked differently, is there anything off limits when we think about your commitment to 100 basis points? Just trying to understand like and think about this review in the context of past restructuring activities for Align. Joseph Hogan: Jason, Joe. Look, I'd just start off and say our strategy remains intact. And our strategy, we're a growth business. We know that. We're technology-led, distribution led in that sense. So -- but I'm not saying anything is completely a [ fag ] among this. We'll look at across the board and see what makes sense. And it's -- I think it's a good progress, a process for us. Also, we picked a really good consultant to work through that has some experience with us also. And so there's a basis for us to work through that. So I just look at this as an opportunity. I think when you look at execution, you want to say where your focus is and whatever, I think it's healthy for the business. Jason Bednar: Okay. Fair enough. And then maybe building on that, I thought for 2027, direct fab was supposed to be a margin driver. Is that in addition to this 100 basis points? Is that captured in this 100 basis points? I guess maybe update us on how you think about direct fab within the context of like the updated margin commentary today? John Morici: Yes. Jason, think of this as this is inclusive of everything for next year. This is the best view that we wanted to give. As you know, and we've talked about when direct fab scales up, there is that by itself is a negative headwind just as you scale that, just the efficiency and everything else that we need to have both on the resin side as well as the actual production side. But the view that we gave next year includes the direct fab. And so the overall 100 basis points or above is inclusive. Operator: Our next question comes from Daniel Grosslight with Citi. Daniel Grosslight: I wanted to dig a little bit more into the Systems revenue. Obviously, a few moving pieces here. But I'm curious what's been the biggest surprise versus your initial expectations? Is it the rental adoption, lower ASP, macro pressure? Just what's been the biggest change and how you're thinking about that? And maybe more importantly, how should we be thinking about Systems revenue in '27? Will these headwinds be behind us, so we should see a return to growth in '27? Or do you think we'll still see some lingering impacts of mix? John Morici: Daniel, this is John. Well, first off, we're not guiding on revenue for next year, but I can kind of get the focus on what we've seen so far this year. We certainly do see that mix that we described in the script, where you have doctors that are making decisions on whether they're going to purchase new or perhaps a certified preowned. Or maybe doctors don't want to put so much money upfront and they'll lease or they'll rent. And you do see that shift happening across, and that certainly shows up in our numbers. And then you also see maybe retail doctors that they don't maybe feel certain, especially in North America, certain about the economy and so on. They pulled back on their spend. But we had a mix -- some favorable mix from a -- at least from a volume standpoint that showed up with DSOs and some of our labs. So you see that coming through in volume. So I would take a step back and say, overall, we're pleased with the volume. The volume is double digits. Our installed base is up double digits. We are expanding the availability to doctors to be able to get new scanners and purchase them or utilize them any which way that they want. And the added piece that's a benefit that we've seen and more so than I've seen in the past is so many of these new scanners that have gone into placement are new doctors, doctors that we don't even sell to right now. And we know that as they start to get more familiar with that scanner and digitize their workflows, it helps us for the broader ecosystem that we have, which includes Invisalign. So we feel good about that volume and that placement, and we're managing the mix as we go forward. Daniel Grosslight: Got it. Okay. And I also have one on just the U.K. VAT ruling. I think you mentioned that you're not going to change list prices here despite the reimposition of the tax. Does that mean you guys are absorbing the cost here? Or just how does that work from a pricing perspective? And does that impact your profitability targets in the U.K.? John Morici: It is -- just to be clear on that, we're keeping our list prices the same. And then that -- now that the U.K. is mandating this VAT, that's essentially being charged to the provider, the customer and then we pass that through back to HMRC. So it's no impact to us from an ASP standpoint. Of course, we're going to appeal. And of course, we want to -- we don't think it's good for U.K. dentistry and health care and ultimately, patients who want to go into treatment. But it's a pass-through, and it's something that won't impact our ASPs as a result. Operator: Our next question comes from Jeff Johnson with Baird. Jeffrey Johnson: So I wanted -- one question on third quarter on case shipment growth and your guidance for that. As I look at the 2Q to 3Q comp, it gets about 4.5 points tougher. You just did 7%. You're guiding to mid-single digits for 3Q, so maybe a couple of points of slowing. But on a comp-adjusted basis, a little better. So I know you keep saying stable. I know in my surveys, I'm sure not seeing much evidence of improvement or anything. But it seems like your guidance is calling for at least on a comp-adjusted basis, a little bit strengthening on that case shipment side in the third quarter. So is that confidence coming from anything you're seeing in that North American market with some of the new financing options like you're talking about? Is it coming from something you're seeing outside the U.S.? Just where maybe seeing a little bit, as John referenced earlier, I think green shoots on that? John Morici: Yes. I would say, Jeff, when you look at what we're seeing, we're seeing continued adoption of DSP. DSP is now rolling out to APAC, which we know drives volume through those Touch-Up cases and ultimately gives retainer revenue as well. So we're seeing that. We see the continued rollout of the no-AA type products. That's really our fastest-growing segment that we see within our portfolio. As doctors start to use it, they start to learn, kind of almost pay as you go with the refinements that come later. That's been a good adoption that we see. And then we talked about some of the financing. More and more doctors are using this to be able to help get those reluctant patients to -- or potential patients to go into treatment. So we're not relying on economies essentially getting better or really changing at all. It's things that we could do to drive that incremental benefit as we look forward. And I would say broadly, as you look at it, Jeff, we were running about 7% volume on a year-over-year basis in the first half. Second half, it's actually a little bit less than what we ran in the first half. So we're reflective of what we see in the market, but we feel good about the initiatives that we have. Jeffrey Johnson: All right. That's helpful. And then maybe one more, just on the scanner and services. And I know the question was just asked. I'm going to try to get at it maybe a slightly different way. I know you're not guiding to '27 at this point. But are you guys taking a decent amount of medicine upfront here? Have you put some of those pricing programs in, whether it's the CPOs or the lease and rental in that, pretty aggressively to the point that, let's say, 10% or 15% of your new user base is going in that direction? Would we think over the next couple of years, that stays the same? Or is it going to be -- 10% of your user base is adopting those kind of lower-priced models this year and next year, it might be 15% or 20%. The next year, 30%. And so we have that kind of continued negative mix headwind we should be thinking about, at least conceptually on your scanner and services side in the next couple of few years. John Morici: I would look at it this way, Jeff. I think we're taking this shift, this mix shift that is happening now, and that's really impacted this year. We've called that out. We think we build off of that as we go forward. There's a certain amount of ASP that we have as a result of this, and we build off of that going forward. It's not to say that doctors won't want to continue to lease and rent. But as you go forward with that, as you know, when you start a lease, you might only take 1 or 2 or maybe 3 months of that revenue in that period, but you're going to get that revenue for the next 24, 36 months going forward. So we know that piece of it builds. And then you're also going to see us do some things around using third-party providers to be able to provide the financing, more of a capital lease structure, such that we can now sell to that capital provider at a higher ASP, and then they will provide the leasing arrangement to those customers and that helps us so that we don't have to take the operating lease on our side. So there's alternatives that we have, but ultimately, we want to be able to drive this business and understand the mix that's going on in the world, but be able to be at a point where we can build off of that as we go forward. Operator: Our next question comes from Elizabeth Anderson with Evercore ISI. Elizabeth Anderson: As we think about your outperformance on gross margins in the quarter and sort of the updated outlook that you provided, is there something to think about differently between sort of the mix of operating margin expansion in 2026 between gross margin and OpEx? Or should we still think about it kind of 50-50 split that you laid out last quarter? John Morici: Yes. I would say, Elizabeth -- this is John. Think of the margin expansion that we've seen, we're very pleased with our op margin expansion. It's primarily driven by the gross margin side. We are seeing a lot of the productivity that we've talked about from last year, some of the productivity improvements around getting closer to our customers, reducing our freight costs, upgrading some of the equipment, using things productively as well as some of the product mix that's really helping us from a gross margin. The no-AA type products, the 3-in-3 and so on, those give us a better gross margin, DSP and so on. So I would say it's a combination of -- in that productivity where we're doing things to help from a product standpoint that drives gross margin as well as a program and initiative standpoint to take costs out to reduce our COGS. And so far this year and the way we're describing this year, it's really been primarily on the gross margin side to generate that 100 basis point improvement in 2026. Elizabeth Anderson: Got it. And maybe as a follow-up, obviously, the question is about the macro forefront. I appreciate what you're saying about sort of the self-generated improvement in the case numbers for the third quarter. Can you give any early commentary sort of on July, particularly regarding the U.S. and sort of how that's trending versus your expectations? John Morici: You know how that goes, Elizabeth. We don't give kind of within the quarter kind of the monthly cadence. I would say, as we've done, we factor in how the quarter plays out previous quarter, plays out by geography and so on, look at order and intake and then make the best view of that, and that's how we'll guide. But -- that's how we've done it for every quarter and including this third quarter. Operator: Our next question comes from Steven Valiquette with Mizuho Securities. Steven Valiquette: A lot of topics have already been talked about here. But one thing I wanted to come back to was the -- back at the tech innovation meeting that you had with us back in May, you guys highlighted the new Advanced Restorative Treatment program targeting dental labs to get further traction with GPs. Just curious how much that might be playing a role in the increased guidance for '26? Or does that maybe get more traction for '27? I just want to get an update on how we think about the progression of that. Joseph Hogan: Yes. Steve, it's Joe. Look, this is not a huge increase right now. We see a number of labs across the world that are adopting this. They're beginning to integrate it into their workflow, particularly for implants and crown and bridge and those kinds of things where you need to move teeth first to keep the teeth out of harm's way and say the name on that sentence. So as you look at our 2027, don't count on us leaning way into that in some way, but I feel good about that. I think we're making good progress. There's a good recognition of it. We've integrated much better into our exocad system. So as a lab works with exocad, they can immediately access ClinCheck and different things that would allow them to be able to plan that treatment properly with the -- obviously, with the aligners upfront. So I'm optimistic about it. I'm not forecasting a big increase here right now, but we'll keep you up to date as it continues to grow. Operator: Our next question comes from Vik Chopra with BMO. Vikramjeet Chopra: So Systems and Scanners, you called out more flexible acquisition models. I'm just curious, how big the proportion of Systems placed under lease arrangements or rentals can grow to over time? And how should we think about the economics and payback period of this strategy? John Morici: Yes, it's a good question, Vik. Right now, it's a small percentage of our overall revenue. But look, I think, especially in certain markets, it's a big percentage in some of those markets. And I would expect that as doctors and others are under pressure from a capital equipment standpoint, that they might try to lease or rent. And from our standpoint, that's a good equation for us because typically then, that price is higher in terms of what they're going to pay us over time. So you don't have to discount as much initially to get a sell-through. Though happy to rent or lease, they keep their monthly payments low. In the end, we end up with maybe a higher amount of revenue over time. It's just -- it doesn't come right up front. But again, we're trying to provide access to our digital ecosystem. This is a way to do that with our customers. And we have the portfolio and the resources to be able to provide that. And when we see that the volume that we put into the market this quarter and to see that the installed base is going up. And like I said earlier, really pleased with the fact that we're selling to doctors that we haven't sold to before. And we know good things happen when that comes about. Vikramjeet Chopra: And just one quick follow-up, if I could. You called out the North American retail channel. I'm just curious if that were to stabilize or return to growth, how much of a benefit is that to your top line? John Morici: Yes, it would certainly be a benefit because right now, it's a drag. So on that retail side, we are laser-focused on all the different initiatives we have to turn that. And we think we can even in this current environment. The economic environment gets better, great. That's a tailwind for us. But we think we can turn this to be positive in this existing environment using all the tools that we've talked about here. And if it does, it certainly would be an improvement to our overall volume that we've described. Operator: Our next question comes from Erin Wright with Morgan Stanley. Erin Wilson Wright: So I wanted to dig a little bit more into the Clear Aligner financing initiatives and some of the ones you've launched recently. Do you think -- or how do you think about the rollout of that? Where do you have -- how have you rolled that out? And then also, when do you think it will really move the needle from a conversion perspective? Do you anticipate -- or do you have any sort of early metrics on that front? And then I just had a quick follow-up on the U.K. VAT tax. I think before you lowered the price by 20%, you're saying you're holding the price. But does that mean you're anticipating a volume impact at all? I'm just curious how you're thinking about that flowing through. John Morici: Okay. Thanks, Erin. I could talk about the U.K. VAT initially. Just on that, we will keep the prices the same that the U.K. VAT will get passed on. So we are looking at what that could mean for volume and making sure we stay close to our customers and so on. They're aware of that change, and we're working closely with them. But like I said, that VAT is a pass-through. So no impact on our ASPs. But you're right, we want to make sure we understand the volume and the trade-offs and so on and maybe gives us a good opportunity to talk about the other portfolio of our products that do come at a lower list price so that maybe there can be some offset if they were used to using some of the more comprehensive unlimited or other products that they can use other parts of our portfolio. So we'll watch that closely. When we think of the Clear Aligner financing or financing for potential patients and so on, we're seeing good traction on this. When we have a doctor that provides different financing alternatives to external providers, if those providers are very interested in increasing their amount of revenue that they can get from these types of procedures, we're seeing good traction. That means low upfront costs. It means making sure that monthly payment is low enough. It's being able to manage maybe some FICO scores and so on. So doing things in a way to make sure that we can drive that ultimate patient to go into treatment. And where we've done that, we've seen good adoption. And that's part of what we want to be able to continue to see as we go forward. Operator: And our next question comes from Michael Ryskin with Bank of America. Michael Ryskin: Great. Two really quick ones probably. One is, on the scanner, you touched on sort of the -- some of the weirdness and some of the macro CapEx environment impacting docs. But there's also been some incremental competition in the space from a handful of others with launches in the last 3 to 6 months. Just wondering if you're seeing that play in the market at all if you're bumping into the model more, if there's been some noise there? And I'll throw my follow-up at the same time. The ASPs, you kind of have guided to softer ASPs in the second half for some time. You tweaked your ASP guide this quarter, but it seems like you're still guiding for a pretty big step down in 3Q, 4Q just to get for the full year -- for full year to be flat to down. It's pretty meaningful like $40, $50 step down. I know you talked about FX and mix, but it would be great if you could just dig into that a little bit more, break down those 2 components? And if it is mix, just expand on that a little bit. John Morici: Yes. Michael, I can take the ASP question first. You certainly have, as we know, going from Q2 to Q3 with China being as big as it is and Europe kind of coming in a lot lower than what it would normally just based on seasonality, you do have a mix effect that hits ASP, and that's why we reflected the ASP reduction going from Q2 to Q3. You have that, we think that it obviously comes back a bit in the fourth quarter because that mix shift then changes. China is lower and as a proportion, and Europe becomes larger. So we have that. But there's nothing out of the ordinary. We're going to continue to have DSP and some other products that get rolled out in the second half in APAC and so on. That comes with a lower list price. It's just the reality. It's products that just don't have as high of a list price because they're noncomprehensive cases. So mix shift, that's normal in the third quarter and then other new products in certain markets like DSP impact the overall ASP. Joseph Hogan: And Michael, too, on the scanning side, I'd say I don't see, I'd say, rapidly increased competition. I'd say the composition of the competition has changed pretty substantially over the last few years. We used to see a lot of Medit. We see more shining 3D than we do Medit today. That's all what I'd call the lower end mirror-based scanners. When you look at the confocal imaging piece, which is primarily represented by our old technology, which is 5D and you have that with -- obviously, with Primescan and 3Shape having that technology, that hasn't changed in a big way either. And lastly, remember, with Lumina, too, that's a brand-new technology. It's a different kind of platform. So it gives us a really good competitive position to be able to work through. But overall, this isn't driven, what I'd say, by a big change in competition, but we have seen a change in the type of competitors that we're dealing with. Operator: And we have reached the end of our question-and-answer session. I will now turn the call back over to Shirley Stacy for closing remarks. Shirley Stacy: Well, thank you, everyone, for joining us today. We look forward to meeting with you at upcoming investor conferences and industry meetings. If you have any follow-up questions, please contact Investor Relations. Thanks, and have a great day. Operator: Thank you. This concludes today's conference, and you may disconnect your lines at this time. Thank you for your participation. Before you buy stock in Align Technology, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Align Technology wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years. 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Our analysts just identified a stock with the potential to be the next Nvidia. Tell us how you invest and we'll show you why it's our #1 pick. Tap here. Record Clear Aligner volumes were driven by double-digit expansion in international markets (APAC, EMEA, Latin America), offsetting relative stability in North America. Management attributed growth to strategic initiatives in patient financing, clinical support, and subscription offerings like DSP, which improved affordability and doctor utilization. The Systems and Services segment faced headwinds from persistent softness in the capital equipment market and a deliberate strategic shift toward lower-priced scanner configurations. A transition toward leasing and rental models for scanners is being used to lower the upfront cost of adoption, intentionally trading near-term revenue for long-term platform growth and recurring treatment revenue. Operational efficiencies and higher Clear Aligner ASPs, supported by lower refinement rates and improved manufacturing throughput, drove non-GAAP operating margin expansion. The company is initiating a comprehensive strategic and operating model review with a global consulting firm to enhance commercial execution and scalability for the next growth phase. Full-year 2026 revenue guidance is expected to be up 3% to 4% year-over-year, while Clear Aligner volume growth is expected to be approximately 6% year-over-year. Q3 2026 guidance anticipates sequential revenue declines due to typical seasonality and the continued mix shift toward lower-priced scanners and flexible acquisition models. Management is targeting at least an additional 100 basis points of operating margin improvement in fiscal 2027, building on the 100 basis point expansion reiterated for 2026. The outlook assumes no improvement in the macroeconomic environment, with growth predicated on internal execution and the rollout of new products like the Invisalign Palatal Expander. Share repurchase commitments for 2026 were increased to $400 million to $500 million, reflecting management's confidence in long-term cash generation and competitive positioning. A U.K. Upper Tribunal ruling overturned a previous VAT exemption for Clear Aligners, resulting in a $37.5 million estimated liability and the reimposition of a 20% VAT on invoices. The company plans to add three new independent directors to the Board to strengthen expertise in healthcare technology and global scaling. Systems and Services revenue is expected to remain pressured as the company prioritizes scanner placements over upfront sales to expand the digital ecosystem funnel. Restructuring and other one-time charges of approximately $90 million to $100 million are expected for the full year 2026, impacting GAAP margins. One stock. Nvidia-level potential. 30M+ investors trust Moby to find it first. Get the pick. Tap here. Management cited the dexterity of their global business, noting that double-digit growth in APAC and EMEA helps compensate for regional macroeconomic fluctuations. Confidence is bolstered by strong performance in the DSO channel and the ability to meet consumers at various price points through a diversified product portfolio. The Q2 ASP beat was driven by price increases, lower net deferrals, and a favorable product mix, including higher list prices for certain orthodontic products. Management expects ASPs to moderate in Q3 due to geographic mix (higher China volume) and the rollout of lower-priced subscription products in APAC. The shift to leasing is a deliberate effort to capture new doctors who haven't previously used Align technology, digitizing their workflows to drive future Invisalign cases. While impacting upfront revenue, these models often result in higher total revenue over the life of the 24-36 month agreements compared to discounted upfront sales. Align will maintain its list prices and pass the 20% VAT through to providers, meaning there is no direct impact on the company's reported ASP. Management is monitoring potential volume impacts and may encourage doctors to utilize lower-priced products in the portfolio to offset the tax burden for patients.

This article first appeared on GuruFocus. Revenue: Record Q2 2026 revenue of $1.06 billion, up 4.3% year-over-year. Clear Aligner Revenue: $870.9 million, up 8.2% year-over-year. Clear Aligner Volume: Record 692,000 cases, up 7.4% year-over-year. Clear Aligner ASP: $1,260 per case, up 0.8% year-over-year. Systems and Services Revenue: $185.3 million, down 10.8% year-over-year. Overall Gross Margin (GAAP): 71.7%, up 1.8 points year-over-year. Non-GAAP Gross Margin: 72.3%, up 1.8 points year-over-year. Clear Aligner Gross Margin: 71.4%, up 1.3 points year-over-year. Systems and Services Gross Margin: 73.3%, up 3.9 points year-over-year. Operating Income (GAAP): $154 million, resulting in an operating margin of 14.6%. Non-GAAP Operating Margin: 22.9%, up 1.6 points year-over-year. Net Income per Diluted Share (GAAP): $1.51. Non-GAAP Net Income per Diluted Share: $2.64, up 6% year-over-year. Cash and Cash Equivalents: $1.1026 billion as of June 30, 2026. Cash Flow from Operations: $192.8 million for Q2 2026. Free Cash Flow: $157.1 million for Q2 2026. Capital Expenditures: $35.7 million for Q2 2026. Share Repurchases: Repurchased approximately 393,400 shares for $67 million in Q2 2026. Warning! GuruFocus has detected 6 Warning Signs with ALGN. Is ALGN fairly valued? Test your thesis with our free DCF calculator. Release Date: July 29, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Record Q2 2026 revenue of $1.06 billion, up 4.3% year-over-year, driven by record Clear Aligner volumes of 692,000 cases. Clear Aligner revenue grew 8.2% year-over-year, with double-digit volume growth in APAC, EMEA, and Latin America. Non-GAAP operating margin of 22.9% exceeded expectations, up 1.6 points year-over-year, driven by operational efficiencies and higher ASPs. Record scanner placements to new doctors, with active scanner units up double digits year-over-year, expanding the digital platform. Strong international momentum with double-digit growth in key regions, supported by initiatives like DSP, patient financing, and no AA products. Systems and Services revenue fell 10.8% year-over-year due to a shift to lower-priced scanners and flexible acquisition models like leasing. North America retail demand remained sluggish, with stable but not improving performance, offset by DSO channel strength. UK VAT ruling reversal creates uncertainty, with a $37.5 million liability recorded and potential volume impacts from the 20% tax pass-through. Q3 2026 revenue guidance of $1.0-$1.02 billion is down sequentially, with Clear Aligner ASPs expected to decline due to geographic mix and FX. Full-year 2026 Systems and Services revenue guidance revised down to a 6%-8% decline, reflecting persistent capital equipment market softness. Here are the key highlights from the Align Technology Inc (NASDAQ:ALGN) Q2 2026 earnings call, focusing on the most significant Q&A exchanges. Q: What gives you the confidence to raise your Clear Aligner volume growth guidance to ~6% for 2026, given the macroeconomic uncertainty and consumer risk? A: (Joe Hogan, President & CEO) Our confidence comes from the strong global mix of our business. We saw double-digit growth in APAC and EMEA, and our DSO channel in North America remains very strong. This geographic and channel diversity allows us to compensate for headwinds in any single area, like the softer North American retail market. Our forecast does not assume any improvement in the macro environment; it is based on continued execution of our specific growth initiatives like DSP, patient financing, and new product offerings. Q: Can you provide more detail on the North American independent (non-DSO) market? Are there any "green shoots" or signs of thawing sluggishness, and can new financing options like "no AA" help turn the tide? A: (Joe Hogan, President & CEO) The North American market is stable, not getting better or worse. We are not counting on the macro to help. The enthusiasm we see is driven by our innovations, such as the Invisalign Palate Expander (IPE) and Mandibular Advancement with Occlusal Blocks (MOAB), which help doctors gain market share. Programs like DSP and the "no AA" product are key tools to meet consumers where they are and drive conversion. (John Morici, CFO) Expanding patient financing options is also gaining traction and helps potential patients decide to start treatment. Q: The Systems and Services revenue guidance was lowered to down 6%-8% for 2026. Is it fair to say that the $55 million shortfall is being made up by higher Clear Aligner volume and ASP assumptions? Also, what drove the better-than-expected ASP of $1,260 in Q2? A: (John Morici, CFO) Yes, that is correct. The lower Systems revenue is being offset by stronger Invisalign volume and higher ASPs. The Q2 ASP benefited from a mix of higher-priced orthodontic products and strong revenue recognition from our most popular products like 3-in-3 and no AA. We are pleased with the ASP performance, which helps support our second-half outlook. Q: Regarding the new strategic and operating model review, are there any obvious areas of optimization or are some areas "off limits"? How does this compare to past restructuring activities? A: (Joe Hogan, President & CEO) Our overall strategy remains intact as a growth business. Nothing is completely off the table; we will look across the board to see what makes sense. We have engaged a leading global consulting firm with experience with us to help enhance commercial execution and organizational effectiveness. This is a healthy process to sharpen our focus and execution. Q: Is the 100 basis point operating margin improvement targeted for 2027 inclusive of the benefits from direct fabrication, or is that an additional driver? A: (John Morici, CFO) The 100 basis point improvement target for 2027 is inclusive of everything, including the scaling of direct fabrication. As we scale direct fab, there is a natural headwind from efficiency and resin costs, so this target accounts for that. The overall improvement is on top of the ~100 basis points we are targeting for 2026. Q: What has been the biggest surprise in the Systems & Services business versus your initial expectations? And should we expect these headwinds from the mix shift to lower-priced scanners and rentals to persist into 2027? A: (John Morici, CFO) The biggest change has been the speed of the mix shift towards lower-cost configurations, certified pre-owned, and leasing/rental models. While this creates a near-term revenue headwind, we are pleased with the double-digit volume growth and record placements to new doctors. We are taking this "medicine" now. As we build a base of recurring lease revenue, the economics improve over time. We are also exploring using third-party capital providers for leases, which would allow us to sell the scanner upfront at a higher ASP. Q: How should we think about the rollout and impact of the new Advanced Restorative Treatment (ART) program targeting dental labs? Is it a factor in the 2026 guidance, or is it more of a 2027 story? A: (Joe Hogan, President & CEO) The ART program is not a huge factor in our current numbers. We are seeing good adoption from labs globally, especially for implant and crown & bridge workflows. It is well-integrated with our exocad system, allowing labs to access ClinCheck easily. We are optimistic about its potential, but it is not a major driver for 2026 or a significant part of our 2027 forecast at this point. Q: How large can the proportion of scanners placed under lease or rental arrangements grow? And what is the payback period on this strategy? A: (John Morici, CFO) It is currently a small percentage of overall revenue, but it is a larger percentage in certain markets. We expect this to grow as doctors face capital equipment pressure. The economics are good for us because the total revenue over the life of a lease or rental is typically higher than an upfront sale, even if it is deferred. The key benefit is expanding access to our digital ecosystem, and we are very pleased that a record number of new doctors are adopting scanners through these flexible models. Q: You mentioned the North American retail channel is a drag. If it were to stabilize or return to growth, how much of a benefit would that be to the top line? A: (John Morici, CFO) It would certainly be a significant benefit. We are laser-focused on turning this channel positive using our existing tools and initiatives, even in the current economic environment. If we succeed, it would be a clear improvement to our overall volume growth. Q: On the UK VAT ruling, you are keeping list prices the same and passing the 20% tax through. Do you anticipate any volume impact from this change? A: (John Morici, CFO) We are keeping list prices the same, so the VAT is a pass-through to the provider and has no impact on our ASPs. We are watching the volume impact closely and working with our customers. This situation may also provide an opportunity to discuss our lower-priced portfolio products (like 3 For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Align Technology, Inc. ALGN reported second-quarter 2026 non-GAAP earnings of $2.64 per share, up 6.0% year over year. The figure beat the Zacks Consensus Estimate by 3.1%. Revenues increased 4.3% to $1.06 billion and topped the consensus mark by 0.4%. The quarterly results benefited from record Clear Aligner shipments of 691.8 thousand cases, up 7.4% year over year. International markets delivered double-digit volume growth, while North America remained stable. Following the earnings announcement, ALGN shares rose 2.6% yesterday. Clear Aligner revenues increased 8.2% year over year to $870.9 million. This growth reflected higher shipment volumes, price increases, lower net deferrals and favorable foreign exchange. These gains were partly offset by higher discounts and a mix shift toward lower-priced products and countries. Shipments to orthodontists and general practitioner dentists rose 7.8% and 6.6%, respectively. A record 89,200 doctors submitted Invisalign cases, while doctor utilization increased 3.8% year over year. International momentum was led by double-digit growth across EMEA and APAC, along with record second-quarter shipments in Latin America. Imaging Systems and CAD/CAM Services revenues declined 10.8% year over year to $185.3 million. Persistent softness in the capital equipment market and a shift toward lower-priced scanners, rentals and leasing programs weighed on reported revenues. However, scanner unit placements increased by double digits, with placements to new doctors reaching a record. The active scanner installed base grew approximately 11%, while restorative, wellness and orthodontic scans increased 16% to more than 12.4 million. Exocad revenues also posted double-digit growth. The second-quarter gross margin expanded 180 basis points year over year to 71.7%, driven by operational efficiencies, a tariff refund and higher Clear Aligner average selling prices. Non-GAAP gross margin also increased 180 basis points to 72.3%. Operating expenses rose 10.7% to $603.4 million, mainly due to a U.K. value-added tax accrual and higher employee compensation. GAAP operating margin contracted 150 basis points to 14.6%, while non-GAAP operating margin expanded 160 basis points to 22.9%. Align ended the second quarter with $1.10 billion in cash and cash equivalents, up from $1.06 billion at the end of the first quarter. Operating cash flow totaled $192.8 million, while free cash flow totaled $157.1 million after capital expenditures of $35.7 million. The company repurchased roughly 393,400 shares for $67 million during the quarter. Management increased its 2026 repurchase commitment to $400-$500 million. ALGN had $733.3 million remaining under its existing $1 billion authorization at quarter-end. Align Technology, Inc. price-eps-surprise | Align Technology, Inc. Quote For the third quarter of 2026, Align expects worldwide revenues of $1.00-$1.02 billion, down sequentially. Clear Aligner volume is projected to grow in the mid-single digits year over year, while average selling prices are expected to decline sequentially due to geographic mix and foreign exchange. Systems and Services revenues are forecasted to decrease both sequentially and year over year. For 2026, management continues to expect worldwide revenue growth of 3-4%. Clear Aligner volume is now projected to increase approximately 6%, while average selling prices are expected to be flat to slightly lower year over year. Systems and Services revenues are forecasted to decline 6-8%, reflecting the shift toward lower-priced scanners and flexible acquisition models. Align Technology exited the second quarter of 2026 on a solid note, with both earnings and revenues beating their respective estimates. The company delivered growth across customer segments and continued to gain momentum among teen and growing kid patients. The growth was led by China, Japan, Turkey, India and Brazil. Management cited continued adoption of Invisalign First, the Invisalign Palatal Expander and Invisalign Mandibular Advancement with Occlusal Blocks. Investments in patient financing, clinical support, doctor subscription programs and practice productivity tools also supported treatment adoption and patient conversion. Expansion of both margins in the quarter is highly promising. However, the seasonality in capital equipment affected the quarter’s Systems and Services revenues. Align Technology currently has a Zacks Rank #4 (Sell). Some better-ranked stocks from the broader medical space are Intuitive Surgical ISRG, Phibro Animal Health PAHC and QuidelOrtho CP QDEL. Intuitive Surgical, carrying a Zacks Rank #2 (Buy) at present, posted a second-quarter 2026 adjusted EPS of $2.80, which exceeded the Zacks Consensus Estimate by 12.9%. Revenues of $2.89 billion topped the Zacks Consensus Estimate by 3.1%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. ISRG’s earnings outpaced estimates in each of the trailing four quarters, the average surprise being 16.5%. Phibro Animal Health, carrying a Zacks Rank #2 at present, posted a third-quarter fiscal 2026 adjusted EPS of 76 cents, which outpaced the Zacks Consensus Estimate by 5.9%. Revenues of $383.5 million outperformed the Zacks Consensus Estimate by 6.3%. PAHC’s earnings outpaced estimates in each of the trailing four quarters, the average surprise being 16.2%. QuidelOrtho, currently carrying a Zacks Rank #2, reported a first-quarter 2026 adjusted loss of 4 cents per share, which missed the Zacks Consensus Estimate by 110.8%. Revenues of $619.8 million beat the Zacks Consensus Estimate by 0.3%. QDEL beat earnings estimates in three of the trailing four quarters and missed on one occasion. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Align Technology, Inc. (ALGN) : Free Stock Analysis Report Intuitive Surgical, Inc. (ISRG) : Free Stock Analysis Report QuidelOrtho Corporation (QDEL) : Free Stock Analysis Report Phibro Animal Health Corporation (PAHC) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Align Technology, Inc. ALGN used its second-quarter 2026 earnings call to emphasize continued Invisalign momentum, expanding digital workflows and efforts to improve operating leverage. Management highlighted record clear aligner volumes while acknowledging near-term pressure from scanner pricing changes and flexible purchasing models. The discussion centered on balancing current revenue mix challenges with longer-term platform expansion. Executives also addressed strategic reviews, capital allocation and investor questions around North America demand trends. CEO Joseph Hogan said growth remained broad-based across geographies, customer channels and patient segments. Clear Aligner shipments reached a record 691,785 cases in the quarter, up 7.4% year over year, supported by international expansion and stable North American performance. Hogan noted that adoption continued among orthodontists, general practitioners and dental support organizations. He highlighted investments in patient financing, clinical support programs and doctor subscription offerings as tools supporting utilization and patient conversion. The company also pointed to continued strength among younger patients. Teen and growing patient treatment starts increased 7.2% year over year to 240,000 Invisalign cases, supported by adoption of newer treatment solutions. Align Technology’s scanner strategy remained a major discussion point during the call. Management said Systems and Services revenues declined 10.8% year over year to $185.3 million due to lower scanner average selling prices and greater use of leasing and rental models. CFO John Morici explained that the shift toward flexible acquisition options is intentional. The company is accepting lower upfront revenues to increase scanner adoption and expand future treatment opportunities through its digital platform. Management highlighted that scanner placements to new doctors reached a record level, while the active scanner installed base grew approximately 11% year over year. The company said these trends support broader digital workflow adoption. The company reported second-quarter revenues of $1.06 billion, up 4.3% year over year, beating the consensus mark of $1.05 billion. Non-GAAP adjusted EPS increased to $2.64 from $2.49 a year earlier, surpassing the Zacks Consensus Estimate of $2.56. Align Technology, Inc. price-consensus-eps-surprise-chart | Align Technology, Inc. Quote Morici said margin improvements were supported by operational efficiencies, higher Clear Aligner average selling prices and manufacturing improvements. Non-GAAP operating margin reached 22.9%, up from 21.3% in the prior-year period. ALGN ended the quarter with $1.1 billion in cash and repurchased approximately 393,400 shares for about $67 million. Management increased its 2026 repurchase expectation to $400 million to $500 million. Management maintained its expectation for 2026 revenue growth of 3% to 4% year over year. Clear Aligner volume growth is expected to be approximately 6%, while Systems and Services revenues are projected to decline 6% to 8%. For the third quarter, Align expects revenues of $1.0 billion to $1.02 billion. Management expects continued scanner mix pressure and seasonal factors to affect Systems and Services results. The company also expects restructuring and other one-time charges to affect third-quarter margins. Full-year non-GAAP operating margin is expected to improve by about 100 basis points from the 2025 levels. A Leerink Partners analyst asked about confidence in maintaining Invisalign case growth despite consumer uncertainty. Hogan pointed to the company’s global mix, including strength in APAC, Europe and Latin America, as a factor supporting resilience. A Stifel analyst questioned whether North American independent practices were improving and whether financing initiatives could help demand. Hogan said the company remains focused on product innovation, affordability programs and expanded treatment options. Analysts also pressed management on scanner revenue pressure. Executives reiterated that lower upfront scanner economics are part of a broader strategy to expand the installed base and create future treatment revenue opportunities. Management emphasized that strategic priorities remain centered on digital orthodontics, restorative dentistry and expanding patient access. Hogan said the company is continuing efforts to improve execution, strengthen innovation and increase operating leverage. Align also announced plans to add independent directors and conduct a strategic and operating model review following discussions with Elliott Management. The company said the review is intended to improve commercial execution and organizational effectiveness. The company’s next phase will depend on balancing near-term scanner revenue pressure with long-term digital platform expansion. Management continues to focus on adoption, utilization and margin improvement. ALGN carries a Zacks Rank #4 (Sell), indicating that earnings estimate revision trends currently point to weaker potential performance relative to higher-ranked stocks. The Zacks Rank can change as analysts update earnings expectations following new financial results. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. The stock has a Value Score of C, Growth Score of A, Momentum Score of D and VGM Score of B. Zacks Style Scores are designed to complement the Zacks Rank by evaluating characteristics such as value, growth and momentum, with stronger scores generally indicating more favorable traits. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Align Technology, Inc. (ALGN) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Record Q2'26 revenues of $1.06 billion increased 4.3% year-over-year, reflecting 8.2% growth from Clear Aligner revenues and a 10.8% decrease in Systems and Services revenues Record Clear Aligner shipments of 691.8 thousand increased 7.4% year-over-year, led by double-digit international growth and stable North America performance Year-over-year growth continued across key customer channels and patient segments, including orthodontists and GP dentists, as well as adult, teen, and kid patients Q2'26 total revenues were $1,056.2 million, up 1.5% sequentially and up 4.3% year-over-year Q2'26 total revenues were unfavorably impacted by foreign exchange by approximately $6.1 million sequentially, and favorably impacted by approximately $12.5 million year-over-year(1) Q2'26 Clear Aligner revenues of $870.9 million increased 8.2% year-over-year, and Clear Aligner volume increased 7.4% year-over-year to 691.8 thousand cases Q2'26 Imaging Systems and CAD/CAM Services revenues of $185.3 million, increased 0.7% sequentially and decreased 10.8% year-over-year, reflecting softness in the capital equipment market and a mix shift toward lower-priced scanners and flexible acquisition models, including leasing and rental programs Q2'26 gross margin of 71.7% was unfavorably impacted by foreign exchange by approximately 0.2 points sequentially and by approximately 0.8 points year-over-year.(1) On a non-GAAP basis, Q2'26 gross margin was 72.3%(1), up 1.8 points year-over-year or up approximately 2.6 points at constant currency Q2'26 operating margin of 14.6% was unfavorably impacted by foreign exchange by approximately 0.6 points sequentially and by approximately 1.4 points year-over-year.(1) On a non-GAAP basis, Q2'26 operating margin was 22.9%(1), up 1.6 points year-over-year or up approximately 3.1 points at constant currency. Q2'26 diluted net income per share was $1.51, non-GAAP diluted net income per share was $2.64.(1) Both Q2'26 GAAP and non-GAAP EPS were unfavorably impacted by approximately $0.23 on a year-over-year basis due to foreign exchange Q2'26 cash and cash equivalents were $1,102.6 million compared to approximately $1,059.8 million as of March 31, 2026 Repurchased approximately 0.4 million shares, returning approximately $67.0 million to shareholders TEMPE, Ariz., July 29, 2026--(BUSINESS WIRE)--Align Technology, Inc. (Nasdaq: ALGN), a leading global medical device company that designs, manufactures, and sells the Invisalign® System of clear aligners, iTero™ intraoral scanners, and exocad™ CAD/CAM software for digital orthodontics and restorative dentistry, today reported financial results for the second quarter ("Q2'26"). Q2'26 total revenues were $1,056.2 million, up 1.5% sequentially and up 4.3% year-over-year. Q2'26 total revenues were unfavorably impacted by foreign exchange by approximately $6.1 million, or 0.6% sequentially, and favorably impacted by approximately $12.5 million, or 1.2% year-over-year.(1) Q2'26 Clear Aligner revenues were $870.9 million, up 1.7% sequentially and up 8.2% year-over-year. Q2'26 Clear Aligner revenues were unfavorably impacted by foreign exchange by approximately $5.1 million, or 0.6% sequentially, and favorably impacted by approximately $10.6 million, or 1.2% year-over-year.(1) Q2'26 Clear Aligner volume of 691.8 thousand cases was up 0.9% sequentially and up 7.4% year-over-year. Q2'26 Imaging Systems and CAD/CAM Services revenues were $185.3 million, up 0.7% sequentially and down 10.8% year-over-year. Q2'26 Imaging Systems and CAD/CAM Services revenues were unfavorably impacted by foreign exchange by approximately $1.0 million, or 0.5% sequentially, and favorably impacted by approximately $1.9 million, or 1.0% year-over-year.(1) Q2'26 gross profit was $757.4 million, resulting in a gross margin of 71.7%. Q2'26 gross margin was unfavorably impacted by foreign exchange by approximately 0.2 points sequentially.(1) On a constant currency basis, excluding the unfavorable foreign exchange impact, Q2'26 gross margin would have been approximately 72.0%. On a year-over-year basis, Q2'26 gross profit was unfavorably impacted by foreign exchange by approximately 0.8 points.(1) On a constant currency basis, excluding the unfavorable foreign exchange impact, Q2'26 gross margin would have been approximately 72.5%. On a non-GAAP basis, Q2'26 gross profit was $763.1 million, resulting in a gross margin of 72.3%.(1) Q2'26 operating income was $154.0 million, resulting in an operating margin of 14.6%. Q2'26 operating income was unfavorably impacted by an estimated $37.5 million liability, inclusive of interest, related to UK VAT. Q2'26 operating margin was unfavorably impacted by foreign exchange by approximately 0.6 points sequentially.(1) On a constant currency basis, excluding the unfavorable foreign exchange impact, Q2'26 operating margin would have been approximately 15.2%. On a year-over-year basis, Q2'26 operating margin was unfavorably impacted by foreign exchange by approximately 1.4 points.(1) On a constant currency basis, excluding the unfavorable foreign exchange impact, Q2'26 operating margin would have been approximately 16.0%.(1) Q2'26 net income was $108.3 million, or $1.51 per diluted share. Foreign exchange unfavorably impacted Q2'26 diluted net income per share by approximately $0.17 sequentially and by approximately $0.23 year-over-year. On a non-GAAP basis, Q2'26 net income was $189.1 million, or $2.64 per diluted share.(1) Commenting on Align's Q2'26 results, Align Technology President and CEO Joe Hogan said, "We delivered a solid second quarter with record revenues of $1.06 billion, up 4.3% year-over-year, driven by record Clear Aligner volumes of 691.8 thousand cases and 8.2% Clear Aligner revenue growth. Q2'26 revenues and Clear Aligner volumes were in line with our outlook, while Clear Aligner ASPs and non-GAAP operating margin of 22.9% exceeded our expectations. Q2’26 year-over-year Clear Aligner volume growth of 7.4% was driven by continued double-digit expansion across APAC, EMEA, and Latin America, together with stable performance in North America. Growth reflected continuing adoption across orthodontist and GP dentist channels and across adult, teen, and growing patient segments, as well as continued double-digit growth from DSOs. Investments in patient financing, clinical support programs, doctor subscription offerings, and practice productivity solutions supported adoption and utilization across our global Invisalign business. In Systems and Services, Q2’26 revenue performance reflected persistent softness in the capital equipment market as well as a shift toward lower-priced scanners and flexible acquisition models, including leasing and rental programs, which generate lower upfront revenue than traditional scanner purchases. By lowering the upfront cost of adoption, we can expand patient access to care, grow recurring revenue, and strengthen the Align™ Digital Platform." Financial Summary - Second Quarter Fiscal 2026 As of June 30, 2026, we had approximately $1,102.6 million in cash and cash equivalents, compared to approximately $1,059.8 million as of March 31, 2026. As of June 30, 2026, we had $300.0 million available under our revolving line of credit and a $50.0 million letter of credit sub-limit. Commenting on Align's Q2'26 results, Align Technology CFO and EVP Global Finance, John Morici said, "Our second quarter results reflect continued execution across the business. Solid Clear Aligner performance, disciplined expense management, and operational improvements supported revenue growth in-line with our outlook and non-GAAP operating margin above our expectations. Our growth initiatives continue to drive doctor adoption, utilization, and patient conversion. While Q2’26 Systems and Services revenue was below our original expectations, underlying scanner adoption remained healthy, and the reported lower revenues reflects lower price scanners and the transition toward lease and rental models that increase access to care by offering a broader range of purchasing options and increasing adoption of our digital scanning technology. This is a deliberate trade-off on our part. While this model may impact upfront economics and timing of revenue recognition, it enables us to serve more customers and to drive for higher-margin treatment revenue and drives durable long-term growth. Stronger Clear Aligner revenue growth and ASP performance helped offset the near-term impact. As more than 23 million patients have now been treated with the Invisalign® System, we believe our integrated digital platform and disciplined execution position us to support customer growth, expand adoption, and drive long-term profitable growth. Our strong balance sheet and healthy free cash flow generation continue to provide flexibility to invest in innovation, support our customers, and return capital to shareholders. During the quarter we repurchased approximately 0.4 million shares, at an average price of $169.45 per share, returning approximately $67 million to shareholders, and ended the quarter with more than $1.1 billion in cash and cash equivalents. We remain committed to disciplined capital allocation, maintaining financial flexibility, and creating long-term value for shareholders." Commenting on Align’s fiscal 2026 outlook, Hogan continued, "As we enter the second half of 2026, we believe we are well positioned to build on the momentum we saw in the first half of the year. We are entering the important teen treatment season with one of the industry's most comprehensive digital treatment portfolios for growing patients and teens. At the same time, we continue to expand opportunities in adult treatment through innovations that connect oral health, restorative workflows, and digital orthodontics, helping doctors incorporate Invisalign® treatment into broader patient care discussion. Our innovation engine remains a key differentiator and central to our growth strategy. Business model innovation, patient financing, subscription programs such as DSP, no-AA offerings, and digital workflow innovation are helping doctors improve patient conversion, increase utilization, and grow their practices. Every digital workflow begins with a scan, making scanner adoption important driver to increasing patient access to orthodontic care and long-term platform growth. As we continue to advance our innovation roadmap and direct fabrication technologies, we are creating more effective and personalized treatment solutions that improve clinical outcomes, enhance operating efficiency, and strengthen the customer experience across orthodontics and restorative dentistry." Align Announcement Highlights Q2'26 Stock Repurchase During Q2'26, we repurchased approximately 393.4 thousand shares of our common stock at an average price of $169.45 per share. These purchases were made pursuant to the $200.0 million open market repurchase plan announced on April 29, 2026, which we expect will be completed in October 2026. As of June 30, 2026, $733.3 million remains available for repurchases of our common stock under our $1.0 billion stock repurchase program announced in April 2025. Tariff Update as of June 30, 2026 As a result of the Supreme Court's ruling on February 20, 2026, that certain of the tariffs imposed under the International Emergency Economic Powers Act ("IEEPA") were unlawful, we are no longer subject to IEEPA tariffs, but are subject to new, temporary tariffs on imports under Section 122 of the Trade Act of 1974, effective February 24, 2026, which was subsequently held unlawful by the U.S. Court of International Trade in a decision that remains subject to appeal. We do not expect this change to have a material impact on our results. UK VAT update as of July 7, 2026 Following the First-tier Tribunal's 2025 decision that clear aligners qualify as VAT-exempt dental prostheses, we stopped charging VAT to UK customers effective August 1, 2025. On July 7, 2026, the UK Upper Tribunal overturned that decision, determining that clear aligners do not qualify as VAT-exempt dental prostheses. We acknowledge the ruling and will comply with applicable law. Effective September 7, 2026, invoices will include UK VAT at 20% on applicable Invisalign® aligners and Vivera™ retainers — our list prices remain unchanged. As a result of the ruling, we have recorded an estimated liability of approximately $37.5 million, inclusive of interest. We intend to appeal, though the ultimate resolution remains subject to uncertainty. Fiscal 2026 Business Outlook Assuming no circumstances occur beyond our control, such as foreign exchange, macroeconomic conditions, an extended war, and changes to currently applicable duties, including tariffs or other fees that could impact our business: Q3'26: We expect Q3’26 worldwide revenues to be in the range of $1,000M to $1,020M, down sequentially from Q2’26. We expect Q3’26 Clear Aligner volume to be up mid-single digits year-over-year and Q3’26 Clear Aligner ASP to be down sequentially from geographic mix and foreign exchange. We expect Q3'26 Systems & Services revenue to be down sequentially and year-over-year as a result of Q3 seasonality alongside a continued mix shift towards lower-priced scanners and flexible acquisition models, including leasing and rental units, and certified pre-owned offerings. We expect Q3’26 worldwide GAAP Gross Margin to be 67.5% to 68.5%, down sequentially approximately by 3 to 4 points, due to the incurrence of one-time charges expected to be approximately $20 to $30 million primarily for accelerated depreciation and restructuring and other charges in Q3'26. We expect Q3'26 non-GAAP Gross Margin to be approximately 71.0%, down sequentially from lower ASPs, consistent with typical Q3 quarter-over-quarter trends. We expect our Q3’26 GAAP Operating Margin to be between 13.5% and 15.0%, due to the incurrence of one-time charges expected to be approximately $35 to $50 million primarily for restructuring and other charges, and accelerated depreciation in Q3'26. We expect Q3'26 non-GAAP Operating Margin to be approximately 24.0%. For Fiscal 2026: We continue to expect 2026 worldwide revenue growth to be up 3% to 4% year-over-year. Our full year 2026 revenue guidance continues to assume a benefit from foreign exchange that is consistent with the assumptions underlying our initial full year outlook. We expect the impact of foreign exchange to moderate in the remaining quarters, trending toward the full-year assumption of approximately 100 basis points. We now expect 2026 Clear Aligner volume growth to be up approximately 6% year-over-year and 2026 Clear Aligner ASP to be flat to slightly down from 2025. We now expect 2026 Systems & Services revenue growth to be down 6% to 8% year-over-year as we anticipate a continued mix shift towards lower-priced scanners and more flexible acquisition models in 2H’26. We expect our 2026 iTero scanner shipment growth to be up double-digits year-over-year, reflecting continued customer adoption and scanner placements - and helping to underpin our second half outlook for Invisalign volumes. We expect 2026 GAAP Gross Margin to be approximately 70.2% to 70.5%, up year-over-year by approximately 3 points, due to the incurrence of one-time charges expected to be approximately $30 to $40 million primarily for accelerated depreciation and restructuring and other charges, partially offset by gain on assets held for sale. We expect 2026 non-GAAP Gross Margin to be up approximately 100 basis points over 2025 non-GAAP Gross Margin. We expect 2026 GAAP Operating Margin to be approximately 15.1% to 15.6%, up year-over-year by approximately 2 points, due to the incurrence of one-time charges expected to be approximately $90 to $110 million, primarily related to restructuring and other charges, accelerated depreciation, and legal settlements, partially offset by gain on assets held for sale. In Q2'26 we recorded $38 million for clear aligner UK VAT liability. We expect 2026 non-GAAP Operating Margin to be approximately 23.7%, a 100-basis point improvement year-over-year consistent with our previous guidance. We expect our investments in capital expenditures for fiscal 2026 to be $125 million to $150 million. Capital expenditures primarily relate to technology upgrades, additional manufacturing capacity as well as maintenance. We now expect to repurchase $400 million to $500 million of our common stock in 2026, reflecting the conviction of the Board and Management in Align's long-term value. This includes approximately $133 million of our common stock we expect to repurchase through October 2026. Commenting on the Company’s outlook, Morici continued, "I want to take a moment to offer some preliminary, high-level framing for 2027, especially given the work we are doing to drive growth, cost discipline and margin expansion. To be clear—we are not issuing formal guidance for next year—it’s too early and our strategic and operating model review is still underway. However, we remain laser focused on executing our strategic plan for profitable revenue growth across our two operating segments. Based on our continued progress and the initiatives we outlined in the Strategic Initiatives press release today, we are comfortable targeting at least that same level of improvement in operating margin again in fiscal 2027, on top of the approximately 100 basis points of operating margin improvement we reiterated today for fiscal 2026. For fiscal 2027, we currently expect GAAP and non-GAAP operating margins to increase at least approximately 100 basis points year-over-year. We’ll share more details after our strategic and operating model review is complete and in conjunction with formal 2027 guidance." Align Webcast and Conference Call We will host a conference call today, July 29, 2026, at 4:30 p.m. EDT, 1:30 p.m. PDT, to review our Q2'26 financial results, discuss future operating trends, and our business outlook. The conference call will also be webcast live via the Internet. To access the webcast, go to the "Events & Presentations" section under "Company Information" on Align's Investor Relations website at http://investor.aligntech.com. To access the conference call, participants may register for the call at https://edge.media-server.com/mmc/p/voy55bot. An archived audio webcast will be available 2 hours after the call's conclusion and will remain available for one month. About Non-GAAP Financial Measures To supplement our consolidated financial statements, which are prepared and presented in accordance with generally accepted accounting principles ("GAAP") in the United States ("U.S. GAAP"), we use the following non-GAAP financial measures: constant currency net revenues, constant currency gross profit, constant currency gross margin, constant currency income from operations, constant currency operating margin, constant currency diluted net income per share, non-GAAP constant currency gross margin, non-GAAP constant currency operating margin, non-GAAP gross profit, non-GAAP gross margin, non-GAAP total operating expenses, non-GAAP income from operations, non-GAAP operating margin, non-GAAP net income before provision for income taxes, non-GAAP provision for income taxes, non-GAAP effective tax rate, non-GAAP net income and non-GAAP diluted net income per share. These non-GAAP financial measures exclude certain items that may not be indicative of our fundamental operating performance, including foreign currency exchange rate impacts, the effects of stock-based compensation, amortization of intangible assets related to certain acquisitions, restructuring and other charges, legal settlements and contingencies, acquisition-related costs, discrete cash and non-cash charges or gains and associated tax impacts that are included in the most directly comparable GAAP financial measure. Our management believes that the use of certain non-GAAP financial measures provides meaningful supplemental information regarding our recurring core operating performance. We believe that both management and investors benefit from referring to these non-GAAP financial measures in assessing our performance and when planning, forecasting, and analyzing future periods. We believe these non-GAAP financial measures are useful to investors because (1) they allow for greater transparency with respect to key metrics used by management in its financial and operational decision-making, and (2) they are used by our institutional investors and the analyst community to help them analyze the performance of our business. There are material limitations to using non-GAAP financial measures as they are not prepared in accordance with U.S. GAAP and may be different from similarly titled non-GAAP financial measures used by other companies. Non-GAAP financial measures exclude certain items that may have a material impact upon our reported results of operations, which can limit their usefulness for comparison purposes. In addition, they are subject to inherent limitations as they reflect the exercise of judgments by management about which charges and gains are excluded or included from the non-GAAP financial measures. We compensate for these limitations by analyzing current and future results on both a GAAP and non-GAAP basis and by providing specific information regarding the GAAP amounts excluded or included from these non-GAAP financial measures in our public disclosures. The presentation of non-GAAP financial information is meant to be considered in addition to, not as a substitute for, superior to, or in isolation from, the directly comparable financial measures prepared in accordance with U.S. GAAP. We urge investors to review the reconciliation of our GAAP financial measures to the comparable non-GAAP financial measures included herein and not to rely on any single financial measure to evaluate our business. For more information on these non-GAAP financial measures and a reconciliation of GAAP to non-GAAP measures, please see the tables captioned "Unaudited GAAP to Non-GAAP Reconciliation." About Align Technology, Inc. Align Technology designs and manufactures the Invisalign® System, the most advanced clear aligner system in the world, iTero™ intraoral scanners and services, and exocad™ CAD/CAM software. These technology building blocks enable enhanced digital orthodontic and restorative workflows to improve patient outcomes and practice efficiencies for over 302.0 thousand doctor customers and are key to accessing Align’s 600 million consumer market opportunity worldwide. Over the past 29 years, Align has helped doctors treat approximately 23.5 million patients with the Invisalign System and is driving the evolution in digital dentistry through the Align™ Digital Platform, our integrated suite of unique, proprietary technologies and services delivered as a seamless, end-to-end solution for patients and consumers, orthodontists and GP dentists, and lab/partners. Visit www.aligntech.com for more information. For additional information about the Invisalign System or to find an Invisalign doctor in your area, please visit www.invisalign.com. For additional information about the iTero digital scanning system, please visit www.itero.com. For additional information about exocad dental CAD/CAM offerings and a list of exocad reseller partners, please visit www.exocad.com. Invisalign, iTero, exocad, Align, Align Digital Platform and iTero Lumina are trademarks of Align Technology, Inc. Forward-Looking Statements This press release, including the tables below, contains forward-looking statements, including statements of our current intentions, beliefs and expectations regarding our ability to expand access to care, grow recurring revenue, and strengthen the Align™ Digital Platform by lowering the upfront cost of adoption; our continuing investments in expanding our digital platform ecosystem and supporting our doctor customers as they grow their practices and deliver exceptional patient outcomes; our growth initiatives continuing to drive doctor adoption, utilization, and patient conversion; lower price scanners and the transition toward lease and rental models increasing access to care by lowering adoption barriers and accelerating installed base growth; our belief that a larger, faster-growing installed base can expand the funnel for higher-margin treatment revenue and drive durable long-term growth; our integrated digital platform and disciplined execution positioning us to support customer growth, expand adoption and drive long-term profitable growth; our flexibility to invest in innovation, support our customers, and return capital to shareholders, and our commitment to disciplined capital allocation, financial flexibility and the creation of long-term value for shareholders; our belief that we are well positioned to build on the momentum we saw in the first half of 2026, and that our innovation roadmap and direct fabrication technologies can create more effective and personalized treatment solutions that improve clinical outcomes, enhance operating efficiency, and strengthen the customer experience across orthodontics and restorative dentistry; the impact of tariffs imposed under Section 122 of the Trade Act of 1974 on our results of operations; the impact of the Upper Tribunal's determination that clear aligners do not qualify as VAT-exempt dental prostheses on our invoices issued on or after September 7, 2026, and our statement that list prices for applicable Invisalign® aligners and Vivera™ retainers will remain unchanged; our estimated liability of approximately $37.5 million, inclusive of interest, related to UK VAT, and our intention to appeal; our expectations for Q3'26 worldwide revenues, Clear Aligner volume, Clear Aligner ASP, Systems and Services revenues (including as a result of a continued mix shift towards lower-priced scanners and flexible acquisition models), GAAP and non-GAAP gross margin (including our expectation that we will incur one-time charges expected to be approximately $20 to $30 million primarily for accelerated depreciation and restructuring and other charges in Q3'26), and GAAP and non-GAAP operating margin (including as a result of one-time charges expected to be approximately $35 to $50 million primarily for restructuring and other charges, and accelerated depreciation, in Q3'26); our expectations for fiscal year 2026 worldwide revenue growth (including our assumption that the impact of foreign exchange will be moderate in the remaining quarters, trending toward the full-year assumption of approximately 100 basis points), Clear Aligner volume growth, Clear Aligner ASP, Systems and Services revenue growth (including our assumptions regarding a continued mix shift towards lower-priced scanners and more flexible acquisition models in 2H’26, and double-digit year-over-year growth for iTero shipments, reflecting continued customer adoption and scanner placements), GAAP and non-GAAP gross margin (including our assumption regarding one-time charges expected to be approximately $30 to $40 million primarily for accelerated depreciation and restructuring and other charges, partially offset by gain on assets held for sale), GAAP and non-GAAP operating margin (including our assumption regarding one-time charges expected to be approximately $90 to $110 million, primarily related to restructuring and other charges, accelerated depreciation, and legal settlements, partially offset by gain on assets held for sale), and investments in capital expenditures; our expectations regarding the timing and amount of future stock repurchases, including our plans to repurchase $400 to $500 million of our common stock in 2026 due to the conviction of our board of directors and management in our long-term value; and our expectation that our fiscal 2027 GAAP and non-GAAP operating margins will improve by approximately 100 basis points year-over-year. Forward-looking statements contained in this press release are based upon information available to Align as of the date hereof. These forward-looking statements reflect our best judgments based on currently known facts and circumstances and are subject to risks and uncertainties, and assumptions that may be inaccurate. As a result, actual results may differ materially and adversely from those expressed or implied in any forward-looking statement. Factors that might cause such a difference include, but are not limited to: macroeconomic conditions, including fluctuations in foreign currency exchange rates, higher interest rates, market volatility, inflation, general economic weakness, and threats of or actual slowdowns or recessions; geopolitical events, such as wars, military conflicts (such as the ongoing military conflicts in the Middle East, including the hostilities involving Israel, Iran, and the United States, and geopolitical tensions involving Ukraine and China), terrorism and major public health crises, which could result in, among other things, disruptions to our supply chain and the global economy, energy shortages and elevated gasoline and other energy costs, inflation, decreased customer and consumer sentiment, uneven patient traffic at dental practices, and a shift in public opinion about companies based in the United States or in the regions where we operate; trade policies, tariffs, customs duties and fees, and retaliatory actions, international trade disputes, or protectionist trade measures taken in response to or resulting from such measures; customer and consumer purchasing behavior and changes in demand for dental services as a result of, among other things, prevailing macroeconomic conditions, declining customer confidence and consumer sentiment, consumer economic uncertainty, employment levels, health insurance coverage, wages, debt obligations, discretionary income, inflationary pressure, and perceptions of current and future economic conditions; variations in our geographic, channel or product mix, product launches, product pilots and product adoption, and selling prices regionally and globally, including product mix shifts to lower priced products or to products and leasing or rental programs with a higher percentage of deferred revenue; reductions, delays or shifts in purchasing or utilization of our products and services by doctors at dental support organizations, orthodontic service organizations and other large group practices; competition from existing and new competitors; competitive pressure from AI-powered technologies in the dental industry, regulatory and legal risks surrounding implementation of AI, and reputational harm from improper use of AI; declines in, or the slowing of the growth of, sales of our clear aligners and intraoral scanners domestically and/or internationally and the impact either would have on the adoption of Invisalign products; the possibility that the development and release of new products or enhancements to existing products do not proceed in accordance with the anticipated timeline or may themselves contain bugs, errors, or defects in software or hardware requiring remediation and that the market for the sale of these new or enhanced products may not develop as expected; the timing, availability and cost of raw materials, components, products and other shipping and supply chain constraints and disruptions; unexpected or rapid changes in the growth or decline of our domestic and/or international markets; rapidly evolving and groundbreaking advances that fundamentally alter the dental industry or the way new and existing customers market and provide products and services to consumers; our ability to protect our intellectual property rights; our ability to comply with regulatory requirements and obtain and maintain regulatory approvals or clearances, including as a result of any shutdowns of the U.S. federal government or reductions in government personnel; the willingness and ability of our customers to maintain and/or increase product utilization in sufficient numbers; our ability to sustain or increase profitability or revenue growth in future periods (or minimize declines) while controlling expenses; expansion of our business and products; our ability to identify, complete, finance and integrate acquisitions, investments and other strategic transactions, and to realize the anticipated synergies and benefits of those transactions; the impact of excess or constrained capacity at our manufacturing and treat operations facilities and pressure on our internal systems and personnel; security breaches, data breaches, or other cybersecurity incidents involving any customer and/or patient data, and our failure to comply with laws, regulations and other obligations related to privacy, data protection, data governance and cybersecurity; natural disasters and extreme weather conditions occurring in a region where one of our facilities or those of our customers or suppliers are located; the timing of case submissions from our doctor customers within a quarter as well as increases in manufacturing cost per case; and the loss of key personnel, labor shortages, or work stoppages for us or our suppliers. The foregoing and other risks are detailed from time to time in our periodic reports filed with the Securities and Exchange Commission, including, but not limited to, our Annual Report on Form 10-K for the year ended December 31, 2025, which was filed with the Securities and Exchange Commission ("SEC") on February 27, 2026 and our latest Quarterly Report on Form 10-Q for the quarter ended March 31, 2026, which was filed with the SEC on May 6, 2026. Align undertakes no obligation to revise or update publicly any forward-looking statements for any reason. View source version on businesswire.com: https://www.businesswire.com/news/home/20260729769697/en/ Contacts Align Technology Madelyn Valente(909) [email protected] Zeno Group Sarah Karlson(828) [email protected]

Align Technology (ALGN) came out with quarterly earnings of $2.64 per share, beating the Zacks Consensus Estimate of $2.56 per share. This compares to earnings of $2.49 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of +3.13%. A quarter ago, it was expected that this maker of the Invisalign tooth-straightening system would post earnings of $2.26 per share when it actually produced earnings of $2.58, delivering a surprise of +14.16%. Over the last four quarters, the company has surpassed consensus EPS estimates four times. Align Technology, which belongs to the Zacks Medical - Dental Supplies industry, posted revenues of $1.06 billion for the quarter ended June 2026, surpassing the Zacks Consensus Estimate by 0.43%. This compares to year-ago revenues of $1.01 billion. The company has topped consensus revenue estimates four times over the last four quarters. The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call. Align Technology shares have added about 12.5% since the beginning of the year versus the S&P 500's gain of 8.5%. While Align Technology has outperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock? There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately. Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions. Ahead of this earnings release, the estimate revisions trend for Align Technology was unfavorable. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #4 (Sell) for the stock. So, the shares are expected to underperform the market in the near future. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. It will be interesting to see how estimates for the coming quarters and the current fiscal year change in the days ahead. The current consensus EPS estimate is $2.88 on $1.02 billion in revenues for the coming quarter and $11.36 on $4.19 billion in revenues for the current fiscal year. Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Medical - Dental Supplies is currently in the top 40% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1. McKesson (MCK), another stock in the same industry, has yet to report results for the quarter ended June 2026. The results are expected to be released on August 5. This prescription drug distributor is expected to post quarterly earnings of $9.59 per share in its upcoming report, which represents a year-over-year change of +16.1%. The consensus EPS estimate for the quarter has been revised 0.2% higher over the last 30 days to the current level. McKesson's revenues are expected to be $104.39 billion, up 6.7% from the year-ago quarter. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Align Technology, Inc. (ALGN) : Free Stock Analysis Report McKesson Corporation (MCK) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Dental technology company Align Technology (NASDAQ:ALGN) met Wall Street’s revenue expectations in Q2 CY2026, with sales up 4.3% year on year to $1.06 billion. On the other hand, next quarter’s revenue guidance of $1.01 billion was less impressive, coming in 1.3% below analysts’ estimates. Its non-GAAP profit of $2.64 per share was 1.7% above analysts’ consensus estimates. Is now the time to buy Align Technology? Find out in our full research report. Revenue: $1.06 billion vs analyst estimates of $1.05 billion (4.3% year-on-year growth, in line) Adjusted EPS: $2.64 vs analyst estimates of $2.60 (1.7% beat) Adjusted Operating Income: $241.7 million vs analyst estimates of $230.6 million (22.9% margin, 4.8% beat) Revenue Guidance for Q3 CY2026 is $1.01 billion at the midpoint, below analyst estimates of $1.02 billion Operating Margin: 14.6%, down from 16.1% in the same quarter last year Sales Volumes were up 7.4% year on year Market Capitalization: $12.58 billion Pioneering an alternative to traditional metal braces with nearly invisible plastic aligners, Align Technology (NASDAQ:ALGN) designs and manufactures Invisalign clear aligners, iTero intraoral scanners, and dental CAD/CAM software for orthodontic and restorative treatments. A company’s long-term sales performance can indicate its overall quality. Any business can put up a good quarter or two, but the best consistently grow over the long haul. Over the last five years, Align Technology grew its sales at a tepid 3.6% compounded annual growth rate. This fell short of our benchmark for the healthcare sector and is a tough starting point for our analysis. Long-term growth is the most important, but within healthcare, a half-decade historical view may miss new innovations or demand cycles. Align Technology’s recent performance shows its demand has slowed as its annualized revenue growth of 2.5% over the last two years was below its five-year trend. We’re wary when companies in the sector see decelerations in revenue growth, as it could signal changing consumer tastes aided by low switching costs. This quarter, Align Technology grew its revenue by 4.3% year on year, and its $1.06 billion of revenue was in line with Wall Street’s estimates. Company management is currently guiding for a 1.4% year-on-year increase in sales next quarter. Looking further ahead, sell-side analysts expect revenue to grow 3% over the next 12 months, similar to its two-year rate. This projection is underwhelming and indicates its newer products and services will not lead to better top-line performance yet. ONE MORE THING: The $21 AI Application Stock Wall Street Forgot. While Wall Street obsesses over who’s building AI, one company is already using it to print money. And nobody’s paying attention. AI chip stocks trade at ridiculous valuations. This company processes a trillion consumer signals monthly using AI and trades at a third of the price. The gap won’t last. The institutions will figure it out. You need to see this first. Read the FREE Report Before They Notice. Adjusted operating margin is one of the best measures of profitability because it tells us how much money a company takes home after subtracting all core expenses, like marketing and R&D. It also removes various one-time costs to paint a better picture of normalized profits. Align Technology has been an efficient company over the last five years. It was one of the more profitable businesses in the healthcare sector, boasting an average adjusted operating margin of 22.4%. Looking at the trend in its profitability, Align Technology’s adjusted operating margin decreased by 1.6 percentage points over the last five years, but it rose by 1.7 percentage points on a two-year basis. Still, shareholders will want to see Align Technology become more profitable in the future. In Q2, Align Technology generated an adjusted operating margin profit margin of 22.9%, up 1.6 percentage points year on year. This increase was a welcome development and shows it was more efficient. We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable. Align Technology’s EPS grew at an unimpressive 1.4% compounded annual growth rate over the last five years, lower than its 3.6% annualized revenue growth. This tells us the company became less profitable on a per-share basis as it expanded due to non-fundamental factors such as interest expenses and taxes. We can take a deeper look into Align Technology’s earnings to better understand the drivers of its performance. As we mentioned earlier, Align Technology’s adjusted operating margin expanded this quarter but declined by 1.6 percentage points over the last five years. This was the most relevant factor (aside from the revenue impact) behind its lower earnings; interest expenses and taxes can also affect EPS but don’t tell us as much about a company’s fundamentals. In Q2, Align Technology reported adjusted EPS of $2.64, up from $2.49 in the same quarter last year. This print beat analysts’ estimates by 1.7%. Over the next 12 months, Wall Street expects Align Technology’s full-year EPS to grow 6% from $11.12 to $11.79. We struggled to find many positives in these results. Overall, this was a weaker quarter. The stock traded down 2.4% to $173.00 immediately after reporting. So should you invest in Align Technology right now? We think that the latest quarter is just one piece of the longer-term business quality puzzle. Quality, when combined with valuation, can help determine if the stock is a buy. We cover that in our actionable full research report which you can read here, it’s free.