SmileDirectClub Inc., the company whose “teledentristy” model aims to disrupt the orthodontics industry, hit back Friday at an NBC report that alleged the company has hurt some of its customers, causing broken teeth and nerve damage.
The news sent its stock
down 15% in early afternoon trade in volume that was about twice the 65-day average of 9.2 million shares.
In a statement, the Nashville, Tenn.-based company said the report that ran on NBC Nightly News with Lester Holt Thursday and online failed to provide viewers with a balanced and fair story.
“Notably, the almost five-minute report and online story does not include one interview or statement from the more than 750,000 satisfied customers who have used our products to improve their lives, nor does it include a single interview with any of the hundreds of dentists who have publicly supported our technology,” said the statement.
SmileDirect has struggled since its initial public offering last year after a series of setbacks that include a scathing report from a short seller, regulatory action in California, Alabama and Georgia and opposition from medical organizations, including the American Dental Association and the American Association of Orthodontists to its business practices.
The NBC report picked up on some of the issues raised by those parties, and included accounts from several people whose teeth were damaged by the company’s aligners and cost thousands of dollars to repair.
SmileDirect calls itself an orthodontics disrupter, using a “teledentristy” business model that allows customers to receive clear aligners (dental braces) by mail. Customers can either get a free 3-D image of their teeth taken at a so-called Smile Shop or buy a kit online to make an impression of their teeth that they can mail to SmileDirect. The company then develops and ships the clear aligners back and the customer undergoes a five to 10-month treatment plan.
NBC included some of the issues raised in the short seller report, including that more than 1,000 complaints about the company and its practices have been filed with the Better Business Bureau.
SmileDirect has also been criticized for forcing customer who complain or want refunds to sign legal releases promising not to complain to regulators or write negative reviews online. The company said Thursday that the practice is “similar to the recommendations set forth by the American Association of Orthodontists and standard business practice.”
SmileDirect reported a loss of $88.3 million in the third quarter, wider than the $15 million loss posted in the year-earlier period. Revenue rose to $180.2 million from $119.7 million.
SmileDirect’s stock is now about 43% below its IPO issue price of $23 on September 12. The S&P 500
has gained about 12% in the same time frame.
The company has repeatedly hit back at “organized dentistry” accusing it of trying to block its effort to provide low-cost teeth-straightening to consumers.
In case you missed it: SmileDirectClub went public: 5 things to know about the teeth-straightening startup