NASHVILLE, Tenn., U.S.: SmileDirectClub (SDC) is a leading provider of remote clear aligner therapy, but the company has missed out on the economic immunity to COVID-19 that seems to have been afforded to some other clear aligner manufacturers. The company’s results slumped in the third quarter and, according to its CEO, the difficulties can be attributed to the financial effects of the pandemic on its target demographic.
Since its founding in 2014, SDC has steadfastly positioned itself as a disruptor within orthodontics and treated around 1.5 million consumers for malocclusion using its virtual teledentistry platform and flagship stores. The company prides itself on offering “clinically safe and effective treatment but without the three-times markup,” and therein also lies the root of SDC’s present troubles.
Speaking to analysts in November, David Katzman, CEO and chairman of SDC, described the company’s patients as those who “historically could not afford the $5,000 to $8,000 [€4,400 to €7,000] price tag for clear aligners. From day one, these customers have been a massive tailwind to our business in the Americas and rest of the world.”
Katzman explained, however, that the company’s core demographic—which has a median household income of $68,000—has struggled financially during the pandemic and was tending not to spend money on tooth straightening. He said that a combination of factors was constraining the demographic’s spending, including rising inflation, underemployment and a struggle to pay household expenses.
“[Our] demographic is also finding it difficult to pay household expenses”
– David Katzman, SmileDirectClub
“The increased cost of nondiscretionary goods and services is likely limiting the ability to spend on discretionary goods and services,” Katzman said, noting that inflation had accelerated during the second quarter of this year and was having a higher relative impact on those with lower incomes. He said that, when it came to purchasing choices, the company’s key demographic was prioritizing goods over services. “In that same vein, our demographic is also finding it difficult to pay household expenses,” he continued, adding that, during the third quarter, 44% of U.S. households surveyed by the Census Bureau had reported difficulty in covering household costs.
For the third quarter, SDC posted revenues of $138 million, which represented a year-over-year decline of 18.3% and a sequential decline of 20.6%—or $36 million—compared with the prior quarter. Unique clear aligner shipments during the period totaled 69,906, compared with 90,006 in the second quarter.
SmileDirectClub to challenge Invisalign maker Align Technology
“We are disappointed with our third-quarter results driven by the macroeconomic headwinds that are influencing the spending of our core demographic,” Katzman said in a statement. He said that the company had responded quickly to support its core demographic, but that it was also moving “upstream” to attract customers from higher income brackets through its challenger campaign.
“[It’s] a natural kind of progression, going from a disruptor to a challenger,” Katzman said, referring to the fact that SDC was now actively competing against Align Technology, which has consistently beaten its own revenue and unit shipment records during the pandemic.
Katzman explained to analysts that SDC launched the challenger campaign in the third quarter “to target Invisalign’s end user users with our value proposition.” He said that “the early results from the campaign have been encouraging and we expect to continue to do well into 2022.”
Tags:
LONDON, UK: Providing health and social care during the pandemic has been fraught with challenges. As health services face ongoing pandemic and seasonal ...
LONDON, UK: As a result of the SARS-CoV-2 pandemic, dental practices across the world have been partially or completely shut down and routine dental ...
LONDON, UK: Attending myriad Zoom meetings is now a reality for many professionals who had to shift to the home office culture during the pandemic. Needless...
CHICAGO, U.S.: A survey by the American Dental Association (ADA) has found that more patients have developed bruxism as a result of stress during the ...
LONDON, UK: Though it has been more than three months since dental practices in England began to reopen after lockdown restrictions were relaxed, guidance ...
LONDON, UK: The dental industry has gone through many sudden and extreme changes since the start of the pandemic, and it is now evident that access to oral ...
CHARLOTTE, N.C., U.S.: The multinational dental company Dentsply Sirona will exit the traditional orthodontics business and reduce its activities in analog ...
RIO DE JANEIRO, Brazil: By April 9, there had been more than 13,000 reported cases of COVID-19 in Brazil and 667 associated deaths, according to the World ...
ISLAMABAD, Pakistan: A study led by researchers at Shaheed Zulfiqar Ali Bhutto Medical University in Islamabad has examined the impact of the SARS-CoV-2 ...
GLASGOW, UK: Changing restrictions during the COVID-19 pandemic have regularly affected the scope of work that dental professionals have been allowed to ...
Live webinar
Tue. 6 August 2024
6:00 pm EST (New York)
Live webinar
Tue. 6 August 2024
8:00 pm EST (New York)
Dr. Cameron Shahbazian DMD MBA
Live webinar
Tue. 13 August 2024
7:00 pm EST (New York)
Live webinar
Wed. 14 August 2024
12:30 pm EST (New York)
Live webinar
Wed. 21 August 2024
9:00 am EST (New York)
Dr. Jim Lai DMD, MSc(Perio), EdD, FRCD(C)
Live webinar
Thu. 22 August 2024
4:00 pm EST (New York)
Live webinar
Wed. 28 August 2024
8:00 pm EST (New York)
To post a reply please login or register