SmileDirectClub is one of the best funded dental care startups, and have recently filed for bankruptcy. Here is what you need to know.

1. SmileDirectClubfilesfor
bankruptcy
SmileDirectClub,arenowneddentalalignermanufacturer,hasfiledfor
Chapter11bankruptcyamidfinancialstrugglesmadeworsebythe
pandemic.TheNashville-basedbrand'sfoundersplantoreinvestinthe
company,hopingtorestructureitandsettleitsdebts.
byRemcoLivain

2. SmileDirectClubIPOhits$8.9bn
Direct-to-consumer
approach
SmileDirectClubsetitselfapart
fromtraditionaldentalcare
providersbyprovidingamore
affordableandconvenientway
forconsumerstostraightentheir
teeth.Thisstrategypaidoffbig
withthecompanyreachingan
$8.9bnvaluationinitsIPO.
Toughcompetition
Thedirect-to-consumerdental
alignermarkethasbeenhighly
profitableoverthelastfewyears,
pittingSmileDirectClubagainst
rivalssuchasInvisalignand
Candid,incitingfierce
competitionforcontrolofthe
market.
Productionissues
SmileDirectClub'sdirect-to-
consumerproductionprocessled
toqualityissuesandnegative
feedbackfromcustomers,with
certainstatesevenfilinglawsuits
againstthecompany.

3. SmileDirectClubfoundersto
invest$20m
1 Revivalplan
Thecompany'scofounders
plantoinvestaminimumof
$20mbackintothebusiness
inhopesofturningitaround
andrestructuringitfollowing
itsrequestingofChapter11
bankruptcylastweek.
2 Bigexpectations
Withthefilingofthis
bankruptcy,thefutureof
SmileDirectClubisstill
uncertain,butthebrand's
investorsandcustomershave
highexpectationsforwhat
thecompanycanaccomplish.
3 Competitorchallenges
Inadditiontoongoingproductionissues,SmileDirectClubalsofaces
stiffcompetitionfromotherbrandsprovidinglow-costdental
aligners,includingInvisalignandCandid.

4. SmileDirectClub'sunprofitablepost-IPO
phase
Revenuestruggle
Aftergoingpublic,
SmileDirectClubdealtwithlow
salesanddiminishedrevenue,
spurringfinancialdifficultiesand
astruggletoremainprofitable.
Customersexperienced
productionissueswhich
weredeemedlow-quality.
Thebrandreceived
negativepressandfrequent
legalbattleswithindividual
states.
TheonsetofCovid-19
forcedSmileDirectClubto
cutbackonitssalesand
marketingactivities.
Competitionrises
SmileDirectClubwasnot
preparedforthehighlevelof
competitioncomingfrom
establishedbrandslike
Invisalignandnewerstartups
likeCandidandByte.These
direct-to-consumercompanies
werealreadyshippingtheirown
dentalalignerstocustomers,
leavingSmileDirectClubtoplay
catch-up.
SmileDirectClub's
competitorshadmore
experiencebuildinghigh-
qualitydentalaligners.
Differentmarketing
strategiesallowed
competitorstobetter
connectwithandtarget
specificaudiences.
Legalbattles
SmileDirectClubstruggledto
fightpatentinfringement
lawsuits.Thebrandhadto
balancethecostoflegalsuits
withthecostofproduction
improvementsandinvestments
inmarketing.
SmileDirectClubfaced
difficultiesincomingupwith
asoliddefense.
Patentcasesbroughtby
competitorslikeAlign
Technologyfurtherstrained
thecompany'sresources.

5. SmileDirectClub'schallengeswith
Covid-19
Retailshutdownduring
pandemic
SmileDirectClub'sdirect-to-
consumerapproachreliesheavily
onin-personinteractionsatits
retaillocations,whichbecame
practicallyimpossiblewiththe
outbreakofCovid-19.
Productionsetbacks
Notonlydidthebrandhave
issueswithitsproduction
processespre-pandemic,butthe
ongoingoutbreakcaused
additionaldelaysandsetbacksin
itsabilitytofulfillorders.
Covidregulationsand
setbacks
Allbusinesseshadtocometo
termswiththenumerous
guidelinesandrestrictionsputin
placeduringthepandemic,and
SmileDirectClubwasno
exception.Changestothe
brand'soperationswere
necessarytokeepcustomers
andemployeessafe,presentinga
newsetofobstaclesto
overcome.

6. Chapter11bankruptcy
Theroadahead
Chapter11bankruptcyis
intendedtoprovide
SmileDirectClubwiththe
necessarytimetofigureout
howitwillrepayitsdebts
andrestructureitsoperations
toremainprofitable.
Founderinvestment
Withthefounderspledging
toinvest$20m,thereishope
forabrighterfutureforthe
once-heraldeddentalaligner
manufacturer.
Competitionshakeup
Mostanalysispredictsthat
oncetheCovid-19pandemic
isover,competitioninthe
dentalalignerindustrywill
heatuponceagainandsome
businessesmaybequieter
thanothers.Beforethis
happens,SmileDirectClub
shouldstrategizeto
guaranteecustomerloyalty,
profitgenerationandgrowth
inthemarket.

7. SmileDirectClubstrugglescontinue
1 Post-IPOobstacles
StrugglesforSmileDirectClubstartedimmediatelyafteritsIPOinSeptember2019inthe
formofdecliningrevenues,lawsuits,andcompetitionfromarapidlyexpandinggroupof
rivals.
2 Poorpublicfeedback
Formanycustomers,SmileDirectClubfailedtoliveuptoexpectations,leadingtolawsuits,
poorconsumerfeedback,andadeclineintrust.
3 Productionandqualityissues
SmileDirectClubfacedintensescrutinyaboutitsproductionprocessesanddelivered
productsin32states.
4 Bankruptcyfiling
TheimmediatecauseofSmileDirectClub'snewesthurdlewasthepandemic,whichdrove
salestonewlowsandledtoalong-termfinancialstrugglethatpromptedabankruptcy
declaration.