September 2019 IPO Helped SmileDirectClub Become an Industry Pioneer
SmileDirectClub was founded in 2014 with the innovative concept of combining teeth aligners and telehealth services. The company has been a major innovator within the field of orthodontics, and it’s grown substantially over the past seven years. Most notably, the company has seen exponential growth in the past 18 months. Chief Financial Officer Kyle Wailes was recently on Fox Business’s Morning with Maria to discuss this spurt of “hypergrowth.”
Putting SmileDirectClub’s IPO in Perspective
SmileDirectClub went public in September 2019 via an initial public offering on the NASDAQ. A successful IPO is a major turning point in any publicly-traded company’s story, but Wailes was careful to put SmileDirectClub’s IPO in perspective. While acknowledging the significance of the offering, Wailes didn’t describe it as an end goal for the company. Instead, he framed the IPO as a “moment” in the company’s story. A significant moment, but a moment nonetheless.
Wailes went on to describe the many other significant aspects of SmileDirectClub’s story thus far. Many of the other items he mentioned are focused on growing the company, and a lot of them are possible because of the capital raise that the IPO provided.
Developing More User-Friendly and Precise Aligners
Of the many investments that SmileDirectClub has made over the past 18 months, possibly none is more important than the development of a new aligner system. Comfort Sense ™ , as the company has branded it, is an aligner system that’s both more comfortable and more precise than the previous generation of aligners. There are two main features that set this new design apart.
First, Comfort Sense ™ aligners have precision-cut edges that are formed by lasers. These edges don’t dig into the gums, as previous aligners’ edges may have. The new aligners are much more comfortable to wear, as a result.
Second, the Comfort Sense ™ system doesn’t use a uniform aligner design. Instead, it progresses from thinner to thicker aligners as a customer proceeds through their course of treatment. This allows customers to more easily adjust to the shifting that aligners do. It’s not until the latter part of treatment that thick aligners, which are needed for precisely moving more resistant teeth, are used.
SmileDirectClub’s Comfort Sense ™ technology is now included on all of the company’s aligners, including both all SmileDirectClub Aligners and all Nighttime Aligners.
Building an Industry-Leading Facility
In order to produce Comfort Sense ™ aligners at scale, SmileDirectClub needed a high-tech facility that had excellent quality control. All of the company’s aligners are manufactured within the U.S. to ensure the level of quality control that’s required is in place. The newest aligners are produced at a new, state-of-the-art facility in Tennessee.
The company’s production facility in Tennessee is a 3D printing plant that’s capable of producing aligners precisely and at volume. The facility was the largest 3D printing plant in all of North America at the time that its machines first started up, and it remains one of the biggest facilities of its kind on the continent.
Expanding Sales Channels
Both within the U.S. and around the world, SmileDirectClub is in the midst of significantly expanding its sales channels.
The company has a presence in multiple countries (the U.S., the United Kingdom, Canada, Australia, New Zealand, Ireland, Germany, Austria, Spain and Hong Kong) and it has plans to begin operations in many more. Specifically, leadership is targeting some 500 million potential customers in North America, Latin America, Europe, Asia and Australia.
In most of the countries where SmileDirectClub has operations or hopes to begin operating, leadership sees opportunities to reach both the general population and niche demographics. The growth plans for the company’s domestic sales are emblematic of this two-pronged approach.
These countries represent people who can afford the company’s services and stand to benefit from the effects of teeth straightening. With such a sizable target pool, there is plenty of opportunity for SmileClubDirect to gain more customers by continuing to penetrate the general market.
Company leadership has also identified a specific opportunity among U.S. teenagers. Whereas traditional orthodontists’ customers usually are 75 percent teenagers, only a small number of SmileClubDirect’s customers are teens. Targeting this particular demographic could substantially increase sales and capture more market share.
Not all countries have both a general and a particular opportunity in the same way that the U.S. does. Many do offer plenty of opportunities like these, however.
Streamlining the customer Experience
In addition to the research, production and sales investments that SmileClubDirect has made, it’s also made investments with other companies in the form of partnerships. One of the most notable partnerships from the past 18 months was an agreement with MetLife, the life insurance and employee benefits provider that has some 20 million dental members.
The SmileClubDirect-MetLife partnership made SmileClubDirect an in-network provider. This status allows the company to bill MetLife directly when MetLife’s members purchase aligner treatments, and it greatly reduces the up-front cost that members must pay for treatment.
Without in-network status, SmileClubDirect’s members must pay for the full treatment themselves and then request a reimbursement from their insurance provider. When SmileClubDirect is in-network, customers can pay only their share and SmileClubDirect will collect the insurer’s portion.
A Well-Used Capital Raise
One of the main purposes of any IPO is to raise capital that can accelerate growth, and SmileClubDirect has certainly done that. The company’s moves in the past 18 months have already created substantial growth, and even more is likely to follow.
This article does not necessarily reflect the opinons of the editors or the management of EconoTimes