SmileDirect has faced strong opposition from medical organizations, which have accused it of endangering patients and practicing medicine illegally.
SmileDirectClub shares tumbled 13% on Monday, bringing their one-month loss to 46%, after California Gov. Gavin Newsom signed a bill into law that includes key changes in the regulation of the company’s “teledentistry” business model.
According to the company statement: “The undebated, clinically unsupported, and ill-advised policy changes that are included in this bill — a bill that was intended to reauthorize the Dental Board of California until last-minute policy additions were added — have created arbitrary barriers to technological innovation.”“It is a complete and total mischaracterization by SmileDirectClub to say the policy changes in AB 1519 were “last minute”,” said spokesman Richard Stapler.
SmileDirect said nothing in the bill requires the company to cease or modify its operations. The new bill will come into effect on Jan. 1, 2020. Last week, short seller Hindenburg Research published a report saying that the company has attracted more than 1,200 Better Business Bureau complaints in its five years of existence and that some of its practices have been deemed illegal by dental boards in Alabama and Georgia.
SmileDirect shares were trading 58% below their IPO price on Monday. The company went public on Sept. 12, and its stock fell 10.7% below the issue price at the open.
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