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SmileDirectClub jumps on plans to start selling aligners to dentists

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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

(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.

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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