Mohammad Ahmad, a 17-year-old from New Jersey, signed up for Smile Direct Club in October, just weeks after his orthodontic company filed for bankruptcy.
He said he was seduced by the company’s deep discount on invisible braces and was assured that financial problems would not affect operations.
But after the company closed in December, Mohammad never received the clear plastic aligners he was promised, leaving him and thousands of other customers like him in a bind.
“Basically I was scammed,” said Mohamad, who still wants his $1,000 (£788) of money he earned as a tutor back.
It was an ignominious end for the Tennessee-based company, which once had a market value of more than $8 billion and promised to revolutionize traditional dentistry through cheaper, remotely monitored treatments.
This concept has convinced over 2 million customers.
For Mohammad, who was already wearing orthodontic braces, he just wanted to address a slight change that occurred after he didn’t wear his retainer as instructed.
But almost from the beginning, Smile Direct Club fought back against critics who expressed concerns about its practices.
The company was involved in a lawsuit with a business association representing traditional dentists and orthodontists.
They accused the company of providing inadequate care and misleading customers, as this telemedicine treatment was often performed after customers sent in their own mouth impressions at home.
Prominent investors such as Hindenburg Research, known for betting on companies, were also alarmed, accusing Smile Direct Club of “cutting corners” and saying it would “become a case study of why things go wrong.
” he warned.
The idea is to save money.
” Invest in companies that are integrating complex and dangerous medical processes into low-cost, high-volume production lines.
” The company denied the allegations, deriding them as “the latest in a series of unproven and misleading attempts to thwart legitimate competition.
” However, the company took threats to its business seriously and strongly suppressed other negative publicity.
Threatened legal action against reporters and academics and forced disgruntled customers to sign non-disclosure agreements to receive refunds until a government lawsuit forced the company to halt the practice this year .
The issue ultimately involved Smile Direct Club, said Myron Guymon, president of the American Association of Orthodontists.
“Although orthodontics may seem simple, it is a complex medical procedure and must begin with a personal examination and proper diagnostic records,” he said.
Smile Direct Club executives did not respond to requests for comment.
In its bankruptcy filing, the company blamed its decline on well-known financial villains.
The pandemic and rising prices were hurting manufacturing operations, increasing costs and putting pressure on our target customers.
The company also pointed to $63 million in damages it was ordered to pay to its archrival and former business partner Align Technology as a result of a contract dispute.
But Jefferies analyst Brandon Couillard said a deeper problem lurks: The cost of resolving reputational issues, not just in quality but also in customer service, is hampering growth and leaving loss-making companies in the lurch.
He pointed out that they were being forced to spend excessively.
About advertising.
“It’s not hard to find people who have had bad experiences with Google,” he said.
“As the company matured, people became more aware of the brand, but it wasn’t always a positive experience.
” Smile Direct Club Listed on Nasdaq, a US Stock Index, in 2019 Particularly successful was the explosive period, when the company’s sales increased at its peak.
The company raised more than his $1 billion, briefly making its young founder a billionaire.
However, his earnings quickly began to decline, dropping from more than $750 million in 2019 to $470 million last year.
Advertising to acquire new customers accounted for more than half of sales.
Losses have increased.
When the company filed for bankruptcy protection in September, it had just $5 million in cash and nearly $900 million in debt.
“It was clear that consumer interest in the brand was waning for a while,” Couillard said.
Investors later sued Smile Direct Club for financial violations, accusing it of withholding important information about critics in a 2019 stock sale.
But Sanjula Jain, chief research officer at health analytics and research company Trilliant Health, said the demise of Smile Direct Club is also a reminder of the limits of the telemedicine market, and her team said that the telehealth market has seen a decline in penetration in almost all regions since 2016.
The peak of the pandemic.
“Consumer behavior is not changing in the way that many market participants and virtual care providers would like,” she says.
“Whether that changes over time remains to be seen.
” Anna Wechsler, a professor at the University of Pennsylvania who has studied direct-to-consumer healthcare companies, believes there is still a future in remote or partially remote orthodontic care.
He said that he thought there was, and said: Younger generations in particular are dissatisfied with their current healthcare options and are looking for more convenient and affordable models.
A 2020 study of 470 patients who underwent teleorthodontics found that approximately 6% ultimately had to return to their traditional physician for follow-up care.
However, more than 87% are satisfied with their care and are willing to accept imperfections for a lower price.
This study warned that Smile Direct Club’s use of non-disclosure agreements could result in biased responses.
However, Professor Wexler said she still expected other companies selling such treatments to adopt her research findings.
Instead, Smile Direct Club accused the team of mischaracterizing the process and defaming the business, and threatened legal action.
“I was shocked,” she recalled, noting that the team was careful not to mention the companies’ names.
This conflict, previously unreported, ended in a letter to the editor.
Professor Wexler said it was not a shame that this particular company had to go under, given its history of trying to silence its critics.
“Perhaps they might have been in a better financial situation if they hadn’t spent so much money on legal advice,” she said.