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Sept. 12, 2019, 12:08 p.m. EDT

SmileDirectClub went public: 5 things to know about the teeth-straightening startup

SmileDirect expects to raise more than $1.3 billion at an initial market cap of roughly $10 billion, more than three times its most recent private valuation

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By Sarah Toy

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Unsurprisingly, Align has said it will not be renewing its supply agreement with SmileDirectClub, which ends at the end of 2019.

See now: This simple $2 toothbrush may be the key to preventing cavities

SmileDirectClub is teaming up with Walgreens and CVS

In addition to its stand-alone SmileShops, SmileDirectClub has struck deals with CVS Health Corp. /zigman2/quotes/209664499/composite CVS +0.58% and Walgreens Boots Alliance Inc. /zigman2/quotes/203410933/composite WBA +1.14% allowing the teeth-straightening startup to open up to 1,500 SmileShops within CVS stores and any number of shops in Walgreens stores across the U.S.

SmileDirectClub currently has over 300 SmileShops across the U.S., Canada, Australia and the United Kingdom, and says it expects to open approximately 20 more each month for the remainder of 2019.

See also: Align Technology stock plummets more than 20% as China sales woes hit earnings forecast

CEO David Katzman has dabbled in all sorts of businesses, from direct-to-consumer contact lenses to the Cleveland Cavaliers

David Katzman, the founder and managing partner of Camelot Venture Group, has been the CEO of SmileDirectClub since 2014, according to the company’s S-1. His private investment group backs mostly direct-to-consumer brands, such as online mortgage company Quicken Loans and 1-800 Contacts, and Katzman has served on the boards of Quicken Loans, diabetic supply company Simplex Healthcare, online promotions company ePrize and bedding company CleanRest. He’s also held the role of vice chairman of the NBA’s Cleveland Cavaliers.

Prior to founding Camelot in 1998, Katzman was president of Home Depot S.O.C., a division of Home Depot Inc. /zigman2/quotes/208081807/composite HD +0.48%  that processes special orders for U.S. Home Depot stores.

See also: Why 37 million people in the U.S. don’t have dental coverage — and the painful price they pay

Revenues are growing, but so are net losses as the company ramps up spend

SmileDirectClub booked sales of $423.2 million in 2018, a 190% increase from the year before. However, expenses grew as well, with marketing and selling expenses growing more than threefold to $213.1 million in 2018 from $64.2 million in 2017. General and administrative expenses also grew to $121.7 million from $48.2 million, contributing to a loss of $32.8 million and $74.8 million in 2017 and 2018.

The Renaissance IPO exchange-trade fund /zigman2/quotes/207665280/composite IPO +1.31%  has gained 32.5% in 2019, while the S&P 500 /zigman2/quotes/210599714/realtime SPX +0.44%  has gained 20.2% and the Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA +0.43%   has gained 16.8%.

More on the summer’s IPO parade : WeWork is going public: 5 things to know about the office-sharing company and Sushi robots & anime video: 5 things to know about newly public restaurant chain Kura Sushi

Also : Newly public luxury secondhand retailer the RealReal says it occupies a ‘space of one’

/zigman2/quotes/209664499/composite
US : U.S.: NYSE
$ 73.37
+0.42 +0.58%
Volume: 1.07M
Nov. 15, 2019 10:57a
P/E Ratio
21.69
Dividend Yield
2.73%
Market Cap
$94.74 billion
Rev. per Employee
$659,586
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/zigman2/quotes/203410933/composite
US : U.S.: Nasdaq
$ 62.19
+0.70 +1.14%
Volume: 1.51M
Nov. 15, 2019 10:57a
P/E Ratio
14.48
Dividend Yield
2.94%
Market Cap
$55.56 billion
Rev. per Employee
$380,198
loading...
/zigman2/quotes/208081807/composite
US : U.S.: NYSE
$ 237.70
+1.15 +0.48%
Volume: 834,045
Nov. 15, 2019 10:57a
P/E Ratio
23.68
Dividend Yield
2.29%
Market Cap
$257.14 billion
Rev. per Employee
$261,993
loading...
/zigman2/quotes/207665280/composite
US : U.S.: NYSE Arca
$ 30.26
+0.39 +1.31%
Volume: 4,259
Nov. 15, 2019 10:31a
loading...
/zigman2/quotes/210599714/realtime
US : S&P US
3,110.34
+13.71 +0.44%
Volume: 475.38M
Nov. 15, 2019 10:57a
loading...
/zigman2/quotes/210598065/realtime
US : Dow Jones Global
27,901.98
+120.02 +0.43%
Volume: 76.83M
Nov. 15, 2019 10:57a
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Sarah Toy reports on health care for MarketWatch. You can follow her on Twitter @sarahtoy17.

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