Sep 12, 2019 - Economy

SmileDirectClub cashes in at IPO

Illustration of dentures with dollar bills rolled up in it

Illustration: Rebecca Zisser/Axios

SmileDirectClub, a provider of at-home teeth straightening systems, raised $1.3 billion in its IPO. It priced 58.54 million shares at $23, above $21-$23 range, for an initial market cap of $8.9 billion, and will trade on the Nasdaq (SDC). J.P. Morgan was lead underwriter.

Why it matters: It shows that rule-muddying isn't just for transportation and housing unicorns. SDC has been the subject of numerous safety complaints to state dental boards from orthodontist organizations, which the company pushes back on as more about profits than patients.

ROI: SDC had raised nearly $400 million in private funding from firms like Clayton, Dubilier & Rice, Spark Capital, Kleiner Perkins Digital Growth and 3L Capital.

The bottom line: This is bad news all over for incumbent Align Technology. First, rival SDC now has a giant war chest and capital markets access. Second, Align is effectively out more than $1 billion, after being forced by an arbiter to sell its 19% stake in SDC back to the company at a way below-market rate, after being found to have violated a non-compete agreement.

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