Orthodontic Treatments - Consumers

Part
01
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Part
01

Orthodontic Treatment Consumers: Demographics

Orthodontic treatment consumers in the US tend to be young women from high income families. This information has been entered into row 2 of the "Demographics" spreadsheet tab.

FINDINGS

  • Almost 60% of Americans who go for orthodontic treatments are from high-income families.
  • The majority of orthodontic treatment consumers are 12-15 years old.
  • Seeing as the majority of orthodontic treatment consumers are 12-15 years old, their education level is most likely high school.
  • A lot of orthodontic treatment consumers are women.

RESEARCH STRATEGY

In order to identify the age, gender, ethnicity, income level, and education level of orthodontic treatment consumers in the US, we turned to scientific journals and publications like NCBI. There, we found several studies on the demographics of orthodontic treatment consumers in the US. However, these studies were published over five years ago. For more recent data, we examined data published by US associations such as the American Association of Orthodontists. The association offered insight into the demographics of US orthodontists but nothing on people who go to these orthodontists was mentioned.

We proceeded to examine government resources like the Centers for Disease Control and Prevention. Through this strategy, we found the age and gender of people who need and visit orthodontists. Since we still needed to find the ethnicity, income level, and education level of these individuals, we scoured data intelligence platforms like Statista. The only thing we found through this medium was the average number of weekly patient visits per U.S. dentist. As a last resort, we scanned data published by dental and orthodontist companies such as Johnson Elite Orthodontists. These companies provided some statistics on people who get orthodontic treatments but they were outdated. Since the aforementioned resources failed in finding recent data, we leveraged outdated information published in 2010 on the ethnicity, income level, and education level of orthodontic treatment consumers in the US.
Part
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Part
02

Smile Direct Club Consumers: Demographics

Customers of Smile Direct Club are mostly millennials, slightly more white females than other races, and are primarily American although the company targets a range of different ethnicities. Smile Direct Club customers are likely of low to middle class incomes due to their need for low-price orthodonic care, and the lack of orthodonic insurance with the presence of dental insurance also lends evidence that they are of the middle income bracket and likely have at least a high school diploma. Although direct information regarding the demographics of Smile Direct Club customers was not readily available, information and insights regarding the demographics for Smile Direct Club consumers are provided below and some applicable screenshots are in the attached document.

Age

  • Numerous sources put that the primary age demographic of Smile Direct Club consumers are millennials. This is more evidenced by reviews of the company in publications such as The Millennial Woman blog, reviews on Yelp, and sources such as Seeking Alpha.
  • Co-founder Alex Fenkell was quoted as saying the company was "seeing a heavy millennial customer".
  • The CVS roll out of Smile Direct locations for scans noticed that they attracted "new, younger customers", and of the 609 SmileShop visitors that were surveyed, 32% were not regular customers and many were the millennial demographic that CVS is trying to target.

Gender

  • Photos of the customer journey show more women than men.
  • Reviews are left more often by women than men.

Ethnicity

  • Information regarding race was not deductible from news sources or reviews. However, an analysis of the company's website shows that 90.39% of the traffic is from America, followed by Canada with 2.34%. A screenshot is provided in the attached document.
  • Customers reviews were provided by customers of all nationalities and genders although there were more females than male reviews, and photos on the company's website portraying customer journeys exhibit a range of ethnic diversity and mixture of males and females.

Income Level

  • The price was of concern for a few customers. Some mentioned payment in on $1,700 instead of $2,100 over 6 months, and appreciated how much cheaper the Smile Direct Club price was than the competitor Visalign which runs at $8,000 and is done through dentist offices. The company payment plan and affordable pricing suggests its customers are those of low to middle-class income.
  • The program costs 60% less than traditional orthodonic programs, and thus would likely appeal to low and middle-class customers. 37 million people in the US do not have dental insurance, further lending credence to the appeal of the company to low and middle-class people.
  • CVS has expanded Smile Direct locations in its drugstores in their quest to find "innovative solutions we can provide conveniently, locally and affordably" demonstrating the desire to reach lower and middle-income customers that may not be able to afford the services otherwise.
  • Arrangements with Aetna and United Healthcare will start to cover some expenses of the aligners driving the price down to less than $1,000, making them further affordable for lower-income customers with insurance.

Education

  • Many reviews cited shopping with Smile Direct Club due to either lack of orthodontic coverage under their current dental insurance or lack of insurance lending to the customers likely being of lower to middle class income.
  • Recent arrangements with Aetna and United Healthcare insurance companies will provide Smile Direct Club services at a discount. Customers that have employment with insurance benefits likely have at least a high school diploma.

Research Strategy

First, we examined the company's website, press releases and investor relations presentations to identify any of its target customers demographics such as age, gender, income level and/or educational level. This information was not readily available from company documentation regarding specific demographics, only the number of customers and locations of their customers.

As another strategy, we searched for information from sources outside of the company such as customer reviews for insights regarding the customer demographics, this search revealed some insights regarding financial motivations that provide insight into the economic position of customers. Analysis of reviews in addition to representations on the company website revealed more white women than other races and genders so we added that to our analysis and insights.

We reviewed the social media pages of Smile Direct Club which provided a lot of visual insights due to the company's strong social media presence as a result of customer selfies and the "Share the Smiles" campaign, and we included that in our insights as well.
Part
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Part
03

Candid Co Consumers: Demographics

Candid Co consumers in the US tend to be millennial women with stable jobs and at least a high school degree. The requested data on the age, gender, ethnicity, income level, and education level of these individuals has been entered into row 4 of the "Demographics" tab in the spreadsheet.

Age

  • On its website, Candid Co features a lot of young people that appear to be millennials and Gen Zers.
  • Based on reviews and followers on Instagram, it appears a lot of US Candid Co users are young.
  • The brand partnered with Simone Biles, a 19-year-old gymnast, for its latest campaign. This proves that it is targeting youths in the US.

Gender

Ethnicity

  • More than half of the users Candid Co features on its social media pages are Caucasian.
  • The brand's reviews are mainly by Caucasians, with African Americans being a distant second.

Income Level

Education Level

  • Candid claims that a lot of its users are working professionals and working mothers.
  • Based on the age and occupational status of its users, it can be concluded that they have at least a high school degree.

RESEARCH STRATEGY

In order to identify the age, gender, ethnicity, income level, and education level of Candid Co consumers in the US, we turned to the company's website and press releases. There, it only offered updates on its growth and reviews about it product, there was no breakdown of who its consumers are. Next, we scanned news publications such as Tech Crunch and Forbes. Although these publications featured Candid Co in recent reports, they mentioned nothing about who its users are. We also reviewed Candid's social media pages. Since there was still no mention of its users, we made deductions on who uses its products based on reviews, testimonials, and interviews featuring its executives.
Part
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Part
04

Orthodontic Treatment Consumers: Dental Insurance

Orthodontic treatment customers as a whole, SmileDirectClub customers, and Candid Co. customers are somewhat less likely to have dental insurance coverage. These findings are summarized in the attached spreadsheet.

1) Orthodontic Treatment Consumers Overall

  • In a national survey regarding children and adolescents under 20 years old, visits for orthodontics procedures were most frequent among the uninsured population. Children with public insurance had the fewest orthodontics visits.
  • In 2013, an estimated 87.8% of children had some amount of dental insurance coverage. More recent estimates are not available.
  • 50% of adults aged 18–64 with private health insurance had dental care coverage throughout the past 12 months.

2) SmileDirect Club Consumers

  • Information on SmileClub Direct's users' dental insurance coverage is not available. However, they do feature a cost breakdown on their website that shows an estimated insurance reimbursement of about 1/3 of the overall cost.
  • Few of the brand's reviews mention using dental insurance or HSAs to pay for treatment. The average cost of treatment disclosed by these customers is close to the full price quoted on SmileClub Direct.
  • It would be reasonable to conclude that most of their customers do not have dental insurance.

3) Candid Co. Customers

  • Candid mentions that treatment may be covered by some insurers and HSAs, but does not factor this into the average cost estimates published on its website.
  • Few of the brand's reviews mention the use of dental insurance or HSAs to pay for treatment.
  • One of the primary selling points mentioned on its website is that the cost is significantly less than what traditional orthodontists charge.
  • It would be reasonable to conclude that most of their customers do not have dental insurance.

Research Strategy

Available data on children's and adults' dental insurance coverage in the United States was pulled from the Center for Disease Control's website and scholarly articles available on PubMed. National surveys about children's dental insurance coverage have not been conducted since the last major survey in 2013, which the 2018 analysis cites. Information about the dental insurance status of SmileDirect Club and Candid Co. customers was not publicly available. In the case of SmileDirect Club, estimates of the likelihood of these customers' dental insurance coverage was triangulated from their self-reported costs on a website dedicated to reviewing elective cosmetic procedures and the overall treatment cost reported on the company's website, as well as the infrequency of the customers' mentions of dental insurance in their reviews. In the case of Candid Co., the likelihood of these customers having dental insurance was triangulated from the infrequency of the word "insurance" in the brand's reviews and the company's focus on significant cost savings as compared to traditional orthodontist office visits. The company's featured cost estimates do not factor savings from dental insurance coverage, but it is mentioned as a potential option that some insurance plans may cover.


Part
05
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Part
05

Candid Co Consumers: Psychographics

A Candid Co consumer is likely to be a tech-savvy, avid social media user who struggles to understand his or her insurance policy and worries about climate change. Details about the consumers are presented in the attached spreadsheet.

Candid Co Consumers

  • Candid Co consumers are likely to lean Democratic, to disapprove Trump’s government, and to worry about climate change. They are less patriotic than older generations, less religious and more concern about healthcare policy changes. They value happiness, passion, diversity, sharing and discovery.
  • Avid social media consumers, they are likely to check social media multiple times a day and to follow brands they like. Facebook, Instagram and YouTube are the most popular platforms, and they prefer streaming services to conventional TV.
  • They seek reasonable prices and convenience, and want products and services that bring them joy. Ninety percent of Candid’s customers discuss the brand and treatment with family and friends. This peer-oriented cohort is more likely to research a brand’s reputation and to make decisions based on reviews.
  • Ninety-nine percent would like some help to understand their dental insurance. They also expect dental service professionals to have an online presence, with a mobile-ready and user-friendly website.

Research Strategy

Direct information about Candid’s target audience was scarce, forcing us to rely on assumptions and creative approaches. The following information presents details about our methodology.

We started by seeking information about Candid’s target audience, hoping to find the insights necessary to complete the profile. Most of the publicly available information was about the product, controversy surrounding the product, and the recent funding the company received. Since the company recently went through funding rounds, we tried to locate any annual report or corporate statements, in order to find a declaration from the company about what segment they are trying to reach. We could not find relevant corporate releases; however, we found an interview with the CEO in which he declares Candid's target audience as young professionals and working mothers.

Next, we examined the company’s marketing efforts, expecting to discover case studies and analysis that would give us precise information about the company’s audience. Hard data was not available, but the company seems to be marketing to millennials, considering its social media feed. The company posts a lot of before and after photos of its clients, most of whom are women in their 20s or 30s. The company only treats people who are over 18 years old and donates $25 per sale to Smile Train, a fact they display prominently on the official site, a typical marketing effort when targeting millennials and Gen Z. Using the CEO statement, the research team checked who are the working moms and young professionals today. Working mothers are likely to be in their 30s or early 40s, while young professionals are usually defined as those between 21 – 39 years old. According to the Pew Research Center, millennials today are those born between 1981 and 1996 (ages 23 to 38 in 2019).

Given the limited amount of data available, we used the demographic insights to create a psychographic profile of urban, middle class, American millennial consumer. When possible, we highlighted information relating directly to Candid Co and dental services in general, as well as information about Millennial moms.


Part
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Part
06

Orthodontic Treatment Consumers: Psychographics

Information on the general habits, values, spending habits, and media consumption habits of orthodontics consumers is not directly available, but it is likely to mirror the trends seen in the 9-16 age category. It is because an estimated 80% of orthodontics consumers in the United States are under the age of 18, and the average age range of these patients is estimated to be 9 to 16 years of age. These findings are detailed below and in row 2, columns B-F of tab "Psychographics" in the attached spreadsheet.

1) Habits

  • Top free time pursuits reported by those aged 13-20 were spending time online, watching TV or movies, and spending time with friends or family.
  • Around 85% of children 2 to 17 years had a dental visit in the last year.
  • On average, 11-year-olds brush approximately 50% of their tooth surfaces. Older teenagers exhibited more proficient oral care.

2) Values

  • When ranking social areas of top concern, 13-19-year-olds listed poverty most frequently as the highest priority. Other issues that this group rates as important are the environment, human rights, health and disease, and education.
  • 89% of 13-19 year-olds say they are concerned about the health of the environment.
  • 59% of 13-18 year-olds are Christians. 21% of those in the same age range are atheist or agnostic. This generation is less religious than previous generations.

3) Spending Habits

  • The average teenager reports spending an average of $2,600 per year.
  • Food is the top spending category for teens. Clothing, entertainment, and cosmetics are also areas that teens report spending.
  • 55% of those who are 13-20 years old believe they have a significant influence on household personal care spending. 43% report spending their own money on items in this category.
  • Given the high cost and medical nature of orthodontics treatments, it may be reasonably assumed that the parents of the average orthodontics consumers pay for their treatment.

4) Media Consumption Habits

  • The average 8-10 year-old spends 6 hours a day using entertainment media. Four of those six hours are television viewing.
  • The average 11-14 year-old spends more time in front of screens with nearly 9 hours a day of entertainment-focused screen time. Five out of those nine hours are dedicated to television.
  • Those in the 15-18 year-old range spend 7.5 hours on entertainment media, of which 4.5 hours are related to watching television.
  • Over 60% of 13-17 year-olds report having at least one profile on a social networking website. Many also spend more than two hours per day on these social websites.


Research Strategy

In order to create a profile, age was a critical factor. The age range was triangulated from statements by the American Association of Orthodontists about the age of orthodontics patients and a Stanford Children's Hospital article about the average age when treatment starts. An article by a dental office on the timeline for treatment stated most problems take between 6 months and 2 years to correct. An average range of age for treatment from beginning to end was then calculated by adding two years onto the end of the range stated by Stanford Children's Hospital. That is, a range of 9 to 14 becomes a range 9 to 16 if we take into account the full treatment time.

Spending habits of this age group were pulled from summaries of 2019 market surveys from a website specializing in finance and credit and from a 2017 IBM report on Generation Z that had a focus on the 13-20 age range. Free time habits were gathered from an IBM survey of Generation Z respondents. Information about the dental habits of those 11-18 years of age was compiled from CDC data on pediatric dental visits and a website detailing the general oral care efficiency of this age range. Media consumption habits for this group were sourced from the Center for Disease Control's website and statements by the American Academy of Child and Adolescent Psychiatry. Information on the social values of this consumer group was compiled from two research studies by marketing research firms. Research on the values of consumers aged 12 and under was unavailable, probably due to their lesser autonomy and spending power.

Part
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Part
07

Smile Direct Club Consumers: Psychographics

A typical Smile Direct Club customer is looking for an inexpensive method to straighten their teeth suggesting most are form lower income brackets. In addition, the customers tend to appreciate privacy, are active on social media, and look for value in their products. Full details of Smile Direct Club's consumer psychographics can be found in the attached spreadsheet.

Profile

  • Smile Direct Club consumers prefer online interaction, and most of the Smile Direct Club process is completed online.
  • Its customers prefer to work discreetly and are comfortable because the process is entirely done from the comfort of their homes with minimum face-to-face contact with Smile Direct Club staff.
  • The company's consumers tend to not enjoy dental visits and choose Smile Direct Club because they can have the teeth alignment process done without meeting a dentist.
  • Its consumers share their teeth alignment experience both online and by word-of-mouth.
  • Smile Direct Club consumers value privacy and are happy having a do-it -yourself option of dealing with teeth alignment.
  • Its consumers value their looks and are ready to go through the teeth alignment process to achieve their desired smile and value services that are tailor-made to suit their specific needs.
  • Smile Direct Club consumers are mostly low cost spenders and are not ready to pay for the high cost of teeth alignment in the traditional options.
  • They are cautious spenders and will usually purchase only after they are convinced that what they are buying offers real value for their money.

Media Consumption Habits

Conclusion

Smile Direct Club operation strategy is appealing to many consumers who value their privacy and wish to pay a lower amount for teeth alignment than traditional methods.

Research Strategy

Research through Smile Direct Club's website did not identify any direct details of the pyschographics of their customers. The research team then used information available on the company's website, customer reviews and on Smile Direct Club analysts' reports to infer the psychographics of their customers.


Part
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Part
08

Orthodontic Treatment Top Players

Three competitors to Smile Direct Club and Candid Co are Dandy, Uniform Teeth, and Invisalign. The website links and overviews of the competitors can be found in the attached spreadsheet.

Dandy (formerly Orthly)

  • Dandy mails clear teeth aligners to customers based on the specifications of an orthodontist they met in person via Orthly's app.
  • Dandy's website can be found here.

Uniform Teeth

  • Uniform Teeth mails clear teeth aligners to patients based on the specifications of an orthodontist they met in person. Patients are matched with the orthodontist via Uniform Teeth's app. The aligners fix crowding, spacing, bites, and chips in a few months.
  • Uniform Teeth's website can be found here.

Invisalign

  • Invisalign sells clear teeth aligners with smart track technology that make the aligners comfortable to wear and produce fast and predictable results. Patients consult a doctor on Invisalign's network.
  • Invisalign's website can be found here.

Research Strategy

Smile Direct Club's and Candid Co's competitors were identified based on the similarity in the product, price, geography, and business model of companies listed as competitors to these brands across business databases and media sources. Smile Direct Club's and Candid Co are teledentistry companies that sell clear aligners -- they do not require consulting an orthodontist in person. The cost to the consumer for Smile Direct Club's aligners is $1,850-$2,265 and that for Candid Co is $1,900-$2,100.

Clear aligners made up 15% of the orthodontist appliances market in 2017 and Align (the maker of Invisalign) had a 66.67% (10%/15%) share of the clear aligners market. The cost to the consumer for Invisalign is $3,000 to $8,000 and it requires consulting an orthodontist in person. Smile Direct Club and Candid are essentially cheaper alternatives to Invisalign.

We began our research by searching Craft, CB Insights, Comparably, Forbes, and Evaluate for the competitors to Smile Direct Club (SDC) and Candid Co: Align Technology, Orthly, Envista, YourSmileDirect, Uniform Teeth, North American Dental Group, Aspen Dental, and Birner Dental Management Services. We then compared the business model of the competitors to that of SDC and Candid--there were no companies that operated on an identical business model, except YourSmileDirect, which is not operational in the United States. However, two companies, Orthly ($1,900-$2,600) and Uniform Teeth ($3,500) have similar offerings at similar price points (similar value proposition).

The next closest competitors were Invisalign and Envista. As Invisalign had a large share of the clear aligners market, we listed it as the third competitor even though it is at a higher price point.



Part
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Part
09

Orthodontic Treatment Competitive Landscape

Dandy, formerly known as Orthly, was established in 2016 and is headquartered in New York. The company specializes in developing clear teeth aligners with the use of modern telehealth practices and proprietary technology. Dandy is working on modernizing orthodontic treatment of straightening teeth by reducing in-person appointments required for treatments and by decreasing the overall cost by almost 65%. The required information on Dandy has been documented in row 2 of the attached spreadsheet.

Summary

  • Orthly was founded by Patrick Lee and Daniel Hanover in 2016 which was later rebranded as Dandy. According to the founders, the clear aligners developed by Dandy are 65% cheaper than its competitors. Dandy’s treatments are covered by insurance, have transparent and clear pricing, and have flexible payment plans for its customers.
  • Dandy helps its customers straighten their teeth with the use of its proprietary technology along with the assistance of best-in-class dentists in the United States. Dandy’s unique process begins with an in-person appointment where the healthcare professional takes 3D digital scans, images, and X-rays of the patient’s mouth. With the scans, dentists develop and review a personalized treatment plan with specialized aligners that are later delivered to the patient’s home.
  • Simple straightening cases can take up to 6 months of treatment with a price of $88 per month or a one-time cost of $1900. Complex cases can take up to 10 months of treatment with a price of $122 per month or a one-time cost of $2600.
  • A limited number of customer reviews and testimonials were found on Dandy's website and social media platforms. An analysis of Dandy’s social media channels indicated that customers have a positive perception of Dandy’s treatments, clear aligners, service, and overall experience. On its Facebook page, Dandy received 32 customer reviews, 26 of which are 5-star reviews and 6 are 4-star reviews.
  • Dandy raised an undisclosed amount in funding through an Angel-round in 2017. Information on the amount raised, lead investors, and financial data on the company have not been made public by Dandy.
  • While the revenue of the company is unavailable, it was found that the doctors/dentists who partner with Dandy make an average of $20,000 in revenue every month.

Research Strategy

We began our search by reviewing Dandy’s website, research reports, industry-specific articles, media reports, and social media channels to obtain an overview of Dandy’s products, founding date, headquarters location, value proposition, competitive advantage, pricing, growth, and consumer perception. While most of the information was readily available, the company’s revenue and market valuation were unavailable in the public domain. We then expanded our search to include company profiler websites such as Bloomberg and Hoovers, financial review websites such as Crunchbase and PitchBook, and market reports from PRNewswire. The lack of financial data published for public consumption can be because the company is privately-held and is fairly a recent startup.

Part
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Part
10

Orthodontic Treatment Competitive Landscape (2)

Uniform Teeth is a startup that specializes in providing teeth-straightening aligners. Additional details of the company including its market valuation, revenue, competitive advantage, value proposition, pricing, and growth are listed in this spreadsheet.

Overview

Competitive Advantage & Pricing

  • A full treatment of Uniform Teeth costs less than half of Invisalign due to reduced corporate overhead costs and margin sharing with doctors.
  • Compared to Invisalign, they also offer better precision in teeth movement as the entire treatment is only operated by selected, trained orthodontists. Orthodontists, in general, specializes in clear aligners by having an additional 2 to 3 years training on teeth alignment, compared to dentists which are allowed by other competitors such as Invisalign.
  • Uniform Teeth also claims up to 50% reduced treatment time compared to other treatments.
  • Their treatment can correct bites, address severe crowding, and gaps, which is not possible with competitors like Smile Direct Club (SDC).
  • They also highlighted the controlled precision of their treatments and trained risk and health assessment conducted by orthodontists versus alternatives operated by non-orthodontists.
  • Treatment can cost between $2,500 and $5,000, depending on the complexity of teeth movements. This includes all doctor visits, treatment plans, aligners, and retainers. Typical treatments cost between $2,000-$3,000.
  • Insurance is accepted and payment plans are available for those who qualify.

Company Growth, Expansion, and Revenue

  • Uniform Teeth has grown from 20 to 60 team members over the last year.
  • They currently have 2 clinics in San Francisco and will expand to Seattle and Chicago in early 2020. The latest round of funding will allow them to scale across the U.S. in 2020 and beyond.
  • No reliable revenue information for Uniform Teeth is available in the public domain. However, Crunchbase estimates it to be around $1,000,000.
  • Uniform Teeth just received $10,000,000 in funding from Canaan, Lerer Hippeau, Refactor Capital, Slow Ventures and Brainchild. This brings their total amount of funding received to $14,000,000. Further valuation details such as percentage stake were not made public by Uniform Teeth and investing parties.

Consumer Perception

  • Uniform Teeth received 65 reviews with an average score of 5 out of 5 on Yelp. Only two out of the 65 reviews were less than 5.
  • Many full-score reviews praised the professional level of consultation, lower costs compared to Invisalign, responsive communication and convenience.
  • The two reviews below 5 points stated the lack of patient accountability, impersonal communications, poor certification of assistants, inconsistent doctors throughout service and aggressive sales tactics as reasons for their review scores.
  • Their lead investor, Canaan reports an 85 percent Net Promoter Score for Uniform Teeth’s service, which suggests a high overall customer satisfaction towards its treatments.
  • After her initial visit, TechCrunch author Megan Rose personally believes that Uniform Teeth genuinely cares about its customers.


Research Strategy

We scoured official sources and news sites for first-hand information regarding Uniform Teeth’s revenue and valuation but found no results. We then attempted to triangulate the revenue of the company by multiplying the known average treatment cost with annual sales/ the number of treatments performed but found no reliable information available regarding the latter for any period. We then expanded our search for articles that discussed revenues of other competitors such as Invisalign and Candid for reliable data on market size and market share but again found no such information available. Hence, we conclude that the figure cited from Crunchbase is the only available data on Uniform Teeth’s revenue.
To triangulate the valuation of the company, we first attempted to find out the percentage stake sold in their latest round of funding in press releases, startup news sites, interviews, and directory listings such as Crunchbase but found no such information available. We then attempted to estimate the valuation of the company by analyzing its financial performance but found no basic financial information such as profits or operating costs of the company in the public domain. This leaves us to conclude that reliable information to estimate the valuation of the company cannot be found.
Part
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Part
11

Orthodontic Treatment Competitive Landscape (3)

Invisalign has been growing at a rate of nearly 30% for the past three years and is currently valued at approximately $19 billion. Great technology and large manufacturing capacity are among its competitive advantages. The consumer sentiment for Invisalign is mostly positive. Detailed information can be found in the attached spreadsheet.

Summary

  • Invisalign was founded in 1997 and is based in San Jose, California.
  • Invisalign's value proposition is that it provides clear teeth aligners that comfortably and predictably straighten teeth in lesser time than braces most of the time.
  • Strong R&D, great technology, a large manufacturing capacity, positive consumer sentiment, and a wide global footprint are Invisalign's competitive advantages.
  • The total cost to an Invisalign consumer can be anywhere between $3,000 to $8,000.
  • Invisalign's 3-years historical CAGR is 28.44%. As of December 2019, Invisalign is valued at approximately $18.74 billion.
  • Consumer sentiment for Invisalign is positive overall and consumers think its a treatment that is "worth it". However, based on reviews and comments on YouTube, Invisalign does not totally live up to its promise of being able to enjoy all foods.
  • Pain, tooth sensitivity, and speech impairment are disadvantages associated with Invisalign. There isn't a major difference in the positive sentiment that surrounds Invisalign versus braces. Many viewers of Invisalign YouTube testimonial videos mistook Invisalign for a retainer.

Research Strategy

We searched annual reports, research reports, and media sources for the valuation of Invisalign. None of the sources we came across provided the valuation for Invisalign. However, we triangulated an approximate estimate for the same based on the current market cap of Align Technologies, the parent company of Invisalign.

The calculations have been presented verbatim in the spreadsheet.

Valuation

Align Technologies is the parent of Invisalign and iTero. In 2018, Align's revenues were $1,966.5M, of which $1,691.5M (86% of total revenue) came from Invisalign (clear aligner) and $275.0M came from iTero (scanner and services). We have calculated the enterprise value of Invisalign using Align Technologies' financials.

Enterprise value formula = Market Capitalization + Preferred stock + Outstanding Debt + Minority Interest Cash & Cash Equivalents

Align Technologies:
Market cap = $21.73B
Outstanding debt = $799.57M
Cash & cash equivalent = $735.36M
Preferred stock = 0
Minority interest = 0

Therefore, the enterprise value = $21.73B + $799.57M + 0 + 0 - $735.36M = $21.79B

Assuming that both Invisalign and iTero have the same business risks and are projected to grow at the same rate in the future, Invisalign's enterprise value is $18.74B (86%*$21.79B). Given that most of Align Technologies' revenue comes from Invisalign, the triangulated estimate is likely to be reasonably accurate.

3-year CAGR calculations

Invisalign's revenues grew by 29.4% in 2018. The volume (1.2 million cases) growth was 31.9%.
Invisalign's revenues grew by 34.1% in 2017. The volume (931,045 cases) growth was 31.4%.
Invisalign's revenues grew by 19.8% in 2016. The volume (708,500 cases) growth was 21.5%.
This translates to a historical 3-year CAGR of 28.44% (calculated using a CAGR calculator)



Sources
Sources

From Part 04
Quotes
  • "Nationally, 50.2% of dentate adults aged 18–64 with private health insurance had dental care coverage throughout the past 12 months."
Quotes
  • "Visits for orthodontic procedures constituted the third largest treatment category (14.5%) and were greatest among the uninsured and higher income populations. Children with public insurance had the fewest orthodontic visits (9.4%)."
Quotes
  • "Rates of dental coverage have been increasing and a high percentage of U.S. children now have coverage. In 2013, an estimated 87.8% of children had dental coverage, a 9.5 percentage point increase since 2000.3 This increase is largely attributable to increasing enrollment in Medicaid and the Children’s Health Insurance Program’s (CHIP) coverage of pediatric dental care since 2009."
From Part 05
From Part 08
Quotes
  • "Just last year, orthodontists prescribed Invisalign trays to 931,000 people, at a cost to the consumer of $3,000 to $8,000 each."
  • "Clear aligners account for just 15% of the existing orthodontic appliances market, and Align currently holds an estimated 10%. "
  • "That's been a windfall for the manufacturer of these devices, San Jose, Calif. based-Align Technology. Last year, it generated profits of $231 million on sales of $1.47 billion."
Quotes
  • "Smiledirectclub sells its 3D-printed “invisible” braces directly to customers, cutting out the orthodontist and instead assessing its customers’ teeth via online check-ups. "