SmileDirectClub The opening bell rang earlier today, marking the first day of trading as a public company. The Orthodontic Company is now trading on the NASDAQ under the symbol "SDC".
Already, the stock is trading at 11% to $ 20.36 per share.
SmileDirectClub has launched an IPO in the hope of acquiring up to $ 1.3 billion at an offer price of $ 23 per share, with an expected market cap of around $ 10 billion. The company originally intended to set its price between $ 19 and $ 22 per share.
The company plans to use the funds raised from the IPO for international expansion and development of new dental products. SmileDirectClub filed a lawsuit to return to the public in August amid concerns from National Dental Societies.
before that, SmileDirectClub reached a $ 3.2 billion valuation after a $ 380 million financing round last October. Investors from Clayton, Dubilier and Rice led the tour, which included the participation of Kleiner Perkins and Spark Capital. This funding was at the forefront of Invisalign's Align Technology investments of $ 46.7 million in SmileDirectClub in 2016, and another $ 12.8 million investment in 2017 to acquire a total of 19% of the company.
In 2018, SmileDirectClub's revenue was $ 432.2 million, a significant increase from just $ 147 million the previous year.
The company charges invisible alignment directly to customers, and licensed dentists (either orthodontists or general dentists) remotely monitor patient progress. Before shipping matrices, patients either take their impressions of the teeth at home and send them to SmileDirectClub or visit one of the company's "SmileShops" to be scanned.
SmileDirectClub says it costs less than 60% of other types of dental straightening treatments, with treatment lengths ranging from four to 14 months. In advance, SmileDirectClub costs $ 1,895 with an average treatment lasting six months.
Despite this, members of the American Orthodontic Society had a problem with SmileDirectClub, confirming before that SmileDirectClub violates the law. Because methods allow people to skip time in person, x-rays are "illegal and creates medical risks."The organization also filed complaints against SmileDirectClub in 36 states, alleging violations of laws and regulations governing dental practice. These complaints were filed with regulatory boards that oversee dental practices and with prosecutors in each state.
SmileDirectClub explicitly calls those problems in S-1 as potential risk factors. Here's a main solid block:
A number of dentists and orthodontists believe that clear aligners are suitable for representing only a limited proportion of their patients. National state and dental associations have released data discouraging the use of orthodontics using the teledentistry platform. Increased market acceptance of our processor via a clear remote alignment tool may depend in part on the recommendations of professionals and associations for dentistry and orthodontics, as well as other factors including effectiveness, safety, ease of use, reliability, aesthetic and price compared to competing products.
Moreover, our ability to do business in each state depends, in part, on that country's particular treatment of telehealth and the organization of the dental authority for dental practice, each subject to political, regulatory and other influences. There is a risk that state authorities may find that our contractual relationships with our doctors violate laws and regulations that prohibit corporate dental practice, which generally prohibit dental practice by entities. Two state dental chambers have established new rules or interpreted existing rules in a manner designed to limit or restrict our ability to conduct our work as it is currently conducted.
In addition, as the S-1 notes, the National Dental Association recently filed a petition with the US Food and Drug Administration claiming that the manufacture of SmileDirectClub violates Prescription Only requirements. Although no regulations or laws that will affect SmileDirectClub have been issued so far, it is a potential scenario that will significantly affect the company's core business.