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The Rise and Fall of Smile Direct Club

The ascent and subsequent decline of SmileDirectClub have been widely acknowledged, both within our profession and among the general public. Founded in 2014 the company’s initial success was remarkable. By directly selling aligners to the public, bypassing traditional dental channels, SmileDirectClub promised straightened teeth in as little as four months, at a price significantly lower than that offered by dental professionals.

The inclusion of teledentistry options and the establishment of physical stores across the USA, as well as expansion into other countries, including our own, contributed to the company’s apparent triumph.

On the surface the business appeared successful, culminating in a 2019 Initial Public Offering (IPO) on the NASDAQ stock exchange with a valuation of US$9 billion. However, the shares, initially trading at US$18, subsequently plummeted to a fraction of a cent. While the dental profession criticised the service, it was the lack of profitability that ultimately led to the demise of the company.

SmileDirectClub was a teledentistry company providing clear aligners directly to consumers. The company is headquartered in Nashville, Tennessee, USA.

The company’s main focus was on providing clear aligners as an alternative to traditional braces for teeth straightening. SmileDirectClub’s business model involves remote teledentistry, allowing customers to receive evaluations and treatment plans without visiting a physical office.

SmileDirectClub has expanded its services internationally, making clear aligners accessible to customers in various countries. The company has also formed partnerships with dental professionals and established SmileShops, physical locations where customers can have 3D scans of their teeth taken for custom aligners.

In September 2019, SmileDirectClub went public with an IPO on the NASDAQ stock exchange. In addition to clear aligners, the company offers other oral care products, including bright on™ premium teeth whitening, retainers, and an electric toothbrush.

Recent court documents have revealed that the company, which abruptly announced the closure of its global operations, owes almost $900 million in debt. This move has left thousands of Australian customers without support for their ongoing orthodontic plans.

SmileDirectClub gained prominence by directly selling dental aligners, creating custom-made aligners and treatments on differentiating plans. The compnay began trading in Australia in May 2019.

In a statement on the company’s website, SmileDirectClub announced that customer care support was no longer available for existing clients, and all pending orders would be cancelled. The company filed for Chapter 11 bankruptcy protection in Texas on September 29, reporting about $890.6 million in debt at the time of filing.

The impact of health measures during the COVID-19 pandemic, including a decline in SmileShop traffic and consumer spending, operational challenges, supply chain issues, a shrinking labour force, and rising inflation, were cited as reasons for the company’s financial difficulties.

In the statement, SmileDirectClub mentioned the cancellation of pending aligner orders, the discontinuation of lifetime guarantees on products, and the expectation for customers to continue monthly payments until fulfilling the terms of the SmilePay program. Refunds and additional measures for customers were promised pending the bankruptcy process.

The company also faced legal challenges in Australia, receiving a $3.5 million fine after being sued by the consumer watchdog for misleading claims. SmileDirectClub admitted to contravening Australian Consumer Law between May 2019 and October 2020 by making false or misleading statements to customers regarding reimbursements from private health funds.

Although based on a more traditional model of suppling aligners to dental professional, SmileStyler, a self-proclaimed Invisalign rival also went into liquidation in December, once again proving copy-cat businesses are not as easy to make profitable as they may first seem.

Customer-care support has also ceased, with the company asking customers to: “Continue treatment outside of the platform” and “Consult with a local doctor or dentist” for questions around future aligner treatment.

In a statement on its website, the company said they had made the decision to wind down its global operations, effective immediately.

Customers who have been already using the product will also lose their lifetime guarantee on the product as it “no longer exists”.

It is doubtful if refunds will be available with the company stating more information would come once the bankruptcy process determined the next steps and additional measures customers can take.

Customers however were told they were expected to continue to make all monthly payments on their treatments until the product was paid off.

In conclusion, the rise and fall of SmileDirectClub serve as a cautionary tale, highlighting the challenges associated with disruptive business models in the healthcare sector.

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