Setting the Stage
Q1 2020, the COVID-19 Pandemic wave is at the brink of sweeping across the globe, sending the stock markets into a frenzy, and forcing dental offices to be shut down in the coming months. Inarguably, this onset of the global pandemic has had far-reaching consequences, both in terms of geography as well as time horizon, leading investors & markets to believe that new Go-to market and commercial models will soon revolutionize the clear aligner industry. This started off a race against time as brands try to outcompete each other by leveraging on the various levers of growth - ranging from re-inventing the treatment access and financing models, to even entering the DTC (direct-to-consumer) channel.
In our latest report, we will try to have a look at the historical performances of the different clear aligner brands and understand what selected brands may have done differently in hindsight to improve their balance sheets and growth outlook. Not just that, we will take a deep dive to understand the direct-to-consumer (DTC) channel, and analyze how did the category perform against the doctor-directed channel.
To understand more about the direct-to-consumer channel, we will focus on DTC brands like SmileDirectClub, Byte aligner and Candid. The largest of them all, SmileDirectClub re-invented the clear aligner space, yet fell a victim to its uncontrolled & risk vulnerable growth strategy. While some may argue that SDC was not yet ready to go into public markets and would have been better off if it were still a PE-backed company. insightsZ has no comments about the company’s financing structure or access to public markets. Neither insightsZ will look into the company’s stock performance – as that’s outside the scope of our current research report.
Global DTC Clear Aligner Category LTM:
FY 22 Straumann Group acquired PlusDental in a deal valued at USD 140 million. Not just that, FY 20 STMN acquired majority (75%) stake in DrSmile in a transaction for USD 40 million. This adds another brand to Straumann Group’s portfolio in the clear aligner space after Clear Correct was acquired in FY 17 in a deal valued at USD 140 million – marking the entry of Straumann Group in the clear aligner category. Not just that, to crack the China code, STMN has also partnered with a local clear aligner player Zheng Li Technology. Likewise, the Basel-based company has also acquired Brazilian clear aligner brand Smilink for an undisclosed amount.
H1 2022, leading direct-to-consumer brand Candid announced that it will completely exit the DTC business and closed down its 45 store locations (Candid Studios). The company originally founded in FY 2017 has repositioned itself by choosing to focus on leading DSO clients and offering them white-label aligner solutions. In Apr 2022, Candid entered into a strategic partnership with New York based DSO National Dental. Not just that, Candid is also strongly leveraging on its GPO network for acquiring solo practices as well as dental chains. In Mar 2022, the company entered into an agreement with a group purchasing organization Sevaredent Sourcing Solutions, which serves more than +2,000 dental offices nationwide.