SmileDirectClub (SDC) has been a company taking their industry by storm with strong revenue growth, solid gross margins, high customer satisfaction scores, and a price point on their products that makes aligners attainable to the general public. SDC was finishing up their vertical integration of manufacturing the aligners and working out the kinks to drive further gross margin improvement and driving sales into existing markets and expanding internationally before COVID-19 hit. The pandemic hit SDC hard as revenue and margins compressed significantly. During this period, SDC changed lenders from JPM to HPS Investment Partners, a private investment firm. This article will explore why SDC changed lenders for the second time in three years, what it’s cash flow looks like and how to value the company.
2020 was expected to be a strong year for SDC. Revenue was expected to increase to $1Bn, with 70% gross margin profit and positive