SmileDirectClub’s Woes Worsen

On October 15, we reported on the ongoing legal issues between SmileDirectClub (SDC) and the state of California. Summing up, California passed legislation that would basically negate SDC’s business model of “teledentistry” in the state.

SDC’s stock value plummeted some 20 percent following the announcement – not a good thing for the corporation as it released its initial public offering (IPO) in September.

On October 19, it was reported that SDC had filed suit against the California Dental Board and other individuals. According to Marketwatch,The suit also says that Joseph Tippins, investigator in the enforcement unit of the Dental Board, told the company in 2017 that the Dental Board had an active investigation of SmileDirect’s SDC, -2.54%  operations. The company, however, which went public in September, did not make any disclosures regarding raids or investigations in its IPO documents.”

As of October 9, the stock value was reported as being 61 percent below its IPO price.

What Does It All Mean?

SDC appears to be involved in a fight for its very existence. At the same time, its plummeting stock value will likely hamstring it somewhat in terms of aggressively funding its legal efforts. And don’t overlook the impact of failing to disclose the existence of an active investigation into its operations prior to the IPO. That omission may well generate investor lawsuits as has happened with many previous IPOs.

Private practice dentists who offer clear aligners will likely find SDC’s legal problems to be encouraging. However, consider that you clear aligner prospects may not be fully informed about the reasons why SDC is being challenged. Those people are likely to have a single takeaway – “Clear aligners, bad.”

If you offer clear aligners, this is the perfect time and opportunity to educate your prospects about the difference between SDC’s teledentistry model and the advantages of meeting with a skilled dentist – you – who will personally examine them, carefully plan what needs to be done to safely and effectively move their teeth, and follow up personally throughout the treatment course.

Overcoming SDC’s Advantages

The teledentistry model of clear aligners is based on the advantages of convenience and low price. The first you can’t expect to compete with head-to-head. When busy people can spend 30-45 minutes at local drugstore and then expect to get their aligners in the mail, that’s convenient. You’re probably shaking your head over the idea of prescribing clear aligners using just a “3-D image” of their teeth but no professional examination… and you should be.

It’s also tough to go head-head-on price. After all the vast majority of SDC sales, by report, do not involve a trained dental professional or a dental practice. That’s a significant cost savings to patients and increased revenue for SDC based on their volume model.

But the prospects who are attracted to clear aligners as conveniently as possible at a low price are overlooking value aspect of the equation. SDC has attracted more than 1200 Better Business Bureau complaints, ranging from creating dental emergencies by providing incorrect aligners, to failure to follow through on promised deliveries, to poor communication.  

You need to communicate the value of hands-on, professional care; the convenience of getting the correct aligners that do what they’re supposed to; and the price savings of not having to pay to have alignment errors corrected. You also need to sell your practice’s reputation for patient satisfaction, any financing options you offer, and the peace of mind that comes with choosing a real, live, trained dentist and staff over a faceless corporation.