SmileDirectClub

SmileDirectClub is a teledentistry company. The company was co-founded in 2014 by Jordan Katzman and Alex Fenkell. It is based in Nashville, Tennessee.

Products

SmileDirectClub produces 3D-printed clear aligners. SmileDirectClub aligners are a competitor of traditional braces and clear alignment companies like Invisalign.

Communication with licensed orthodontic professionals and other SmileDirectClub staff takes place virtually. Impression kits are sent to customers, after which teeth molds are reviewed by dentists or orthodontists who oversee the treatment process. The company reportedly works with 225 licensed professionals.

While most business and dentistry is conducted online, the company has 300 retail locations across the United States, Canada, Australia and the United Kingdom.

History

The company initially partnered with Align Technology as an exclusive third-party distributor for its aligners. After a dispute over violation of a non-compete clause claiming Align "misused confidential SmileDirectClub information and violated its fiduciary duties," Align was ordered by an arbitrator to close its retail locations and return its ownership stake in SmileDirect. Align filed an additional arbitration to recoup amount the value of the ownership stake. In 2021, the arbitrator has ordered SmileDirectClub to pay Align $43.4 million (plus $2.1 million in interest) for the ownership stake.

In October 2018, SmileDirectClub raised $380 million in an investment round led by Clayton, Dubilier & Rice and Kleiner Perkins, for a $3.2 billion valuation according to '' Bloomberg''. SmileDirectClub was initially funded by Camelot Venture Group. NBA player Draymond Green was an early investor in the company, investing in 2015, after personally using its products.

The company expanded into Canada in November 2018, and expanded into the UK and Australia in 2019.

During the 61st Annual Grammy Awards, SmileDirectClub announced a collaboration with singer Shawn Mendes on campaign to show "that confidence is gained with an amazing smile."

In April 2019, CVS announced that the company would add SmileDirectClub locations to hundreds of CVS stores. In May 2019, HP and SmileDirectClub announced a partnership to produce over 20 million 3D-printed molds over the following year.In August 2019, the company filed S-1 paperwork to go public. On September 12, 2019, the company went public by offering initial shares at $23, above the expected price of $19-$22 per share. SDC's IPO opened at $20.55 and closed at $16.67 after the first day, a 28% loss from the initial shares offering. After the loss, the CFO of the company has stated that the focus of the company will remain the same despite market evaluations.

SmileDirectClub was awarded a business-model patent on the process used to plastic aligners for customers on April 28, 2020. SmileDirectClub sued a competitor Candid Care, calling it "a copycat model". U.S. District Judge Colm Connolly invalidated the patent.

On April 14, 2021, the company was the subject of a cyberattack. In a filing, the SmileDirectClub reported that they were "able to successfully block the attack, no ransom was paid, and the Company's systems and operations are back online and performing normally." The estimated cost was $10 million to $15 million in revenue "from the cyberattack and the associated downtime in treatment planning and manufacturing."

On August 3, 2021, a workplace shooting occurred at the company's manufacturing facility in Nashville. Two security guards and a manager were injured by the gunman, 22-year-old employee Antonio King, who was then shot and killed by responding police officers. SmileDirectClub released a statement after the shooting, saying it was saddened by the events.

Criticisms

The American Association of Orthodontists (AAO) has filed complaints with 36 state dental boards, alleging that SmileDirectClub violates regulatory standards. According to SmileDirectClub representatives, 12 of the cases have been closed and no adverse legal action has been taken against the company. The AAO has stated that only five states confirmed closed cases.

In September 2019, a group of customers filed a class-action lawsuit against the company claiming SmileDirectClub engaged in false advertising and violating FDA regulations. Due to a clause in SmileDirectClub's consent forms that require disputes to be resolved via arbitration, all but two plaintiffs in the lawsuit withdrew.

In January 2020, the ''New York Times'' published an article revealing SmileDirectClub's usage of non-disclosure agreements worked to limit information about customers’ dissatisfaction with its products, including medical concerns. The company sued Lifehacker's parent company for defamation and libel after the site published an article that outlined the risks of its products. It also sued state dental boards after making it harder for SmileDirectClub to operate. SmileDirectClub's chief legal officer defended the company's actions stating, “when we believe that there is an organized campaign to damage our reputation amongst consumers, dentists and/or investors, we will defend ourselves and our mission to democratize access to care every chance we get.”

In March 2020, CBC News's ''Marketplace'' released an investigative report where they found the company had made misleading claims about their aligners and gave questionable treatment plans. Marketplace sent four potential customers wearing hidden cameras to SmileDirectClub locations in the Toronto area. While SmileDirectClub approved all four patients for treatment plans, orthodontists asked to review the treatment plan said that none should have been approved. In one case, the orthodontist said that the proposed treatment plan could increase the likelihood of chips and wear. SmileDirectClub's disputed this assessment and stated that the treatment plans would all result in an improved smile appearance. Following the investigative, SmileDirectClub released a list of changes that they were making to the company, including increased trainings, changes to their forms so customers better understand they need to visit a dentist six months prior to starting treatment, and making the contact information for treating doctor available as soon as they are approved for treatment.

SmileDirectClub filed a $2.8 billion lawsuit against NBC News in May 2020 accusing the news organization of broadcasting a story with errors in it. The NBC Nightly News story cited patients who complained of pain after receiving SmileDirectClub's treatment. One patient featured in the story said her orthodontist diagnosed her with a crossbite “possibly caused by” the company's aligners. Another patient gave testimonial that his dentist said SmileDirectClub's aligners “moved his teeth so fast that it caused some of them to detach from the bone.” SmileDirectClub's lawsuit claims the story contained more than 40 false and misleading statements. An NBC News spokesperson responded in a statement about the lawsuit, "we stand by our reporting and believe this is a meritless claim.”

References

Further reading

Inc. 30 Under 30

External links

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Telemedicine
American companies established in 2014
Health care companies established in 2014
2014 establishments in Tennessee
Health care companies based in Tennessee
Companies based in Nashville, Tennessee
Companies listed on the Nasdaq
2019 initial public offerings
Dental companies of the United States