Suddenly collapsed! Amazon's big brand filed for bankruptcy with debts exceeding $1 billion

Since last year, news of various big sellers going bankrupt in the cross-border e-commerce industry has become common.

Recently, news came out that another top brand on the Amazon platform has officially filed for bankruptcy.

SmileDirectClub officially files for bankruptcy

Amazon-owned SmileDirectClub announced that it has filed for Chapter 11 bankruptcy in Texas.

The direct cause of the bankruptcy was that the company fell into financial crisis and was heavily in debt.

Currently , SmileDirectClub lists $499 million in assets and more than $1 billion in liabilities in its bankruptcy filing.

SmileDirectClub hopes to strengthen its balance sheet through the asset restructuring and use it to fuel the company's future growth plans.

SmileDirectClub has now initiated an asset restructuring process. If the company can meet certain conditions ( such as net cash flow tests), it will receive up to $60 million in additional funds.

In addition, the company's founder has promised to provide the company with $80 million in rescue funds, and will first use $20 million in the next two months to maintain the company's normal operations and promote the development of the company's business .

However, it should be noted that if SmileDirectClub does not receive interest from the going concern transaction and cannot find a buyer or investor by November 23, 2023 , the company 's assets will be liquidated in an orderly manner.

It is regrettable that SmileDirectClub, once a top brand in the category that was popular on Amazon , eventually went bankrupt.

It is reported that SmileDirectClub ( hereinafter referred to as SDC ) was founded in 2014. It is a direct-to-consumer manufacturer of transparent dental braces . It was once popular in Europe and the United States for its remote invisible orthodontic service of "no need for dentists, direct contact with patients" .

The company is headquartered in Nashville, Tennessee, USA , with operations in the United States, Canada, Australia, New Zealand, the United Kingdom, Ireland, Germany, Austria, Hong Kong, Spain, Singapore and Mexico.

SDC's sales model is a direct-to-consumer DTC model, allowing patients to bypass dentists and clinics, saving the trouble of running back and forth .

Consumers who need orthodontic treatment can use the dental molds provided by SDC or go to a nearby designated location for 3D dental scans . After the consumer scans their teeth, SDC's dentists will remotely check the dental molds or 3D images , and then provide the consumer with a "smile plan" . The company will mail dental braces to the consumer based on the treatment plan . After the orthodontic treatment is over, consumers can also purchase dental retainers from SDC .

As we all know , traditional dental treatment is very expensive, and requires regular visits to the dental clinic for follow-up and treatment, and the treatment cycle is also long.

The cost of a full course of orthodontic treatment in the US market is about $ 5,000-8,000 , but the orthodontic braces provided by SDC only cost about $2,000, and they are all invisible materials , and can be paid in installments, which is quite competitive in terms of price. In addition, SDC has shortened the average period of orthodontic treatment to 6 months , thus attracting a large number of consumers.

With such a subversive business model , SDC has become the leading company in the DTC model in the invisible orthodontic field.

SDC 's important sales channels are Amazon and independent websites. SmileDirectClub's teeth whitening kits have very high sales on the Amazon platform, and have long been on the Amazon Best Seller list, with more than 8,000 reviews .

From 2016 to 2019, SmileDirectClub 's growth rate was amazing, with operating revenue soaring from US$20.6 million to US$750 million.

SDC continues to lose money and its stock price plummets!

However, in recent years, SDC's revenue has been declining and it has continued to lose money.

In 2022, SDC's net loss reached $280 million. In 2021, the figure was $340 million.

In the first half of 2023, SDC's total revenue was $208 million , down 20% from the same period last year. Its net loss reached $119 million , compared with $139 million in the same period last year .

SmileDirectClub mentioned in a court document that the company's main business is the sales of dental braces , but due to the impact of the epidemic in recent years, sales of dental braces have dropped significantly. In order to save daily expenses, consumers choose to put their orthodontic needs aside.

Moreover, during the epidemic, SDC was affected by supply chain disruptions and worker shortages , and its order fulfillment capabilities declined accordingly . The company's sales were hit very hard. From 2019 to 2022, SDC's sales fell by 37.3%.

In order to save the company's operating costs, SDC had to close a large number of directly-operated stores. At the same time, due to insufficient cash flow, SDC's investment in marketing was also reduced.

Not only did revenue continue to decline, but SmileDirectClub 's stock price also plummeted.

It is understood that in 2019 , SmileDirectClub was listed on the Nasdaq in the United States , with an initial public offering price of US$23 per share , raising a total of more than US$1.3 billion. Its market value once soared to US$9 billion (approximately RMB 65.8 billion), making it one of the top five IPOs in the United States in 2019.

But before SDC filed for bankruptcy, the stock price had fallen to $0.42 per share , a 97% drop .

Today, SDC 's stock price has fallen to $ 0.075 per share ( October 25th ), a drop of more than 99% .

Under the influence of multiple factors, SDC fell into an operational crisis.

Faced with numerous crises, SDC once tried to save itself.

In 2021, SDC raised US$747.5 million through convertible notes and other financial instruments to expand its business .

In 2023, SDC also made two important initiatives. First, driven by the AI ​​craze , SDC built an artificial intelligence-driven platform ; second, it expanded its customer base and provided higher-value products to high-net-worth consumer groups .

However, on the eve of filing for bankruptcy, SDC lost the patent dispute with Invisalign 's parent company Align Technology and was ordered by the court to pay Align Technology $63 million in compensation , which undoubtedly dealt a direct blow to SDC .

In the end , SDC couldn't bear it and went bankrupt .

Leading medical companies have collapsed one after another, and the industry is facing a cold winter!

Under the influence of continued high inflation, consumers' spending power has plummeted and demand has slowed down accordingly , and the medical dental sector has been directly affected.

Judging from the current market situation, the sales growth of companies and sellers in this track has also slowed down significantly .

Moreover, this chill has almost spread to the entire medical innovation industry . Since the beginning of this year, many leading medical companies have collapsed, and medical investment and financing have also shown a sluggish trend .

For example, Rotech Healthcare Inc, the leading company in home ventilators , Surgalign , one of the top 100 orthopedic device companies in the world , Goldfinch , a kidney disease drug biotechnology company , and Babylon, a star Internet medical company .

The collapse of several leading medical companies has also alerted sellers. The market is changing, and consumer demand is also changing. It is crucial to better avoid market risks and find new ways out in a complex market environment .

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