More than eight years ago, SmileDirectClub introduced itself to the world as a practical solution to orthodontal care.
A decade earlier, when both were in summer camp, the then twenty-something founding entrepreneurs Alex Fenkell and Jordan Katzman had shared a common, unpleasant experience.
“I met my co-founder, Jordan Katzman when we were thirteen years old at summer camp and we both had full metal wired braces,” Alex Fenkell said in a nationally published news interview. “It was truly a miserable experience. As we became best friends and business partners, we were reflecting back on that pain-point in our youth and we figured there had to be a better way to go about it. We started to really look at the market and we were shocked by how expensive invisible aligners were and how little of the market was being reached. We figured if we could bring an affordable invisible aligner to the masses in the comfort of their own home, we could really help people.”
There’s no doubt that SmileDirectClub has really helped people. In just three months after its rollout as a private company owned by Fenkell and Katzman, SmileDirectClub completed 300,000 customer assessments in just three months. The entrepreneurial duo’s invisible aligners available for just $250 a month and $99 a month for the next 15 months have disrupted the orthodontics industry, offering millions of consumers a lower-cost alternative to the $3,000 and up they would have to pay for Invisalign and the up-to $7,000 they would have to pay for traditional orthodontics.
By breaking down economic barriers to orthodontic care, SmileDirectClub pioneered a new way to approach orthodontia.
As CMO John Sheldon explained it to Forbes reporter Jeff Fromm, the spectacular success of SmileDirectClub rests on its commitment to accessibility and its having been founded at the time of a new megatrend toward teledentistry. Orthodontic care tends to be hard to access in inner cities. Over 60% of all counties, and an even greater percentage of rural counties, lack access to an orthodontist.
With the pandemic, SmileDirectClub’s business model became even more relevant to reaching minorities in need of orthodontic care.
Customers could still begin their journey toward a better smile at any of hundreds of SmileDirectClub’s “smile shops” in CVS or Walgreens in the US, or at dozens of locations in the UK and Australia for a quick scan of their teeth. CVS and Walgreens remained open during the lockdowns. Of course, many people in inner cities or rural areas can’t reach a CVS or a Walgreens, either, but for them, SmileDirectCulb offers a kit for taking impressions of the customer’s teeth at home.
Customers still got the much lower price tag for treatment, a plan that requires no in-person visits with the orthodontist, a much faster path to results (5 to 10 months compared to up to 24 months with traditional orthodontics), and in some cases, insurance coverage.
SmileDirectClub repurposed its 3D printing facilities to produce 55,000 face shields it distributed to hospitals, healthcare organizations, and the dental community in the first few weeks of the pandemic.
Even during the pandemic, SmileDirectClub has increased revenues:
- Revenues for the fourth quarter of 2020 are 10 percent over revenues for the third quarter of 2020.
- Earnings before interest, taxes, depreciation, and amortization were in the black at $7 million for the fourth quarter of 2020, up 137 percent over the third quarter.
- For FY 2020, SmileDirectClub had revenues of $657 million, compared to revenues of $750 million in FY 2019. However, net revenues for FY 2020 were ($77 million), compared to ($538 million), an improvement of $461 million.
- The company shipped 101,794 aligners in the fourth quarter of 2020, with an average gross sales price of $1,820.
- The company ended FY 2020 with $500,000,000 in cash.
- The company has no significant competitors and does not experience pricing pressure.
SmileDirectClub has also achieved significant operating efficiencies:
- The company has supplemented its 82 permanent brick-and-mortar stores with over 100 pop-up events across the United States.
- The company’s manufacturing model has proven to be scalable to keep up with growth without exceptionally large new capital investments.
Guidance from the company paints a favorable picture of profits. The company expects earnings before interest, taxes, depreciation, and amortization to be positive in the first quarter of 2021, but a slightly lower level because of increased ad buys at lower rates. The company has found that there is an average lead time of 15 months for advertising to convert to sales. The company’s marketing strategy is to penetrate new demographic markets for controlled growth.
The pandemic has made teledentistry much more acceptable consumers in the US, UK, and Australia. SmileDirectClub is the undisputed low-cost provider in a growing market, with clear aligners becoming the orthodontics of choice for their customers in every market. SmileDirectClub is poised for revenue growth, operating stability, and continued social responsibility in 2021.