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Cover - shares	6 Months Ended
Cover - shares	Jun. 30, 2020	Aug. 10, 2020
Entity Information [Line Items]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Jun. 30, 2020
Document Transition Report	false
Entity File Number	001-39037
Entity Registrant Name	SMILEDIRECTCLUB, INC.
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	83-4505317
Entity Address, Address Line One	414 Union Street
Entity Address, City or Town	Nashville,
Entity Address, State or Province	TN
Entity Address, Postal Zip Code	37219
City Area Code	800
Local Phone Number	848-7566
Title of 12(b) Security	Class A common stock, par value $0.0001 per share
Trading Symbol	SDC
Security Exchange Name	NASDAQ
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	true
Entity Ex Transition Period	false
Entity Shell Company	false
Entity Central Index Key	0001775625
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2020
Document Fiscal Period Focus	Q2
Amendment Flag	false
Common Class A
Entity Information [Line Items]
Entity Common Stock, Shares Outstanding (in shares)		110,710,708
Common Class B
Entity Information [Line Items]
Entity Common Stock, Shares Outstanding (in shares)		274,876,789

Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
ASSETS
Cash and cash equivalents	$ 388,971	$ 318,458
Accounts receivable	232,337	239,413
Inventories	28,571	18,431
Prepaid and other current assets	16,902	14,186
Total current assets	666,781	590,488
Accounts receivable, non-current	79,504	106,315
Property, plant and equipment, net	174,892	177,543
Operating lease right-of-use asset	33,120	0
Other assets	11,291	11,299
Total assets	965,588	885,645
LIABILITIES AND PERMANENT EQUITY
Accounts payable	34,487	52,706
Accrued liabilities	85,652	93,339
Deferred revenue	41,519	25,435
Current portion of long-term debt	30,815	35,376
Other current liabilities	7,572	0
Total current liabilities	200,045	206,856
Long-term debt, net of current portion	389,513	173,150
Operating lease liabilities, net of current portion	34,338	0
Other long-term liabilities	43,768	47,354
Total liabilities	667,664	427,360
Commitment and contingencies
Permanent Equity
Additional paid-in-capital	470,838	447,866
Accumulated other comprehensive income (loss)	42	(272)
Accumulated deficit	(170,562)	(114,513)
Noncontrolling interest	(20,052)	125,166
Warrants	17,620	0
Total permanent equity	297,924	458,285
Total liabilities and permanent equity	965,588	885,645
Common Class A
Permanent Equity
Common stock	11	10
Common Class B
Permanent Equity
Common stock	$ 27	$ 28

Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - $ / shares	Jun. 30, 2020	Dec. 31, 2019
Common Class A
Common stock, par value (USD per share)	$ 0.0001	$ 0.0001
Common stock, shares issued (in shares)	110,123,999	103,303,674
Common stock, shares outstanding (in shares)	110,123,999	103,303,674
Common Class B
Common stock, par value (USD per share)	$ 0.0001	$ 0.0001
Common stock, shares issued (in shares)	275,376,789	279,474,505
Common stock, shares outstanding (in shares)	275,376,789	279,474,505

Condensed Consolidated Statements of Operations (Unaudited) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Total revenues	$ 107,073	$ 195,794	$ 303,723	$ 373,530
Cost of revenues	48,776	31,767	108,553	72,238
Cost of revenues—related parties	0	2,898	0	11,342
Total cost of revenues	48,776	34,665	108,553	83,580
Gross profit	58,297	161,129	195,170	289,950
Marketing and selling expenses	34,518	113,413	176,842	209,146
General and administrative expenses	68,689	47,031	159,718	96,490
Lease abandonment and impairment of long-lived assets	24,633	0	24,633	0
Other store closure and related costs	4,476	0	4,476	0
Income (loss) from operations	(74,019)	685	(170,499)	(15,686)
Interest expense	10,050	3,420	14,072	7,316
Interest expense—related parties	0	0	0	75
Loss on extinguishment of debt	13,781	29,640	13,781	29,640
Other (income) expense	(1,765)	(37)	3,159	81
Net loss before income tax (benefit) expense	(96,085)	(32,338)	(201,511)	(52,798)
Income tax (benefit) expense	(1,419)	97	555	117
Net loss	(94,666)	(32,435)	(202,066)	(52,915)
Net loss attributable to noncontrolling interest	(67,867)	0	(146,017)	0
Net loss attributable to SmileDirectClub, Inc.	$ (26,799)	(32,435)	$ (56,049)	(52,915)
Earnings per share of Class A common stock:
Earnings per share of Class A common stock, basic (in USD per share)	$ (0.25)		$ (0.52)
Earnings per share of Class A common stock, diluted (in USD per share)	$ (0.25)		$ (0.53)
Weighted average shares outstanding:
Weighted average shares outstanding, basic (in shares)	109,048,411		106,819,870
Weighted average shares outstanding, diluted (in shares)	385,133,303		384,492,628
Common Class A
Earnings per share of Class A common stock:
Earnings per share of Class A common stock, basic (in USD per share)	$ (0.25)		$ (0.52)
Earnings per share of Class A common stock, diluted (in USD per share)	$ (0.25)		$ (0.53)
Excluding Financing Revenue
Total revenues	$ 94,409	185,241	$ 278,337	353,867
Financing Revenue
Total revenues	$ 12,664	$ 10,553	$ 25,386	$ 19,663

Condensed Consolidated Statements of Comprehensive Loss (Unaudited) Statement - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Statement of Other Comprehensive Income [Abstract]
Net loss	$ (94,666)	$ (32,435)	$ (202,066)	$ (52,915)
Other comprehensive loss:
Foreign currency translation adjustment	107	0	1,149	0
Comprehensive loss	(94,559)	(32,435)	(200,917)	(52,915)
Comprehensive loss attributable to noncontrolling interests	(67,790)	0	(145,182)	0
Comprehensive loss attributable to SmileDirectClub, Inc.	$ (26,769)	$ (32,435)	$ (55,735)	$ (52,915)

- Definition

The consolidated profit or loss for the period, net of income taxes, including the portion attributable to the noncontrolling interest.

+ References

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+ Details

Condensed Consolidated Statements of Changes in Equity (Deficit) (Unaudited) - USD ($) $ in Thousands	Total	Common Stock Common Class A	Common Stock Common Class B	Additional Paid in Capital	Warrants	Accumulated Deficit	Noncontrolling Interest	Accumulated Other Comprehensive Income (Loss)	SDC Financial, LLC	SDC Financial, LLC Additional Paid in Capital	SDC Financial, LLC Warrants	SDC Financial, LLC Accumulated Deficit
Members' units, beginning balance (in shares) at Dec. 31, 2018										108,878	369
Members' equity, beginning balance at Dec. 31, 2018									$ (90,437)	$ 57,677	$ 315	$ (148,429)
Increase (Decrease) in Members' Equity [Roll Forward]
Net income prior to Reorganization Transactions, Net loss	$ (52,915)								(52,915)			(52,915)
Redemption of member units (in shares)										(20,710)
Redemption of member units									(54,154)	$ (54,154)
Preferred Unit redemption accretion									(36,761)	(36,761)
Equity-based compensation									8,262	$ 8,262
Members' units, ending balance (in shares) at Jun. 30, 2019										88,168	369
Members' equity, ending balance at Jun. 30, 2019									(226,005)	$ (24,976)	$ 315	(201,344)
Beginning balance, temporary equity at Dec. 31, 2018									388,634
Increase (Decrease) in Temporary Equity [Roll Forward]
Preferred Unit redemption accretion									36,761
Ending balance, temporary equity at Jun. 30, 2019									425,395
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Other Comprehensive Income (Loss), Foreign Currency Transaction and Translation Adjustment, Net of Tax	0
Members' units, beginning balance (in shares) at Mar. 31, 2019										108,878	369
Members' equity, beginning balance at Mar. 31, 2019									(112,802)	$ 55,792	$ 315	(168,909)
Increase (Decrease) in Members' Equity [Roll Forward]
Net income prior to Reorganization Transactions, Net loss	(32,435)								(32,435)			(32,435)
Redemption of member units (in shares)										(20,710)
Redemption of member units									(54,154)	$ (54,154)
Preferred Unit redemption accretion									(27,049)	(27,049)
Equity-based compensation									435	$ 435
Members' units, ending balance (in shares) at Jun. 30, 2019										88,168	369
Members' equity, ending balance at Jun. 30, 2019									(226,005)	$ (24,976)	$ 315	$ (201,344)
Beginning balance, temporary equity at Mar. 31, 2019									398,346
Increase (Decrease) in Temporary Equity [Roll Forward]
Preferred Unit redemption accretion									27,049
Ending balance, temporary equity at Jun. 30, 2019									$ 425,395
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Other Comprehensive Income (Loss), Foreign Currency Transaction and Translation Adjustment, Net of Tax	0
Net income prior to Reorganization Transactions, Net loss	(202,066)					$ (56,049)	$ (146,017)
Beginning balance (in shares) at Dec. 31, 2019		103,303,674	279,474,505
Beginning balance at Dec. 31, 2019	458,285	$ 10	$ 28	$ 447,866	$ 0	(114,513)	125,166	$ (272)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of Class A shares in connection with RSU vesting (in shares)		1,263,223
Issuance of Class A shares in connection with RSU vesting	0
Issuance of Class B shares in connection with warrant exercise (in shares)			1,459,386
Issuance of Class B shares in connection with warrant exercise	922			(15)			937
Exchange of Class B common stock for Class A common stock (in shares)		5,557,102	(5,557,102)
Exchange of Class B common stock for Class A common stock	0	$ 1	$ (1)	973			(973)
HPS Warrant issuance	17,620				17,620
Equity-based compensation	27,217			27,217
Equity-based payments	(4,529)			(4,529)
Other Comprehensive Income (Loss), Foreign Currency Transaction and Translation Adjustment, Net of Tax	1,149						835	314
Other	(674)			(674)
Ending balance (in shares) at Jun. 30, 2020		110,123,999	275,376,789
Ending balance at Jun. 30, 2020	297,924	$ 11	$ 27	470,838	17,620	(170,562)	(20,052)	42
Increase (Decrease) in Members' Equity [Roll Forward]
Net income prior to Reorganization Transactions, Net loss	(94,666)					(26,799)	(67,867)
Beginning balance (in shares) at Mar. 31, 2020		108,171,207	276,454,886
Beginning balance at Mar. 31, 2020	365,138	$ 11	$ 27	461,046	0	(143,763)	47,805	12
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of Class A shares in connection with RSU vesting (in shares)		742,045
Issuance of Class A shares in connection with RSU vesting	0
Issuance of Class B shares in connection with warrant exercise (in shares)			132,650
Issuance of Class B shares in connection with warrant exercise	0			(15)			15
Exchange of Class B common stock for Class A common stock (in shares)		1,210,747	(1,210,747)
Exchange of Class B common stock for Class A common stock	0	$ 0	$ 0	82			(82)
HPS Warrant issuance	17,620				17,620
Equity-based compensation	10,821			10,821
Equity-based payments	(1,462)			(1,462)
Other Comprehensive Income (Loss), Foreign Currency Transaction and Translation Adjustment, Net of Tax	107						77	30
Other	366			366
Ending balance (in shares) at Jun. 30, 2020		110,123,999	275,376,789
Ending balance at Jun. 30, 2020	$ 297,924	$ 11	$ 27	$ 470,838	$ 17,620	$ (170,562)	$ (20,052)	$ 42

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019
Operating Activities
Net loss	$ (202,066)	$ (52,915)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	25,357	9,723
Deferred loan cost amortization	1,666	475
Equity-based compensation	27,217	8,262
Loss on extinguishment of debt	13,594	17,693
Paid in kind interest expense	1,771	0
Lease abandonment and impairment of long-lived assets	25,915	0
Changes in ROU asset	4,070	0
Other non-cash operating activities	0	1,783
Changes in operating assets and liabilities:
Accounts receivable	33,887	(100,937)
Inventories	(10,140)	(4,968)
Prepaid and other current assets	(4,009)	(5,772)
Accounts payable	(6,001)	15,436
Accrued liabilities	(13,184)	28,461
Due to related parties	0	(16,862)
Deferred revenue	16,084	1,729
Net cash used in operating activities	(85,839)	(97,892)
Investing Activities
Purchases of property, equipment, and intangible assets	(47,861)	(38,148)
Net cash used in investing activities	(47,861)	(38,148)
Financing Activities
Payment of IPO related costs	(1,155)	0
Proceeds from warrant exercise	922	0
Repurchase of Class A shares to cover employee tax withholdings	(4,529)	0
Proceeds from HPS Credit Facility and Warrants, net	388,000	0
Borrowings on long-term debt	16,807	151,300
Payments of loan costs	(11,336)	(6,127)
Principal payments on long-term debt	(180,762)	(152,400)
Principal payments on related party debt	0	(20,598)
Payments on finance leases	(4,997)	0
Other	1,263	(976)
Net cash provided by (used in) financing activities	204,213	(28,801)
Increase (decrease) in cash and cash equivalents	70,513	(164,841)
Cash and cash equivalents at beginning of period	318,458	313,929
Cash and cash equivalents at end of period	$ 388,971	$ 149,088

Organization and Basis of Presentation	6 Months Ended
Organization and Basis of Presentation	Jun. 30, 2020
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Organization and Basis of Presentation	Organization and Basis of Presentation   Organization SmileDirectClub, Inc. was formed on April 11, 2019 with no operating assets or operations as a Delaware corporation for the purpose of facilitating an initial public offering and other related transactions in order to carry on the business of SDC Financial LLC and its subsidiaries. Unless otherwise indicated or the context otherwise requires, references to “we,” “us,” “our,” the “Company,” “SmileDirectClub,” and similar references refer to SmileDirectClub, Inc. and its consolidated subsidiaries, including SDC Financial LLC and its subsidiaries. “SDC Financial” refers to SDC Financial LLC and “SDC Inc.” refers to SmileDirectClub, Inc. The Company is engaged by its network of doctors to provide a suite of non-clinical administrative support services, including access to and use of its SmileCheck platform, as a dental support organization (“DSO”). For purposes of these notes to interim condensed consolidated financial statements (unaudited), the Company’s affiliated network of dentists and orthodontists is included in the definition of “we,” “us,” “our,” and the “Company” as it relates to any clinical aspect of the member’s treatment. All of the Company’s manufacturing operations are directly or indirectly conducted by Access Dental Lab, LLC (“Access Dental”), one of its operating subsidiaries. The Company’s direct-to-consumer model provides customers with a customized clear aligner therapy treatment delivered through its teledentistry platform. The Company integrates the marketing, aligner manufacturing, and fulfillment, and provides a proprietary web-based teledentistry platform for the monitoring of treatment by licensed dentists and orthodontists through the completion of a member’s treatment. The Company is headquartered in Nashville, Tennessee and has locations throughout the U.S, Puerto Rico, Canada, Australia, New Zealand, the U.K., Ireland, Hong Kong, Germany, and Costa Rica. SDC Inc. is a holding company. Its sole material asset is its equity interest in SDC Financial which, through its direct and indirect subsidiaries, conducts all of the Company’s operations. SDC Financial is a Delaware limited liability company and wholly owns SmileDirectClub, LLC (“SDC LLC”) (a Tennessee limited liability company) and Access Dental (a Tennessee limited liability company). Because SDC Inc. is the managing member of SDC Financial, SDC Inc. indirectly operates and controls all of the business and affairs of SDC Financial and its subsidiaries. Initial Public Offering On September 16, 2019, SDC Inc. completed an initial public offering (“IPO”) of 58,537,000 shares of its Class A common stock at a public offering price of $23.00 per share. SDC Inc. received $1,286 million in proceeds, net of underwriting discounts and commissions. SDC Inc. used substantially all of the net proceeds after expenses to purchase newly-issued membership interest units from SDC Financial. Reorganization Transactions In connection with the IPO, the Company completed the following transactions (the “Reorganization Transactions”): •the formation of SDC Inc. as a Delaware corporation to function as the ultimate parent of SmileDirectClub and a publicly traded entity; •SDC Inc.’s acquisition of the pre-IPO membership interest units in SDC Financial (“Pre-IPO Units”) held by certain pre-IPO investors that are taxable as corporations for U.S. federal income tax purposes (“Blockers”), pursuant to a series of mergers (the “Blocker Mergers”) of the Blockers with wholly owned subsidiaries of SDC Inc., and the issuance by SDC Inc. to the equityholders of the Blockers shares of Class A common stock as consideration in the Blocker Mergers; •the amendment and restatement of the SDC Financial’s limited liability company operating agreement (the “SDC Financial LLC Agreement”) to, among other things, modify the capital structure of SDC Financial by replacing the different classes of Pre-IPO Units (including restricted Pre-IPO Units held by certain employees) with a single new class of membership interests of SDC Financial (“LLC Units”); •the issuance to each of the pre-IPO investors previously holding Pre-IPO Units (including restricted Pre-IPO Units) of a number of shares of SDC Inc. Class B common stock equal to the number of LLC Units held by it; •the issuance to certain employees of cash and shares of Class A common stock pursuant to their Incentive Bonus Agreements (“IBAs”); and •the equitable adjustment, pursuant to their terms, of outstanding warrants to purchase Pre-IPO Units held by two service providers into warrants to acquire LLC Units (together with an equal number of shares of SDC Inc.’s Class B common stock). Following the completion of the Reorganization Transactions and the IPO, SDC Inc. owns 26.9% of SDC Financial. Holders (other than SDC Inc.) of LLC Units following the consummation of the Reorganization Transactions and the IPO (“Continuing LLC Members”) own the remaining 73.1% of SDC Financial. SDC Inc. is the sole managing member of SDC Financial and, although SDC Inc. has a minority economic interest in SDC Financial, it has the sole voting power in, and controls the management of, SDC Financial. Accordingly, SDC Inc. consolidates the financial results of SDC Financial and reports a noncontrolling interest in its condensed consolidated financial statements. As the Reorganization Transactions are considered transactions between entities under common control, the financial statements for periods prior to the IPO and Reorganization Transactions have been adjusted to combine the previously separate entities for presentation purposes. In connection with the Reorganization Transactions and the IPO, the Company entered into a Tax Receivable Agreement (the “Tax Receivable Agreement”) with the Continuing LLC Members, pursuant to which SDC Inc. agreed to pay the Continuing LLC Members 85% of the amount of cash tax savings, if any, in U.S. federal, state, and local income tax or franchise tax that SDC Inc. actually realizes as a result of (a) the increases in tax basis attributable to exchanges of LLC Units by Continuing LLC Members and (b) tax benefits related to imputed interest deemed to be paid by SDC Inc. as a result of the Tax Receivable Agreement. Basis of Presentation and Consolidation The accompanying unaudited condensed financial statements have been prepared in accordance with United States generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Rule 10-01of Regulation S-X of the SEC and, in the opinion of management, reflect all normal recurring adjustments necessary for a fair presentation of results for the unaudited interim periods presented. Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with GAAP have been condensed or omitted. The results of operations for the interim period are not necessarily indicative of the results to be obtained for the full fiscal year. All intercompany accounts and transactions have been eliminated in the unaudited condensed financial statements. The interim condensed consolidated financial statements include the accounts of SDC Inc., which consolidates SDC Financial and its wholly-owned subsidiaries, as well as accounts of contractually affiliated professional corporations (“PCs”) managed by the Company. The interim condensed consolidated financial statements include the accounts of variable interest entities in which the Company is the primary beneficiary under the provisions of Accounting Standards Codification (‘‘ASC”) Topic 810, ‘‘Consolidation.” At June 30, 2020, the variable interest entities include 45 dentist owned PCs and at December 31, 2019 the variable interest entities included 44 dentist owned PCs. The Company is a dental service organization and does not engage in the practice of dentistry. All clinical services are provided by dentists and orthodontists who are engaged as independent contractors or otherwise engaged by the dentist-owned PCs. The Company contracts with the PCs and dentists and orthodontists through a suite of agreements, including but not limited to, management services agreements, supply agreements, and licensing agreements, pursuant to which the Company provides the administrative, non-clinical management services to the PCs and independent contractors. The Company has the contractual right to manage the activities that most significantly impact the variable interest entities’ economic performance through these agreements without engaging in the corporate practice of dentistry. Additionally, the Company would absorb substantially all of the expected losses of these entities should they occur. The accompanying consolidated statements of operations reflect the revenue earned and the expenses incurred by the PCs. All significant intercompany balances and transactions are eliminated in consolidation. In January 2020, the Company adopted lease accounting guidance as discussed in Note 2 and Note 6 to the unaudited condensed consolidated financial statements. Adoption of the new lease accounting guidance had a material impact to the Company’s unaudited condensed consolidated balance sheets and related disclosures, and resulted in the recording of additional right-of-use assets and lease liabilities as of the date of adoption. This guidance was applied using the optional transition method which allowed the Company to not recast comparative financial information but rather recognize a cumulative-effect adjustment to retained earnings as of the effective date in the period of adoption. No material adjustments to retained earnings were made as a result of the adoption of this guidance. Consistent with the optional transition method, the financial information in the condensed consolidated balance sheets prior to the adoption of this new lease accounting guidance has not been adjusted and is therefore not comparable to the current period presented. The standard did not materially impact the Company’s condensed consolidated statements of operations, comprehensive loss, changes in equity (deficit), or cash flows. For additional information, including the required disclosures, related to the impact of adopting this standard, see Note 2 and Note 6 to the unaudited condensed consolidated financial statements. COVID-19 Pandemic The impacts of COVID-19 unfolded globally throughout the first quarter of 2020, growing in strength from what the World Health Organization (“WHO”) declared a Public Health Emergency of International Concern in January, to an increased threat assessment by the WHO from high to very high in February, culminating with the WHO characterization of COVID-19 as a pandemic in March 2020. In response to COVID-19 and the related containment measures, the Company took the following steps to ensure the health and safety of its employees and its members: transitioned its employees, where possible, to a remote working environment; temporarily closed all of its SmileShops (except in Hong Kong); reconfigured its production lines to observe social distancing; and implemented enhanced cleaning and sanitizing routines, thermal temperature screening, mandatory personal protective equipment (“PPE”) protocols and other health and safety measures at its manufacturing facilities. The Company also enacted a resilience policy that provides its employees paid leave for COVID-19 testing and any required self-quarantine. Further, the Company’s manufacturing employees who were able to work during the quarter received a temporary wage increase for recognition of their service during this unprecedented time. During the second quarter of 2020, the Company performed a review of its real estate needs and initiated restructuring actions related to a real estate repositioning program. As a result of these changes, the Company incurred a one-time charge of $29,109 for the three and six months ended June 30, 2020. This one-time charge was primarily associated with the closure of its manufacturing facility in Kyle, Texas; the consolidation of several floors at Company headquarters in Nashville, Tennessee; the closure and consolidation of many of the SmileShops, which is an on-going evaluation; and the impairment of right of use assets and leasehold improvements at the closed SmileShops. Given the uncertain operating environment and the shift to work-from-home, the Company made the strategic decision to align its rent costs with the current needs of the business, while also ensuring that the Company has sufficient capacity to support future growth. The Company continues to evaluate its SmileShops and other properties to determine if it will further rationalize its footprint to better align with marketplace demand, including the direct and indirect effects of the COVID-19 pandemic. For a complete discussion of the Company’s restructuring actions, see “Note 5—Lease Abandonment, Impairment of Long-lived Assets and Store Closure and Other Related Charges” in the Notes to Condensed Consolidated Financial Statements in this Quarterly Report on Form 10-Q. In April, the Company continued to repurpose certain of its 3D printing capabilities in order to manufacture PPE at cost for healthcare organizations and government agencies. Additionally, the Company took the following actions in an effort to fortify the short-term financial position of the business: reduced its marketing spend as a percentage of revenue; furloughed much of its headquarters and retail workforce, bringing employees back on an as-needed basis; suspended cash pay temporarily for its executive and leadership teams; and bolstered its business continuity plans. In May, the Company took action to secure its financial condition and liquidity needs by entering into the new HPS Credit Facility, under which it can borrow up to $500,000. For a complete discussion of the new HPS Credit Facility, see “Note 10-Long-Term Debt” in the Notes to Condensed Consolidated Financial Statements in this Quarterly Report on Form 10-Q. In June, the Company began to re-open SmileShops, in line with its real estate repositioning program, based on local public health guidelines and evolving customer behaviors and expectations. As of June 30, 2020 the Company had 42 SmileShops in operation. As part of this process and the repositioning actions more generally, the Company realigned its workforce to be commensurate with the needs of its business, which required a portion of its employees to continue to be furloughed, and in some instances, separated from the Company.

Summary of Significant Accounting Policies

6 Months Ended

Jun. 30, 2020

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

Management Use of Estimates

The preparation of the interim condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that impact the reported amounts. On an ongoing basis, the Company evaluates its estimates, including those related to the fair values of financial instruments, useful lives of property, plant and equipment, revenue recognition, equity-based compensation, long-lived assets, and contingent liabilities, among others. In connection with its credit facility with HPS Investment Partners, the Company issued warrants to certain affiliates of HPS Investment Partners. The warrants were recorded at fair value within equity on the condensed consolidated balance sheets using the Black-Scholes option pricing model (see Note 10). Each of these estimates varies in regard to the level of judgment involved and its potential impact on the Company’s financial results. Estimates are considered critical either when a different estimate could have reasonably been used, or where changes in the estimate are reasonably likely to occur from period to period, and such use or change would materially impact the Company’s financial condition, results of operations, or cash flows. Actual results could differ from those estimates.

Revenue Recognition

The Company’s revenues are derived primarily from sales of aligners, impression kits, whitening gel, and retainers, and interest earned through its SmilePay financing program. Revenue is recorded for all customers based on the amount that is expected to be collected, which considers implicit price concessions, discounts and returns.

The Company identifies a performance obligation as distinct if both of the following criteria are met: the customer can benefit from the good or service either on its own or together with other resources that are readily available to the customer and the entity’s promise to transfer the good or service to the customer is separately identifiable from other promises in the contract. Determining the standalone selling price (“SSP”) and allocation of consideration from a contract to the individual performance obligations, and the appropriate timing of revenue recognition, is the result of significant qualitative and quantitative judgments. Management considers a variety of factors such as historical sales, usage rates (the number of times a customer is expected to order additional aligners), costs, and expected margin, which may vary over time depending upon the unique facts and circumstances related to each performance obligation, in making these estimates. Further, the Company’s process for estimating usage rates requires significant judgment and evaluation of inputs, including historical data and forecasted usages. Changes in the allocation of the SSP between performance obligations will not affect the amount of total revenues recognized for a particular contract. The Company uses the expected cost plus a margin approach to determine the SSP for performance obligations, and discounts are allocated to each performance obligation based on the relative standalone selling price. However, any material changes in the allocation of the SSP could impact the timing of revenue recognition, which may have a material effect on the Company’s financial position and result of operations as the contract consideration is allocated to each performance obligation, delivered or undelivered, at the inception of the contract based on the SSP of each distinct performance obligation.

The Company estimates the amount expected to be collected based upon management’s assessment of historical write-offs and expected net collections, business and economic conditions, and other collection indicators.

Management relies on the results of detailed reviews of historical write-offs and collections as a primary source of information in estimating the amount of contract consideration expected to be collected and implicit price concessions. Uncollectible receivables are written-off in the period management believes it has exhausted its ability to collect payment from the customer. The Company believes its analysis provides reasonable estimates of its revenues and valuations of its accounts receivable.

A description of the revenue recognition for each product sold by the Company is detailed below.

Aligners and Impression Kits: The Company enters into contracts with customers for aligner sales that involve multiple future performance obligations. The Company determined that aligner sales comprise the following distinct performance obligations: initial aligners, modified aligners, refinement aligners, and retainers for international sales only which can occur at any time throughout the treatment plan (which is typically between five to ten months) upon the direction of and prescription from the treating dentist or orthodontist.

The Company allocates revenues for each performance obligation based on its SSP and recognizes the revenues as control of the performance obligation is transferred upon shipment of the aligners. The Company recognizes aligner revenue on amounts expected to be collected during the course of the treatment plan.

The Company bills its customers either upfront for the full cost of aligners or monthly through its SmilePay financing program, which involves a down payment and a fixed amount per month for up to 24 months. The Company’s accounts receivable related to the SmilePay financing program are reported at the amount expected to be collected on the consolidated balance sheets, which considers implicit price concessions. Financing revenue from its accounts receivable is recognized based on the contractual market interest rate with the customer, net of implicit price concessions. There are no fees or origination costs included in accounts receivable.

The Company sells impression kits to its customers as an alternative to an in-person visit at one of its retail locations where the customer receives a free oral digital imaging of their teeth. The Company combines the sales of its impression kits with aligner sales and recognizes the revenues as control of the performance obligation is transferred upon shipment of the aligners. The Company estimates the amount of impression kit sales that do not result in an aligner therapy treatment plan and recognizes such revenue when aligner conversion becomes remote.

Retainers and Other Products: The Company sells retainers and other products (such as whitening gel and tooth brushes) to customers, which can be purchased on the Company’s website or certain retail outlets. The sales of these products are independent and separate from the customer’s decision to purchase aligner therapy for domestic sales. The Company determined that the transfer of control for these performance obligations occurs as the title of such products passes to the customer.

The following table summarizes revenue recognized for each product sold by the Company:


	Three Months Ended June 30,						Six Months Ended June 30,
	2020		2019		2020		2019
Aligner revenue, net of implicit price concessions	$	77,897	$	181,471	$	248,832	$	346,723
Financing revenue, net of implicit price concessions	12,664		10,554		25,386		19,664
Retainers and other products revenue	16,512		3,769		29,505		7,143
Total revenue	$	107,073	$	195,794	$	303,723	$	373,530

Implicit price concessions included in total revenue	$	11,319	$	20,719	$	34,688	$	39,084

Deferred Revenue: Deferred revenue represents the Company’s contract liability for performance obligations associated with sales of aligners. Of the Company’s revenues during the three and six months ended June 30, 2020 and 2019, $4,759, $3,325, $16,867, and $14,550 was previously included in deferred revenue on the consolidated balance sheets as of March 31, 2020 and 2019 and December 31, 2019 and 2018, respectively.

Shipping and Handling Costs

Shipping and handling charges are recorded in cost of revenues in the consolidated statements of operations upon shipment. The Company incurred approximately $5,961, $2,945, $11,352 and $7,601 in outsourced shipping expenses for the three and six months ended June 30, 2020 and 2019, respectively.

Cost of Revenues

Cost of revenues includes the total cost of products produced and sold. Such costs include direct materials, direct labor, overhead costs (occupancy costs, indirect labor, and depreciation), fees retained by doctors, freight and duty expenses associated with moving materials from vendors to the Company’s facilities and from its facilities to the customers, and adjustments for shrinkage (physical inventory losses), lower of cost or net realizable value, slow moving product and excess inventory quantities.

Marketing and Selling Expenses

Marketing and selling expenses include direct online and offline marketing and advertising costs, costs associated with intraoral imaging services, selling labor, and occupancy costs of SmileShop locations. All marketing and selling expenses are expensed as incurred. For the three and six months ended June 30, 2020 and 2019, the Company incurred marketing and selling costs of $34,518, $113,413, $176,842 and $209,146, respectively.

General and Administrative Expenses

General and administrative expenses include payroll and benefit costs for corporate team members, equity-based compensation expenses, occupancy costs of corporate facilities, bank charges and costs associated with credit and debit card interchange fees, outside service fees, and other administrative costs, such as computer maintenance, supplies, travel, and lodging.

Depreciation and Amortization

Depreciation includes expenses related to the Company’s property, plant and equipment, including finance leases. Amortization includes expenses related to definite-lived intangible assets and capitalized software. Depreciation and amortization are calculated using the straight-line method over the useful lives of the related assets, ranging from three to ten years. Leasehold improvements are amortized using the straight-line method over the shorter of the related lease terms or their useful lives. Depreciation and amortization are included in cost of revenues, selling expenses, and general and administrative expenses depending on the purpose of the related asset. Depreciation and amortization by financial statement line item were as follows:


	Three Months Ended June 30,						Six Months Ended June 30,
	2020		2019		2020		2019
Cost of revenues	$	5,887	$	2,327	$	11,441	$	4,414
Marketing and selling expenses	1,628		1,184		3,271		2,061
General and administrative expenses	6,401		1,557		10,645		3,248
Total	$	13,916	$	5,068	$	25,357	$	9,723

Fair Value of Financial Instruments

The Company measures the fair value of financial instruments as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value is estimated by applying the following hierarchy, which prioritizes the inputs used to measure fair value into three levels and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair value measurement:

Level 1 — Quoted (unadjusted) prices in active markets for identical assets or liabilities.

Level 2 — Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the asset or liability.

Level 3 — Inputs that are generally unobservable and typically reflect management’s estimate of assumptions that market participants would use in pricing the asset or liability.

The Company’s financial instruments consist of cash, receivables, accounts payable, debt instruments, warrants, and derivative financial instruments. Due to their short-term nature, the carrying values of cash, current receivables, and trade payables, approximate current fair value at each balance sheet date. The warrants are recorded at their initial fair value. The Company had $401,228 and $150,448 in borrowings under its debt facilities (as discussed in Note 10) as of June 30, 2020 and December 31, 2019, respectively. Based on market interest rates (Level 2 inputs), the carrying value of the borrowings under its debt facilities approximates fair value for each period reported.

Derivative Financial Instruments

The Company accounts for derivative financial instruments in accordance with applicable accounting standards for such instruments and hedging activities, which require that all derivatives are recorded on the balance sheet at fair value. The accounting for changes in the fair value of derivatives depends on the intended use of the derivative, whether the Company has elected to designate a derivative in a hedging relationship and apply hedge accounting, and whether the hedging relationship has satisfied the criteria necessary to apply hedge accounting. Derivatives designated and qualifying as a hedge of the exposure to changes in the fair value of an asset, liability, or firm commitment attributable to a particular risk are considered fair value hedges. Derivatives designated and qualifying as a hedge of the exposure to variability in expected future cash flows, or other types of forecasted transactions, are considered cash flow hedges. Hedge accounting generally provides for the matching of the timing of gain or loss recognition on the hedging instrument with the recognition of the changes in the fair value of the hedged asset or liability that are attributable to the hedged risk in a fair value hedge or the earnings effect of the hedged forecasted transactions in a cash flow hedge. The Company had no outstanding derivatives at June 30, 2020 or December 31, 2019; however, the Company may enter into derivative contracts that are intended to economically hedge a certain portion of its risk, even though hedge accounting does not apply or the Company elects not to apply the hedge accounting standards.

Certain Risks and Uncertainties

The Company’s operating results depend to a significant extent on the ability to market and develop its products. The life cycles of the Company’s products are difficult to estimate due, in part, to the effect of future product enhancements and competition. The inability to successfully develop and market the Company’s products as a result of competition or other factors would have a material adverse effect on its business, financial condition, and results of operations.

The Company provides credit to customers in the normal course of business. The Company maintains reserves for potential credit losses and such losses have been within management’s expectations. No individual customer accounted for 1% or more of the Company’s accounts receivable at June 30, 2020 or December 31, 2019, or net revenue for the three or six months ended June 30, 2020 and 2019.

Some of the Company’s products are considered medical devices and are subject to extensive regulation in the U.S. and internationally. The regulations to which the Company is subject are complex. Regulatory changes could result in restrictions on the Company’s ability to carry on or expand its operations, higher than anticipated costs or lower than anticipated sales. The failure to comply with applicable regulatory requirements may have a material adverse impact on the Company.

The Company’s reliance on international operations exposes it to related risks and uncertainties, including difficulties in staffing and managing international operations, such as hiring and retaining qualified personnel; political, social and economic instability; interruptions and limitations in telecommunication services; product and material transportation delays or disruption; trade restrictions and changes in tariffs; import and export license requirements and restrictions; fluctuations in foreign currency exchange rates; and potential adverse tax consequences. If any of these risks materialize, operating results may be harmed.

The Company purchases certain inventory from sole suppliers, and the inability of any supplier or manufacturer to fulfill the supply requirements could materially and adversely impact its future operating results.

Cash and Cash Equivalents

Cash and cash equivalents consists of all highly-liquid investments with original maturities of less than three months. Cash is held in various financial institutions in the U.S. and internationally, including certain reserve accounts in accordance with the Company’s credit facility with HPS Investment Partners (see Note 10).

Inventories

Inventories are stated at the lower of cost or net realizable value using the first-in, first-out method of inventory accounting. Inventory consists of raw materials for producing impression kits and aligners and finished goods. Inventory is net of shrinkage and obsolescence.

Property, Plant and Equipment, net

Property, plant and equipment are stated at cost less accumulated depreciation and amortization. Routine maintenance and repairs are charged to expense as incurred. At the time property, plant and equipment are retired from service, the cost and accumulated depreciation or amortization are removed from the respective accounts and the related gains or losses are reflected in the consolidated statements of operations.

Leases

On January 1, 2020, the Company adopted the new leases standard using the modified retrospective transition method, which requires that it recognizes leases differently pre- and post-adoption. See “Recently Adopted Accounting Pronouncements—ASU No. 2016-02” below for more information. The Company categorizes leases at their inception as either operating or finance leases. Lease agreements cover certain retail locations, office space, warehouse, manufacturing and distribution space and equipment. Operating leases are included in operating lease right-of-use assets, other current liabilities, and long-term right-of-use operating lease obligations in the condensed consolidated balance sheets. Finance leases are included in property, plant and equipment, net, current portion of long-term debt, and long-term debt.

Leased assets represent the Company’s right to use an underlying asset for the lease term, and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Operating lease right-of-use assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. The Company uses a secured incremental borrowing rate as the discount rate for determining the present value of lease payments when the rate implicit in the contract is not readily determinable. Leases that have a term of twelve months or less upon commencement date are considered short-term in nature. Accordingly, short-term leases are not included on the condensed consolidated balance sheets and are expensed on a straight-line basis over the lease term, which commences on the date we have the right to control the property.

Internally Developed Software Costs

The Company generally provides services to its customers using software developed for internal use. The costs that are incurred to develop such software are expensed as incurred during the preliminary project stage. Once certain criteria have been met, direct costs incurred in developing or obtaining computer software are capitalized. Training and maintenance costs are expensed as incurred. Capitalized software costs are included in property, plant and equipment in the consolidated balance sheets and are amortized over a three-year period. During the three and six months ended June 30, 2020 and 2019, the Company capitalized $3,627, $2,485, $7,383, and $4,886, respectively, of internally developed software costs. Amortization expense for internally developed software was $1,785, $267, $3,282, and $737 for the three and six months ended June 30, 2020, and 2019, respectively.

Impairment

The Company evaluates long-lived assets (including finite-lived intangible assets) for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset group may not be recoverable. An

asset or asset group is considered impaired if its carrying amount exceeds the future undiscounted net cash flows that the asset or asset group is expected to generate. Factors the Company considers important which could trigger an impairment review include significant negative industry or economic trends, significant loss of customers and changes in the competitive environment. If an asset or asset group is considered to be impaired, the impairment to be recognized is calculated as the amount by which the carrying amount of the asset or asset group exceeds its fair market value. The Company’s estimates of future cash flows attributable to long-lived assets require significant judgment based on its historical and anticipated results and are subject to many assumptions. The estimation of fair value utilizing a discounted cash flow approach includes numerous uncertainties which require significant judgment when making assumptions of expected growth rates and the selection of discount rates, as well as assumptions regarding general economic and business conditions, and the structure that would yield the highest economic value, among other factors.

Debt Issuance Costs

The Company records debt issuance costs related to its term debt as direct deductions from the carrying amount of the debt. The costs are amortized to interest expense over the life of the debt using the effective interest method.

Income Taxes

SDC Inc. is the managing member of SDC Financial and, as a result, consolidates the financial results of SDC Financial in the unaudited condensed consolidated financial statements. SDC Financial and its subsidiaries are limited liability companies and have elected to be taxed as partnerships for income tax purposes except for a subsidiary, SDC Holding, LLC (‘‘SDC Holding”) and its domestic and foreign subsidiaries, which are taxed as corporations. As such, SDC Financial does not pay any federal income taxes, as any income or loss is included in the tax returns of the individual members. SDC Financial does pay state income tax in certain jurisdictions, and the Company’s income tax provision in the consolidated financial statements reflects the income taxes for those states. Additionally, certain wholly-owned entities taxed as corporations are subject to federal, state, and foreign income taxes, in the jurisdictions in which they operate, and accruals for such taxes are included in the consolidated financial statements. The Company further evaluates deferred tax assets in each jurisdiction and recognizes associated benefits when positive evidence of realization exceeds negative evidence, and otherwise records valuation allowances as necessary.

Tax Receivable Agreement

In connection with the Reorganization Transactions and the IPO, the Company entered into a Tax Receivable Agreement (the “Tax Receivable Agreement”) with the Continuing LLC Members, pursuant to which SDC Inc. agreed to pay the Continuing LLC Members 85% of the amount of cash tax savings, if any, in U.S. federal, state, and local income tax or franchise tax that SDC Inc. actually realizes as a result of (a) the increases in tax basis attributable to exchanges by Continuing LLC Members and (b) tax benefits related to imputed interest deemed to be paid by SDC Inc. as a result of the Tax Receivable Agreement. The Company recognizes this contingent liability in its consolidated financial statements when amounts become probable as to incurrence and estimable in amount.

Recent Accounting Pronouncements

In August 2018, the FASB issued ASU 2018-15, “Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract.” This update clarifies the accounting treatment for fees paid by a customer in a cloud computing arrangement (hosting arrangement) by providing guidance for determining when the arrangement includes a software license. This guidance is effective for years beginning after December 15, 2020, with early adoption permitted. The amendments may be applied either retrospectively or prospectively to all implementation costs incurred after the date of adoption. The Company adopted ASU 2018-15 on July 1, 2020 and does not expect this guidance to have a material impact on its consolidated financial statements and related disclosures.

In January 2020, the Company adopted FASB ASU 2018-07, “Compensation—Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting,” which expands the scope of Topic 718 to include share-based payment transactions for acquiring goods and services from non-employees. The adoption of this guidance did not have a material impact on the Company’s condensed consolidated financial statements and related disclosures.

Inventories

6 Months Ended

Jun. 30, 2020

Inventory Disclosure [Abstract]

Inventories

Inventories are comprised of the following:


	June 30, 2020		December 31, 2019
Raw materials	$	9,278	$	5,950
Finished goods	19,293		12,481
Total inventories	$	28,571	$18,431

Prepaid and other assets

6 Months Ended

Jun. 30, 2020

Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]

Prepaid and other assets

Prepaid and other assets are comprised of the following:


	June 30, 2020		December 31, 2019
Prepaid expenses	$	12,772	$	10,503
Deposits to vendors	2,191		3,132
Other	1,939		551
Total prepaid and other current assets	$	16,902	$	14,186
Prepaid expenses, non-current	$	1,101	$	1,308
Deposits to vendors, non-current	3,670		3,346
Indefinite-lived intangible assets	6,217		6,217
Other intangible assets, net	303		428
Total other assets	$	11,291	$	11,299

In March 2019, the Company purchased an intangible asset related to manufacturing. The Company evaluates the remaining useful life and carrying value of this indefinite-lived intangible asset at least annually or when events and circumstances warrant such a review, to determine whether significant events or changes in circumstances indicate that a change in the useful life or impairment in value may have occurred. There were no impairment charges related to the Company’s indefinite-lived intangible asset during the three and six months ended June 30, 2020.

Lease Abandonment, Impairment of Long-Lived Assets and Store Closure and Other Related Charges

6 Months Ended

Jun. 30, 2020

Restructuring and Related Activities [Abstract]

Lease Abandonment, Impairment of Long-Lived Assets and Store Closure and Other Related Charges

Lease Abandonment, Impairment of Long-lived Assets and Store Closure and Other Related Charges

During the second quarter of 2020, the Company performed a review of its real estate needs and initiated restructuring actions related to a real estate repositioning program. As a result of these changes, the Company incurred one-time charges of $29,109 for the three and six months ended June 30, 2020. This charge was primarily associated with the closure of the manufacturing facility in Kyle, Texas; the consolidation of several floors at the Company headquarters in Nashville, Tennessee; the closure and consolidation of many SmileShops, which is an on-going evaluation; and the impairment of right of use assets and leasehold improvements at the closed manufacturing facility and SmileShops. Given the uncertain operating environment and the shift to work-from-home, the Company made the strategic decision to align its rent costs with the current needs of the business, while also ensuring that the Company has sufficient capacity to support future growth. The Company continues to evaluate its SmileShops and other properties to determine if it will further rationalize its footprint to better align with marketplace demand, including the direct and indirect effects of the COVID-19 pandemic. Additional future restructuring charges may result from the Company’s real estate repositioning and optimization initiatives.

The following table summarizes charges for the three and six months ended June 30, 2020. There were no similar charges for the three and six months ended June 30, 2019.


	Three Months Ended June 30, 2020		Six Months Ended June 30, 2020
Lease abandonment and impairment of long-lived assets:
Impairment of property, plant and equipment	$	16,747	$	16,747
Impairment of right of use asset	7,886		7,886
	$	24,633	$	24,633
Store closure and other related charges:
Short-term lease termination fees	3,823		3,823
Other expenses	653		653
	$	4,476	$	4,476

The balance of the accruals for the restructuring programs recorded in accrued expenses in the condensed consolidated balance sheets as of June 30, 2020 was $2,541.

Property, plant and equipment, net

6 Months Ended

Jun. 30, 2020

Property, Plant and Equipment [Abstract]

Property, plant and equipment, net

Property, plant and equipment were comprised of the following:


	June 30, 2020		December 31, 2019
Lab and SmileShop equipment	$	89,269	$	79,103
Computer equipment and software	68,266		48,401
Leasehold improvements	24,148		13,275
Furniture and fixtures	14,408		13,152
Vehicles	6,147		2,660
Construction in progress	36,996		60,317
Property, plant and equipment, gross	239,234		216,908
Less: accumulated depreciation	(64,342)		(39,365)
Property, plant and equipment, net	$	174,892	$	177,543

The carrying values of assets under finance leases were $25,478 and $26,501 as of June 30, 2020 and December 31, 2019, respectively, net of accumulated depreciation of $10,450 and $4,670, respectively.

Leases

6 Months Ended

Jun. 30, 2020

Leases [Abstract]

Leases

The Company leases property and equipment under finance and operating leases. For leases with terms greater than 12 months, the Company records the related right-of-use assets and right-of-use obligations at the present value of lease payments over the term. Certain of the Company’s leases include rental escalation clauses and renewal options that are factored into the determination of lease payments when appropriate. Certain of the Company’s leased store locations have variable payments based upon scan volume as well as other variable property related costs. The Company does not separate lease and non-lease components of contracts.

Generally, the Company uses its estimated incremental borrowing rate to discount the lease payments based on information available at lease commencement, as most of its leases do not provide a readily determinable implicit interest rate. The Company estimates its collateralized incremental borrowing rate based upon a synthetic credit rating and yield curve analysis at commencement or modification date in determining the present value of lease payments.

The following table presents lease-related assets and liabilities at June 30, 2020:

Leases Assets and Liabilities

Balance Sheet Classification

June 30, 2020

Assets:

Operating leases

Operating lease right-of-use asset

33,120

Finance leases

Property, plant, and equipment, net

25,478

58,598

Liabilities:

Operating leases

Other current liabilities

7,572

Finance leases

Current portion of long-term debt

10,231

Operating leases

Operating lease liabilities, net of current portion

34,338

Finance leases

Long-term debt, net of current portion

16,962

69,103

Weighted average remaining term:

Operating leases

6.1 years

Finance leases

2.1 years

Weighted average discount rate:

Operating leases

5.60

Finance leases

7.50

⁽¹⁾ Finance lease assets are recorded net of accumulated amortization of $10,450 as of June 30, 2020.

⁽²⁾ Upon adoption of the new lease standard, discount rates used for existing leases were established at January 1, 2020.

The following table presents certain information related to lease expense for finance and operating leases:


Expense Category	Statement of Operations Classification	Three Months Ended June 30, 2020		Six Months Ended June 30, 2020
Finance lease expense:
Amortization of leased assets	Cost of revenues	$	2,497	$	4,994
Interest of lease liabilities	Interest expense	540		1,126
Operating leases⁽³⁾		2,518		5,037
Short-term lease expense⁽³⁾		2,001		9,643
Variable lease expense⁽³⁾		213		2,504
Total lease expense		$	7,769	$	23,304
⁽³⁾ Expenses are included in “Cost of revenues”, “Marketing and selling expenses”, or “General and administrative expenses” in our condensed consolidated statements of operations, depending on the purpose of the related asset.

Other Information

The following table represents supplemental cash flow information:


	Six Months Ended June 30, 2020
Cash paid for amounts used in the measurement of lease liabilities:
Cash used in operating activities	$	6,152
Cash used in investing activities	$	—
Cash used in financing activities	$	4,997

Maturities of Lease Liabilities

The following table reconciles the undiscounted cash flows to the finance lease liabilities and operating lease liabilities recorded on the condensed consolidated balance sheet at June 30, 2020:


	Finance Leases		Operating Leases
2020 (remaining)	$	6,076	$	4,892
2021	11,209		9,441
2022	6,859		7,559
2023	—		6,904
2024	—		6,136
2025 and thereafter	—		15,405
Total minimum lease payments	24,144		50,337
Residual value	5,661		—
Amount representing interest	(2,612)		(8,427)
Present value of future minimum lease payments	27,193		41,910
Less: current portion	(10,231)		(7,572)
Long-term lease liabilities	$	16,962	$	34,338

Leases

The following table presents lease-related assets and liabilities at June 30, 2020:

Leases Assets and Liabilities

Balance Sheet Classification

June 30, 2020

Assets:

Operating leases

Operating lease right-of-use asset

33,120

Finance leases

Property, plant, and equipment, net

25,478

58,598

Liabilities:

Operating leases

Other current liabilities

7,572

Finance leases

Current portion of long-term debt

10,231

Operating leases

Operating lease liabilities, net of current portion

34,338

Finance leases

Long-term debt, net of current portion

16,962

69,103

Weighted average remaining term:

Operating leases

6.1 years

Finance leases

2.1 years

Weighted average discount rate:

Operating leases

5.60

Finance leases

7.50

⁽¹⁾ Finance lease assets are recorded net of accumulated amortization of $10,450 as of June 30, 2020.

⁽²⁾ Upon adoption of the new lease standard, discount rates used for existing leases were established at January 1, 2020.

The following table presents certain information related to lease expense for finance and operating leases:


Expense Category	Statement of Operations Classification	Three Months Ended June 30, 2020		Six Months Ended June 30, 2020
Finance lease expense:
Amortization of leased assets	Cost of revenues	$	2,497	$	4,994
Interest of lease liabilities	Interest expense	540		1,126
Operating leases⁽³⁾		2,518		5,037
Short-term lease expense⁽³⁾		2,001		9,643
Variable lease expense⁽³⁾		213		2,504
Total lease expense		$	7,769	$	23,304
⁽³⁾ Expenses are included in “Cost of revenues”, “Marketing and selling expenses”, or “General and administrative expenses” in our condensed consolidated statements of operations, depending on the purpose of the related asset.

Other Information

The following table represents supplemental cash flow information:


	Six Months Ended June 30, 2020
Cash paid for amounts used in the measurement of lease liabilities:
Cash used in operating activities	$	6,152
Cash used in investing activities	$	—
Cash used in financing activities	$	4,997

Maturities of Lease Liabilities

The following table reconciles the undiscounted cash flows to the finance lease liabilities and operating lease liabilities recorded on the condensed consolidated balance sheet at June 30, 2020:


	Finance Leases		Operating Leases
2020 (remaining)	$	6,076	$	4,892
2021	11,209		9,441
2022	6,859		7,559
2023	—		6,904
2024	—		6,136
2025 and thereafter	—		15,405
Total minimum lease payments	24,144		50,337
Residual value	5,661		—
Amount representing interest	(2,612)		(8,427)
Present value of future minimum lease payments	27,193		41,910
Less: current portion	(10,231)		(7,572)
Long-term lease liabilities	$	16,962	$	34,338

Accrued liabilities

6 Months Ended

Jun. 30, 2020

Payables and Accruals [Abstract]

Accrued liabilities

Accrued liabilities were comprised of the following:


	June 30, 2020		December 31, 2019
Accrued marketing and selling costs	$	11,792	$	31,804
Accrued payroll and payroll related expenses	24,114		25,019
Accrued sales and other taxes	8,522		8,367
Other	41,224		28,149
Total accrued liabilities	$	85,652	$	93,339

Income taxes

6 Months Ended

Jun. 30, 2020

Income Tax Disclosure [Abstract]

Income taxes

SDC Inc. is the managing member of SDC Financial and, as a result, consolidates the financial results of SDC Financial. SDC Financial and its subsidiaries are limited liability companies and have elected to be taxed as partnerships for income tax purposes except for a subsidiary, SDC Holding and certain of its domestic and foreign subsidiaries, which are taxed as corporations. As such, SDC Financial does not pay any federal income taxes, as any income or loss is included in the tax returns of the individual members. SDC Financial does pay state income tax in certain jurisdictions, and the Company’s income tax provision in the consolidated financial statements reflects the income taxes for those states. Additionally, certain wholly-owned entities taxed as corporations are subject to federal, state, and foreign income taxes in the jurisdictions in which they operate, and accruals for such taxes are included in the consolidated financial statements. The Company further evaluates deferred tax assets in each jurisdiction and recognizes associated benefits when positive evidence of realization exceeds negative evidence, and otherwise records valuation allowances as necessary.

The Company’s U.S. federal and state income tax returns for the tax years 2015 and beyond remain subject to examination by the Internal Revenue Service. The Company also has operations in Costa Rica, Puerto Rico, Canada, Australia, New Zealand, the U.K., Ireland, Germany, Austria, Hong Kong, and Singapore with tax filings in each foreign jurisdiction. With respect to state and local jurisdictions, the Company and its subsidiaries are typically subject to examination for several years after the income tax returns have been filed. The Internal Revenue Service has commenced an examination of the SDC, LLC’s U.S. income tax return for 2017. We anticipate this audit will conclude within the next twelve months. Although the outcome of tax audits is always uncertain, the Company believes that adequate amounts of tax, interest and penalties have been provided for in the accompanying consolidated financial statements for any adjustments that may be incurred due to state or local audits and uncertain tax positions. The Company is also subject to withholding taxes in foreign jurisdictions. The Company’s income tax expense may vary from the expense that would be expected based on statutory rates due principally to its organizational structure and recognition of valuation allowances against deferred tax assets.

The income tax provision was as follows:


	Three Months Ended June 30,						Six Months Ended June 30,
	2020		2019		2020		2019
Current:
Federal	$	(1,698)	$	—	$	—	$	—
State	225		82		158		102
Foreign	140		—		340		—
Current income tax provision	$	(1,333)	$	82	$	498	$	102
Deferred:
Federal	$	—	$	—	$	—	$	—
State	(86)		15		57		15
Foreign	—		—		—		—
Deferred income tax provision	$	(86)	15		$	57	$	15
Total income tax provision	$	(1,419)	$	97	$	555	$	117

At June 30, 2020 the Company had unused federal net operating loss carryforwards (tax effected) for federal income tax purposes of approximately $25,577, which can be carried forward indefinitely and may be used to offset future taxable income. In addition, the Company had unused net operating loss carryforwards (tax effected) for state income tax purposes of approximately $15,718, which expire from 2029 through 2034. The Company also had unused net operating loss carryforwards (tax effected) for foreign income tax purposes of approximately $1,180. Additionally, the Company has certain other deferred tax assets related to potential future tax benefits. All deferred tax assets are evaluated using positive and negative evidence as to their future realization. The Company considers recent historic losses to be significant negative evidence, and as such, records a valuation allowance against substantially all of its deferred tax assets.

As of June 30, 2020, the Company maintained a valuation allowance of approximately $213,332 against its deferred tax assets. If there is a change in the Company’s assessment of the amount of deferred income tax assets that is realizable, adjustments to the valuation allowance will be made in future periods.

Tax Receivable Agreement

The Company expects to obtain an increase in its share of the tax basis in the net assets of SDC Financial when LLC Units are redeemed from or exchanged by Continuing LLC Members. The Company intends to treat any redemptions and exchanges of LLC Units as direct purchases of LLC Units for U.S. federal income tax purposes. These increases in tax basis may reduce the amounts that it would otherwise pay in the future to various tax authorities. They may also decrease gains (or increase losses) on future dispositions of certain capital assets to the extent tax basis is allocated to those capital assets.

In connection with the Reorganization Transactions and the IPO, the Company entered into the Tax Receivable Agreement with the Continuing LLC Members. The Tax Receivable Agreement provides for the payment by SDC Inc. of 85% of the amount of any tax benefits that SDC Inc. actually realizes, or in some cases is deemed to realize, as a result of (i) increases in SDC Inc.’s share of the tax basis in the net assets of SDC Financial resulting from any redemptions or exchanges of LLC Units, (ii) tax basis increases attributable to payments made under the Tax Receivable Agreement, and (iii) deductions attributable to imputed interest pursuant to the Tax Receivable Agreement (the ‘‘TRA Payments”). The Company expects to benefit from the remaining 15% of any of cash savings, if any, that it realizes.

During the year ended December 31, 2019, the Company acquired an aggregate of $635,690 in LLC Units in connection with the redemption of certain Continuing LLC Members, which resulted in an increase in the tax basis of

the assets of SDC Financial subject to the provisions of the Tax Receivable Agreement. The Company has not recognized any additional liability under the Tax Receivable Agreement after concluding it was not probable that such TRA Payments would be paid based on its estimates of future taxable income. No payments were made to the Continuing LLC Members pursuant to the Tax Receivable Agreement during the six month period ended June 30, 2020.

The amounts payable under the Tax Receivable Agreement will vary depending upon a number of factors, including the amount, character, and timing of the taxable income of SDC Inc. in the future. If the valuation allowance recorded against the deferred tax assets applicable to the tax attributes referenced above is released in a future period, the Tax Receivable Agreement liability may be considered probable at that time and recorded within earnings.

Long-Term Debt

6 Months Ended

Jun. 30, 2020

Debt Disclosure [Abstract]

Long-Term Debt

The Company’s debt and capital lease obligations are comprised of the following:


	June 30, 2020		December 31, 2019
HPS Credit Facility, net of unamortized financing costs of $11,493	$	372,551	$	—
JPM Credit Facility, net of unamortized financing costs of $2,513	—		147,935
Align redemption promissory note	20,584		34,090
Capital lease obligations (Note 7)	27,193		26,501
Total debt	420,328		208,526
Less current portion	(30,815)		(35,376)
Total long-term debt	$	389,513	$	173,150

HPS Credit Facility

On May 12, 2020, SDC U.S. SmilePay SPV (“SPV”), a wholly-owned special purpose subsidiary of the Company, entered into a Loan Agreement among SPV, as borrower, SmileDirectClub, LLC, as the seller and servicer, certain lenders, and HPS Investment Partners, LLC, as administrative agent and collateral agent, providing a five year secured term loan facility to SPV in an initial aggregate maximum principal amount of $400,000, net of original issue discount of $12,000, with the ability to request incremental term loans of up to an additional aggregate principal amount of $100,000 with the consent of the lenders participating in such increase (the “HPS Credit Facility”).

The proceeds of the HPS Credit Facility were used to repay all outstanding amounts under the previous JPM Credit Facility and for working capital and other corporate purposes. In connection with the repayment, the Company paid $187 in fees and wrote-off the remaining unamortized loan costs of $1,594, both of which are included in loss from extinguishment of debt in the accompanying condensed consolidated statements of operations.

The Company recorded $11,784 related to deferred financing costs of the HPS Credit Facility. During the six months ended June 30, 2020, the Company amortized under the effective interest rate method $291 of deferred financing costs. The original issue discount is included in loss from extinguishment of debt in the accompanying condensed consolidated statements of operations.

Outstanding loans under the HPS Credit Facility bear interest at a variable rate equal to three-month LIBOR (subject to a 1.75% per annum floor), plus 7.50% per annum payable in cash, plus 3.25% per annum payable in kind or, at the Company’s election, wholly or partially in cash.

Subject to certain exceptions, the HPS Credit Facility is secured by first-priority security interests in SPV’s assets, which consist of certain receivables, cash governed by a control agreement with HPS, intellectual property and related assets. SPV’s obligations under the Loan Agreement are guaranteed on a limited basis by SmileDirectClub, LLC and SDC Financial LLC. As of June 30, 2020, the Company had $361,302 of its receivables collateralized as part of the HPS Credit Facility.

The HPS Credit Facility contains various restrictions, covenants, ratios and events of default, including:

•SPV has limitations on consolidations, creation of liens, incurring additional indebtedness, dispositions of assets, investments and paying dividends or other distributions.

•SDC Financial LLC, its consolidated subsidiaries and certain originator entities must maintain minimum monthly liquidity of $100,000 and are subject to additional leverage ratios upon the occurrence of additional debt.

•SDC Financial LLC is subject to a consolidated leverage ratio measured as of the end of each fiscal quarter beginning March 31, 2022, to be calculated based on annualized EBITDA for the first three quarters of 2022, and thereafter, to be calculated based on EBITDA during the trailing four fiscal quarters for the relevant period.

The HPS Credit Facility can be refinanced during the first year, provided that SPV would be required to pay the amount of interest that would have accrued during the remainder of the first year, plus 4% of the principal amount prepaid; and after the first year, for a fee of 4% of the principal amount prepaid, with the prepayment fee decreasing each year to 3% in the third year, 2% in the fourth year and 1% in the fifth year.

As of June 30, 2020, the Company had $401,228 outstanding and was in compliance with all covenants in the HPS Credit Facility.

HPS Warrants

In connection with the HPS Credit Facility, the Company issued warrants (“HPS Warrants”) to affiliates of HPS Investment Partners, LLC exercisable at any time into an aggregate of 3,889,575 shares of the Company’s Class A common stock, which amounted to 1% of the Company’s total outstanding Class A and Class B common stock, including the HPS Warrants, as of the closing date of the HPS Credit Facility, at an exercise price of $7.11 per share, payable in cash or pursuant to a cashless exercise. The HPS Warrants were recorded at their initial fair value of $17,620 and are being accreted through interest expense to the outstanding loan balance of the HPS Credit Facility.

JPM Credit Facility

In June 2019, the Company entered into a loan and security agreement with JPMorgan Chase Bank, N.A., as the administrative agent, the collateral agent and a lender (the “JPM Credit Facility”), providing a secured revolving credit facility in an initial aggregate maximum principal amount of $500 million with the potential to increase the aggregate principal amount that may be borrowed up to an additional $250 million with the consent of the lenders participating in such increase. The proceeds of the HPS Credit Facility were used to pay all outstanding amounts under the JPM Credit Facility.

The Company recorded $6,188 related to deferred financing costs of the JPM Credit Facility. During the six months ended June 30, 2020, the Company amortized under the effective interest rate method $919 of deferred financing costs.

Align Redemption Promissory Note

In connection with the required redemption of Align’s 20,710 Pre-IPO Units described in Note 16, the Company entered into a promissory note with Align Technology, Inc. (“Align”). Under the terms of the promissory note, the Company will make monthly payments of $2,311 to Align through March 2021. The promissory note bears annual interest of 2.52% which is included in the consolidated statement of operations. As of June 30, 2020, the Company has $20,584 outstanding under this promissory note.

Future Maturities

Annual future maturities of long-term debt, excluding finance lease obligations, unamortized financing costs and unamortized HPS Warrant value, are as follows:


	HPS Credit Facility		Align Redemption Promissory Note		Total
2020 (remaining)	$	—	$	13,678	$	13,678
2021	—		6,906		6,906
2022	—		—		—
2023	—		—		—
2024	—		—		—
2025	401,228		—		401,228
Total	$	401,228	$	20,584	$	421,812

Noncontrolling Interests	6 Months Ended
Noncontrolling Interests	Jun. 30, 2020
Noncontrolling Interest [Abstract]
Noncontrolling Interests	Noncontrolling InterestsSDC Inc. is the sole managing member of SDC Financial and consolidates the financial results of SDC Financial. Therefore, SDC Inc. reports a noncontrolling interest based on the common units of SDC Financial held by the Continuing LLC Members. Changes in SDC Inc.’s ownership interest in SDC Financial, while SDC Inc. retains its controlling interest in SDC Financial, are accounted for as equity transactions. As such, future redemptions or direct exchanges of LLC Units by the Continuing LLC Members will result in a change in ownership and reduce or increase the amount recorded as noncontrolling interest and increase or decrease additional paid-in capital when SDC Financial has positive or negative net assets, respectively. As of June 30, 2020, SDC Inc. had 110,123,999 shares of Class A common stock outstanding, which resulted in an equivalent amount of ownership of LLC Units by SDC Inc. As of June 30, 2020, SDC Inc. had a 28.3% economic ownership interest in SDC Financial.

Variable Interest Entities	6 Months Ended
Variable Interest Entities	Jun. 30, 2020
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Variable Interest Entities	Variable Interest Entities Upon completion of the IPO, SDC Inc. became the managing member of SDC Financial with 100% of the management and voting power in SDC Financial. In its capacity as managing member, SDC Inc. has the sole authority to make decisions on behalf of SDC Financial and bind SDC Financial to signed agreements. Further, SDC Financial maintains separate capital accounts for its investors as a mechanism for tracking earnings and subsequent distribution rights. Accordingly, management concluded that SDC Financial is determined to be a limited partnership or similar legal entity as contemplated in ASC 810. Furthermore, management concluded that SDC Inc. is SDC Financials’ primary beneficiary. As the primary beneficiary, SDC Inc. consolidates the results of SDC Financial for financial reporting purposes under the variable interest consolidation model guidance in ASC 810. SDC Inc.’s relationship with SDC Financial results in no recourse to the general credit of SDC Inc. SDC Financial and its consolidated subsidiaries represents SDC Inc.’s sole investment. SDC Inc. shares in the income and losses of SDC Financial in direct proportion to SDC Inc.’s ownership percentage. Further, SDC Inc. has no contractual requirement to provide financial support to SDC Financial. SDC Inc.’s financial position, performance and cash flows effectively represent those of SDC Financial as of and for the period ended June 30, 2020. Prior to the IPO and Reorganization Transactions, SDC Inc. was not impacted by SDC Financial.

Incentive Compensation Plans

6 Months Ended

Jun. 30, 2020

Share-based Payment Arrangement [Abstract]

Incentive Compensation Plans

Incentive Compensation PlansIn connection with the IPO, the Company adopted the 2019 Omnibus Incentive Compensation Plan (the “2019 Plan”) in August 2019. The Company’s board of directors or the compensation committee of the board of directors, acting as plan administrator, administers the 2019 Plan and the awards granted under it. The Company reserved a total of 38,486,295 shares of Class A common stock for issuance pursuant to the 2019 Plan. The Company currently has two types of share-based compensation awards outstanding under the 2019 Plan: Class A common stock options (“Options”) and Class A restricted stock units (“RSUs”), including those issued pursuant to IBAs.

Class A Common Stock Options

Options activity was as follows during the six months ended June 30, 2020:


		Weighted		Weighted
	Number of	Average		Average Remaining	Aggregate
	Options	Exercise Price		Contractual Term	Intrinsic Value
Outstanding at December 31, 2019	1,744,556	$	23.00	9.7	$	—
Granted	—	—		—	—
Exercised	—	—		—	—
Expired	—	—		—	—
Forfeited	65,217	23.00		—	—
Outstanding at June 30, 2020	1,679,339	$	23.00	9.4	$	—
Exercisable at June 30, 2020	—	$	—	—	$	—

The Company estimates fair value of the Options using the Black-Scholes option pricing model. Inputs to the Black-Scholes option pricing model include an expected dividend yield of 0%, expected volatility of 45%, risk-free interest rate of 1.7% and an expected term of 6.0 years or 6.5 years, pursuant to vesting terms, resulting in a weighted average fair value of $10.29 or $10.68 per Option pursuant to vesting terms. As of June 30, 2020, unrecognized compensation expense related to the Options was $12,868. This expense is expected to be recognized over a weighted average period of 2.2 years.

Expected dividend yield - An increase in the expected dividend yield would decrease compensation expense.

Expected volatility - This is a measure of the amount by which the price of the equity instrument has fluctuated or is expected to fluctuate. The expected volatility was based on the historical volatility of a group of guideline companies. An increase in expected volatility would increase compensation expense.

Risk-free interest rate - This is the U.S. Treasury rate as of the measurement date having a term approximating the expected life of the award. An increase in the risk-free interest rate would increase compensation expense.

Expected term - The period of time over which the awards are expected to remain outstanding. The Company estimates the expected term as the mid-point between actual or expected vesting date and the contractual term. An increase in the expected term would increase compensation expense.

Restricted Stock Units

Incentive Bonus Awards

The Company has IBA agreements with several key employees to provide a bonus payment in the event of a liquidation event as defined in each agreement. The bonus amounts are calculated based on the value of the Company at the time of the liquidation event, less an amount determined upon the employee entering into the agreement. The right to the payment generally vests annually over a five-year period, with certain liquidation events resulting in an acceleration of the vesting period. As the vesting of these awards was contingent on a liquidation event, no amounts were required to be recorded prior to a liquidation event. The IBA agreements were modified in August 2019 to accelerate certain vesting conditions upon a liquidation event and to modify the settlement terms, whereby the Company settled the vested portion of each IBA in 50% shares of Class A common stock and/or vested RSUs and 50% cash, of which approximately 80% of the cash (40% of the total vested portion of the award) that the IBA holders would have otherwise received was withheld by the Company to fulfill tax withholding obligations and the remainder was paid out to IBA holders upon the occurrence of a liquidation event. As a result of the modification and the occurrence of a liquidation event through the IPO, the Company recorded equity-based compensation expense of $316,959, equivalent to the amount of IBAs vested at the time of the IPO, in the form of cash, 5,654,078 shares of Class A common stock and 2,199,453 vested RSUs to be released over a period of six to twenty-four months following the date of the IPO. The unvested portion of the IBAs are represented in the form of unvested RSUs that will vest, subject to the holders’ continued employment, over a period generally ranging from 2 years to 4 years.

Non-IBA Restricted Stock Units

The Company granted RSUs to certain team members that generally vest annually over two to three years or after three years from the date of grant, subject to the recipient’s continued employment or service to the Company through each vesting date.

A summary of activity related to these RSUs is as follows:


	IBA RSUs	Non-IBA RSUs	Total RSUs	Weighted Average Grant Date Fair Value
RSUs outstanding, December 31, 2019	4,794,394	1,089,796	5,884,190	$	21.88
Granted	—	1,739,095	1,739,095	$	9.15
Vested	(1,396,028)	—	(1,396,028)	$	23.00
Forfeited	(48,982)	(140,449)	(189,431)	$	14.63
RSUs outstanding, June 30, 2020	3,349,384	2,688,442	6,037,826	$	18.18

As of June 30, 2020, unrecognized compensation expense related to unvested IBA and non-IBA RSUs was $59,785. This expense is expected to be recognized over a weighted average period of 1.8 years.

Incentive Bonus Units

SDC Financial issued Incentive Bonus Units (“IBUs”) to employees and non-employees. For employee IBUs, the fair value is based on SDC Financial’s unit value on the date of grant. For non-employee IBUs the fair value is determined at the time of vesting.

Two employee IBU agreements were modified in July 2019 to accelerate certain vesting conditions upon a change of control. As a result of the acceleration of vesting conditions resulting from the Reorganization Transactions and the IPO, the Company recognized incremental compensation expense of $436 during the year ended December 31, 2019. As of June 30, 2020, unrecognized compensation expense related to unvested IBUs was $599.

Employee Stock Purchase Plan

The SmileDirectClub, Inc. team member Stock Purchase Plan (“SPP”) was initiated in November 2019. Under the SPP, the Company is authorized to issue up to 5,772,944 shares of its Class A common stock to qualifying employees. Eligible team members may direct the Company, during each six months option period, to withhold up to 30% of their base salary and commissions, the proceeds from which are used to purchase shares of Class A common stock at a price equal to the lesser of 85% of the closing market price on the exercise date or the grant date. For accounting purposes, the SPP is considered a compensatory plan such that the Company recognizes equity-based compensation expense based on the fair value of the options held by the employees to purchase the Company’s shares.

Summary of Equity-Based Compensation Expense

The Company recognized compensation expense of $10,821, $435, $27,217, and $8,262 for the three and six months ended June 30, 2020 and 2019, respectively. Amounts are included in general and administrative expense on the consolidated statements of operations.

Earnings per Share

6 Months Ended

Jun. 30, 2020

Earnings Per Share [Abstract]

Earnings Per Share

Earnings per Share Basic earnings per share of Class A common stock is computed by dividing net income attributable to SDC Inc. by the weighted-average number of shares of Class A common stock outstanding during the period. Diluted earnings per share of Class A common stock is computed by dividing net income attributable to SDC Inc., adjusted for the assumed exchange of all potentially dilutive LLC Units for Class A common stock, by the weighted-average number of shares of Class A common stock outstanding adjusted to give effect to potentially dilutive elements. Prior to the IPO, the SDC Financial membership structure included Pre-IPO Units, some of which were profits interests. The Company analyzed the calculation of earnings per unit for periods prior to the IPO and determined that it resulted in

values that would not be meaningful to the users of these unaudited consolidated financial statements. Therefore, earnings per share information has not been presented for the three and six months ended June 30, 2019.

The following table sets forth reconciliations of the numerators and denominators used to compute basic and diluted earnings per share of Class A common stock:


	Three Months Ended June 30,		Six Months Ended June 30,
			2020		2020
Numerator:
Net loss	$	(94,666)	$	(202,066)

Less: Net loss attributable to noncontrolling interests subsequent to the Reorganization Transactions	(67,867)		(146,017)
Net loss attributable to SDC Inc. - basic	(26,799)		(56,049)
Add: Reallocation of net loss attributable to noncontrolling interests after the Reorganization Transactions from the assumed exchange of LLC Units for Class A common stock	(67,867)		(146,017)
Net loss attributable to SDC Inc. - diluted	$	(94,666)	$	(202,066)
Denominator:
Weighted average shares of Class A common stock outstanding - basic	109,048,411		106,819,870
Add: Dilutive effects as shown separately below
LLC Units that are exchangeable for Class A common stock	276,084,892		277,672,758



Weighted average shares of Class A common stock outstanding - diluted	385,133,303		384,492,628

Earnings per share of Class A common stock outstanding - basic	$	(0.25)	$	(0.52)
Earnings per share of Class A common stock outstanding - diluted	$	(0.25)	$	(0.53)

Shares of the Company’s Class B common stock do not participate in the earnings or losses of the Company and are therefore not participating securities. As such, separate presentation of basic and diluted earnings per share of Class B common stock under the two-class method has not been presented.

Due to their anti-dilutive effect, the following securities have been excluded from diluted net loss per share in the periods presented:


	Three Months Ended June 30,	Six Months Ended June 30,
	2020	2020
Options	1,679,339	1,679,339
Restricted Stock Units	6,037,826	6,037,826
HPS Warrants	3,889,575	3,889,575

Employee Benefit Plans	6 Months Ended
Employee Benefit Plans	Jun. 30, 2020
Retirement Benefits [Abstract]
Employee Benefit Plans	Employee Benefit PlansThe Company has a defined contribution retirement plan under Section 401(k) of the Internal Revenue Code of 1986, as amended, that covers substantially all U.S. employees who meet minimum age and service requirements and allows participants to defer a portion of their annual compensation on a pre-tax basis. For the six months ended June 30, 2020 and 2019, the Company matched 100% of employees’ salary deferral contributions up to 3% and 50% of employees’ salary deferral contributions from 3% to 5% of employees’ eligible compensation. The Company contributed $410, $668, $1,661 and $1,063 to the 401(k) plan for the three and six months ended June 30, 2020 and 2019, respectively.

Related Party Transactions	6 Months Ended
Related Party Transactions	Jun. 30, 2020
Related Party Transactions [Abstract]
Related Party Transactions	Related Party Transactions Products and Services The Company is affiliated through common ownership by the Company’s Chairman and Chief Executive Officer, with several other entities (‘‘Affiliates”). Certain Affiliates incur (or previously incurred) costs related to the Company, including travel costs, certain senior management personnel costs, freight, and rent, the most significant of which is freight. The Company reimbursed $0, $2,398, $0 and $4,764 of freight incurred through an Affiliate during the three and six months ended June 30, 2020 and 2019, respectively, which is included in cost of revenues—related parties. These costs incurred by Affiliates related to the Company are billed at actual cost to the Company by the Affiliates. In addition, the Company paid one of the Affiliates $0, $450, $0 and $900 in management fees for the three and six months ended June 30, 2020 and 2019, respectively, which is included in general and administrative expenses. These fees include charges relating to several individuals who provide senior leadership to the Company as well as certain other services. Certain of these individuals have been granted IBUs, which have resulted in equity-based compensation expense (see Note 12). The Company purchased legal services from a law firm where a partner is an immediate family member of a director of the Company. Fees paid for services totaled $1,703, $286, $2,544 and $346 for the three and six months ended June 30, 2020 and 2019, respectively. The Company was party to a Strategic Supply Agreement with Align, a former equityholder of the Company, in which the Company had the option to purchase aligners from Align at a price that varies with the level of product purchased. While the majority of the Company’s aligners were manufactured in-house, the Company did purchase aligners under this agreement during the first quarter of 2019. Additionally, the Company purchases oral digital imaging equipment from Align. For the three and six months ended June 30, 2020 and 2019, purchases from Align of equipment were $0, $0, $0 and $5,651, respectively, and purchases of aligners included in cost of revenues—related parties were $0, $0, $0 and $6,577, respectively. In February 2019, the Company entered into an agreement with the David Katzman Revocable Trust (the ‘‘Trust”) to purchase all of the issued and outstanding membership units of a limited liability corporation (‘‘SDC Plane”) owned by the Trust for a purchase price of approximately $1,100, which was the Trust’s acquisition cost. SDC Plane owns an interest in an aircraft, which is available for use by its executives. In February 2020, the Company completed the purchase of a private aircraft from Camelot SI Leasing, LLC, for $3,400, the appraised value of the aircraft. Distribution Payable In August 2019, SDC Financial declared a distribution of $43,400 less any amount determined to be due and payable to Align in connection with the current Align arbitration proceedings to the pre-IPO investors. Such distribution will be paid upon final determination of the outcome and amount payable, if any, in connection with such current arbitration proceedings. This amount is presented within other long-term liabilities on the accompanying condensed consolidated balance sheets.

Commitments and Contingencies	6 Months Ended
Commitments and Contingencies	Jun. 30, 2020
Commitments and Contingencies Disclosure [Abstract]
Commitments and Contingencies	Commitments and Contingencies  Legal Matters In the ordinary course of conducting its business, the Company is involved, from time to time, in various contractual, product liability, intellectual property, and other claims and disputes incidental to its business. Litigation is subject to many uncertainties, the outcome of individual litigated matters is not predictable with assurance, and it is reasonably possible that some of these matters may be decided unfavorably to the Company. In addition, the Company periodically receives communications from state and federal regulatory and similar agencies inquiring about the nature of its business activities, licensing of professionals providing services, and similar matters. Such matters are routinely concluded with no financial or operational impact on the Company. From September to December 2019, a number of purported stockholder class action complaints were filed in the U.S. District Court for the Middle District of Tennessee and in state courts in Tennessee, Michigan and New York against the Company, members of the Company’s board of directors, certain of its current officers, and the underwriters of its IPO. The following complaints have been filed to date: Mancour v. SmileDirectClub, Inc., 19-1169-IV (TN Chancery Court filed 9/27/19), Vang v. SmileDirectClub, Inc., 19c2316 (TN Circuit Court filed 9/30/19), Fernandez v. SmileDirectClub, Inc., 19c2371 (TN Circuit Court filed 10/4/19), Wei Wei v. SmileDirectClub, Inc., 19-1254-III (TN Chancery Court filed 10/18/19), Andre v. SmileDirectClub, Inc., 19-cv-12883 (E.D. Mich. filed 10/2/19), Ginsberg v. SmileDirectClub, Inc., 19-cv-09794 (S.D.N.Y. filed 10/23/19), Franchi v. SmileDirectClub, Inc., 19- cv-962 (M.D. Tenn. filed 10/29/19), Nurlybayev v. SmileDirectClub, Inc., 19-177527-CB (Oakland County, MI Circuit Court filed 10/30/19), Sasso v. Katzman, et al., No. 657557/2019 (NY Supreme Court filed 12/18/19), Nurlybayev v. SmileDirectClub, Inc., No. 652603/2020 (Supreme Ct. N.Y. Cty. filed June 19, 2020). In December 2019, the Fernandez, Vang, Mancour and Wei Wei actions were consolidated as In re SmileDirectClub, Inc. Securities Litigation, 19-1169-IV (TN Chancery Court filed December 20, 2019). The Andre and Ginsberg actions were transferred to the U.S. District Court for the Middle District of Tennessee, where they were consolidated with the Franchi action and an amended complaint was filed on February 21, 2020. The complaints all allege, among other things, that the registration statement filed with the SEC on August 16, 2019, and accompanying amendments, and the Prospectus filed with the SEC on September 13, 2019, in connection with the Company’s initial public offering were inaccurate and misleading, contained untrue statements of material facts, omitted to state other facts necessary to make the statements made not misleading, and omitted to state material facts required to be stated therein. The complaints seek unspecified money damages, other equitable relief, and attorneys’ fees and costs. All of the actions are in the preliminary stages. On February 26, 2020, the Company prevailed on its motion to dismiss the Nurlybayev action in Michigan state court. On June 19, 2020, Plaintiff Nurlybayev filed a substantially similar action in New York state court. The Company intends to move to dismiss this action. On January 22, 2020, the Sasso action was stayed. On June 4, 2020, the court denied the Company’s motion to dismiss or stay and the Company has therefore sought to appeal that decision and obtained a stay during that appeal. On March 23, 2020, the Company moved to dismiss the Tennessee federal action. That motion remains pending. The Company denies any alleged wrongdoing and intends to vigorously defend against these actions. In November and December 2019 and March 2020, three stockholder derivative actions were filed against the members of the Company’s board of directors, certain of the Company’s current officers and related entities. The complaints allege, among other things, that the defendants breached their fiduciary duties by allowing the Final IPO Prospectus to contain materially misleading statements and by participating in insider selling in connection with the IPO. The complaints seek, among other things, money damages on behalf of the Company, restitution and/or disgorgement from the selling director defendants and cancellation of the Company’s Class B common stock. The three derivative actions have been consolidated into In Re SmileDirectClub, Inc. Derivative Litigation, C.A. No. 2019-0940-MTZ (Delaware Chancery Court) and Plaintiffs filed a consolidated amended complaint on April 8, 2020. The action remains in the preliminary stages. Some state dentistry boards have established new rules or interpreted existing rules in a manner that limits or restricts the Company’s ability to conduct its business as currently conducted in other states or have engaged in conduct so as to otherwise interfere with the Company’s ability to conduct its business. We have filed actions in federal court in Alabama, Georgia, and California against the state dental boards in those states, alleging violations by the dental boards of various laws, including the Sherman Act and the Commerce Clause. While a national orthodontic association has filed Amicus Briefs in support of the dental boards in both the Georgia and Alabama litigations and has filed a motion to do the same in California (which motion was denied), the FTC and DOJ have filed joint Amicus Briefs in support of the Company in both the Alabama and Georgia matters. The California matter was amended and an order of dismissal was entered on July 7, 2020. The Company filed notice of appeal on July 17, 2020 and expects oral argument in or around the first quarter of 2021. Both the Alabama and Georgia matters are pending before the 11^th Circuit Court of Appeals as a result of the dental boards in both states appealing the lower courts’ decisions. Oral argument before the 11^th Circuit Court of Appeals occurred in the Georgia matter on May 20, 2020 and in the Alabama matter on July 8, 2020. The FTC and DOJ participated in oral arguments in support of the Company. The DOJ’s antitrust chief presented in the Alabama matter. On August 11, 2020, the 11th Circuit Court of Appeals affirmed the Georgia district court’s denial of the board members’ motion to dismiss. In September 2019, a putative class action on behalf of a consumer and three orthodontists was brought against the Company in the U.S. District Court for the Middle District of Tennessee, Ciccio, et al. v. SmileDirectClub, LLC, et al., Case No. 3:19-cv-00845 (M.D. Tenn.). The Plaintiffs assert claims for breach of warranty, false advertising under the Lanham Act, common law fraud, and various state consumer protection statutes relating to the Company’s advertising. The Company filed its motion to strike and motion to dismiss the providers claims in December 2019 with briefing on the motions concluded in February 2020, which the Court has since denied. In January 2020, one of the putative consumers who withdrew from the above action filed a declaratory judgment action in the U.S. District Court for the Southern District of Florida seeking to compel the Company to arbitrate. The consumer plaintiff simultaneously filed a putative class arbitration in the American Arbitration Association, pursuing substantially similar claims. This consumer and the original consumer plaintiff in the Middle District of Tennessee litigation have since sought to rejoin the Middle District of Tennessee litigation or, in the alternative, to intervene, which the Court granted. That ruling has been appealed, and a motion to stay the consumer claims is pending before the Court. Litigation is in the pleading stage and discovery has not yet commenced. The Company denies any alleged wrongdoing and intends to defend against these actions vigorously. In March 2019, a final arbitration award was issued in an arbitration proceeding brought by the Company alleging that one of its former members, Align Technology, Inc., had violated certain restrictive covenants set forth in its operating agreement. The arbitrator ruled that Align had breached both the non-competition and confidentiality provisions of its operating agreement and that, as a result, Align was required to close its Invisalign Stores, return all of the Company’s confidential information, and sell its membership units to the Company or certain of the Company’s pre-IPO unitholders for an amount equal to the balance of Align’s capital account as of November 2017. The arbitrator also extended the non-competition period to which Align is subject through August of 2022 and prohibited Align from using the Company’s confidential information in any manner going forward. The Company is paying Align $54,000, pursuant to a promissory note payable over 24 months through March 2021, in full redemption of Align’s membership units pursuant to this ruling. The ruling has been confirmed in its entirety in the circuit court of Cook County, Chicago, Illinois, but Align continues to object to the purchase price and repurchase documentation despite the arbitration ruling and its confirmation, and has since filed a subsequent arbitration proceeding disputing the $54,000 redemption amount and seeking an additional $43,400. The parties have exchanged written discovery and started depositions. Tax Receivable Agreement As described in Note 8, the Company is a party to the Tax Receivable Agreement pursuant to which SDC Inc. is contractually committed to pay the Continuing LLC Members 85% of the amount of any tax benefits that SDC Inc. actually realizes, or in some cases is deemed to realize, as a result of certain transactions. The Company is not obligated to make any payments under the Tax Receivable Agreement until the tax benefits associated with the transactions that gave rise to the payments are realized. TRA Payments are contingent upon, among other things, (i) generation of future taxable income over the term of the Tax Receivable Agreement and (ii) future changes in tax laws. If the Company does not generate sufficient taxable income in the aggregate over the term of the Tax Receivable Agreement to utilize the tax benefits, then it will not be required to make the related TRA Payments. During the three and six months ended June 30, 2020 and 2019, the Company recognized no liabilities relating to its obligations under the Tax Receivable Agreement, after concluding that it was not probable that the Company would have sufficient future taxable income over the term of the Tax Receivable Agreement to utilize the related tax benefits. There were no transactions subject to the Tax Receivable Agreement for which the Company recognized the related liability, as the Company concluded that it would not have sufficient future taxable income to utilize all of the related tax benefits.

Segment Reporting	6 Months Ended
Segment Reporting	Jun. 30, 2020
Segment Reporting [Abstract]
Segment Reporting	Segment ReportingThe Company provides aligner products. The Company’s chief operating decision maker views the operations and manages the business on a consolidated basis and, therefore the Company has one operating segment, aligner products, for segment reporting purposes in accordance with ASC 280-10, “Segment Reporting.” For the three and six months ended June 30, 2020 and 2019, a substantial majority of the Company’s revenues were generated by sales within the United States and substantially all of its net property, plant and equipment was within the United States.

Summary of Significant Accounting Policies (Policies)

6 Months Ended

Jun. 30, 2020

Accounting Policies [Abstract]

Basis of Presentation and Consolidation

The accompanying unaudited condensed financial statements have been prepared in accordance with United States generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Rule 10-01of Regulation S-X of the SEC and, in the opinion of management, reflect all normal recurring adjustments necessary for a fair presentation of results for the unaudited interim periods presented. Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with GAAP have been condensed or omitted. The results of operations for the interim period are not necessarily indicative of the results to be obtained for the full fiscal year. All intercompany accounts and transactions have been eliminated in the unaudited condensed financial statements.

The interim condensed consolidated financial statements include the accounts of SDC Inc., which consolidates SDC Financial and its wholly-owned subsidiaries, as well as accounts of contractually affiliated professional corporations (“PCs”) managed by the Company.

The interim condensed consolidated financial statements include the accounts of variable interest entities in which the Company is the primary beneficiary under the provisions of Accounting Standards Codification (‘‘ASC”) Topic 810, ‘‘Consolidation.” At June 30, 2020, the variable interest entities include 45 dentist owned PCs and at December 31, 2019 the variable interest entities included 44 dentist owned PCs. The Company is a dental service organization and does not engage in the practice of dentistry. All clinical services are provided by dentists and orthodontists who are engaged as independent contractors or otherwise engaged by the dentist-owned PCs. The Company contracts with the PCs and dentists and orthodontists through a suite of agreements, including but not

limited to, management services agreements, supply agreements, and licensing agreements, pursuant to which the Company provides the administrative, non-clinical management services to the PCs and independent contractors. The Company has the contractual right to manage the activities that most significantly impact the variable interest entities’ economic performance through these agreements without engaging in the corporate practice of dentistry. Additionally, the Company would absorb substantially all of the expected losses of these entities should they occur. The accompanying consolidated statements of operations reflect the revenue earned and the expenses incurred by the PCs.

All significant intercompany balances and transactions are eliminated in consolidation.

Recent Accounting Pronouncements

In January 2020, the Company adopted lease accounting guidance as discussed in Note 2 and Note 6 to the unaudited condensed consolidated financial statements. Adoption of the new lease accounting guidance had a material impact to the Company’s unaudited condensed consolidated balance sheets and related disclosures, and resulted in the recording of additional right-of-use assets and lease liabilities as of the date of adoption. This guidance was applied using the optional transition method which allowed the Company to not recast comparative financial information but rather recognize a cumulative-effect adjustment to retained earnings as of the effective date in the period of adoption. No material adjustments to retained earnings were made as a result of the adoption of this guidance. Consistent with the optional transition method, the financial information in the condensed consolidated balance sheets prior to the adoption of this new lease accounting guidance has not been adjusted and is therefore not comparable to the current period presented. The standard did not materially impact the Company’s condensed consolidated statements of operations, comprehensive loss, changes in equity (deficit), or cash flows. For additional information, including the required disclosures, related to the impact of adopting this standard, see Note 2 and Note 6 to the unaudited condensed consolidated financial statements.

Recent Accounting Pronouncements

Management Use of Estimates

Revenue Recognition

A description of the revenue recognition for each product sold by the Company is detailed below.

The following table summarizes revenue recognized for each product sold by the Company:


	Three Months Ended June 30,						Six Months Ended June 30,
	2020		2019		2020		2019
Aligner revenue, net of implicit price concessions	$	77,897	$	181,471	$	248,832	$	346,723
Financing revenue, net of implicit price concessions	12,664		10,554		25,386		19,664
Retainers and other products revenue	16,512		3,769		29,505		7,143
Total revenue	$	107,073	$	195,794	$	303,723	$	373,530

Implicit price concessions included in total revenue	$	11,319	$	20,719	$	34,688	$	39,084

Shipping and Handling Costs

Cost of Revenues

Marketing and Selling, General and Administrative Expenses

Marketing and Selling Expenses

General and Administrative Expenses

Depreciation and Amortization

Depreciation and AmortizationDepreciation includes expenses related to the Company’s property, plant and equipment, including finance leases. Amortization includes expenses related to definite-lived intangible assets and capitalized software. Depreciation and amortization are calculated using the straight-line method over the useful lives of the related assets, ranging from three to ten years. Leasehold improvements are amortized using the straight-line method over the shorter of the related lease terms or their useful lives. Depreciation and amortization are included in cost of revenues, selling expenses, and general and administrative expenses depending on the purpose of the related asset

Fair Value of Financial Instruments

Level 1 — Quoted (unadjusted) prices in active markets for identical assets or liabilities.

Level 3 — Inputs that are generally unobservable and typically reflect management’s estimate of assumptions that market participants would use in pricing the asset or liability.

Derivatives Financial Instruments

Derivative Financial InstrumentsThe Company accounts for derivative financial instruments in accordance with applicable accounting standards for such instruments and hedging activities, which require that all derivatives are recorded on the balance sheet at fair value. The accounting for changes in the fair value of derivatives depends on the intended use of the derivative, whether the Company has elected to designate a derivative in a hedging relationship and apply hedge accounting, and whether the hedging relationship has satisfied the criteria necessary to apply hedge accounting. Derivatives designated and qualifying as a hedge of the exposure to changes in the fair value of an asset, liability, or firm commitment attributable to a particular risk are considered fair value hedges. Derivatives designated and qualifying as a hedge of the exposure to variability in expected future cash flows, or other types of forecasted transactions, are considered cash flow hedges. Hedge accounting generally provides for the matching of the timing of gain or loss recognition on the hedging instrument with the recognition of the changes in the fair value of the hedged asset or liability that are attributable to the hedged risk in a fair value hedge or the earnings effect of the hedged forecasted transactions in a cash flow hedge. The Company had no outstanding derivatives at June 30, 2020 or December 31, 2019; however, the Company may enter into derivative contracts that are intended to economically hedge a certain portion of its risk, even though hedge accounting does not apply or the Company elects not to apply the hedge accounting standards.

Certain Risks and Uncertainties

Cash and Cash Equivalents

Cash and Cash Equivalents Cash and cash equivalents consists of all highly-liquid investments with original maturities of less than three months. Cash is held in various financial institutions in the U.S. and internationally, including certain reserve accounts in accordance with the Company’s credit facility with HPS Investment Partners (see Note 10).

Inventories

Property, Plant and Equipment, net

Leases

Internally Developed Software Costs

Internally Developed Software CostsThe Company generally provides services to its customers using software developed for internal use. The costs that are incurred to develop such software are expensed as incurred during the preliminary project stage. Once certain criteria have been met, direct costs incurred in developing or obtaining computer software are capitalized. Training and maintenance costs are expensed as incurred. Capitalized software costs are included in property, plant and equipment in the consolidated balance sheets and are amortized over a three-year period.

Impairment

Debt Issuance Costs

Income Taxes

Tax Receivable Agreement

Summary of Significant Accounting Policies (Tables)

6 Months Ended

Jun. 30, 2020

Accounting Policies [Abstract]

Schedule of Revenue by Product

The following table summarizes revenue recognized for each product sold by the Company:


	Three Months Ended June 30,						Six Months Ended June 30,
	2020		2019		2020		2019
Aligner revenue, net of implicit price concessions	$	77,897	$	181,471	$	248,832	$	346,723
Financing revenue, net of implicit price concessions	12,664		10,554		25,386		19,664
Retainers and other products revenue	16,512		3,769		29,505		7,143
Total revenue	$	107,073	$	195,794	$	303,723	$	373,530

Implicit price concessions included in total revenue	$	11,319	$	20,719	$	34,688	$	39,084

Schedule of Depreciation and Amortization

Depreciation and amortization by financial statement line item were as follows:


	Three Months Ended June 30,						Six Months Ended June 30,
	2020		2019		2020		2019
Cost of revenues	$	5,887	$	2,327	$	11,441	$	4,414
Marketing and selling expenses	1,628		1,184		3,271		2,061
General and administrative expenses	6,401		1,557		10,645		3,248
Total	$	13,916	$	5,068	$	25,357	$	9,723

Inventories (Tables)

6 Months Ended

Jun. 30, 2020

Inventory Disclosure [Abstract]

Schedule of Inventory

Inventories are comprised of the following:


	June 30, 2020		December 31, 2019
Raw materials	$	9,278	$	5,950
Finished goods	19,293		12,481
Total inventories	$	28,571	$18,431

Prepaid and other assets (Tables)

6 Months Ended

Jun. 30, 2020

Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]

Schedule Prepaid and Other Assets

Prepaid and other assets are comprised of the following:


	June 30, 2020		December 31, 2019
Prepaid expenses	$	12,772	$	10,503
Deposits to vendors	2,191		3,132
Other	1,939		551
Total prepaid and other current assets	$	16,902	$	14,186
Prepaid expenses, non-current	$	1,101	$	1,308
Deposits to vendors, non-current	3,670		3,346
Indefinite-lived intangible assets	6,217		6,217
Other intangible assets, net	303		428
Total other assets	$	11,291	$	11,299

Lease Abandonment, Impairment of Long-Lived Assets and Store Closure and Other Related Charges (Tables)

6 Months Ended

Jun. 30, 2020

Restructuring and Related Activities [Abstract]

Schedule of Restructuring Charges

The following table summarizes charges for the three and six months ended June 30, 2020. There were no similar charges for the three and six months ended June 30, 2019.


	Three Months Ended June 30, 2020		Six Months Ended June 30, 2020
Lease abandonment and impairment of long-lived assets:
Impairment of property, plant and equipment	$	16,747	$	16,747
Impairment of right of use asset	7,886		7,886
	$	24,633	$	24,633
Store closure and other related charges:
Short-term lease termination fees	3,823		3,823
Other expenses	653		653
	$	4,476	$	4,476

Property, plant and equipment, net (Tables)

6 Months Ended

Jun. 30, 2020

Property, Plant and Equipment [Abstract]

Schedule of Property, Plant, and Equipment, Net

Property, plant and equipment were comprised of the following:


	June 30, 2020		December 31, 2019
Lab and SmileShop equipment	$	89,269	$	79,103
Computer equipment and software	68,266		48,401
Leasehold improvements	24,148		13,275
Furniture and fixtures	14,408		13,152
Vehicles	6,147		2,660
Construction in progress	36,996		60,317
Property, plant and equipment, gross	239,234		216,908
Less: accumulated depreciation	(64,342)		(39,365)
Property, plant and equipment, net	$	174,892	$	177,543

Leases (Tables)

6 Months Ended

Jun. 30, 2020

Leases [Abstract]

Schedule of Right of Use Assets and Lease Liabilities

The following table presents lease-related assets and liabilities at June 30, 2020:

Leases Assets and Liabilities

Balance Sheet Classification

June 30, 2020

Assets:

Operating leases

Operating lease right-of-use asset

33,120

Finance leases

Property, plant, and equipment, net

25,478

58,598

Liabilities:

Operating leases

Other current liabilities

7,572

Finance leases

Current portion of long-term debt

10,231

Operating leases

Operating lease liabilities, net of current portion

34,338

Finance leases

Long-term debt, net of current portion

16,962

69,103

Weighted average remaining term:

Operating leases

6.1 years

Finance leases

2.1 years

Weighted average discount rate:

Operating leases

5.60

Finance leases

7.50

⁽¹⁾ Finance lease assets are recorded net of accumulated amortization of $10,450 as of June 30, 2020.

⁽²⁾ Upon adoption of the new lease standard, discount rates used for existing leases were established at January 1, 2020.

Schedule of Lease Expense and Supplemental Cash Flow Informatoin for Finance and Operating Leases

The following table presents certain information related to lease expense for finance and operating leases:


Expense Category	Statement of Operations Classification	Three Months Ended June 30, 2020		Six Months Ended June 30, 2020
Finance lease expense:
Amortization of leased assets	Cost of revenues	$	2,497	$	4,994
Interest of lease liabilities	Interest expense	540		1,126
Operating leases⁽³⁾		2,518		5,037
Short-term lease expense⁽³⁾		2,001		9,643
Variable lease expense⁽³⁾		213		2,504
Total lease expense		$	7,769	$	23,304
⁽³⁾ Expenses are included in “Cost of revenues”, “Marketing and selling expenses”, or “General and administrative expenses” in our condensed consolidated statements of operations, depending on the purpose of the related asset.

Other Information

The following table represents supplemental cash flow information:


	Six Months Ended June 30, 2020
Cash paid for amounts used in the measurement of lease liabilities:
Cash used in operating activities	$	6,152
Cash used in investing activities	$	—
Cash used in financing activities	$	4,997

Schedule of Operating Lease Liability Maturities

The following table reconciles the undiscounted cash flows to the finance lease liabilities and operating lease liabilities recorded on the condensed consolidated balance sheet at June 30, 2020:


	Finance Leases		Operating Leases
2020 (remaining)	$	6,076	$	4,892
2021	11,209		9,441
2022	6,859		7,559
2023	—		6,904
2024	—		6,136
2025 and thereafter	—		15,405
Total minimum lease payments	24,144		50,337
Residual value	5,661		—
Amount representing interest	(2,612)		(8,427)
Present value of future minimum lease payments	27,193		41,910
Less: current portion	(10,231)		(7,572)
Long-term lease liabilities	$	16,962	$	34,338

Schedule of Finance Lease Liability Maturities

The following table reconciles the undiscounted cash flows to the finance lease liabilities and operating lease liabilities recorded on the condensed consolidated balance sheet at June 30, 2020:


	Finance Leases		Operating Leases
2020 (remaining)	$	6,076	$	4,892
2021	11,209		9,441
2022	6,859		7,559
2023	—		6,904
2024	—		6,136
2025 and thereafter	—		15,405
Total minimum lease payments	24,144		50,337
Residual value	5,661		—
Amount representing interest	(2,612)		(8,427)
Present value of future minimum lease payments	27,193		41,910
Less: current portion	(10,231)		(7,572)
Long-term lease liabilities	$	16,962	$	34,338

Accrued liabilities (Tables)

6 Months Ended

Jun. 30, 2020

Payables and Accruals [Abstract]

Schedule of Accrued Liabilities

Accrued liabilities were comprised of the following:


	June 30, 2020		December 31, 2019
Accrued marketing and selling costs	$	11,792	$	31,804
Accrued payroll and payroll related expenses	24,114		25,019
Accrued sales and other taxes	8,522		8,367
Other	41,224		28,149
Total accrued liabilities	$	85,652	$	93,339

Income taxes (Tables)

6 Months Ended

Jun. 30, 2020

Income Tax Disclosure [Abstract]

Schedule of Income Tax Provision

The income tax provision was as follows:


	Three Months Ended June 30,						Six Months Ended June 30,
	2020		2019		2020		2019
Current:
Federal	$	(1,698)	$	—	$	—	$	—
State	225		82		158		102
Foreign	140		—		340		—
Current income tax provision	$	(1,333)	$	82	$	498	$	102
Deferred:
Federal	$	—	$	—	$	—	$	—
State	(86)		15		57		15
Foreign	—		—		—		—
Deferred income tax provision	$	(86)	15		$	57	$	15
Total income tax provision	$	(1,419)	$	97	$	555	$	117

Long-Term Debt (Tables)

6 Months Ended

Jun. 30, 2020

Debt Disclosure [Abstract]

Schedule of Debt and Capital Lease Obligations

The Company’s debt and capital lease obligations are comprised of the following:


	June 30, 2020		December 31, 2019
HPS Credit Facility, net of unamortized financing costs of $11,493	$	372,551	$	—
JPM Credit Facility, net of unamortized financing costs of $2,513	—		147,935
Align redemption promissory note	20,584		34,090
Capital lease obligations (Note 7)	27,193		26,501
Total debt	420,328		208,526
Less current portion	(30,815)		(35,376)
Total long-term debt	$	389,513	$	173,150

Schedule of Maturities of Long-term Debt

Annual future maturities of long-term debt, excluding finance lease obligations, unamortized financing costs and unamortized HPS Warrant value, are as follows:


	HPS Credit Facility		Align Redemption Promissory Note		Total
2020 (remaining)	$	—	$	13,678	$	13,678
2021	—		6,906		6,906
2022	—		—		—
2023	—		—		—
2024	—		—		—
2025	401,228		—		401,228
Total	$	401,228	$	20,584	$	421,812

Incentive Compensation Plans (Tables)

6 Months Ended

Jun. 30, 2020

Share-based Payment Arrangement [Abstract]

Schedule of Stock Option Activity

Options activity was as follows during the six months ended June 30, 2020:


		Weighted		Weighted
	Number of	Average		Average Remaining	Aggregate
	Options	Exercise Price		Contractual Term	Intrinsic Value
Outstanding at December 31, 2019	1,744,556	$	23.00	9.7	$	—
Granted	—	—		—	—
Exercised	—	—		—	—
Expired	—	—		—	—
Forfeited	65,217	23.00		—	—
Outstanding at June 30, 2020	1,679,339	$	23.00	9.4	$	—
Exercisable at June 30, 2020	—	$	—	—	$	—

Schedule of Restricted Stock Unit Activity

A summary of activity related to these RSUs is as follows:


	IBA RSUs	Non-IBA RSUs	Total RSUs	Weighted Average Grant Date Fair Value
RSUs outstanding, December 31, 2019	4,794,394	1,089,796	5,884,190	$	21.88
Granted	—	1,739,095	1,739,095	$	9.15
Vested	(1,396,028)	—	(1,396,028)	$	23.00
Forfeited	(48,982)	(140,449)	(189,431)	$	14.63
RSUs outstanding, June 30, 2020	3,349,384	2,688,442	6,037,826	$	18.18

Earnings per Share (Tables)

6 Months Ended

Jun. 30, 2020

Earnings Per Share [Abstract]

Schedule of Earnings Per Share, Basic and Diluted

The following table sets forth reconciliations of the numerators and denominators used to compute basic and diluted earnings per share of Class A common stock:


	Three Months Ended June 30,		Six Months Ended June 30,
			2020		2020
Numerator:
Net loss	$	(94,666)	$	(202,066)

Less: Net loss attributable to noncontrolling interests subsequent to the Reorganization Transactions	(67,867)		(146,017)
Net loss attributable to SDC Inc. - basic	(26,799)		(56,049)
Add: Reallocation of net loss attributable to noncontrolling interests after the Reorganization Transactions from the assumed exchange of LLC Units for Class A common stock	(67,867)		(146,017)
Net loss attributable to SDC Inc. - diluted	$	(94,666)	$	(202,066)
Denominator:
Weighted average shares of Class A common stock outstanding - basic	109,048,411		106,819,870
Add: Dilutive effects as shown separately below
LLC Units that are exchangeable for Class A common stock	276,084,892		277,672,758



Weighted average shares of Class A common stock outstanding - diluted	385,133,303		384,492,628

Earnings per share of Class A common stock outstanding - basic	$	(0.25)	$	(0.52)
Earnings per share of Class A common stock outstanding - diluted	$	(0.25)	$	(0.53)

Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share

Due to their anti-dilutive effect, the following securities have been excluded from diluted net loss per share in the periods presented:


	Three Months Ended June 30,	Six Months Ended June 30,
	2020	2020
Options	1,679,339	1,679,339
Restricted Stock Units	6,037,826	6,037,826
HPS Warrants	3,889,575	3,889,575

Organization and Basis of Presentation - Initial Public Offering (Details) - IPO $ / shares in Units, $ in Millions	Sep. 16, 2019 USD ($) $ / shares shares
Subsidiary, Sale of Stock [Line Items]
Number of shares issued in transaction (in shares) \| shares	58,537,000
Price per share of stock sold (USD per share) \| $ / shares	$ 23.00
Consideration received on sale of stock \| $	$ 1,286

Organization and Basis of Presentation - Reorganization Transactions (Details)	Sep. 17, 2019	Sep. 12, 2019
SDC Financial, LLC
Noncontrolling Interest [Line Items]
Ownership percentage	26.90%
Continuing LLC Members \| SDC Financial, LLC
Noncontrolling Interest [Line Items]
Ownership percentage	73.10%
Affiliated Entity \| Tax Receivable Agreement
Noncontrolling Interest [Line Items]
Related party transaction rate		85.00%

Organization and Basis of Presentation - Basis of Presentation and Consolidation (Details) - variable_interest_entity	6 Months Ended	12 Months Ended
	Jun. 30, 2020	Dec. 31, 2019
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Number of variable interest entities	45	44

Organization and Basis of Presentation - COVID-19 Pandemic (Details)	3 Months Ended		6 Months Ended
	Jun. 30, 2020 USD ($) shop	Jun. 30, 2019 USD ($)	Jun. 30, 2020 USD ($) shop	Jun. 30, 2019 USD ($)	May 31, 2020 USD ($)
Debt Instrument [Line Items]
Restructuring costs and asset impairment Charges	$ 29,109,000	$ 0	$ 29,109,000	$ 0
Number of SmileShops in operation \| shop	42		42
HPS Credit Facility \| Revolving Credit Facility
Debt Instrument [Line Items]
Maximum borrowing capacity					$ 500,000,000

Summary of Significant Accounting Policies - Schedule of Revenue by Product Including Price Concessions (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Disaggregation of Revenue [Line Items]
Revenue recognized	$ 107,073	$ 195,794	$ 303,723	$ 373,530
Implicit price concessions included in total revenue	11,319	20,719	34,688	39,084
Aligner revenue, net of implicit price concessions
Disaggregation of Revenue [Line Items]
Revenue recognized	77,897	181,471	248,832	346,723
Financing revenue, net of implicit price concessions
Disaggregation of Revenue [Line Items]
Revenue recognized	12,664	10,554	25,386	19,664
Retainers and other products revenue
Disaggregation of Revenue [Line Items]
Revenue recognized	$ 16,512	$ 3,769	$ 29,505	$ 7,143

Summary of Significant Accounting Policies - Deferred Revenue (Details) - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019	Mar. 31, 2019	Dec. 31, 2018
Aligners
Disaggregation of Revenue [Line Items]
Revenue recognized that was included in deferred revenue	$ 4,759	$ 16,867	$ 3,325	$ 14,550

Summary of Significant Accounting Policies - Shipping and Handling Costs (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Disaggregation of Revenue [Line Items]
Cost of revenues	$ 48,776	$ 31,767	$ 108,553	$ 72,238
Shipping and Handling
Disaggregation of Revenue [Line Items]
Cost of revenues	$ 5,961	$ 2,945	$ 11,352	$ 7,601

Summary of Significant Accounting Policies - Marketing and Selling Expenses (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Accounting Policies [Abstract]
Marketing and selling expenses	$ 34,518	$ 113,413	$ 176,842	$ 209,146

Summary of Significant Accounting Policies - Summary of Depreciation and Amortization, Income Statement Location (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Property, Plant and Equipment [Line Items]
Depreciation and amortization	$ 13,916	$ 5,068	$ 25,357	$ 9,723
Cost of revenues
Property, Plant and Equipment [Line Items]
Depreciation and amortization	5,887	2,327	11,441	4,414
Marketing and selling expenses
Property, Plant and Equipment [Line Items]
Depreciation and amortization	1,628	1,184	3,271	2,061
General and administrative expenses
Property, Plant and Equipment [Line Items]
Depreciation and amortization	$ 6,401	$ 1,557	$ 10,645	$ 3,248
Minimum
Property, Plant and Equipment [Line Items]
Amortization and depreciation, useful life			3 years
Maximum
Property, Plant and Equipment [Line Items]
Amortization and depreciation, useful life			10 years

Summary of Significant Accounting Policies - Fair Value of Financial Instruments (Details) - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
Accounting Policies [Abstract]
Debt facilities borrowings	$ 401,228	$ 150,448

Summary of Significant Accounting Policies - Internally Developed Software Costs (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Property, Plant and Equipment [Line Items]
Capitalized internally developed software costs	$ 3,627	$ 2,485	$ 7,383	$ 4,886
Amortization of internally developed software costs	$ 1,785	$ 267	$ 3,282	$ 737
Capitalized Computer Software
Property, Plant and Equipment [Line Items]
Amortization period			3 years

Summary of Significant Accounting Policies - Tax Receivable Agreement (Details)	Sep. 12, 2019
Affiliated Entity \| Tax Receivable Agreement
Related Party Transaction [Line Items]
Related party transaction rate	85.00%

Inventories - Schedule of Inventory (Details) - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
Inventory Disclosure [Abstract]
Raw materials	$ 9,278	$ 5,950
Finished goods	19,293	12,481
Total inventories	$ 28,571	$ 18,431

Prepaid and other assets - Summary of Prepaid and Other Assets (Details) - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]
Prepaid expenses	$ 12,772	$ 10,503
Deposits to vendors	2,191	3,132
Other	1,939	551
Total prepaid and other current assets	16,902	14,186
Prepaid expenses, non-current	1,101	1,308
Deposits to vendors, non-current	3,670	3,346
Indefinite-lived intangible assets	6,217	6,217
Other intangible assets, net	303	428
Total other assets	$ 11,291	$ 11,299

Prepaid and other assets - Narrative (Details) - USD ($)	3 Months Ended	6 Months Ended
	Jun. 30, 2020	Jun. 30, 2020
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]
Impairment of indefinite-lived intangible assets	$ 0	$ 0

Lease Abandonment, Impairment of Long-Lived Assets and Store Closure and Other Related Charges - Narrative (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Restructuring and Related Activities [Abstract]
Restructuring costs and asset impairment Charges	$ 29,109	$ 0	$ 29,109	$ 0
Restructuring reserve	$ 2,541		$ 2,541

Lease Abandonment, Impairment of Long-Lived Assets and Store Closure and Other Related Charges - Schedule of Restructuring Charges (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Restructuring and Related Activities [Abstract]
Impairment of property, plant and equipment	$ 16,747		$ 16,747
Impairment of right of use asset	7,886		7,886
Lease abandonment and impairment of long-lived assets, total	24,633	$ 0	24,633	$ 0
Short-term lease termination fees	3,823		3,823
Other expenses	653		653
Other store closure and related costs	$ 4,476	$ 0	$ 4,476	$ 0

Property, plant and equipment, net - Schedule of Property, Plant and Equipment (Details) - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
Property, Plant and Equipment [Line Items]
Property, plant, equipment, and finance lease right-of-use asset, gross	$ 239,234
Less: accumulated depreciation	(64,342)
Property, plant, equipment and finance lease right-of-use asset, net	174,892
Property, plant and equipment, gross		$ 216,908
Less: accumulated depreciation		(39,365)
Property, plant and equipment, net	174,892	177,543
Lab and SmileShop equipment
Property, Plant and Equipment [Line Items]
Property, plant, equipment, and finance lease right-of-use asset, gross	89,269
Property, plant and equipment, gross		79,103
Computer equipment and software
Property, Plant and Equipment [Line Items]
Property, plant and equipment, gross	68,266	48,401
Leasehold improvements
Property, Plant and Equipment [Line Items]
Property, plant and equipment, gross	24,148	13,275
Furniture and fixtures
Property, Plant and Equipment [Line Items]
Property, plant and equipment, gross	14,408	13,152
Vehicles
Property, Plant and Equipment [Line Items]
Property, plant and equipment, gross	6,147	2,660
Construction in progress
Property, Plant and Equipment [Line Items]
Property, plant and equipment, gross	$ 36,996	$ 60,317

Property, plant and equipment, net - Narrative (Details) - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
Property, Plant and Equipment [Line Items]
Finance lease right-of-use asset, carrying value	$ 25,478
Property, plant and equipment, net	174,892	$ 177,543
Finance lease, right-of-use asset, accumulated amortization	$ 10,450
Accumulated depreciation		39,365
Assets Held under Capital Leases
Property, Plant and Equipment [Line Items]
Property, plant and equipment, net		26,501
Accumulated depreciation		$ 4,670

Leases - ROU Assets and Lease Liabilities (Details) - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
Assets:
Operating leases	$ 33,120	$ 0
Finance leases	25,478
Total leased assets	58,598
Liabilities:
Operating lease, liability, current	7,572
Finance lease, liability, current	10,231
Operating Lease, Liability, Noncurrent	34,338	$ 0
Finance lease, liability, noncurrent	16,962
Lease liability	$ 69,103
Weighted average remaining term:
Operating lease, weighted average remaining lease term	6 years 1 month 6 days
Finance lease, weighted average remaining lease term	2 years 1 month 6 days
Weighted average discount rate:
Operating lease, weighted average discount rate, percent	5.60%
Finance lease, weighted average discount rate, percent	7.50%
Finance lease, right-of-use asset, accumulated amortization	$ 10,450

Leases - Components of Lease Cost (Details) - USD ($) $ in Thousands	3 Months Ended	6 Months Ended
	Jun. 30, 2020	Jun. 30, 2020	Jun. 30, 2019
Finance lease expense:
Amortization of leased assets	$ 2,497	$ 4,994
Interest of lease liabilities	540	1,126
Operating leases	2,518	5,037
Short-term lease expense	2,001	9,643
Variable lease expense	213	2,504
Total lease expense	$ 7,769	23,304
Cash used in operating activities		6,152
Cash used in investing activities		0
Cash used in financing activities		$ 4,997	$ 0

Leases - Undiscounted Cash Flows of Operating Lease and Finance Lease (Details) - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
Finance Lease, Liability, Payment, Due [Abstract]
2020 (remaining)	$ 6,076
2021	11,209
2022	6,859
2023	0
2024	0
2025 and thereafter	0
Total minimum lease payments	24,144
Residual value	5,661
Amount representing interest	(2,612)
Present value of future minimum lease payments	27,193
Less: current portion	(10,231)
Long-term lease liabilities	16,962
Lessee, Operating Lease, Liability, Payment, Due [Abstract]
2020 (remaining)	4,892
2021	9,441
2022	7,559
2023	6,904
2024	6,136
2025 and thereafter	15,405
Total minimum lease payments	50,337
Residual value	0
Amount representing interest	(8,427)
Present value of future minimum lease payments	41,910
Less: current portion	(7,572)
Long-term lease liabilities	$ 34,338	$ 0

Accrued liabilities - Schedule of Accrued Liabilities (Details) - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
Payables and Accruals [Abstract]
Accrued marketing and selling costs	$ 11,792	$ 31,804
Accrued payroll and payroll related expenses	24,114	25,019
Accrued sales and other taxes	8,522	8,367
Other	41,224	28,149
Total accrued liabilities	$ 85,652	$ 93,339

Income taxes - Schedule of Income Tax Provision (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Current:
Federal	$ (1,698)	$ 0	$ 0	$ 0
State	225	82	158	102
Foreign	140	0	340	0
Current income tax provision	(1,333)	82	498	102
Deferred:
Federal	0	0	0	0
State	(86)	15	57	15
Foreign	0	0	0	0
Deferred income tax provision	(86)	15	57	15
Total income tax provision	$ (1,419)	$ 97	$ 555	$ 117

Income taxes - Narrative (Details) - USD ($) $ in Thousands		12 Months Ended
Income taxes - Narrative (Details) - USD ($) $ in Thousands	Sep. 12, 2019	Dec. 31, 2019	Jun. 30, 2020
Operating Loss Carryforwards [Line Items]
Valuation allowance			$ 213,332
LLC units acquired in the period		$ 635,690
Tax Receivable Agreement
Operating Loss Carryforwards [Line Items]
Expected income tax benefit from remaining cash savings percentage	15.00%
Affiliated Entity \| Tax Receivable Agreement
Operating Loss Carryforwards [Line Items]
Related party transaction rate	85.00%
Domestic Tax Authority
Operating Loss Carryforwards [Line Items]
Operating loss carryforwards, tax effected			25,577
State and Local Jurisdiction
Operating Loss Carryforwards [Line Items]
Operating loss carryforwards, tax effected			15,718
Foreign Tax Authority
Operating Loss Carryforwards [Line Items]
Operating loss carryforwards, tax effected			$ 1,180

Long-Term Debt - Schedule of Debt and Capital Lease Obligations (Details) - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
Debt Instrument [Line Items]
Long-term debt	$ 421,812
Capital lease obligations	27,193
Capital lease obligations		$ 26,501
Total debt	420,328	208,526
Less current portion	(30,815)	(35,376)
Total long-term debt	389,513	173,150
Line of Credit \| HPS Credit Facility
Debt Instrument [Line Items]
Long-term debt	372,551	0
Unamortized financing costs	11,493
Line of Credit \| JPM Credit Facility
Debt Instrument [Line Items]
Long-term debt	0	147,935
Unamortized financing costs		2,513
Promissory Note \| Align Redemption Promissory Note
Debt Instrument [Line Items]
Long-term debt	$ 20,584	$ 34,090

Long-Term Debt - HPS Credit Facility (Details) - USD ($)		6 Months Ended
	May 12, 2020	Jun. 30, 2020	Jun. 30, 2019
Line of Credit Facility [Line Items]
Deferred loan cost amortization		$ 1,666,000	$ 475,000
Revolving Credit Facility \| HPS Credit Facility \| Line of Credit \| SDC U.S. SmilePay SPV
Line of Credit Facility [Line Items]
Debt term	5 years
Maximum borrowing capacity	$ 400,000,000
Debt discount	12,000,000
Additional aggregate principal available	100,000,000
Financing costs incurred	187,000
Write off of deferred debt issuance cost	1,594,000
Deferred financing costs	11,784,000
Deferred loan cost amortization		291,000
Receivables collateralized on outstanding debt		361,302,000
Debt instrument, covenant minimum monthly liquidity	$ 100,000,000
Debt instrument, refinancing fee, percentage of principal amount prepaid, year one	4.00%
Debt instrument, refinancing fee, percentage of principal amount prepaid, year two	4.00%
Debt instrument, refinancing fee, percentage of principal amount prepaid, year three	3.00%
Debt instrument, refinancing fee, percentage of principal amount prepaid, year four	2.00%
Debt instrument, refinancing fee, percentage of principal amount prepaid, year five	1.00%
Long-term debt, including unamortized financing costs		$ 401,228,000
Revolving Credit Facility \| HPS Credit Facility \| Line of Credit \| SDC U.S. SmilePay SPV \| London Interbank Offered Rate (LIBOR) \| Minimum
Line of Credit Facility [Line Items]
Basis spread on variable rate	1.75%
Revolving Credit Facility \| HPS Credit Facility \| Line of Credit \| SDC U.S. SmilePay SPV \| LIBOR - Payable In Cash
Line of Credit Facility [Line Items]
Basis spread on variable rate	7.50%
Revolving Credit Facility \| HPS Credit Facility \| Line of Credit \| SDC U.S. SmilePay SPV \| LIBOR - Payable In Kind
Line of Credit Facility [Line Items]
Basis spread on variable rate	3.25%

Long-Term Debt - HPS Warrants (Details) $ / shares in Units, $ in Thousands	May 12, 2020 USD ($) $ / shares shares
Debt Instrument [Line Items]
Fair value of warrants \| $	$ 17,620
Class of Warrant or Right, Exercise Price of Warrants or Rights \| $ / shares	$ 7.11
Common Class A
Debt Instrument [Line Items]
Class of Warrant or Right, Outstanding \| shares	3,889,575
Common Class A, Common Class B, And Warrants [Member]
Debt Instrument [Line Items]
Class Of Warrant Or Right, Percent Of Outstanding Stock And Warrants	1.00%

Long-Term Debt - JPM Credit Facility (Details) - Line of Credit - JPM Credit Facility - USD ($)	6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019
Debt Instrument [Line Items]
Maximum borrowing capacity		$ 500,000,000
Additional borrowing capacity		250,000,000
Deferred financing costs		$ 6,188,000
Amortization of deferred financing and debt issuance costs	$ 919,000

Long-Term Debt - Align Redemption Promissory Note (Details) - USD ($)	Sep. 16, 2019	Jun. 30, 2020	Dec. 31, 2019
Debt Instrument [Line Items]
Pre-IPO units required for redemption (in shares)	20,710
Long-term debt		$ 421,812,000
Promissory Note \| Align Redemption Promissory Note
Debt Instrument [Line Items]
Monthly payments	$ 2,311,000
Interest rate, stated percentage	2.52%
Long-term debt		$ 20,584,000	$ 34,090,000

Long-Term Debt - Schedule of Debt Maturities (Details) - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
Debt Instrument [Line Items]
2020 (remaining)	$ 13,678
2021	6,906
2022	0
2023	0
2024	0
2025	401,228
Total	421,812
Line of Credit \| HPS Credit Facility
Debt Instrument [Line Items]
Total	372,551	$ 0
Line of Credit \| HPS Credit Facility \| Revolving Credit Facility \| SDC U.S. SmilePay SPV
Debt Instrument [Line Items]
2020 (remaining)	0
2021	0
2022	0
2023	0
2024	0
2025	401,228
Total	401,228
Promissory Note \| Align Redemption Promissory Note
Debt Instrument [Line Items]
2020 (remaining)	13,678
2021	6,906
2022	0
2023	0
2024	0
2025	0
Total	$ 20,584	$ 34,090

Noncontrolling Interests - Narrative (Details) - shares	6 Months Ended
Noncontrolling Interests - Narrative (Details) - shares	Jun. 30, 2020	Dec. 31, 2019
SDC Financial, LLC
Class of Stock [Line Items]
Economic ownership interest	28.30%
Common Class A
Class of Stock [Line Items]
Common stock, shares outstanding (in shares)	110,123,999	103,303,674

Variable Interest Entities (Details)	6 Months Ended
Variable Interest Entities (Details)	Jun. 30, 2020
Variable Interest Entity, Primary Beneficiary
Variable Interest Entity [Line Items]
Ownership percentage	100.00%

Incentive Compensation Plans - Class A Common Stock Options Narrative (Details) $ / shares in Units, $ in Thousands	6 Months Ended
	Jun. 30, 2020 USD ($) award_type $ / shares	Aug. 31, 2019 shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of award types \| award_type	2
Expected dividend yield	0.00%
Expected volatility rate	45.00%
Risk-free interest rate	1.70%
Unrecognized compensation expense \| $	$ 12,868
Weighted average period, expected expense recognition	2 years 2 months 12 days
2019 Omnibus Incentive Compensation Plan \| Common Class A
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares reserved for future issuance (in shares) \| shares		38,486,295
Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected term	6 years
Weighted average fair value per option (in dollars per share)	$ 10.29
Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected term	6 years 6 months
Weighted average fair value per option (in dollars per share)	$ 10.68

Incentive Compensation Plans - Schedule of Stock Option Activity (Details) - 2019 Omnibus Incentive Compensation Plan - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended	6 Months Ended	12 Months Ended
	Jun. 30, 2020	Jun. 30, 2020	Dec. 31, 2019
Number of Options
Outstanding at beginning of period (in shares)		1,744,556
Granted (in shares)		0
Exercised (in shares)		0
Expired (in shares)		0
Forfeited (in shares)		65,217
Outstanding at end of period (in shares)	1,679,339	1,679,339	1,744,556
Exercisable at end of period (in shares)	0
Weighted Average Exercise Price
Outstanding at beginning of period (in dollars per share)		$ 23.00
Granted (in dollars per share)		0
Exercised (in dollars per share)		0
Expired (in dollars per share)		0
Forfeited (in dollars per share)		23.00
Outstanding at end of period (in dollars per share)	$ 23.00	$ 23.00	$ 23.00
Exercisable at end of period (in dollars per share)	$ 0
Weighted Average Remaining Contractual Term
Weighted Average Remaining Term		9 years 4 months 24 days	9 years 8 months 12 days
Aggregate Intrinsic Value
Outstanding at December 31, 2019		$ 0
Exercised		0
Outstanding at June 30, 2020	$ 0	$ 0	$ 0
Exercisable at June 30, 2020	$ 0

Incentive Compensation Plans - Incentive Bonus Awards Narrative (Details) - USD ($) $ in Thousands	1 Months Ended	3 Months Ended		6 Months Ended
	Aug. 31, 2019	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019	Dec. 31, 2019
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Equity-based compensation expense		$ 10,821	$ 435	$ 27,217	$ 8,262
Restricted Stock Units (RSUs), Incentive Bonus Awards
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
RSUs to be released (in shares)		3,349,384		3,349,384		4,794,394
Restricted Stock Units (RSUs), Incentive Bonus Awards \| 2019 Omnibus Incentive Compensation Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Award vesting period	5 years
Award accelerated vesting, percent settled in cash	50.00%
Award accelerated vesting, percent of Cash award, withheld for taxes	80.00%
Award accelerated vesting, percent of total vested award	40.00%
Equity-based compensation expense	$ 316,959
RSUs to be released (in shares)	2,199,453
Restricted Stock Units (RSUs), Incentive Bonus Awards \| 2019 Omnibus Incentive Compensation Plan \| Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Award vesting period	2 years
Award requisite service period	6 months
Restricted Stock Units (RSUs), Incentive Bonus Awards \| 2019 Omnibus Incentive Compensation Plan \| Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Award vesting period	4 years
Award requisite service period	24 months
Restricted Stock Units (RSUs), Incentive Bonus Awards \| 2019 Omnibus Incentive Compensation Plan \| Common Class A
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Award accelerated vesting, percent settled through stock issuance	50.00%
Shares issued, after forfeiture (in shares)	5,654,078

Incentive Compensation Plans - Non-IBA Restricted Stock Units Narrative (Details) - USD ($) $ in Thousands	1 Months Ended	6 Months Ended
	Dec. 31, 2019	Jun. 30, 2020
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized compensation expense		$ 12,868
Weighted average period, expected expense recognition		2 years 2 months 12 days
Restricted Stock Units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized compensation expense		$ 59,785
Weighted average period, expected expense recognition		1 year 9 months 18 days
Minimum \| Restricted Stock Units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Award vesting period	2 years
Maximum \| Restricted Stock Units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Award vesting period	3 years

Incentive Compensation Plans - Schedule of Restricted Stock Unit Activity (Details)	6 Months Ended
	Jun. 30, 2020 $ / shares shares
IBA RSUs
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward]
RSUs outstanding at beginning of period (in shares)	4,794,394
Granted (in shares)	0
Vested (in shares)	(1,396,028)
Cancelled (in shares)	(48,982)
RSUs outstanding at end of period (in shares)	3,349,384
Non-IBA RSUs
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward]
RSUs outstanding at beginning of period (in shares)	1,089,796
Granted (in shares)	1,739,095
Vested (in shares)	0
Cancelled (in shares)	(140,449)
RSUs outstanding at end of period (in shares)	2,688,442
Restricted Stock Units
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward]
RSUs outstanding at beginning of period (in shares)	5,884,190
Granted (in shares)	1,739,095
Vested (in shares)	(1,396,028)
Cancelled (in shares)	(189,431)
RSUs outstanding at end of period (in shares)	6,037,826
Weighted Average Grant Date Fair Value
RSUs outstanding at beginning of period (in dollars per share) \| $ / shares	$ 21.88
Granted (in dollars per share) \| $ / shares	9.15
Vested (in dollars per share) \| $ / shares	23.00
Cancelled (in dollars per share) \| $ / shares	14.63
RSUs outstanding at end of period (in dollars per share) \| $ / shares	$ 18.18

Incentive Compensation Plans - Incentive Bonus Units Narrative (Details) - USD ($) $ in Thousands	1 Months Ended	3 Months Ended		6 Months Ended		12 Months Ended
	Jul. 31, 2019	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019	Dec. 31, 2019
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Equity-based compensation expense		$ 10,821	$ 435	$ 27,217	$ 8,262
Unrecognized compensation expense		12,868		12,868
Incentive Bonus Units, Employee \| 2019 Omnibus Incentive Compensation Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of awards modified (in shares)	2
Incentive Bonus Units \| 2019 Omnibus Incentive Compensation Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Equity-based compensation expense						$ 436
Unrecognized compensation expense		$ 599		$ 599

Incentive Compensation Plans - Employee Stock Purchase Plan Narrative (Details) - Employee Stock - Employee Stock Purchase Plan	1 Months Ended
	Nov. 30, 2019 shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares authorized (in shares)	5,772,944
Option period	6 months
Maximum employee subscription rate	30.00%
Purchase price of common stock, as a percent of the closing market price	85.00%

Incentive Compensation Plans - Narrative (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Share-based Payment Arrangement [Abstract]
Equity-based compensation expense	$ 10,821	$ 435	$ 27,217	$ 8,262

Earnings per Share - Summary of Earnings per Share (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Numerator [Abstract]
Net loss	$ (94,666)	$ (32,435)	$ (202,066)	$ (52,915)
Less: Net loss attributable to noncontrolling interests subsequent to the Reorganization Transactions	(67,867)	$ 0	(146,017)	$ 0
Net loss attributable to SDC Inc. - basic	(26,799)		(56,049)
Add: Reallocation of net loss attributable to noncontrolling interests after the Reorganization Transactions from the assumed exchange of LLC Units for Class A common stock	(67,867)		(146,017)
Net loss attributable to SDC Inc. - diluted	$ (94,666)		$ (202,066)
Denominator [Abstract]
Weighted average shares of Class A common stock outstanding - basic (in shares)	109,048,411		106,819,870
Add: Dilutive effects as shown separately below (in shares)	276,084,892		277,672,758
Weighted average shares of Class A common stock outstanding - diluted (in shares)	385,133,303		384,492,628
Earnings per share of Class A common stock, basic (in USD per share)	$ (0.25)		$ (0.52)
Earnings per share of Class A common stock, diluted (in USD per share)	$ (0.25)		$ (0.53)

Earnings per Share - Antidilutive Securities Excluded From Computation of Earnings per Share (Details) - shares	3 Months Ended	6 Months Ended
	Jun. 30, 2020	Jun. 30, 2020
Options
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of earnings per share (in shares)	1,679,339	1,679,339
Restricted Stock Units
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of earnings per share (in shares)	6,037,826	6,037,826
HPS Warrants
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of earnings per share (in shares)	3,889,575	3,889,575

Employee Benefit Plans (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
Employee Benefit Plans (Details) - USD ($) $ in Thousands	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Defined Contribution Plan Disclosure [Line Items]
Company contribution for 401(k)	$ 410	$ 668	$ 1,661	$ 1,063
Threshold One
Defined Contribution Plan Disclosure [Line Items]
Employer match			100.00%	100.00%
Employer matching contribution, percent of Employees' gross pay			3.00%	3.00%
Threshold Two
Defined Contribution Plan Disclosure [Line Items]
Employer match			50.00%	50.00%
Threshold Two \| Minimum
Defined Contribution Plan Disclosure [Line Items]
Employer matching contribution, percent of Employees' gross pay			3.00%	3.00%
Threshold Two \| Maximum
Defined Contribution Plan Disclosure [Line Items]
Employer matching contribution, percent of Employees' gross pay			5.00%	5.00%

Related Party Transactions - Products and Services and Distribution Payable Narrative (Details) - USD ($) $ in Thousands	1 Months Ended			3 Months Ended		6 Months Ended
	Feb. 29, 2020	Aug. 31, 2019	Feb. 28, 2019	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
SDC Financial, LLC
Related Party Transaction [Line Items]
Distribution declared		$ 43,400
Private Aircraft
Related Party Transaction [Line Items]
Purchases from related party	$ 3,400
Align
Related Party Transaction [Line Items]
Cost of revenues—related parties				$ 0	$ 0	$ 0	$ 6,577
Align \| Oral Digital Imaging Equipment
Related Party Transaction [Line Items]
Purchases from related party				0	0	0	5,651
David Katzman Revocable Trust
Related Party Transaction [Line Items]
Purchase of members' units, value			$ 1,100
Affiliated Entity
Related Party Transaction [Line Items]
Management fees paid to affiliate				0	450	0	900
Affiliated Entity \| Freight
Related Party Transaction [Line Items]
Cost of revenues—related parties				0	2,398	0	4,764
Law Firm of Immediate Family Member of Director of the Company
Related Party Transaction [Line Items]
Management fees paid to affiliate				$ 1,703	$ 286	$ 2,544	$ 346

Commitments and Contingencies - Narrative (Details)		1 Months Ended		5 Months Ended
Commitments and Contingencies - Narrative (Details)	Sep. 12, 2019	Sep. 30, 2019 orthodontist	Mar. 31, 2019 USD ($)	Mar. 31, 2020 complaint
Affiliated Entity \| Tax Receivable Agreement
Loss Contingencies [Line Items]
Related party transaction rate	85.00%
Pending Litigation \| In Re SmileDirectClub, Inc. Derivative Litigation, C.A.
Loss Contingencies [Line Items]
Complaints filed \| complaint				3
Pending Litigation \| U.S. District Court For The Middle District Of Tennessee, Ciccio, et al. v. SmileDirectClub, LLC
Loss Contingencies [Line Items]
Number of plaintiffs \| orthodontist		3
Pending Litigation \| Align Technology, Inc. Arbitration
Loss Contingencies [Line Items]
Additional damages sought			$ 43,400,000
Promissory Note \| Align Redemption Promissory Note
Loss Contingencies [Line Items]
Debt instrument, face amount			$ 54,000,000
Term of debt			24 months

Segment Reporting - Narrative (Details)	6 Months Ended
Segment Reporting - Narrative (Details)	Jun. 30, 2020 segment
Segment Reporting [Abstract]
Number of operating segments	1