0001775625-22-000074 | 10-Q | XBRL Viewer

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Cover - shares	6 Months Ended
Cover - shares	Jun. 30, 2022	Aug. 04, 2022
Entity Information [Line Items]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Jun. 30, 2022
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	342-0462
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	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Central Index Key	0001775625
Document Fiscal Year Focus	2022
Document Fiscal Period Focus	Q2
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Common Class A
Entity Information [Line Items]
Entity Common Stock, Shares Outstanding (in shares)		121,134,398
Common Class B
Entity Information [Line Items]
Entity Common Stock, Shares Outstanding (in shares)		268,823,501

Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands	Jun. 30, 2022	Dec. 31, 2021
ASSETS
Cash	$ 158,264	$ 224,860
Accounts receivable, net	166,528	184,558
Inventories	43,110	40,803
Prepaid and other current assets	23,816	17,519
Total current assets	391,718	467,740
Accounts receivable, net, non-current	55,093	59,210
Property, plant and equipment, net	210,574	227,201
Operating lease right-of-use assets	23,825	24,927
Other assets	19,350	15,480
Total assets	700,560	794,558
LIABILITIES AND EQUITY (DEFICIT)
Accounts payable	33,780	19,922
Accrued liabilities	91,062	122,066
Deferred revenue	17,352	20,258
Current portion of long-term debt	6,189	10,997
Other current liabilities	5,921	4,997
Total current liabilities	154,304	178,240
Long-term debt, net of current portion	785,961	729,973
Operating lease liabilities, net of current portion	18,482	20,352
Other long-term liabilities	349	347
Total liabilities	959,096	928,912
Equity (Deficit)
Additional paid-in-capital	460,820	448,867
Accumulated other comprehensive income	967	293
Accumulated deficit	(338,207)	(295,321)
Noncontrolling interest	(399,775)	(305,852)
Warrants	17,620	17,620
Total equity (deficit)	(258,536)	(134,354)
Total liabilities and equity (deficit)	700,560	794,558
Common Class A
Equity (Deficit)
Common stock	12	12
Common Class B
Equity (Deficit)
Common stock	$ 27	$ 27

Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - $ / shares	Jun. 30, 2022	Dec. 31, 2021
Common Class A
Common stock, par value (USD per share)	$ 0.0001	$ 0.0001
Common stock, shares issued (in shares)	120,995,922	119,280,781
Common stock, shares outstanding (in shares)	120,995,922	119,280,781
Common Class B
Common stock, par value (USD per share)	$ 0.0001	$ 0.0001
Common stock, shares issued (in shares)	268,823,501	269,243,501
Common stock, shares outstanding (in shares)	268,823,501	269,243,501

Condensed Consolidated Statements of Operations (Unaudited) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Total revenues	$ 125,796	$ 174,181	$ 277,442	$ 373,642
Cost of revenues	34,075	45,860	77,141	93,821
Gross profit	91,721	128,321	200,301	279,821
Marketing and selling expenses	71,191	95,943	167,902	193,066
General and administrative expenses	72,320	85,042	143,113	166,120
Lease abandonment and impairment of long-lived assets	0	0	1,232	0
Restructuring and other related costs	3,168	536	14,700	1,664
Loss from operations	(54,958)	(53,200)	(126,646)	(81,029)
Interest expense	4,454	1,939	6,010	19,505
Loss on extinguishment of debt	0	0	0	47,631
Other expense	5,818	130	7,241	1,042
Net loss before provision for income tax expense (benefit)	(65,230)	(55,269)	(139,897)	(149,207)
Provision for income tax expense (benefit)	256	(12)	(1,207)	1,695
Net loss	(65,486)	(55,257)	(138,690)	(150,902)
Net loss attributable to noncontrolling interest	(45,181)	(38,377)	(95,804)	(105,113)
Net loss attributable to SmileDirectClub, Inc.	$ (20,305)	$ (16,880)	$ (42,886)	$ (45,789)
Earnings (loss) per share of Class A common stock:
Basic (USD per share)	$ (0.17)	$ (0.14)	$ (0.36)	$ (0.39)
Diluted (USD per share)	$ (0.17)	$ (0.14)	$ (0.36)	$ (0.39)
Weighted average shares outstanding:
Basic (in shares)	120,818,400	118,344,050	120,507,211	117,656,599
Diluted (in shares)	389,665,923	387,609,677	389,483,239	387,246,120
Common Class A
Earnings (loss) per share of Class A common stock:
Basic (USD per share)	$ (0.17)	$ (0.14)	$ (0.36)	$ (0.39)
Diluted (USD per share)	$ (0.17)	$ (0.14)	$ (0.36)	$ (0.39)
Excluding Financing Revenue
Total revenues	$ 116,802	$ 162,587	$ 259,314	$ 351,389
Financing Revenue
Total revenues	$ 8,994	$ 11,594	$ 18,128	$ 22,253

Condensed Consolidated Statements of Comprehensive Loss - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Statement of Other Comprehensive Income [Abstract]
Net loss	$ (65,486)	$ (55,257)	$ (138,690)	$ (150,902)
Other comprehensive income (loss):
Foreign currency translation adjustment	1,654	(252)	2,170	(83)
Comprehensive loss	(63,832)	(55,509)	(136,520)	(150,985)
Comprehensive loss attributable to noncontrolling interests	(44,041)	(38,552)	(94,308)	(105,170)
Comprehensive loss attributable to SmileDirectClub, Inc.	$ (19,791)	$ (16,957)	$ (42,212)	$ (45,815)

- Definition

Amount after tax of increase (decrease) in equity from transactions and other events and circumstances from net income (loss) and other comprehensive income (loss), attributable to noncontrolling interests. Excludes changes in equity resulting from investments by owners and distributions to owners.

+ References + Details

- Definition

Amount after tax of increase (decrease) in equity from transactions and other events and circumstances from net income and other comprehensive income. Excludes changes in equity resulting from investments by owners and distributions to owners.

+ References + Details

- 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 Stock Common Class A	Common Stock Common Class B	Additional Paid-in Capital	Warrants	Accumulated Deficit	Noncontrolling Interest	Accumulated Other Comprehensive Income (Loss)
Beginning balance (in shares) at Dec. 31, 2020			115,429,319	270,908,566
Beginning balance at Dec. 31, 2020	$ 234,138		$ 11	$ 27	$ 483,393	$ 17,620	$ (192,879)	$ (73,932)	$ (102)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net loss	(150,902)						(45,789)	(105,113)
Issuance of Class A shares in connection with equity based awards (in shares)			1,494,451
Issuance of Class A shares in connection with equity-based awards	0		$ 1		(1)
Exchange of Class B common stock for Class A common stock (in shares)			1,665,065	(1,665,065)
Exchange of Class B common stock for Class A common stock	0				(388)			388
Issuance of shares in connection with stock purchase plan(in shares)			83,574
Issuance of shares in connection with stock purchase plan	632				632
Equity-based compensation	27,167				27,167
Equity-based payments	(7,263)				(7,263)
Foreign currency translation adjustment	(83)							(57)	(26)
Capped call instruments	(69,518)				(69,518)
Other	(95)				(95)
Ending balance (in shares) at Jun. 30, 2021			118,672,409	269,243,501
Ending balance at Jun. 30, 2021	34,076		$ 12	$ 27	433,927	17,620	(238,668)	(178,714)	(128)
Beginning balance (in shares) at Mar. 31, 2021			117,893,041	269,272,682
Beginning balance at Mar. 31, 2021	80,208		$ 12	$ 27	424,563	17,620	(221,788)	(140,175)	(51)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net loss	(55,257)						(16,880)	(38,377)
Issuance of Class A shares in connection with equity based awards (in shares)			666,613
Exchange of Class B common stock for Class A common stock (in shares)			29,181	(29,181)
Exchange of Class B common stock for Class A common stock	0				(13)			13
Issuance of shares in connection with stock purchase plan(in shares)		83,574
Issuance of shares in connection with stock purchase plan	632				632
Equity-based compensation	12,008				12,008
Equity-based payments	(3,220)				(3,220)
Foreign currency translation adjustment	(252)							(175)	(77)
Other	(43)				(43)
Ending balance (in shares) at Jun. 30, 2021			118,672,409	269,243,501
Ending balance at Jun. 30, 2021	34,076		$ 12	$ 27	433,927	17,620	(238,668)	(178,714)	(128)
Beginning balance (in shares) at Dec. 31, 2021			119,280,781	269,243,501
Beginning balance at Dec. 31, 2021	(134,354)		$ 12	$ 27	448,867	17,620	(295,321)	(305,852)	293
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net loss	(138,690)						(42,886)	(95,804)
Issuance of Class A shares in connection with equity based awards (in shares)			1,295,141
Issuance of Class A shares in connection with equity-based awards	0		$ 0		0
Exchange of Class B common stock for Class A common stock (in shares)			420,000	(420,000)
Exchange of Class B common stock for Class A common stock	0				(385)			385
Issuance of shares in connection with stock purchase plan	429				429
Equity-based compensation	13,866				13,866
Equity-based payments	(1,955)				(1,955)
Foreign currency translation adjustment	2,170							1,496	674
Other	(2)				(2)
Ending balance (in shares) at Jun. 30, 2022			120,995,922	268,823,501
Ending balance at Jun. 30, 2022	(258,536)		$ 12	$ 27	460,820	17,620	(338,207)	(399,775)	967
Beginning balance (in shares) at Mar. 31, 2022			120,433,220	268,993,501
Beginning balance at Mar. 31, 2022	(203,537)		$ 12	$ 27	452,153	17,620	(317,902)	(355,900)	453
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net loss	(65,486)						(20,305)	(45,181)
Issuance of Class A shares in connection with equity based awards (in shares)			392,702
Exchange of Class B common stock for Class A common stock (in shares)			170,000	(170,000)
Exchange of Class B common stock for Class A common stock	0				(166)			166
Issuance of shares in connection with stock purchase plan	429				429
Equity-based compensation	8,560				8,560
Equity-based payments	(108)				(108)
Foreign currency translation adjustment	1,654							1,140	514
Other	(48)				(48)
Ending balance (in shares) at Jun. 30, 2022			120,995,922	268,823,501
Ending balance at Jun. 30, 2022	$ (258,536)		$ 12	$ 27	$ 460,820	$ 17,620	$ (338,207)	$ (399,775)	$ 967

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021
Operating Activities
Net loss	$ (138,690)	$ (150,902)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	38,496	33,169
Deferred loan cost amortization	2,329	3,041
Equity-based compensation	13,866	27,167
Loss on extinguishment of debt	0	47,631
Paid in kind interest expense	0	3,324
Asset impairment and related charges	6,300	0
Other non-cash operating activities	1,102	798
Changes in operating assets and liabilities:
Accounts receivable	22,147	3,726
Inventories	(2,307)	(3,701)
Prepaid and other current assets	(6,377)	(6,572)
Accounts payable	16,726	(11,998)
Accrued liabilities	(29,790)	(2,990)
Deferred revenue	(2,906)	(2,044)
Net cash used in operating activities	(79,104)	(59,351)
Investing Activities
Purchases of property, equipment, and intangible assets	(32,872)	(45,303)
Net cash used in investing activities	(32,872)	(45,303)
Financing Activities
Repurchase of Class A shares to cover employee tax withholdings	(2,340)	(6,260)
Proceeds from stock purchase plan	429	632
Repayment of HPS Credit Facility	0	(396,497)
Payment of extinguishment costs	0	(37,701)
Borrowings of long-term debt	54,920	747,500
Payments of issuance costs	(5,426)	(21,179)
Purchase of capped call transactions	0	(69,518)
Final payment of Align arbitration	0	(43,400)
Principal payments on long-term debt	0	(4,609)
Payments of finance leases	(4,808)	(5,182)
Other	2,553	(83)
Net cash provided by financing activities	45,328	163,703
Effect of exchange rates change on cash and cash equivalents	52	875
Increase (decrease) in cash	(66,596)	59,924
Cash at beginning of period	224,860	316,724
Cash at end of period	$ 158,264	$ 376,648

Organization and Basis of Presentation	6 Months Ended
Organization and Basis of Presentation	Jun. 30, 2022
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. For purposes of these notes to 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. SmileDirectClub is an oral care company and creator of the first MedTech platform for teeth straightening. Through the Company’s cutting-edge teledentistry technology and vertically integrated model, it is revolutionizing the oral care industry, from clear aligner therapy to its affordable, premium oral care product line. SmileDirectClub’s mission is to democratize access to a smile each and every person loves by making it affordable and convenient for everyone. SmileDirectClub is headquartered in Nashville, Tennessee and operates in the U.S., Costa Rica, Puerto Rico, Canada, Australia, United Kingdom, France, and Ireland. 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 $1,286,000 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. owned 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”) owned 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 interim 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 interim condensed consolidated 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 10-01 of 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 periods are not necessarily indicative of the results to be obtained for the full fiscal year. All intercompany balances and transactions are eliminated in consolidation. 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, 2022, the variable interest entities include 56 dentist owned PCs, and at December 31, 2021 the variable interest entities included 53 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 interim condensed consolidated statements of operations reflect the revenue earned and the expenses incurred by the PCs. COVID-19 Pandemic Although increasing rates of vaccinations across the globe and decreasing governmental restrictions have begun to lessen the impact of COVID-19, the Company continues to navigate the uncertain and unprecedented economic and operating conditions resulting from COVID-19 and its protracted duration. Beginning in 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 that remains ongoing. As a result of these actions, the Company incurred one-time charges of approximately $536 and $1,664 during the three and six months ended June 30, 2021, primarily associated with the closure and consolidation of many of our SmileShops, which is an on-going evaluation. Restructuring of Operations During the three and six months ended June 30, 2022, the Company incurred one-time charges of approximately $3,168 and $15,932, respectively, primarily associated with lease buyouts, asset impairments related to the closure of regional operating centers and SmileShops, and employee-related costs, including severance and retention payments, associated with the previously announced suspension of operations in Mexico, Spain, Germany, Netherlands, Austria, Hong Kong, Singapore and New Zealand. The Company will continue to operate in and scale its presence in the United States, Canada, United Kingdom, Ireland, France and Australia. With these changes, the Company implemented a reduction in workforce to right-size its operating structure so it is tailored to the countries in which the Company will continue to operate and focus. 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.

Summary of Significant Accounting Policies

6 Months Ended

Jun. 30, 2022

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 at the time of issuance within equity on the interim condensed consolidated balance sheet using the Black-Scholes option pricing model (see Note 9). 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 cancellations and refunds from customer 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 SSP. 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, expected net collections including implicit price concessions, and cancellations and refunds from customer returns, business and economic conditions, and other collection indicators. Management relies on the results of detailed reviews of historical write-offs, cancellations, returns, and collections as a primary source of information in estimating the amount of contract consideration expected to be collected. 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, touch-up aligners, and retainers for international sales only which can occur at any time throughout the treatment plan (which is typically between five months 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 26 months. The Company’s accounts receivable related to the SmilePay financing program are reported at the amount expected to be collected on the interim condensed 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 doctor-prescribed impression kits to its customers as an alternative to an in-person visit at one of its SmileShops, popup locations, or Partner Network locations, comprised of affiliated dentist and orthodontist offices, 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 or retail partner.

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


	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Aligner revenue, net	$	99,032	$	142,854	$	217,960	$	310,317
Financing revenue, net	8,994		11,594		18,128		22,253
Retainers and other products revenue	17,770		19,733		41,354		41,072

Total revenue	$	125,796	$	174,181	$	277,442	$	373,642
Implicit price concessions, cancellations, and refunds included in total revenue	$	23,910	$	33,129	$	52,319	$	68,649

Deferred Revenue: Deferred revenue represents the Company’s contract liability for performance obligations associated with sales of aligners. For the three and six months ended June 30, 2022 and 2021, the Company recognized revenue of $125,796, $174,181, $277,442 and $373,642, respectively. Of the Company’s revenues during the three and six months ended June 30, 2022 and 2021, $2,856, $4,113, $13,100, and $20,103 was previously included in deferred revenue on the interim condensed consolidated balance sheets as of December 31, 2021 and 2020, respectively.

Allowance for credit losses and other revenue adjustments: The Company records a provision to maintain an allowance for credit losses and other revenue adjustments that result from the failure or inability of its members or other partners to make required payments deemed collectible when the product was delivered, or customer returns resulting in cancellations or refunds. When determining the allowances for member receivables, the Company considers the probability of recoverability of accounts receivable based on past experience, taking into account current collection trends and general economic factors,

including bankruptcy rates. The Company also considers future economic trends in its estimation of expected credit losses over the lifetime of the asset. Credit risks are assessed based on historical write-offs, cancellations, and adjustments, net of recoveries, as well as an analysis of the aged accounts receivable balances. Accounts receivable may be fully reserved for when specific collection issues are known to exist, such as a history of missed scheduled payments and customer service or production issues.

Activity in the allowance for credit losses and other revenue adjustments was as follows:


	Accounts Receivable Allowance for Credit Losses
Balance at January 1, 2022	$	49,309
Current period provision for expected credit losses	28,409
Write-offs and other adjustments charged against the allowance, net of recoveries	(27,353)
Refunds paid	(2,746)
Balance at March 31, 2022	$	47,619
Current period provision for expected credit losses	23,910
Write-offs and other adjustments charged against the allowance, net of recoveries	(23,247)
Refunds paid	(3,379)
Balance at June 30, 2022	$	44,903

As of June 30, 2022 and December 31, 2021 approximately $39,354 and $43,097 related to implicit price concessions and cancellation and adjustment reserves is included in net receivables, respectively, and $5,549 and $6,212 related to refund reserves is included in current liabilities in the accompanying consolidated balance sheets, respectively.

Shipping and Handling Costs

Shipping and handling charges are recorded in cost of revenues in the interim condensed consolidated statements of operations upon shipment. The Company incurred approximately $4,279, $5,768 $9,938, and $12,677 in outsourced shipping expenses for the three and six months ended June 30, 2022 and 2021, 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, including advertising, are expensed as incurred. For the three and six months ended June 30, 2022 and 2021, the Company incurred marketing, selling, and advertising costs of $71,191, $95,943, $167,902, and $193,066, 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 is 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 is included in cost of revenues, marketing and 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,
	2022		2021		2022		2021
Cost of revenues	$	5,676	$	6,879	$	11,519	$	13,929
Marketing and selling expenses	862		1,473		1,826		3,044
General and administrative expenses	13,042		8,357		25,151		16,196
Total	$	19,580	$	16,709	$	38,496	$	33,169

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, current and non-current receivables, accounts payable, debt instruments, 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 Company had $812,500 and $747,500 in borrowings under its debt facilities (as discussed in Note 9) as of June 30, 2022 and December 31, 2021, respectively. The fair value of the Company’s debt facilities is based upon market quotes and trades by investors in partial interests of these instruments (Level 2). As of June 30, 2022, the fair value of the debt facility was approximately $113,620 compared to its carrying value of $732,000. The Company entered into a 2022 HPS Credit Facility on April 27, 2022. 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.

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, 2022 or December 31, 2021, or net revenue for the three and six months ended June 30, 2022 and 2021.

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

Cash 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.

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 and impairment charges. 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 interim condensed consolidated statements of operations.

Leases

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 operating lease liabilities in the interim 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 interim 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 interim condensed consolidated balance sheets and are amortized over a three-year to five-year period. During the three and six months ended June 30, 2022 and 2021, the Company capitalized $5,019, $3,772, $8,774, and $8,301, respectively, of internally developed software costs. Amortization expense for internally developed software was $6,911, $3,568, $12,692, and $6,747 for the three and six months ended June 30, 2022, and 2021, respectively.

Impairment

The Company evaluates long-lived 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 interim 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 interim condensed 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 interim condensed 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 computes the provision for income taxes using the liability method and recognizes deferred tax assets and liabilities for temporary differences between financial statement and income tax bases of assets and liabilities, as well as for operating loss and tax credit carryforwards. The Company measures deferred tax assets and liabilities using tax rates applicable to taxable income in effect for the years in which those tax assets are expected to be realized or settled and provides a valuation allowance against deferred tax assets when it cannot conclude that it is more likely than not that some or all deferred tax assets will be realized. In addition, the Company recognizes tax benefits from uncertain tax positions only if it expects that its tax positions are more likely than not that they will be sustained, based on the technical merits of the positions, on examination by the jurisdictional tax authority. The Company recognizes any accrued interest and penalties to unrecognized tax benefits as interest expense and income tax expense, respectively.

Tax Receivable Agreement

In connection with the Reorganization Transactions and the IPO, the Company entered into a 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 interim condensed consolidated financial statements when amounts become probable as to incurrence and estimable in amount.

Inventories

6 Months Ended

Jun. 30, 2022

Inventory Disclosure [Abstract]

Inventories

Inventories are comprised of the following:



	June 30,		December 31,
	2022		2021
Raw materials	$	16,575	$	14,662
Finished goods	26,535		26,141
Total inventories	$	43,110	$	40,803

Prepaid and Other assets

6 Months Ended

Jun. 30, 2022

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

Prepaid and Other assets

Prepaid and Other Assets

Prepaid and other assets are comprised of the following:



	June 30,		December 31,
	2022		2021
Prepaid expenses	$	12,253	$	11,496
Deposits to vendors	4,646		5,443
Other	6,917		580
Total prepaid and other current assets	$	23,816	$	17,519
Prepaid expenses, non-current	$	1,523	$	1,911
Deposits to vendors, non-current	919		967
Indefinite-lived intangible assets	7,820		7,155
Other intangible assets, net	2,233		2,458
Investments and other	6,855		2,989
Total other assets	$	19,350	$	15,480

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 assets during the three and six months ended June 30, 2022, or 2021.

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

6 Months Ended

Jun. 30, 2022

Restructuring and Related Activities [Abstract]

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

Lease Abandonment, Impairment of Long-lived Assets, Restructuring and Other Related ChargesThe Company implemented changes during the three and six months ended June 30, 2022 resulting in one-time charges of $3,168 and $15,932, respectively. These charges were primarily associated with lease buyouts, asset impairments related to the closure of regional operating centers and SmileShops, and employee-related costs, including severance and retention payments, associated with the previously announced suspension of operations in Mexico, Spain, Germany, Netherlands, Austria, Hong Kong, Singapore and New Zealand. Incentive retention payments will generally vest over a 12 month period ending March 2023 and were provided to certain team members as a result of the restructuring. The Company expects full year fiscal 2022 restructuring expenses of approximately $20,000 -$25,000. The Company will continue to operate in and scale its presence in the United States, Canada, United Kingdom, Ireland, France and Australia. With these changes, the Company implemented a reduction in workforce to right-size its operating structure so it is tailored to the countries in which the Company will continue to operate and focus. 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 lease abandonment and impairment of long-lived assets and restructuring and other related charges for the periods presented:


	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Lease abandonment and impairment of long-lived assets:
Impairment of property, plant and equipment	$	—	$	—	$	1,232	$	—

	$	—	$	—	$	1,232	$	—
Restructuring and other related charges:
Impairment of inventory	$	189	$	—	$	643	$	—
Short-term lease termination fees	66		—		258		—
Other expenses including personnel related costs such as severance and retention	2,913		536		13,799		1,664
	$	3,168	$	536	$	14,700	$	1,664

The balance of the unpaid accruals for the restructuring programs recorded in the interim condensed consolidated balance sheet as of June 30, 2022 was $133 in accrued liabilities. The balance of paid unearned expense for the restructuring programs recorded in the interim condensed consolidated balance sheet as of June 30, 2022 was $6,391 in prepaid expenses and other current assets.

Property, Plant and Equipment, Net

6 Months Ended

Jun. 30, 2022

Property, Plant and Equipment [Abstract]

Property, Plant and Equipment, Net

Property, plant and equipment were comprised of the following:



	June 30,		December 31,
	2022		2021
Lab and SmileShop equipment	$	119,704	$	118,320
Computer equipment and software	208,028		178,508
Leasehold improvements	35,262		36,474
Furniture and fixtures	13,814		13,321
Vehicles	6,882		8,018
Construction in progress	12,314		23,182
	396,004		377,823
Less: accumulated depreciation	(185,430)		(150,622)
Property, plant and equipment, net	$	210,574	$	227,201

The carrying values of assets under finance leases were $5,846 and $10,163 as of June 30, 2022 and December 31, 2021, respectively, net of accumulated depreciation of $18,968 and $18,013, respectively.

Accrued Liabilities

6 Months Ended

Jun. 30, 2022

Payables and Accruals [Abstract]

Accrued Liabilities

Accrued liabilities were comprised of the following:



	June 30,		December 31,
	2022		2021
Accrued marketing and selling costs	$	27,412	$	37,883
Accrued payroll and payroll related expenses	22,815		15,829
Accrued sales tax and related costs	4,047		8,769
Other	36,788		59,585
Total accrued liabilities	$	91,062	$	122,066

Income Taxes	6 Months Ended
Income Taxes	Jun. 30, 2022
Income Tax Disclosure [Abstract]
Income Taxes	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. The Company files income tax returns in the U.S. federal, various states and foreign jurisdictions. Any taxable income or loss generated by SDC Financial is passed through to and included in the taxable income or loss of its members, including SDC Inc., generally on a pro rata basis or otherwise under the terms of the SDC Financial LLC Agreement. The Company is subject to U.S. federal income taxes, in addition to state and local income taxes with respect to its allocable share of any taxable income or loss of SDC Financial, as well as any stand-alone income or loss generated by SDC Inc. The Company recorded an income tax expense (benefit) of $256 and $(1,207) for three and six months ended June 30, 2022 compared to an income tax expense (benefit) of $(12) and $1,695 during the three and six months ended June 30, 2021, respectively. 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.

- Definition

The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section 50
-Paragraph 21
-URI https://asc.fasb.org/extlink&oid=121826272&loc=d3e32857-109319

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-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section S99
-Paragraph 2
-Subparagraph (SAB Topic 11.C)
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Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
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Reference 8: http://www.xbrl.org/2003/role/disclosureRef
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Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 235
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-Section S99
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-Subparagraph (SX 210.4-08(h)(2))
-URI https://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690

+ Details

Long-Term Debt

6 Months Ended

Jun. 30, 2022

Debt Disclosure [Abstract]

Long-Term Debt

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



	June 30,		December 31,
	2022		2021
2026 Convertible Senior Notes, net of unamortized financing costs $15,500 and $17,527, respectively	$	732,000	$	729,973
2022 HPS Credit Facility, net of unamortized financing costs of $1,296	53,961		—


Finance lease obligations	6,189		10,997
Total debt	792,150		740,970
Less current portion	(6,189)		(10,997)
Total long-term debt	$	785,961	$	729,973

2026 Convertible Senior Notes

On February 9, 2021, the Company issued $650,000 principal amount of the Company’s 0.00% Convertible Senior Notes due 2026 (the “Notes”). The Company also granted the initial purchasers of the Notes an option to purchase up to an additional $97,500 aggregate principal amount of the Notes (“Option Notes”). On February 9, 2021, the initial purchasers of the Notes exercised their option to purchase $70,000 aggregate principal amount of the Option Notes (the “First Greenshoe Exercise”). The sale of the Option Notes from the First Greenshoe Exercise closed on February 12, 2021. On February 11, 2021, the initial purchasers of the Notes exercised the remaining portion of their option to purchase $27,500 aggregate principal amount of the Option Notes (the “Second Greenshoe Exercise” and the Option Notes issued in connection with the Second Greenshoe Exercise, the “Second Greenshoe Option Notes”). The sale of the Second Greenshoe Option Notes closed on February 16, 2021.

The Notes were issued and governed by an indenture, dated February 9, 2021 (the “Indenture”) between the Company and Wilmington Trust, National Association, as trustee. The Notes will mature on February 1, 2026, unless earlier repurchased, redeemed or converted. The Notes will not bear regular interest, and the principal amount of the Notes will not accrete.

The initial conversion rate for the Notes is 55.3710 shares of the Company's Class A Common Stock per $1,000 principal amount of Notes, which is equivalent to an initial conversion price of approximately $18.06 per share of Class A Common Stock. The initial conversion price of the Notes represents a premium of approximately 40% over the last reported sale of $12.90 per share of the Company's Class A Common Stock on February 4, 2021. The conversion rate and conversion price will be subject to customary adjustments upon the occurrence of certain events in accordance with the terms of the Indenture.

The Company recorded $21,391 related to deferred financing costs of the Notes. For three and six months ended June 30, 2022, the Company amortized under the effective interest rate method $1,050 and $2,112 of deferred financing costs, respectively.

The Notes are the Company’s senior, unsecured obligations and are (i) equal in right of payment with the Company’s existing and future senior, unsecured indebtedness; (ii) senior in right of payment to the Company’s existing and future indebtedness that is expressly subordinated to the Notes; (iii) effectively subordinated to the Company’s existing and future secured indebtedness, to the extent of the value of the collateral securing that indebtedness; and (iv) structurally subordinated to all existing and future indebtedness and other liabilities, including the Company’s trade payables, and (to the extent the Company is not a holder thereof) preferred equity, if any, of the Company’s subsidiaries.

The Company may, at its option, redeem some of the Notes, in whole or in part, at the applicable redemption price as set forth in the Indenture.

If certain corporate events that constitute a “Fundamental Change” (as defined in the Indenture) occur, then noteholders may require the Company to repurchase their Notes at a cash repurchase price equal to the principal amount of the Notes to be repurchased, plus accrued and unpaid special interest, if any. The definition of Fundamental Change includes certain business combination transactions involving the Company and certain de-listing events with respect to the Company’s Class A common stock.

The Notes have customary provisions relating to the occurrence of an “Event of Default” (as defined in the Indenture), which include the following: (i) a default by the Company in the payment when due (whether at maturity, upon redemption or repurchase upon fundamental change or otherwise) of the principal of, or the redemption price or fundamental change repurchase price for, any Note (ii) a default by the Company for 30 days in the payment when due of special interest, if any, on any Note; (iii) the Company’s failure to send certain notices under the Indenture within specified periods of time; (iv) a default by the Company in its obligation to convert a Note in accordance with the Indenture upon the exercise of the conversion right with respect thereto, if such default is not cured within three business days after its occurrence; (v) the Company’s failure to comply with certain covenants in the Indenture relating to the Company’s ability to consolidate with or merge with or into, or sell, lease or otherwise transfer, in one transaction or a series of transactions, all or substantially all of the assets of the Company and its subsidiaries, taken as a whole, to another person; (vi) a default by the Company in its other obligations or agreements under the Indenture or the Notes (other than a default set forth in clauses (i), (ii), (iii), (iv) or (v) above) if such default is not cured or waived within 60 days after written notice is given in accordance with the Indenture; (vii) certain defaults by the Company or any of its significant subsidiaries with respect to indebtedness for borrowed money of at least $50,000; and (viii) certain events of bankruptcy, insolvency and reorganization involving the Company or any of the Company’s significant subsidiaries.

If an Event of Default involving bankruptcy, insolvency or reorganization events with respect to the Company (and not solely with respect to a significant subsidiary of the Company) occurs, then the principal amount of, and all accrued and unpaid special interest, if any, on all of the Notes then outstanding will immediately become due and payable without any further action or notice by any person. If any other Event of Default occurs and is continuing, then the Trustee, by notice to the Company, or noteholders of at least 25% of the aggregate principal amount of Notes then outstanding, by written notice to the Company and the Trustee, may declare the principal amount of, and all accrued and unpaid special interest, if any, on all of the Notes then outstanding to become due and payable immediately. However, notwithstanding the foregoing, the Company may elect, at its option, that the sole remedy for an Event of Default relating to certain failures by the Company to comply with certain reporting covenants in the Indenture consists exclusively of the right of the noteholders to receive special interest on the Notes for up to 180 days at a specified rate per annum not exceeding 0.50% on the principal amount of the Notes.

The Company used approximately $69,518 of the net proceeds from the Notes to fund the cost of entering into the capped call transactions described below. The Company used a portion of the remainder of the net proceeds from the offering to repay amounts owed under the HPS Credit Facility.

On February 4, 2021, in connection with the pricing of the Notes, the Company entered into privately negotiated capped call transactions (the “Base Capped Call Transactions”) with certain of the initial purchasers of the Notes and/or their respective affiliates and/or other financial institutions (the “Option Counterparties”). In addition, on February 9, 2021, in connection with First Greenshoe Exercise and on February 11, 2021, in connection with the Second Greenshoe Exercise, the Company entered into additional privately negotiated capped call transactions (collectively, and together with the Base Capped Call Transactions, the “Capped Call Transactions”) with the Option Counterparties. The Capped Call Transactions cover, subject to anti-dilution adjustments substantially similar to those applicable to the Notes, the number of shares of Class A common stock initially underlying the Notes. The Capped Call Transactions are expected generally to reduce potential dilution to the Class A common stock upon any conversion of the Notes and/or offset any potential cash payments the Company is required to make in excess of the principal amount of such converted Notes, as the case may be, with such reduction and/or offset subject to a cap.

The Capped Call Transactions are separate transactions entered into by the Company with each Option Counterparty, and are not part of the terms of the Notes and will not affect any noteholder’s rights under the Notes. Noteholders will not have any rights with respect to the Capped Call Transactions.

In connection with the issuance of the Notes, SmileDirectClub, Inc. entered into an intercompany convertible promissory note (“Intercompany Convertible Note”) with SDC Financial, LLC, whereby SmileDirectClub, Inc. provided the net proceeds from the issuance of the Notes to SDC Financial, LLC. The terms of the Intercompany Convertible Note mirrors the terms of the Notes issued by SmileDirectClub, Inc. The intent of the Intercompany Convertible Note is to maintain the parity of shares of Class A common stock with LLC Units as required by the SDC Financial LLC Agreement.

2020 HPS Credit Facility

In May 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 (the “2020 HPS Credit Facility”). On March 29, 2021, the HPS Credit Facility was paid in full and terminated. In connection with the repayment, the unamortized loan costs, the unaccreted warrant value, and the prepayment fee described above are recorded as a loss on extinguishment of debt in the accompanying interim condensed consolidated statements of operations.

2022 HPS Credit Facility

On April 27, 2022, SPV entered into a Loan Agreement (“the 2022 HPS Credit Facility”) by and 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 42-month secured delayed-draw term loan facility to SPV in an aggregate maximum principal amount of up to $255,000.

The Company recorded $5,426 for deferred financing costs of the 2022 HPS Credit Facility. Of the $5,426 deferred financing costs, $3,888 is associated with the unused loan commitment amount and is presented as “Other assets” in the accompanying interim condensed consolidated balance sheets. The remaining costs of $1,539 are amortized over the term of the loan. During the three and six months ended June 30, 2022, the Company amortized under the effective interest rate method $243 of deferred financing costs.

Outstanding loans under the Loan Agreement bear interest at a variable rate equal to (i) subject to a 1.00% per annum floor, three-month LIBOR plus 10.75% per annum, of which interest accrued at up to 3.75% per annum may be payable in kind, or (ii) subject to a 2.00% per annum floor, an interest rate equal to the greater of (a) the prime rate in effect from time to time and (b) the federal funds rate in effect from time to time plus 0.5%, plus in each case 9.75% per annum, of which, in each of the foregoing cases, interest accrued at up to 3.75% per annum may be payable in kind. In addition to paying interest on the outstanding principal balance, the Company is required to pay lender’s commitment fee of 2.75% per annum based on the unused facility amount. As required under the loan agreement, the total of $13,000 was deposited into the SDC Cash Reserve account on the closing date of the 2022 HPS Credit Facility.

Subject to certain exceptions, the Loan Agreement is secured by first-priority security interests in SPV’s assets, which consist of certain receivables, cash, 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 (collectively, the “Guarantors”). The Guarantors guarantee (i) on a full recourse basis, up to 10% of SPV’s outstanding obligations under the Loan Agreement plus enforcement costs, and (ii) certain losses incurred by the lenders as a result of fraud, misrepresentation, legal and regulation violations and certain other actions and omissions by SPV and/or certain of its affiliates. The Guarantors do not pledge their assets to secure any obligations of SPV under the Loan Agreement. As of June 30, 2022, the Company had $214,840 of its receivable collateralized as part of the 2022 HPS Credit Facility.

The 2022 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 $50,000 and are subject to additional leverage ratios upon the occurrence of additional debt.

If any event of default under the 2022 HPS Credit Facility occurs, then the collateral agent may declare any outstanding obligations under the 2022 HPS Credit Facility to be immediately due and payable. In addition, if SPV or certain of its affiliates become the subject of voluntary or involuntary proceedings under any bankruptcy, insolvency or similar law, then any outstanding obligations under the 2022 HPS Credit Facility will automatically become immediately due and payable.

As of June 30, 2022, the Company had $65,000 outstanding including the original discount of $10,200 and was in compliance with all covenants in the 2022 HPS Credit Facility.

HPS Warrants

In connection with the 2020 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 2020 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 included within stockholders’ equity. The termination and payoff of the 2020 HPS Credit Facility did not impact the HPS Warrants.

Align Redemption Promissory Note

In connection with the required redemption of Align’s 20,710 Pre-IPO Units described in Note 15, the Company entered into a promissory note with Align Technology, Inc. (“Align”). Under the terms of the promissory note, the Company was scheduled to make monthly payments of $2,311 to Align through March 2021. The promissory note bore annual interest of 2.52% which is included in the interim condensed consolidated statement of operations. As of June 30, 2022, the Company has $0 outstanding under this promissory note.

Future Maturities

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


	2022 HPS Credit Facility		2026 Convertible Senior Notes		Total
2022 (remaining)	$	—	$	—	$	—
2023	—		—		$	—
2024	—		—		$	—
2025	65,000		—		$	65,000
2026	—		747,500		$	747,500

Total	$	65,000	$	747,500	$	812,500

- Definition

The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants.

+ References

Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
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+ Details

Noncontrolling Interests	6 Months Ended
Noncontrolling Interests	Jun. 30, 2022
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, 2022, SDC Inc. had 120,995,922 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, 2022, SDC Inc. had a 31.0% economic ownership interest in SDC Financial.

Variable Interest Entities	6 Months Ended
Variable Interest Entities	Jun. 30, 2022
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 Financial’s 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 three months and six months ended June 30, 2022 and 2021. Prior to the IPO and Reorganization Transactions, SDC Inc. was not impacted by SDC Financial.

Incentive Compensation Plans

6 Months Ended

Jun. 30, 2022

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, 2022:


	Number of Options	Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (Number of Years)	Aggregate Intrinsic Value
Outstanding at December 31, 2021	1,664,122	$	22.70	7.7	$	—
Granted	—	—		—	—
Exercised	—	—		—	—
Expired	—	—		—	—
Forfeited	(260,869)	23.00		—	—
Outstanding at June 30, 2022	1,403,253	$	22.64	7.3	$	—
Exercisable at June 30, 2022	610,316	$	22.80	7.3	$	—

The Company estimates fair value of the Options using the Black-Scholes option pricing model. There were no grants during the six months ended June 30, 2022.

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 which were released over a period of six to twenty-four months following the date of the IPO. The unvested portion of the IBAs is 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:


	RSUs	Weighted Average Grant Date Fair Value
RSUs outstanding, December 31, 2021	4,837,161	$	15.53
Granted	26,975,166	$	2.26
Vested	(1,186,557)	$	10.30
Forfeited	(1,902,216)	$	6.18
RSUs outstanding, June 30, 2022	28,723,554	$	2.97

As of June 30, 2022, unrecognized RSUs compensation expense was $74,363. This expense is expected to be recognized over a weighted average period of 3.0 years.

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 $8,560, $12,008, $13,866, and $27,167 for the three and six months ended June 30, 2022 and 2021, respectively. Amounts are included in general and administrative expense on the interim condensed consolidated statements of operations.

Earnings (Loss) Per Share

6 Months Ended

Jun. 30, 2022

Earnings Per Share [Abstract]

Earnings (Loss) Per Share

Earnings (Loss) Per ShareBasic earnings per share of Class A common stock is computed by dividing net loss 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 loss 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.

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


	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Numerator:
Net loss	$	(65,486)	$	(55,257)	$	(138,690)	$	(150,902)

Less: Net loss attributable to noncontrolling interests	(45,181)		(38,377)		(95,804)		(105,113)
Net loss attributable to SDC Inc. - basic	(20,305)		(16,880)		(42,886)		(45,789)
Add: Reallocation of net loss attributable to noncontrolling interests from the assumed exchange of LLC Units for Class A common stock	(45,181)		(38,377)		(95,804)		(105,113)
Net loss attributable to SDC Inc. - diluted	$	(65,486)	$	(55,257)	$	(138,690)	$	(150,902)
Denominator:
Weighted average shares of Class A common stock outstanding - basic	120,818,400		118,344,050		120,507,211		117,656,599
Add: Dilutive effects as shown separately below
LLC Units that are exchangeable for Class A common stock	268,847,523		269,265,627		268,976,028		269,589,521
Weighted average shares of Class A common stock outstanding - diluted	389,665,923		387,609,677		389,483,239		387,246,120

Earnings (loss) per share of Class A common stock outstanding - basic	$	(0.17)	$	(0.14)	$	(0.36)	$	(0.39)
Earnings (loss) per share of Class A common stock outstanding - diluted	$	(0.17)	$	(0.14)	$	(0.36)	$	(0.39)

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 (loss) 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 earnings (loss) per share in the periods presented:


	Three Months Ended June 30,		Six Months Ended June 30,
	2022	2021	2022	2021
Options	1,403,253	1,729,339	1,403,253	1,729,339
Restricted Stock Units	28,723,554	5,811,738	28,723,554	5,811,738
Warrants	3,889,575	3,889,575	3,889,575	3,889,575
Shares issuable under the Notes (if converted method)(1)	41,389,822	41,389,822	41,389,822	41,389,822

(1) In connection with the issuance of the Notes, the Company entered into Capped Call Transactions, which were not included for purposes of calculating the number of diluted shares outstanding, as their effect would have been anti-dilutive. The Capped Call Transactions are expected to reduce the potential dilution to the Company’s common stock (or, in the event a conversion of the Notes is settled in cash, to reduce its cash payment obligation) in the event that at the time of conversion of the Notes the Company’s common stock price exceeds the conversion price of the Notes.

Employee Benefit Plans	6 Months Ended
Employee Benefit Plans	Jun. 30, 2022
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 three and six months ended June 30, 2022 and 2021, 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 $719, $780, $1,554 and $1,600 to the 401(k) plan for the three and six months ended June 30, 2022 and 2021, respectively.

- Definition

The entire disclosure for retirement benefits.

+ References

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+ Details

Related Party Transactions	6 Months Ended
Related Party Transactions	Jun. 30, 2022
Related Party Transactions [Abstract]
Related Party Transactions	Related Party Transactions Products and Services The Company purchased legal services from a law firm where a partner is an immediate family member of an executive officer and director of the Company. Fees paid for services totaled $2,263, $1,916, $4,532 and $3,262 for the three and six months ended June 30, 2022 and 2021, respectively. Distribution PayableIn 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 Align arbitration proceedings to the pre-IPO investors. The arbitration proceedings were finalized and this amount plus accrued interest was paid to Align in March 2021.

Commitments and Contingencies	6 Months Ended
Commitments and Contingencies	Jun. 30, 2022
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 and could have a material impact on the financial statements. 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 or former 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). 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 the actions are in the preliminary stages. The Company denies any alleged wrongdoing and is vigorously defending against these actions. In December 2019, the Fernandez, Vang, Mancour and Wei Wei actions were consolidated and re-captioned In re SmileDirectClub, Inc. Securities Litigation, 19-1169-IV (Davidson County, TN Chancery Court). Plaintiffs filed a consolidated amended complaint on December 20, 2019, and Defendants moved to stay or dismiss the action on February 10, 2020. On June 4, 2020, the court denied that motion. Defendants subsequently moved for permission to seek an interlocutory appeal of that decision. On June 22, 2020, the court granted that motion. On August 3, 2020, Defendants filed an application for interlocutory appeal with the court of appeals, which was denied. On September 21, 2020, Defendants filed an application for interlocutory appeal with the Tennessee Supreme Court, which was denied. On October 2, 2020, Plaintiffs moved for class certification, which Defendants opposed on January 25, 2021. On April 28, 2021, the court ruled in favor of the Plaintiffs class certification. The Company filed its notice of appeal on May 4, 2021. That appeal was fully briefed as of October 6, 2021. All trial court proceedings are stayed during the pendency of the appeal. On March 18, 2022, the Tennessee Court of Appeals dismissed the Plaintiff's Section 12(a)(2) claims but affirmed the grant of certification. The trial court stay has been lifted and discovery has commenced in the trial court. 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. Plaintiffs filed a consolidated amended complaint on February 21, 2020, and Defendants moved to dismiss the action on March 23, 2020. That motion remains pending. While that motion was pending, the parties stipulated to allow Plaintiffs to file a further amended complaint, which Plaintiffs filed on March 31, 2021. Defendants’ motion to dismiss the new complaint was due on or before May 14, 2021. That motion was fully briefed as of July 19, 2021 and remains pending. In the Nurlybayev action, on January 10, 2020, the Defendants moved to dismiss or stay the entire action in favor of the related actions pending in Tennessee, which motion was granted and the case was dismissed on February 26, 2020. On June 19, 2020, Plaintiff Nurlybayev filed a substantially similar action in New York state court. On August 21, 2020, Defendants filed a motion to dismiss that action, which the Court granted on May 25, 2021. On January 31, 2022, Plaintiff filed a notice of appeal. On March 2, 2022, we filed our opposition. Plaintiff filed their reply brief on March 11, 2022. On April 5, 2022, the Court heard argument on the appeal and on May 5, 2022 the Court of Appeals granted our motion to dismiss. In the Sasso action, Plaintiff agreed to stay the action pending resolution of any motions to dismiss in any of the related actions. The Court so-ordered the parties’ stipulation to that effect on January 22, 2020. 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. Following a proactive voluntary dismissal by the majority of consumer plaintiffs, one consumer has 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 the Court stayed the consumer claims pending the appeal. On June 25, 2021, the appellate court reversed the district court and remanded with instructions to order the intervening plaintiff to mandatory binding arbitration. All remaining consumer claims remain stayed. On October 13, 2021, the Court entered an Amended Scheduling Order, effectively staying merits discovery, and setting deadlines of March 30, 2022, to complete class certification fact discovery and September 2, 2022, to complete briefing on motions regarding class certification. Class certification fact discovery was completed on March 30, 2022. The Company denies any alleged wrongdoing and intends to defend against this action vigorously. Some state dental 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 the FTC and DOJ filed a joint Amicus Brief in support of the Company. Oral argument was held on July 26, 2021, with the FTC and DOJ arguing in support of the Company at oral argument as well. On March 17, 2022 the 9th Circuit issued its ruling reversing in part and affirming in part the District Court’s decision. On April 21, 2022, the 9th Circuit issued an amended opinion adding a footnote indicating that no petitions for panel rehearing or rehearing en banc will be entertained. The case will now proceed to discovery in the District Court and trial has been set for May 2023. Both the Alabama and Georgia matters were then sent to the 11th Circuit Court of Appeals as a result of the dental boards in both states appealing the lower court’s decisions. Oral argument before the 11th 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. On December 8, 2020, the 11th Circuit Court of Appeals voted to have a rehearing en banc. The FTC and DOJ filed an amicus and participated in oral argument that was held on February 23, 2021. On July 20, 2021, the 11th Circuit Court of Appeals ruled in the Company’s favor, finding that the Georgia Dental Board did not have an interlocutory right of appeal and therefore denied the Georgia Board’s appeal. On July 29, 2021, the 11th Circuit Court of Appeals also denied the Alabama Dental Board’s appeal. Both cases were remanded to the respective District Courts to proceed accordingly into the discovery phase. On November 22, 2021, the Georgia Board filed a motion to dismiss in the Northern District of Georgia. On January 6, 2022, a hearing was held on the motion to dismiss. On July 15, 2022, the Court granted the Georgia Board’s motion to dismiss without prejudice, allowing the Company to reassert its claims and an amended Complaint was filed on July 29, 2022. On July 12, 2021, the Australian Competition & Consumer Commission filed an Originating Application against SmileDirectClub, LLC and the Company’s Australian affiliate SmileDirectClub Aus Pty Ltd. The Originating Application alleges certain misstatements by the Company in connection with the availability of consumers having the ability to have private health care coverage cover a portion of their costs when seeking treatment through the Company’s telehealth platform. The Company has denied any wrongdoing and has filed its Concise Response to the Statement of Claim. Should the matter not be resolved, trial has been scheduled to commence on April 17, 2023. 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 (“TRA”) 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, 2022 and 2021, 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. Other Tax Matters We operate in numerous jurisdictions in which taxing authorities may challenge our position with respect to income and non-income-based taxes. We routinely receive inquiries and may also from time to time receive challenges or assessments from these taxing authorities. With respect to non-income-based taxes, we recognize liabilities when we believe it is probable that amounts will be owed to the taxing authorities and such amounts are estimable. For example, in most countries we charge and remit Value Added Tax (“VAT”) when procuring goods and services, or providing services, within the normal course of business. VAT receivables are established in jurisdictions where input VAT exceeds output VAT and are recoverable through the filing of refund claims. These receivables have inherent audit and collection risks unique to the specific jurisdictions that evaluate our refund claims. We have received a challenge from a non-U.S. taxing authority for VAT related to certain sales made and services provided by certain of the Company’s subsidiaries. The Company believes these transactions are exempt from VAT and has filed legal actions challenging the taxing authority’s application of VAT to them. Discussions on these matters are ongoing. The Company believes its interpretation of these VAT rules is appropriate, and that it will be successful in its challenge against the taxing authority’s assessments. Accordingly, the Company does not believe it is probable that it will incur a loss related to these matters. However, the interpretation and application of these VAT rules is an unsettled issue, and the resolution of tax and regulatory matters is unpredictable. If it is determined in these proceedings that VAT applies to some or all of these various transactions, the Company could incur a charge that ranges between zero and $22,900 for these matters, including any interest and penalties associated with these matters and the amount, if any, of VAT the Company might subsequently recover related to its input costs.

Segment Reporting

6 Months Ended

Jun. 30, 2022

Segment Reporting [Abstract]

Segment Reporting

The Company provides aligner products. The Company’s chief operating decision maker (“CODM”) views the operations and manages the business primarily on a consolidated basis, however, the CODM regularly evaluates, monitors, and makes operational decisions based on the results of operations segmented between North America (defined as the U.S. and Canada) and Rest of World. For both three and six months ended June 30, 2022, approximately 85.1% of the Company’s revenues were generated by sales within North America, and substantially all of its net property, plant and equipment was within North America. Below are the tabular results of operations summarized at the revenue and operating loss level for North America and the Rest of World for the three and six months ended June 30, 2022 and 2021.


	Three Months Ended June 30, 2022
	North America		Rest of World		Total
Revenue	$	107,019	$	18,777	$	125,796

Net loss before provision for income tax expense (benefit)	$	(49,032)	$	(16,198)	$	(65,230)

Reconciliation of net loss before provision for income tax expense (benefit) to Adjusted EBITDA
Depreciation and amortization	$	16,797	$	2,783	$	19,580
Interest expense	4,442		12		4,454

Restructuring and other related costs	2,814		354		3,168

Equity-based compensation	7,419		1,141		8,560
Other non-operating general and administrative losses	4,373		1,933		6,306
Adjusted EBITDA	$	(13,187)	$	(9,975)	$	(23,162)


	Three Months Ended June 30, 2021
	North America		Rest of World		Total
Revenue	$	145,533	$	28,648	$	174,181

Net loss before provision for income tax expense (benefit)	$	(37,794)	$	(17,475)	$	(55,269)

Reconciliation of net loss before provision for income tax expense (benefit) to Adjusted EBITDA
Depreciation and amortization	$	14,054	$	2,655	$	16,709
Interest expense	1,936		3		1,939

Restructuring and other related costs	513		23		536

Equity-based compensation	10,492		1,516		12,008
Other non-operating general and administrative losses	1,669		(68)		1,601
Adjusted EBITDA	$	(9,130)	$	(13,346)	$	(22,476)


	Six Months Ended June 30, 2021
	North America		Rest of World		Total
Revenue	$	311,751	$	61,891	$	373,642

Net loss before provision for income tax expense (benefit)	$	(119,610)	$	(29,597)	$	(149,207)

Reconciliation of net loss before provision for income tax expense (benefit) to Adjusted EBITDA
Depreciation and amortization	$	27,925	$	5,244	$	33,169
Interest expense	19,489		16		19,505

Restructuring and other related costs	1,603		61		1,664
Loss on extinguishment of debt	47,631		—		47,631
Equity-based compensation	23,229		3,938		27,167
Other non-operating general and administrative losses	2,195		318		2,513
Adjusted EBITDA	$	2,462	$	(20,020)	$	(17,558)

- Definition

The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 31
-URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8924-108599

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 34
-URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8981-108599

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 21
-Subparagraph (a)
-URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8721-108599

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
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-URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e9031-108599

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 32
-Subparagraph (f)
-URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8933-108599

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 32
-Subparagraph (e)
-URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8933-108599

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 26
-URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8844-108599

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
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-Section 50
-Paragraph 41
-URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e9038-108599

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 32
-Subparagraph (d)
-URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8933-108599

Reference 10: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
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-Paragraph 22
-URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8736-108599

Reference 11: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 42
-URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e9054-108599

Reference 12: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
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-Section 50
-Paragraph 15
-URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8657-108599

Reference 13: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 21
-Subparagraph (b)
-URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8721-108599

Reference 14: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-URI https://asc.fasb.org/topic&trid=2134510

+ Details

Summary of Significant Accounting Policies (Policies)	6 Months Ended
Summary of Significant Accounting Policies (Policies)	Jun. 30, 2022
Accounting Policies [Abstract]
Basis of Presentation and Consolidation	Basis of Presentation and ConsolidationThe accompanying interim condensed consolidated 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 10-01 of 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 periods are not necessarily indicative of the results to be obtained for the full fiscal year. All intercompany balances and transactions are eliminated in consolidation. 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, 2022, the variable interest entities include 56 dentist owned PCs, and at December 31, 2021 the variable interest entities included 53 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 interim condensed consolidated statements of operations reflect the revenue earned and the expenses incurred by the PCs.
Management Use of Estimates	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 at the time of issuance within equity on the interim condensed consolidated balance sheet using the Black-Scholes option pricing model (see Note 9). 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	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 cancellations and refunds from customer 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 SSP. 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, expected net collections including implicit price concessions, and cancellations and refunds from customer returns, business and economic conditions, and other collection indicators. Management relies on the results of detailed reviews of historical write-offs, cancellations, returns, and collections as a primary source of information in estimating the amount of contract consideration expected to be collected. 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, touch-up aligners, and retainers for international sales only which can occur at any time throughout the treatment plan (which is typically between five months 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 26 months. The Company’s accounts receivable related to the SmilePay financing program are reported at the amount expected to be collected on the interim condensed 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 doctor-prescribed impression kits to its customers as an alternative to an in-person visit at one of its SmileShops, popup locations, or Partner Network locations, comprised of affiliated dentist and orthodontist offices, 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 or retail partner. Deferred Revenue: Deferred revenue represents the Company’s contract liability for performance obligations associated with sales of aligners.Shipping and Handling CostsShipping and handling charges are recorded in cost of revenues in the interim condensed consolidated statements of operations upon shipment. 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.
Allowance for credit losses and other revenue adjustments	Allowance for credit losses and other revenue adjustments: The Company records a provision to maintain an allowance for credit losses and other revenue adjustments that result from the failure or inability of its members or other partners to make required payments deemed collectible when the product was delivered, or customer returns resulting in cancellations or refunds. When determining the allowances for member receivables, the Company considers the probability of recoverability of accounts receivable based on past experience, taking into account current collection trends and general economic factors, including bankruptcy rates. The Company also considers future economic trends in its estimation of expected credit losses over the lifetime of the asset. Credit risks are assessed based on historical write-offs, cancellations, and adjustments, net of recoveries, as well as an analysis of the aged accounts receivable balances. Accounts receivable may be fully reserved for when specific collection issues are known to exist, such as a history of missed scheduled payments and customer service or production issues.
Marketing and Selling, General and Administrative Expenses	Marketing and Selling ExpensesMarketing 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, including advertising, are expensed as incurred. 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 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 is 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 is included in cost of revenues, marketing and selling expenses, and general and administrative expenses depending on the purpose of the related asset.
Fair Value of Financial Instruments	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, current and non-current receivables, accounts payable, debt instruments, 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.
Certain Risks and Uncertainties	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, 2022 or December 31, 2021, or net revenue for the three and six months ended June 30, 2022 and 2021. 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	Cash Cash 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.
Inventories	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, Net Property, plant and equipment are stated at cost less accumulated depreciation and amortization and impairment charges. 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 interim condensed consolidated statements of operations.
Leases	Leases 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 operating lease liabilities in the interim 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 interim 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	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.
Impairment	ImpairmentThe Company evaluates long-lived 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	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	Income Taxes SDC Inc. is the managing member of SDC Financial and, as a result, consolidates the financial results of SDC Financial in the interim 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 interim condensed 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 interim condensed 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 computes the provision for income taxes using the liability method and recognizes deferred tax assets and liabilities for temporary differences between financial statement and income tax bases of assets and liabilities, as well as for operating loss and tax credit carryforwards. The Company measures deferred tax assets and liabilities using tax rates applicable to taxable income in effect for the years in which those tax assets are expected to be realized or settled and provides a valuation allowance against deferred tax assets when it cannot conclude that it is more likely than not that some or all deferred tax assets will be realized. In addition, the Company recognizes tax benefits from uncertain tax positions only if it expects that its tax positions are more likely than not that they will be sustained, based on the technical merits of the positions, on examination by the jurisdictional tax authority. The Company recognizes any accrued interest and penalties to unrecognized tax benefits as interest expense and income tax expense, respectively. Tax Receivable Agreement In connection with the Reorganization Transactions and the IPO, the Company entered into a 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 interim condensed consolidated financial statements when amounts become probable as to incurrence and estimable in amount.

Summary of Significant Accounting Policies (Tables)

6 Months Ended

Jun. 30, 2022

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,
	2022		2021		2022		2021
Aligner revenue, net	$	99,032	$	142,854	$	217,960	$	310,317
Financing revenue, net	8,994		11,594		18,128		22,253
Retainers and other products revenue	17,770		19,733		41,354		41,072

Total revenue	$	125,796	$	174,181	$	277,442	$	373,642
Implicit price concessions, cancellations, and refunds included in total revenue	$	23,910	$	33,129	$	52,319	$	68,649

Schedule of Accounts Receivable Allowance for Credit Loss and Revenue Adjustments

Activity in the allowance for credit losses and other revenue adjustments was as follows:


	Accounts Receivable Allowance for Credit Losses
Balance at January 1, 2022	$	49,309
Current period provision for expected credit losses	28,409
Write-offs and other adjustments charged against the allowance, net of recoveries	(27,353)
Refunds paid	(2,746)
Balance at March 31, 2022	$	47,619
Current period provision for expected credit losses	23,910
Write-offs and other adjustments charged against the allowance, net of recoveries	(23,247)
Refunds paid	(3,379)
Balance at June 30, 2022	$	44,903

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,
	2022		2021		2022		2021
Cost of revenues	$	5,676	$	6,879	$	11,519	$	13,929
Marketing and selling expenses	862		1,473		1,826		3,044
General and administrative expenses	13,042		8,357		25,151		16,196
Total	$	19,580	$	16,709	$	38,496	$	33,169

Inventories (Tables)

6 Months Ended

Jun. 30, 2022

Inventory Disclosure [Abstract]

Schedule of Inventory

Inventories are comprised of the following:



	June 30,		December 31,
	2022		2021
Raw materials	$	16,575	$	14,662
Finished goods	26,535		26,141
Total inventories	$	43,110	$	40,803

Prepaid and Other assets (Tables)

6 Months Ended

Jun. 30, 2022

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,		December 31,
	2022		2021
Prepaid expenses	$	12,253	$	11,496
Deposits to vendors	4,646		5,443
Other	6,917		580
Total prepaid and other current assets	$	23,816	$	17,519
Prepaid expenses, non-current	$	1,523	$	1,911
Deposits to vendors, non-current	919		967
Indefinite-lived intangible assets	7,820		7,155
Other intangible assets, net	2,233		2,458
Investments and other	6,855		2,989
Total other assets	$	19,350	$	15,480

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

6 Months Ended

Jun. 30, 2022

Restructuring and Related Activities [Abstract]

Schedule of Restructuring Charges

The following table summarizes lease abandonment and impairment of long-lived assets and restructuring and other related charges for the periods presented:


	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Lease abandonment and impairment of long-lived assets:
Impairment of property, plant and equipment	$	—	$	—	$	1,232	$	—

	$	—	$	—	$	1,232	$	—
Restructuring and other related charges:
Impairment of inventory	$	189	$	—	$	643	$	—
Short-term lease termination fees	66		—		258		—
Other expenses including personnel related costs such as severance and retention	2,913		536		13,799		1,664
	$	3,168	$	536	$	14,700	$	1,664

Property, plant and equipment, net (Tables)

6 Months Ended

Jun. 30, 2022

Property, Plant and Equipment [Abstract]

Schedule of Property, Plant, and Equipment, Net

Property, plant and equipment were comprised of the following:



	June 30,		December 31,
	2022		2021
Lab and SmileShop equipment	$	119,704	$	118,320
Computer equipment and software	208,028		178,508
Leasehold improvements	35,262		36,474
Furniture and fixtures	13,814		13,321
Vehicles	6,882		8,018
Construction in progress	12,314		23,182
	396,004		377,823
Less: accumulated depreciation	(185,430)		(150,622)
Property, plant and equipment, net	$	210,574	$	227,201

Accrued Liabilities (Tables)

6 Months Ended

Jun. 30, 2022

Payables and Accruals [Abstract]

Schedule of Accrued Liabilities

Accrued liabilities were comprised of the following:



	June 30,		December 31,
	2022		2021
Accrued marketing and selling costs	$	27,412	$	37,883
Accrued payroll and payroll related expenses	22,815		15,829
Accrued sales tax and related costs	4,047		8,769
Other	36,788		59,585
Total accrued liabilities	$	91,062	$	122,066

Long-Term Debt (Tables)

6 Months Ended

Jun. 30, 2022

Debt Disclosure [Abstract]

Schedule of Debt and Finance Lease Obligations

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



	June 30,		December 31,
	2022		2021
2026 Convertible Senior Notes, net of unamortized financing costs $15,500 and $17,527, respectively	$	732,000	$	729,973
2022 HPS Credit Facility, net of unamortized financing costs of $1,296	53,961		—


Finance lease obligations	6,189		10,997
Total debt	792,150		740,970
Less current portion	(6,189)		(10,997)
Total long-term debt	$	785,961	$	729,973

Schedule of Maturities of Long-term Debt

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


	2022 HPS Credit Facility		2026 Convertible Senior Notes		Total
2022 (remaining)	$	—	$	—	$	—
2023	—		—		$	—
2024	—		—		$	—
2025	65,000		—		$	65,000
2026	—		747,500		$	747,500

Total	$	65,000	$	747,500	$	812,500

Incentive Compensation Plans (Tables)

6 Months Ended

Jun. 30, 2022

Share-Based Payment Arrangement [Abstract]

Schedule of Stock Option Activity

Options activity was as follows during the six months ended June 30, 2022:


	Number of Options	Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (Number of Years)	Aggregate Intrinsic Value
Outstanding at December 31, 2021	1,664,122	$	22.70	7.7	$	—
Granted	—	—		—	—
Exercised	—	—		—	—
Expired	—	—		—	—
Forfeited	(260,869)	23.00		—	—
Outstanding at June 30, 2022	1,403,253	$	22.64	7.3	$	—
Exercisable at June 30, 2022	610,316	$	22.80	7.3	$	—

Schedule of Restricted Stock Unit Activity

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


	RSUs	Weighted Average Grant Date Fair Value
RSUs outstanding, December 31, 2021	4,837,161	$	15.53
Granted	26,975,166	$	2.26
Vested	(1,186,557)	$	10.30
Forfeited	(1,902,216)	$	6.18
RSUs outstanding, June 30, 2022	28,723,554	$	2.97

Earnings (Loss) Per Share (Tables)

6 Months Ended

Jun. 30, 2022

Earnings Per Share [Abstract]

Schedule of Earnings (Loss) Per Share, Basic and Diluted

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


	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Numerator:
Net loss	$	(65,486)	$	(55,257)	$	(138,690)	$	(150,902)

Less: Net loss attributable to noncontrolling interests	(45,181)		(38,377)		(95,804)		(105,113)
Net loss attributable to SDC Inc. - basic	(20,305)		(16,880)		(42,886)		(45,789)
Add: Reallocation of net loss attributable to noncontrolling interests from the assumed exchange of LLC Units for Class A common stock	(45,181)		(38,377)		(95,804)		(105,113)
Net loss attributable to SDC Inc. - diluted	$	(65,486)	$	(55,257)	$	(138,690)	$	(150,902)
Denominator:
Weighted average shares of Class A common stock outstanding - basic	120,818,400		118,344,050		120,507,211		117,656,599
Add: Dilutive effects as shown separately below
LLC Units that are exchangeable for Class A common stock	268,847,523		269,265,627		268,976,028		269,589,521
Weighted average shares of Class A common stock outstanding - diluted	389,665,923		387,609,677		389,483,239		387,246,120

Earnings (loss) per share of Class A common stock outstanding - basic	$	(0.17)	$	(0.14)	$	(0.36)	$	(0.39)
Earnings (loss) per share of Class A common stock outstanding - diluted	$	(0.17)	$	(0.14)	$	(0.36)	$	(0.39)

Schedule of Antidilutive Securities Excluded from Computation of Earnings (Loss) Per Share

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


	Three Months Ended June 30,		Six Months Ended June 30,
	2022	2021	2022	2021
Options	1,403,253	1,729,339	1,403,253	1,729,339
Restricted Stock Units	28,723,554	5,811,738	28,723,554	5,811,738
Warrants	3,889,575	3,889,575	3,889,575	3,889,575
Shares issuable under the Notes (if converted method)(1)	41,389,822	41,389,822	41,389,822	41,389,822

Segment Reporting (Tables)

6 Months Ended

Jun. 30, 2022

Segment Reporting [Abstract]

Schedule Of Reconciliation To Income Loss From Continuing Operations

Below are the tabular results of operations summarized at the revenue and operating loss level for North America and the Rest of World for the three and six months ended June 30, 2022 and 2021.


	Three Months Ended June 30, 2022
	North America		Rest of World		Total
Revenue	$	107,019	$	18,777	$	125,796

Net loss before provision for income tax expense (benefit)	$	(49,032)	$	(16,198)	$	(65,230)

Reconciliation of net loss before provision for income tax expense (benefit) to Adjusted EBITDA
Depreciation and amortization	$	16,797	$	2,783	$	19,580
Interest expense	4,442		12		4,454

Restructuring and other related costs	2,814		354		3,168

Equity-based compensation	7,419		1,141		8,560
Other non-operating general and administrative losses	4,373		1,933		6,306
Adjusted EBITDA	$	(13,187)	$	(9,975)	$	(23,162)


	Six Months Ended June 30, 2022
	North America		Rest of World		Total
Revenue	$	236,049	$	41,393	$	277,442

Net loss before provision for income tax expense (benefit)	$	(103,061)	$	(36,836)	$	(139,897)

Reconciliation of net loss before provision for income tax expense (benefit) to Adjusted EBITDA
Depreciation and amortization	$	32,351	$	6,145	$	38,496
Interest expense	5,976		34		6,010
Lease abandonment and impairment of long-lived assets	—		1,232		1,232
Restructuring and other related costs	11,324		3,376		14,700

Equity-based compensation	11,956		1,910		13,866
Other non-operating general and administrative losses	5,242		2,748		7,990
Adjusted EBITDA	$	(36,212)	$	(21,391)	$	(57,603)


	Three Months Ended June 30, 2021
	North America		Rest of World		Total
Revenue	$	145,533	$	28,648	$	174,181

Net loss before provision for income tax expense (benefit)	$	(37,794)	$	(17,475)	$	(55,269)

Reconciliation of net loss before provision for income tax expense (benefit) to Adjusted EBITDA
Depreciation and amortization	$	14,054	$	2,655	$	16,709
Interest expense	1,936		3		1,939

Restructuring and other related costs	513		23		536

Equity-based compensation	10,492		1,516		12,008
Other non-operating general and administrative losses	1,669		(68)		1,601
Adjusted EBITDA	$	(9,130)	$	(13,346)	$	(22,476)


	Six Months Ended June 30, 2021
	North America		Rest of World		Total
Revenue	$	311,751	$	61,891	$	373,642

Net loss before provision for income tax expense (benefit)	$	(119,610)	$	(29,597)	$	(149,207)

Reconciliation of net loss before provision for income tax expense (benefit) to Adjusted EBITDA
Depreciation and amortization	$	27,925	$	5,244	$	33,169
Interest expense	19,489		16		19,505

Restructuring and other related costs	1,603		61		1,664
Loss on extinguishment of debt	47,631		—		47,631
Equity-based compensation	23,229		3,938		27,167
Other non-operating general and administrative losses	2,195		318		2,513
Adjusted EBITDA	$	2,462	$	(20,020)	$	(17,558)

Organization and Basis of Presentation - Initial Public Offering (Details) - IPO $ / shares in Units, $ in Thousands	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. 16, 2019
Affiliated Entity \| Tax Receivable Agreement
Noncontrolling Interest [Line Items]
Related party transaction rate		85.00%
SDC Financial, LLC
Noncontrolling Interest [Line Items]
Ownership percentage	26.90%
SDC Financial, LLC \| Continuing LLC Members
Noncontrolling Interest [Line Items]
Ownership percentage	73.10%

Organization and Basis of Presentation - Basis of Presentation and Consolidation (Details) - variable_interest_entity	Jun. 30, 2022	Dec. 31, 2021
Variable Interest Entity, Primary Beneficiary
Variable Interest Entity [Line Items]
Variable interest entity, number of entities	56	53

Organization and Basis of Presentation - COVID-19 Pandemic (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
COVID-19 Pandemic
Restructuring Cost and Reserve [Line Items]
Restructuring costs and asset impairment charges	$ 3,168	$ 536	$ 15,932	$ 1,664

Summary of Significant Accounting Policies - Revenue Recognition (Details)	6 Months Ended
	Jun. 30, 2022
Minimum
Disaggregation of Revenue [Line Items]
Treatment plan period	5 months
Maximum
Disaggregation of Revenue [Line Items]
Treatment plan period	10 months
Customer payment period	26 months

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, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Disaggregation of Revenue [Line Items]
Revenue recognized	$ 125,796	$ 174,181	$ 277,442	$ 373,642
Implicit price concessions, cancellations, and refunds included in total revenue	23,910	33,129	52,319	68,649
Aligner revenue, net
Disaggregation of Revenue [Line Items]
Revenue recognized	99,032	142,854	217,960	310,317
Financing revenue, net
Disaggregation of Revenue [Line Items]
Revenue recognized	8,994	11,594	18,128	22,253
Retainers and other products revenue
Disaggregation of Revenue [Line Items]
Revenue recognized	$ 17,770	$ 19,733	$ 41,354	$ 41,072

- Definition

Amount, including tax collected from customer, of revenue from satisfaction of performance obligation by transferring promised good or service to customer. Tax collected from customer is tax assessed by governmental authority that is both imposed on and concurrent with specific revenue-producing transaction, including, but not limited to, sales, use, value-added and excise.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 41
-Subparagraph (a)
-URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e9038-108599

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 5
-URI https://asc.fasb.org/extlink&oid=126920106&loc=SL49130545-203045

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 32
-Subparagraph (b)
-URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8933-108599

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 32
-Subparagraph (a)
-URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8933-108599

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 30
-Subparagraph (a)
-URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8906-108599

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 22
-Subparagraph (b)
-URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8736-108599

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 22
-Subparagraph (a)
-URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8736-108599

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 4
-Subparagraph (a)
-URI https://asc.fasb.org/extlink&oid=126920106&loc=SL49130543-203045

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 42
-URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e9054-108599

Reference 10: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 40
-URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e9031-108599

Reference 11: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 924
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SAB Topic 11.L)
-URI https://asc.fasb.org/extlink&oid=6472922&loc=d3e499488-122856

+ Details

Summary of Significant Accounting Policies - Deferred Revenue (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Disaggregation of Revenue [Line Items]
Total revenues	$ 125,796	$ 174,181	$ 277,442	$ 373,642
Previously deferred revenue recognized	2,856	4,113
Aligners
Disaggregation of Revenue [Line Items]
Total revenues	$ 99,032	$ 142,854	217,960	310,317
Previously deferred revenue recognized			$ 13,100	$ 20,103

- Definition

+ References

+ Details

Summary of Significant Accounting Policies - Schedule of Accounts Receivable Allowance for Credit Loss (Details) - USD ($) $ in Thousands	3 Months Ended
	Jun. 30, 2022	Mar. 31, 2022	Dec. 31, 2021
Accounts Receivable, Allowance for Credit Loss [Roll Forward]
Beginning balance	$ 47,619	$ 49,309
Current period provision for expected credit losses and other revenue adjustments	23,910	28,409
Write-offs and other adjustments charged against the allowance, net of recoveries	(23,247)	(27,353)
Refunds Paid	(3,379)	(2,746)
Ending balance	44,903	$ 47,619
Implicit price concessions and cancellation and adjustment reserves included in net receivables	39,354		$ 43,097
Customer refund liability, current	$ 5,549		$ 6,212

Summary of Significant Accounting Policies - Shipping and Handling Costs (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Shipping and Handling
Disaggregation of Revenue [Line Items]
Cost of revenues	$ 4,279	$ 9,938	$ 5,768	$ 12,677

Summary of Significant Accounting Policies - Marketing and Selling Expenses (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Accounting Policies [Abstract]
Marketing and selling expenses	$ 71,191	$ 95,943	$ 167,902	$ 193,066

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, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Property, Plant and Equipment [Line Items]
Depreciation and amortization	$ 19,580	$ 16,709	$ 38,496	$ 33,169
Cost of revenues
Property, Plant and Equipment [Line Items]
Depreciation and amortization	5,676	6,879	11,519	13,929
Marketing and selling expenses
Property, Plant and Equipment [Line Items]
Depreciation and amortization	862	1,473	1,826	3,044
General and administrative expenses
Property, Plant and Equipment [Line Items]
Depreciation and amortization	$ 13,042	$ 8,357	$ 25,151	$ 16,196
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, 2022	Dec. 31, 2021
Accounting Policies [Abstract]
Long-term debt	$ 812,500	$ 747,500
Debt facilities borrowings	113,620
Carrying value	$ 732,000

Summary of Significant Accounting Policies - Internally Developed Software Costs (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Property, Plant and Equipment [Line Items]
Capitalized internally developed software costs	$ 5,019	$ 3,772	$ 8,774	$ 8,301
Amortization of internally developed software costs	$ 6,911	$ 3,568	$ 12,692	$ 6,747
Capitalized Computer Software minimum
Property, Plant and Equipment [Line Items]
Amortization period			3 years
Capitalized computer software maximum
Property, Plant and Equipment [Line Items]
Amortization period			5 years

Summary of Significant Accounting Policies - Tax Receivable Agreement (Details)	Sep. 16, 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, 2022	Dec. 31, 2021
Inventory Disclosure [Abstract]
Raw materials	$ 16,575	$ 14,662
Finished goods	26,535	26,141
Total inventories	$ 43,110	$ 40,803

Prepaid and Other assets - Summary of Prepaid and Other Assets (Details) - USD ($) $ in Thousands	Jun. 30, 2022	Dec. 31, 2021
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]
Prepaid expenses	$ 12,253	$ 11,496
Deposits to vendors	4,646	5,443
Other	6,917	580
Total prepaid and other current assets	23,816	17,519
Prepaid expenses, non-current	1,523	1,911
Deposits to vendors, non-current	919	967
Indefinite-lived intangible assets	7,820	7,155
Other intangible assets, net	2,233	2,458
Investments and other	6,855	2,989
Total other assets	$ 19,350	$ 15,480

Prepaid and Other assets - Narrative (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]
Impairment of indefinite-lived intangible assets	$ 0	$ 0	$ 0	$ 0

Lease Abandonment, Impairment of Long-Lived Assets, Restructuring and Other Related Charges - Narrative (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021	Dec. 31, 2022	Dec. 31, 2021
Restructuring Cost and Reserve [Line Items]
Incentive retention payments, vesting period			12 months
Restructuring reserve	$ 133		$ 133
Prepaid expenses	12,253		12,253			$ 11,496
Restructuring and other related charges:
Restructuring Cost and Reserve [Line Items]
Prepaid expenses	6,391		6,391
COVID-19 Pandemic
Restructuring Cost and Reserve [Line Items]
Restructuring costs and asset impairment charges	$ 3,168	$ 536	$ 15,932	$ 1,664
COVID-19 Pandemic \| Restructuring and other related charges: \| Minimum \| Forecast
Restructuring Cost and Reserve [Line Items]
Expected restructuring expenses					$ 20,000
COVID-19 Pandemic \| Restructuring and other related charges: \| Maximum \| Forecast
Restructuring Cost and Reserve [Line Items]
Expected restructuring expenses					$ 25,000

Lease Abandonment, Impairment of Long-Lived Assets, Restructuring and Other Related Charges - Schedule of Restructuring Charges (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Lease abandonment and impairment of long-lived assets:
Lease abandonment and impairment of long-lived assets, total	$ 0	$ 0	$ 1,232	$ 0
Restructuring and other related charges:
Restructuring and other related costs	3,168	536	14,700	1,664
Lease abandonment and impairment of long-lived assets:
Lease abandonment and impairment of long-lived assets:
Impairment of property, plant and equipment	0	0	1,232	0
Lease abandonment and impairment of long-lived assets, total	0	0	1,232	0
Restructuring and other related charges:
Restructuring and other related charges:
Impairment of inventory	189	0	643	0
Short-term lease termination fees	66	0	258	0
Other expenses including personnel related costs such as severance and retention	2,913	536	13,799	1,664
Restructuring and other related costs	$ 3,168	$ 536	$ 14,700	$ 1,664

Property, Plant and Equipment, Net - Schedule of Property, Plant and Equipment (Details) - USD ($) $ in Thousands	Jun. 30, 2022	Dec. 31, 2021
Property, Plant and Equipment [Line Items]
Property, plant, and equipment and finance lease right-of-use asset, before accumulated depreciation and amortization	$ 396,004	$ 377,823
Less: accumulated depreciation	(185,430)	(150,622)
Property, plant, and equipment and finance lease right-of-use asset, net	210,574	227,201
Lab and SmileShop equipment
Property, Plant and Equipment [Line Items]
Property, plant, and equipment and finance lease right-of-use asset, before accumulated depreciation and amortization	119,704	118,320
Computer equipment and software
Property, Plant and Equipment [Line Items]
Property, plant, and equipment and finance lease right-of-use asset, before accumulated depreciation and amortization	208,028	178,508
Leasehold improvements
Property, Plant and Equipment [Line Items]
Property, plant, and equipment and finance lease right-of-use asset, before accumulated depreciation and amortization	35,262	36,474
Furniture and fixtures
Property, Plant and Equipment [Line Items]
Property, plant, and equipment and finance lease right-of-use asset, before accumulated depreciation and amortization	13,814	13,321
Vehicles
Property, Plant and Equipment [Line Items]
Property, plant, and equipment and finance lease right-of-use asset, before accumulated depreciation and amortization	6,882	8,018
Construction in progress
Property, Plant and Equipment [Line Items]
Property, plant, and equipment and finance lease right-of-use asset, before accumulated depreciation and amortization	$ 12,314	$ 23,182

Property, Plant and Equipment, Net - Narrative (Details) - USD ($) $ in Thousands	Jun. 30, 2022	Dec. 31, 2021
Property, Plant and Equipment [Abstract]
Finance lease ROU, before accumulated amortization	$ 5,846	$ 10,163
Finance lease ROU, accumulated amortization	$ 18,968	$ 18,013

Accrued Liabilities - Schedule of Accrued Liabilities (Details) - USD ($) $ in Thousands	Jun. 30, 2022	Dec. 31, 2021
Payables and Accruals [Abstract]
Accrued marketing and selling costs	$ 27,412	$ 37,883
Accrued payroll and payroll related expenses	22,815	15,829
Accrued sales tax and related costs	4,047	8,769
Other	36,788	59,585
Total accrued liabilities	$ 91,062	$ 122,066

Income Taxes (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
Income Taxes (Details) - USD ($) $ in Thousands	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Income Tax Disclosure [Abstract]
Provision for income tax expense (benefit)	$ 256	$ (12)	$ (1,207)	$ 1,695

- Definition

Amount of current income tax expense (benefit) and deferred income tax expense (benefit) pertaining to continuing operations.

+ References + Details

Long-Term Debt - Schedule of Debt and Capital Lease Obligations (Details) - USD ($) $ in Thousands	Jun. 30, 2022	Dec. 31, 2021
Debt Instrument [Line Items]
Finance lease obligations	$ 6,189	$ 10,997
Total debt	792,150	740,970
Less current portion	(6,189)	(10,997)
Total long-term debt	785,961	729,973
Convertible Debt \| 2026 Convertible Senior Notes
Debt Instrument [Line Items]
Long-term debt	732,000	729,973
Unamortized financing costs	15,500	17,527
Line of Credit \| 2022 HPS Credit Facility
Debt Instrument [Line Items]
Long-term debt	53,961	$ 0
Unamortized financing costs	$ 1,296

Long-Term Debt - 2026 Convertible Senior Notes (Details) - USD ($)			3 Months Ended	6 Months Ended
	Feb. 11, 2021	Feb. 09, 2021	Jun. 30, 2022	Jun. 30, 2022	Jun. 30, 2021	Feb. 04, 2021
Debt Instrument [Line Items]
Share price (USD per share)						$ 12.90
Deferred loan cost amortization				$ 2,329,000	$ 3,041,000
Payments to fund equity transactions		$ 69,518,000
Convertible Senior Notes Due 2026 \| Convertible Debt
Debt Instrument [Line Items]
Debt instrument, face amount		$ 650,000,000
Interest rate, stated percentage		0.00%
Debt instrument, convertible, conversion price (USD per share)		$ 18.06
Debt instrument, convertible, beneficial conversion feature, percentage		40.00%
Deferred financing costs		$ 21,391,000
Deferred loan cost amortization			$ 1,050,000	$ 2,112,000
Debt instrument, debt default, period when payment due of special interest		30 days
Debt Instrument, debt default, period to cure default		3 days
Debt instrument, debt default, written notice period		60 days
Debt instrument, debt default, amount outstanding threshold		$ 50,000
Debt instrument, debt default, percent of aggregate principal amount		25.00%
Debt instrument, debt default, period of special interest payments to meet covenants		180 days
Debt instrument, debt default, period of special interest payments to meet covenants, maximum interest rate		0.50%
Convertible Senior Notes Due 2026, Option Notes \| Convertible Debt
Debt Instrument [Line Items]
Debt instrument, face amount		$ 97,500,000
Proceeds from issuance of debt	$ 27,500,000	$ 70,000,000

Long-Term Debt - HPS Credit Facility (Details) - USD ($)		1 Months Ended	3 Months Ended	6 Months Ended
	Apr. 27, 2022	May 31, 2020	Jun. 30, 2022	Jun. 30, 2022	Jun. 30, 2021	Feb. 09, 2021
Line of Credit Facility [Line Items]
Debt issuance costs remaining for amortization	$ 1,539,000
Deferred loan cost amortization				$ 2,329,000	$ 3,041,000
Receivables collateralized			$ 214,840,000	214,840,000
2022 HPS Credit Facility \| Convertible Debt
Line of Credit Facility [Line Items]
Deferred financing costs	5,426,000
Unused loan commitment amount	$ 3,888,000
Deferred loan cost amortization			243,000	243,000
Convertible Senior Notes Due 2026 \| Convertible Debt
Line of Credit Facility [Line Items]
Deferred financing costs						$ 21,391,000
Deferred loan cost amortization			1,050,000	2,112,000
Interest rate, stated percentage						0.00%
Revolving Credit Facility \| 2020 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
Revolving Credit Facility \| 2022 HPS Credit Facility \| Line of Credit
Line of Credit Facility [Line Items]
Debt discount			10,200,000	10,200,000
Payable in kind interest percentage	3.75%
Interest rate	2.00%
Interest rate base rate	9.75%
Commitment fee percentage	2.75%
Guarantor guarantee, percentage	10.00%
Line of credit			$ 65,000,000	$ 65,000,000
Revolving Credit Facility \| 2022 HPS Credit Facility \| Line of Credit \| London Interbank Offered Rate (LIBOR)
Line of Credit Facility [Line Items]
Basis spread on variable rate	10.75%
Revolving Credit Facility \| 2022 HPS Credit Facility \| Line of Credit \| Fed Funds Effective Rate Overnight Index Swap Rate
Line of Credit Facility [Line Items]
Basis spread on variable rate	0.50%
Revolving Credit Facility \| 2022 HPS Credit Facility \| Line of Credit \| Minimum
Line of Credit Facility [Line Items]
Interest rate, stated percentage	1.00%
Revolving Credit Facility \| 2022 HPS Credit Facility \| Line of Credit \| SDC U.S. SmilePay SPV
Line of Credit Facility [Line Items]
Debt term	42 months
Maximum borrowing capacity	$ 255,000
Cash reserve deposit required and made	13,000,000
Debt instrument, covenant minimum m,onthly liquidity	$ 50,000,000

Long-Term Debt - HPS Warrants (Details) $ / shares in Units, $ in Thousands	May 31, 2020 USD ($) $ / shares shares
Debt Instrument [Line Items]
Exercise price of warrants (USD per share) \| $ / shares	$ 7.11
Fair value of warrants \| $	$ 17,620
Common Class A
Debt Instrument [Line Items]
Warrants outstanding (in shares) \| shares	3,889,575
Common Class A, Common Class B, And Warrants
Debt Instrument [Line Items]
Warrants as a percentage of outstanding common stock and warrants	1.00%

Long-Term Debt - Align Redemption Promissory Note (Details) - USD ($) $ in Thousands	Sep. 16, 2019	Jun. 30, 2022
Debt Instrument [Line Items]
Pre-IPO units required for redemption (in shares)	20,710
Promissory Note \| Align Redemption Promissory Note
Debt Instrument [Line Items]
Monthly payments	$ 2,311
Interest rate, stated percentage	2.52%
Long-term debt		$ 0

- Definition

Amount, excluding unamortized premium (discount) and debt issuance cost, of long-term debt. Excludes lease obligation.

+ References + Details

Long-Term Debt - Schedule of Debt Maturities (Details) - USD ($) $ in Thousands	Jun. 30, 2022	Dec. 31, 2021
Debt Instrument [Line Items]
2022 (remaining)	$ 0
2023	0
2024	0
2025	65,000
2026	747,500
Total	812,500	$ 747,500
2022 HPS Credit Facility
Debt Instrument [Line Items]
2022 (remaining)	0
2023	0
2024	0
2025	65,000
2026	0
Total	65,000
Convertible Debt \| 2026 Convertible Senior Notes
Debt Instrument [Line Items]
2022 (remaining)	0
2023	0
2024	0
2025	0
2026	747,500
Total	$ 747,500

Noncontrolling Interests (Details) - shares	6 Months Ended
Noncontrolling Interests (Details) - shares	Jun. 30, 2022	Dec. 31, 2021
SDC Financial, LLC
Class of Stock [Line Items]
Economic ownership interest	31.00%
Common Class A
Class of Stock [Line Items]
Common stock, shares outstanding (in shares)	120,995,922	119,280,781

Variable Interest Entities (Details)	6 Months Ended
Variable Interest Entities (Details)	Jun. 30, 2022
Variable Interest Entity, Primary Beneficiary
Variable Interest Entity [Line Items]
Ownership percentage	100.00%

Incentive Compensation Plans - Class A Common Stock Options - Narrative (Details)	6 Months Ended
	Jun. 30, 2022 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
2019 Omnibus Incentive Compensation Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Granted (in shares)	0
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)		38,486,295

Incentive Compensation Plans - Schedule of Stock Option Activity (Details) - 2019 Omnibus Incentive Compensation Plan - USD ($) $ / shares in Units, $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2022	Dec. 31, 2021
Number of Options
Outstanding at beginning of period (in shares)	1,664,122
Granted (in shares)	0
Exercised (in shares)	0
Expired (in shares)	0
Forfeited (in shares)	(260,869)
Outstanding at end of period (in shares)	1,403,253	1,664,122
Exercisable at end of period (in shares)	610,316
Weighted Average Exercise Price
Outstanding at beginning of period (in dollars per share)	$ 22.70
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)	22.64	$ 22.70
Exercisable at end of period (in dollars per share)	$ 22.80
Weighted Average Remaining Contractual Term (Number of Years)
Weighted average contractual term, outstanding	7 years 3 months 18 days	7 years 8 months 12 days
Weighted average remaining contractual term, exercisable	7 years 3 months 18 days
Aggregate Intrinsic Value
Outstanding at December 31, 2021	$ 0
Outstanding at June 30, 2022	0	$ 0
Exercisable at June 30, 2022	$ 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, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based payment arrangement, expense		$ 8,560	$ 12,008	$ 13,866	$ 27,167
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%
Share-based payment arrangement, 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) - Restricted Stock Units $ in Thousands	6 Months Ended
	Jun. 30, 2022 USD ($)
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized compensation expense	$ 74,363
Weighted average period, expected expense recognition	3 years
Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Award vesting period	2 years
Maximum
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) - Restricted Stock Units	6 Months Ended
	Jun. 30, 2022 $ / shares shares
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) \| shares	4,837,161
Granted (in shares) \| shares	26,975,166
Vested (in shares) \| shares	(1,186,557)
Cancelled (in shares) \| shares	(1,902,216)
RSUs outstanding at end of period (in shares) \| shares	28,723,554
Weighted Average Grant Date Fair Value
RSUs outstanding at beginning of period (in dollars per share) \| $ / shares	$ 15.53
Granted (in dollars per share) \| $ / shares	2.26
Vested (in dollars per share) \| $ / shares	10.30
Cancelled (in dollars per share) \| $ / shares	6.18
RSUs outstanding at end of period (in dollars per share) \| $ / shares	$ 2.97

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 - Equity-Based Compensation Expense - Narrative (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Share-Based Payment Arrangement [Abstract]
Share-based payment arrangement, expense	$ 8,560	$ 12,008	$ 13,866	$ 27,167

Earnings (Loss) Per Share - Summary of Earnings per Share (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Numerator:
Net loss	$ (65,486)	$ (55,257)	$ (138,690)	$ (150,902)
Less: Net loss attributable to noncontrolling interests	(45,181)	(38,377)	(95,804)	(105,113)
Net loss attributable to SDC Inc. - basic	(20,305)	(16,880)	(42,886)	(45,789)
Add: Reallocation of net loss attributable to noncontrolling interests from the assumed exchange of LLC Units for Class A common stock	(45,181)	(38,377)	(95,804)	(105,113)
Net loss attributable to SDC Inc. - diluted	$ (65,486)	$ (55,257)	$ (138,690)	$ (150,902)
Denominator:
Weighted average shares of Class A common stock outstanding - basic (in shares)	120,818,400	118,344,050	120,507,211	117,656,599
Add: Dilutive effects as shown separately below
LLC Units that are exchangeable for Class A common stock (in shares)	268,847,523	269,265,627	268,976,028	269,589,521
Weighted average shares of Class A common stock outstanding - diluted (in shares)	389,665,923	387,609,677	389,483,239	387,246,120
Basic (USD per share)	$ (0.17)	$ (0.14)	$ (0.36)	$ (0.39)
Diluted (USD per share)	$ (0.17)	$ (0.14)	$ (0.36)	$ (0.39)

Earnings (Loss) Per Share - Antidilutive Securities Excluded From Computation of Earnings per Share (Details) - shares	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Options
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of earnings per share (in shares)	1,403,253	1,729,339	1,403,253	1,729,339
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)	28,723,554	5,811,738	28,723,554	5,811,738
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	3,889,575	3,889,575
Shares issuable under the Notes (if converted method)
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of earnings per share (in shares)	41,389,822	41,389,822	41,389,822	41,389,822

Employee Benefit Plans (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
Employee Benefit Plans (Details) - USD ($) $ in Thousands	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Defined Contribution Plan Disclosure [Line Items]
Company contribution for 401(k)	$ 719	$ 780	$ 1,554	$ 1,600
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 (Details) - USD ($) $ in Thousands	1 Months Ended	3 Months Ended		6 Months Ended
	Aug. 31, 2019	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
SDC Financial, LLC
Related Party Transaction [Line Items]
Distribution declared	$ 43,400
Law Firm of Immediate Family Member of Director of the Company
Related Party Transaction [Line Items]
Management fees paid to affiliate		$ 2,263	$ 1,916	$ 4,532	$ 3,262

Commitments and Contingencies (Details) - USD ($)		6 Months Ended
Commitments and Contingencies (Details) - USD ($)	Sep. 16, 2019	Jun. 30, 2022
Minimum
Loss Contingencies [Line Items]
Estimated potential income tax expense, VAT assessment		$ 0
Maximum
Loss Contingencies [Line Items]
Estimated potential income tax expense, VAT assessment		$ 22,900,000
Tax Receivable Agreement \| Affiliated Entity
Loss Contingencies [Line Items]
Related party transaction rate	85.00%

Segment Reporting - Narrative (Details)	3 Months Ended	6 Months Ended
Segment Reporting - Narrative (Details)	Jun. 30, 2022	Jun. 30, 2022
North America \| Revenue from Contract with Customer Benchmark \| Geographic Concentration Risk
Revenue, Major Customer [Line Items]
Concentration risk, percentage	85.10%	85.10%

Segment Reporting - Revenues (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Segment Reporting Information [Line Items]
Revenue	$ 125,796	$ 174,181	$ 277,442	$ 373,642
Net loss before provision for income tax expense (benefit)	(65,230)	(55,269)	(139,897)	(149,207)
Depreciation and amortization	19,580	16,709	38,496	33,169
Lease abandonment and impairment of long-lived assets	0	0	1,232	0
Loss on extinguishment of debt	0	0	0	47,631
Adjusted EBITDA	(23,162)	(22,476)	(57,603)	(17,558)
EBITDA Reconciliation
Segment Reporting Information [Line Items]
Depreciation and amortization	19,580	16,709	38,496	33,169
Interest expense	4,454	1,939	6,010	19,505
Lease abandonment and impairment of long-lived assets			1,232
Restructuring and other related costs	3,168	536	14,700	1,664
Loss on extinguishment of debt				47,631
Equity-based compensation	8,560	12,008	13,866	27,167
Other non-operating general and administrative losses	6,306	1,601	7,990	2,513
North America
Segment Reporting Information [Line Items]
Revenue	107,019	145,533	236,049	311,751
Net loss before provision for income tax expense (benefit)	(49,032)	(37,794)	(103,061)	(119,610)
Adjusted EBITDA	(13,187)	(9,130)	(36,212)	2,462
North America \| EBITDA Reconciliation
Segment Reporting Information [Line Items]
Depreciation and amortization	16,797	14,054	32,351	27,925
Interest expense	4,442	1,936	5,976	19,489
Lease abandonment and impairment of long-lived assets			0
Restructuring and other related costs	2,814	513	11,324	1,603
Loss on extinguishment of debt				47,631
Equity-based compensation	7,419	10,492	11,956	23,229
Other non-operating general and administrative losses	4,373	1,669	5,242	2,195
Rest of World
Segment Reporting Information [Line Items]
Revenue	18,777	28,648	41,393	61,891
Net loss before provision for income tax expense (benefit)	(16,198)	(17,475)	(36,836)	(29,597)
Adjusted EBITDA	(9,975)	(13,346)	(21,391)	(20,020)
Rest of World \| EBITDA Reconciliation
Segment Reporting Information [Line Items]
Depreciation and amortization	2,783	2,655	6,145	5,244
Interest expense	12	3	34	16
Lease abandonment and impairment of long-lived assets			1,232
Restructuring and other related costs	354	23	3,376	61
Loss on extinguishment of debt				0
Equity-based compensation	1,141	1,516	1,910	3,938
Other non-operating general and administrative losses	$ 1,933	$ (68)	$ 2,748	$ 318