January 14, 2020 / 3:27 PM / in 2 months

SmileDirectClub jumps on plans to start selling aligners to dentists

(Reuters) - Shares of SmileDirectClub Inc (SDC.O) rose 17.4% on Tuesday after the online dentistry company said it would sell aligners directly to dentists, widening its distribution channel after a deal with rival Align Technology Inc (ALGN.O) expired last month.

FILE PHOTO: David Katzman, CEO of SmileDirectClub stands with founders Jordan Katzman (R) and Alex Fenkell as the company debuts its IPO at the Nasdaq MarketSite in New York, U.S. September 12, 2019. REUTERS/Lucas Jackson

Shares of Align, which manufactured clear aligners for SmileDirectClub, were down 3.9% at $286.47.

SmileDirectClub, which sold its aligners online after virtual consultations using 3D imaging technology, said it was no longer obligated to stick to the direct-to-consumer channel as agreed with Align, which also makes clear aligners called Invisalign.

In 2016, Align signed a supply agreement to manufacture for SmileDirectClub. As part of the transaction, Align had acquired a 17% stake in SmileDirectClub for $46.7 million, which it no longer holds.

SmileDirectClub said starting this year it would provide its clear aligners to dentists and orthodontists, an in-office option.

“We have seen increasing demand from the dentists and orthodontists in our network who wish to provide SmileDirectClub clear aligners to their in-office patients,” Co-Founder Alex Fenkell said.

The addition of a new distribution channel should benefit the company’s volumes, Evercore ISI analyst Elizabeth Anderson said.

“However, many questions remain including dentists’/orthodontists’ willingness to take up a product that they have heretofore seen as a competitor.”

SmileDirectClub said it will support the new distribution channel through its existing clear aligner manufacturing operation in Antioch, Tennessee.

The Nashville, Tennessee-based company’s IPO was priced at $23 per share on Sept. 11, above the expected range. However, SmileDirectClub ended 2019 nearly 62% lower.

Reporting by Manojna Maddipatla in Bengaluru; Editing by Shinjini Ganguli

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