SmileDirectClub down 10% on potential headwinds in California

IPO flop SmileDirectClub (SDC -9.7%) continues its downward march, albeit on below-average volume. Shares have cratered almost 60% from the $23 IPO price.

The latest bad news is from California where Governor Gavin Newsom just signed Assembly Bill AB1519 which includes a mandatory bone imaging requirement (an X-ray) for orthodontic patients, a standard that, it says, is a “thinly veiled attempt” to protect traditional dentistry.

The company adds that the bill does not preclude its continued operations in the state, but it does create “unnecessary hurdles and costs” for patients.

In his signing statement, Mr. Newsom stated that he expects all stakeholders to work together to find a better way to create teledentistry policy. The bill will not go into effect until stakeholders have the opportunity to submit public comments and debate the merits of any proposed rules with clinical data.

The first step in the company’s current treatment model is a 3D image of the customer’s teeth that is offered at no charge in one of its retail stores or an impression kit ordered online that is sent directly to the customer. At present, radiographic imaging is not part of the process.

Competitor Align Technology (ALGN +2.8%) is up on below-average volume. Its treatment model involves laser imaging via its iTero intraoral scanners and dental x-rays (at the dentist’s election).

https://seekingalpha.com/news/3505544-smiledirectclub-10-percent-potential-headwinds-california