CVS will bring hundreds of SmileDirectClub shops to its stores, offering a cheaper way to straighten teeth

Key Points
  • CVS Health will open "hundreds" of SmileDirectClub locations inside its stores this year.
  • Called a SmileShop, customers can receive a 3D scan of their teeth that's used to create a pair of invisible braces.
  • Walgreens is testing SmileDirectClub locations in four of its stores.
CVS wasn’t always a drugstore. Now it wants to revolutionize health care.
CVS wants to revolutionize health care

CVS Health is about to make it easier to straighten your teeth.

The drugstore chain will open "hundreds" of SmileDirectClub locations inside its stores this year, with plans to open more than 1,000 locations over the next two years, the company announced Thursday. Called a SmileShop, customers can receive a 3D scan of their teeth that will be used to create a pair of invisible braces.

CNBC reported in January that CVS was running a pilot with SmileDirectClub to fit people for clear braces inside its drugstores. At the time, the idea was being tried out at just six CVS locations. The pilot grew to 13 locations, with the test performing so well that CVS decided to expand it.

"For me, [this partnership is] about how CVS is very much on the look out for innovative solutions we can provide conveniently, locally and affordably," CVS' Vice President of Beauty Maly Bernstein said in an interview. "This is one example of us making sure we're leaders in doing that."

CVS will open "hundreds" of SmileDirectClub SmileShops in its drugstores this year and may open more than 1,000 locations over the next few years.
Source: CVS

CVS is trying to keep up with its changing customers. People are shopping online more, especially on sites like Amazon, hurting CVS and other drugstores' sales of everyday items like vitamins and toilet paper. CVS thinks focusing on health and beauty products and services will be a way to draw people in.

Teeth-straightening start-up SmileDirectClub began online. People ordering the clear aligners online fit themselves using an at-home impression kit. If they go to a store, a "SmileGuide" performs a 3D scan for them.

Bernstein's team found SmileDirectClub on social media and liked the brand's loyal following, how it engaged with customers and its convenient and affordable experience, she said. They called the Nashville, Tennessee-based start-up and pitched them on becoming their lead partner in bringing their services into stores nationwide.

SmileDirectClub liked the idea and agreed to test it.

"We actually proved to one another we were right," Bernstein said. "This was something customers did want, and did appreciate being able to go to their local store to have that first scan done."

CVS found the SmileShop locations were attracting new, younger customers in the pilot, CVS Pharmacy President Kevin Hourican said in an interview. Of the 609 SmileShop visitors surveyed in three stores over a month, 32% weren't regular customers, he said. Many of the patients were millennials, a key demographic CVS wants to tap.

The inside of a SmileShop, where customers can get a 3D scan of their teeth before receiving a custom pair of aligners.
Source: SmileDirectClub

The retail team contacted its new colleagues at health insurer Aetna, which merged with CVS in a $70 billion acquisition. Aetna was already in talks with SmileDirectClub and will start covering the aligners this summer for more than its 10 million Aetna Dental members. UnitedHealthcare will also start covering SmileDirectClub's services for its more than 1.5 million members with orthodontic coverage, the health insurer announced Thursday.

Under both arrangements, patients will be able to buy the clear teeth aligners for less than $1,000. Without insurance, SmileDirectClub charges $1,850 for a one-time payment, or $2,170 for a two-year payment plan. Traditional braces can cost upwards of $9,000.

"This is big for raising awareness, and it opens up new marketing opportunities," SmileDirectClub co-founder Alex Fenkell said. "We got into this business to increase access to care."

Partnering with CVS gives SmileDirectClub a chance to quickly scale. The company launched online roughly five years ago and has grown to nearly 250 stores today. With CVS, it will more than double its bricks-and-mortar footprint in the U.S.

The tie-up with CVS isn't exclusive either, he added, meaning SmileDirectClub can still work with other drugstore chains. And it's already doing so. The start-up opened four SmileShop locations in Walgreens stores earlier this month. But Fenkell said it's "really to early to determine" how that will scale from here.

CVS will add SmileShop to its new health-focused health-focused concept stores, called HealthHUBs by the end of the year. The HealthHUBs are designed to help customers with chronic conditions like diabetes and asthma. Meantime, CVS will continue to search for other services to bring into stores, like optical, Hourican said. CVS already offers optical in 34 locations, though it may expand the offering.