Reality bites for teeth-straightening startup
which plunged 28% on its first day of trading. Shares of the Nashville, Tenn.-based company closed at $16.67 Thursday, a day after it raised $1.35 billion in an initial public offering. The deal priced at $23 a share, above the expected range of $19 to $22.
The slide marks the year’s worst stock-market debut for a U.S. company valued at over $1 billion, according to Dealogic data on IPOs on U.S. exchanges. By comparison, shares of
fell 7.6% on their first day of trading in May. SmileDirectClub listed on Nasdaq under the ticker symbol SDC. The company sells clear teeth aligners directly to consumers without requiring visits to orthodontists’ offices, at a fraction of the price of traditional treatments. The startup received backing at a $3.2 billion valuation last year from Clayton, Dubilier & Rice, Kleiner Perkins and Spark Capital. Its IPO was closely watched by other firms in the emerging business of teledentistry, such as Candid Care Co. and Uniform Teeth, which are seeking to disrupt the traditional orthodontics industry.
Even with its first-day tumble, SmileDirectClub has increased in valuation from its last funding round. Based on its Thursday closing price, the company has a market capitalization of more than $6 billion. Established orthodontists have cast doubt on the company’s methods. The American Association of Orthodontists said in a statement in July that it had “serious concerns” about the approach used by SmileDirectClub and its peers. The group said it had filed complaints against the startup with dental boards and authorities in 36 states. SmileDirectClub has defended its methods and dismissed the group’s complaints as the reaction of an entrenched industry trying to defend its profit margins. A spokeswoman for SmileDirectClub didn’t respond to a request for comment. Write to Alexander Osipovich at email@example.com
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