Dental aligner manufacturer SmileDirectClub Inc. has filed for bankruptcy, just a few years after its successful $1.35 billion IPO. The Nashville-based company made the Chapter 11 declaration in Texas, allowing it to continue operations while developing a plan to settle its debts. As part of the revival plan, the company’s founders will invest a minimum of $20 million back into the business. SmileDirectClub introduced plastic aligners as an affordable alternative to traditional braces and employed a direct-to-consumer marketing strategy. However, the company faced financial challenges, including decreasing revenues, a patent dispute, and the impact of the pandemic.
After its highly valued IPO, SmileDirectClub struggled to maintain profitability, leading to its bankruptcy filing. The company faced obstacles such as decreasing revenues and a patent tussle with a competitor, which strained its resources. The onset of the pandemic further worsened its financial situation, forcing the company to cut back on sales and promotional activities. SmileDirectClub pioneered the direct-to-consumer dental aligner market, but it faced tough competition from brands like Invisalign, Candid, Byte, NewSmile, and ALIGERNCO, intensifying the challenges it had to overcome.
As a result of these difficulties, SmileDirectClub’s share value plummeted, with the stock closing at $0.42 following the bankruptcy announcement. In contrast, its competitors, such as Invisalign and Dentsply Sirona, closed at $305.32 and $34.16, respectively. Despite its early success and innovative approach to the dental aligner market, SmileDirectClub was unable to sustain its growth and profitability, ultimately leading to its bankruptcy declaration.