SmileDirectClub disrupted orthodontics — from $3.2B unicorn to Chapter 7 in 5 years

SmileDirectClub was founded in 2014 by Jordan Katzman and Alex Fenkell with an idea: make orthodontic clear aligners cheaper and more accessible by cutting out the dentist's office. Customers ordered impression kits online, received aligners by mail, and were overseen by licensed orthodontists remotely. The model was a hit with consumers who could not afford braces, and investors poured in. In 2018, Clayton, Dubilier & Rice and Kleiner Perkins invested $380 million at a $3.2 billion valuation. It grew to 6,300 employees, 300 SmileShop locations, and $750 million in annual revenue.

But the model drew fierce opposition from the American Association of Orthodontists, which filed complaints with 36 state dental boards. Lawsuits piled up: a class action alleging false advertising, an NBC investigation showing patients approved for treatment that orthodontists said was unsafe, and a $2.8 billion defamation lawsuit against NBC that was dismissed. The company also faced a $43.4 million payment to Align Technology after a dispute over their partnership. A cyberattack cost $10–15 million in revenue, and a workplace shooting added to the chaos.

By 2023 the business was unsustainable. SmileDirectClub filed for Chapter 11 bankruptcy in September 2023 with debts it could not service. Three months later, after failing to find a buyer, it converted to Chapter 7 liquidation. All 6,300 employees lost their jobs, 300 SmileShops closed, and the company that was valued at $3.2 billion was sold for parts. The brand's assets and technology were acquired by a Nashville successor called SmileSet, but the original investors lost everything.