SmileDirectClub Files For Chapter 11 Bankruptcy Just Four Years After $1.35 Billion IPO

SmileDirectClub Inc. SDC, a dental aligner manufacturer, has filed for bankruptcy just a few years after its remarkable $1.35 billion IPO.

What Happened: The Nashville-based company made its Chapter 11 declaration in Texas this past week. The move will allow it to sustain operations while formulating a strategy to settle its debts.

As a part of the revival plan, the company's founders are set to pump a minimum of $20 million back into the business, according to Bloomberg.

SmileDirectClub introduced plastic aligners, presenting a more affordable alternative to age-old braces, and took a direct-to-consumer marketing approach.

Also Read: SmileDirectClub's Return On Capital Employed Insights

The company's valuation soared to $8.9 billion in its 2019 IPO, elevating its founders to billionaire status.

However, the post-IPO phase was riddled with obstacles. The company grappled with decreasing revenues and remained unprofitable. A patent tussle with a competing firm further strained its resources.

The onset of the pandemic dealt an additional blow, compelling the company to slash its sales and promotional activities.

While SmileDirectClub pioneered the direct-to-consumer dental aligner market, it faces stiff competition from brands like Invisalign, which is owned by Align Technology, Inc ALGN; Candid; Byte, which is owned by Dentsply Sirona Inc XRAY; NewSmile; and ALIGERNCO. These competitors have been vying for a share of the lucrative dental aligner market, further intensifying the challenges for SmileDirectClub.

Align closed Friday's trading session at $305.32. Dentsply Sirona closed at $34.16. SmileDirectClub closed at $0.42 following the bankruptcy announcement. 

Now Read: SmileDirectClub Reports Second Quarter 2023 Financial Results

This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

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