Leidi.com Lei Jianping October 1
SmileDirectClub (Nasdaq: SDC), an American orthodontic company, recently announced the implementation of a comprehensive recapitalization transaction process. The additional capital and stronger financial position resulting from this recapitalization are intended to improve the company's balance sheet and fuel growth plans.
SmileDirectClub will seek to recapitalize through a transaction in which the company's founders commit to investing at least $20 million to improve the company's balance sheet and protect its near- and long-term financial health.
SmileDirectClub may receive up to $60 million in additional capital upon meeting certain conditions, including the favorable conclusion of the marketing process.
The founders' investment in the company reflects their commitment to SmileDirectClub's mission of democratizing quality oral care and their belief in the success of the recently launched SmileMaker Platform and CarePlus growth initiatives.
In order to complete the transaction, SmileDirectClub voluntarily filed for protection under Chapter 11 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court for the Southern District of Texas.
During this restructuring, SmileDirectClub intends to continue to provide customers with affordable and convenient oral care services without disruption. The additional liquidity the company has received from its founders, coupled with its normal operating cash flow, is designed to ensure that SmileDirectClub can continue to deliver on its commitments to its stakeholders without disruption throughout the process.
SmileDirectClub CEO David Katzman said, "This transaction is designed to ensure that our future financial structure reflects the talents of our team members and the quality of our business, and I am excited about the future. I look forward to continuing to work with the leadership and our talented team, Transform smiles with the reliability and quality our customers deserve.”
SmileDirectClub is a direct-to-consumer orthodontic startup that connects licensed dentists or orthodontists with orthodontic patients through teledentistry for remote scheduling to prescribe and supervise treatment.
In 2014, 30-year-old Alex Fenkell and 29-year-old Jordan Katzman founded SmileDirectClub and listed it on NASDAQ in the United States in 2019. At that time, it raised The capital exceeds US$1.3 billion and the market value is approximately US$9 billion.
However, SmileDirectClub has been losing money and has slashed sales and marketing during the pandemic shutdowns, leading to continued revenue declines.
The financial report shows that SmileDirectClub's revenue in the first half of 2023 was US$208 million, a decrease of 20% from US$259 million in the same period last year; its net loss was US$119 million, compared with US$139 million in the same period last year.
SmileDirectClub also tried to expand into new product areas such as teeth whitening, overnight retainers and lip balm, and competed fiercely with Invisalign maker Align Technology (ALGN) for invisible aligners, but was damaged in the patent war.
Currently, SmileDirectClub lists $499 million in assets and more than $1 billion in liabilities in its bankruptcy filing.
As of now, SmileDirectClub's stock price has dropped to US$0.415, with a market value of US$55.6 million. It has dropped nearly US$9 billion from its peak market value, which can be said to be a drop of up to 99%.
SmileDirectClub also has a counterpart in China called Times Angel. As of now, Times Angel’s stock price is 48.65 yuan and its market value is HK$8.246 billion.
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