Smile Direct Club priced an initial public offering of 58.5 million Class A common shares, seeking to raise $1.2 billion at the midpoint of its estimated price range.
In a Securities and Exchange Commission Form S-1 dated Tuesday, the Nashville provider of teeth-straightening technology said it would offer the shares at an estimated $19 to $22 each under the symbol SDC. They'll trade on the Nasdaq Global Market.
Smile Direct granted the underwriters an option on an additional 8.8 million shares if demand for the offering requires.
If the option is exercised and the shares sell at the top of the range, the deal would raise $1.48 billion. Last October, Smile Direct was valued at $3.2 billion in a private fundraising round led by Clayton, Dubilier & Rice, Kleiner Perkins and Spark Capital.
The company will have a dual class of shares. The Class A will have one vote per share. The Class B will have 10 votes a share and no economic rights. After the offering, Chairman and Chief Executive David Katzman will control a majority of the voting power for election of directors.
J.P. Morgan and Citigroup are lead book-running managers for the offering.
In the SEC statement, Smile Direct said that in 2018 its net loss widened to $74.8 million from $32.8 million a year earlier. Revenue that year almost tripled to $423.2 million from $146 million a year earlier.
The company is expanding geographically. This year it began operating in the U.K. in the third quarter and in Australia in Q2. It launched in Canada last November and now has 15,000 customers there. Overall it has 700,000 customers across all 50 U.S. states, Puerto Rico, Canada, Australia and the U.K.
The company operates 300 centers, including partnerships with the drugstore chains CVS (CVS - Get Report) and Walgreen's (WBA - Get Report) . Or customers can order doctor-prescribed teeth-alignment kits by mail.
The filing lists a number of risk factors, including that the company has a history of net losses and might not turn profitable.
Changes in regulations or laws governing healthcare and dentistry could materially hurt Smile Direct's business.
Compliance with Food and Drug Administration and other regulations is "expensive and time-consuming." And the company said the interests of CEO Katzman might at some point conflict with those of shareholders.
Smile Direct is also qualified as an emerging growth company and is thus exempt from certain disclosure requirements.
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