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Shares of the online dentistry company SmileDirectClub slid 15% Thursday after opening at $ 20.55 a share.
The company set its IPO at $ 23 a share on Wednesday, above the expected range of $ 19 to $ 22. SmileDirectClub sold 58.5 million shares, raising $ 1.3 billion and valuing the online dentistry business to $ 8.9 billion. Thursday's decision would give the company an approximate value of $ 7.7 billion.
Shares are traded on the Nasdaq under the symbol SDC.
The start-up, created in 2014, sells teeth aligners directly to consumers on its website and in its "SmileShops" from $ 1,895 for a two-year plan. Founders Alex Fenkell and Jordan Katzman wish to disrupt the orthodontic sector with less expensive treatments for teeth smoothness, convenience and vivid advertising on television and in social media.
The company announced sales of $ 423.2 million last year, an increase of 190% from the $ 146 million reported in 2017, according to its prospectus filed last month. Last year, it recorded a net loss of $ 74.8 million, more than double the $ 32.78 million net loss recorded in 2017.
Acquiring new customers is expensive. SmileDirectClub spent $ 289.3 million on marketing and overhead last year.
Jordan Katzman's father, David Katzman, has financed the launch of SmileDirectClub's development cycle through his venture capital fund, Camelot Venture Group, and is the managing director. Camelot invests in consumer brands such as 1-800-Contacts and Quicken Loans.
David Katzman's brother, Steven Katzman, is the chief operating officer. The Katzman family, combined, will retain more than 65% of the voting rights between the three men after the offer. Chief Executive Officer David Katzman alone will hold nearly 30% of the votes with 87 million Class B Shares, or 10 votes for every Class A Share vote.
SmileDirectClub operates more than 300 sites, according to its initial prospectus filing. He has also signed partnerships with Walgreens and CVS to open "SmileShops" in their pharmacies.
Customers can visit a SmileShop store to have someone scan their teeth and create a 3D image, which SmileDirectClub then uses to create a custom aligner. They can also order a kit online and send back an impression.
The Nashville, Tennessee-based company plans to use proceeds from its IPO to fund its international expansion, as well as its research and development activities, according to the record. Aligners from SmileDirectClub are currently available in the United States, Canada, Australia and the United Kingdom.
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