SmileDirectClub tumbled in its trading debut on Thursday, a rare setback for a buzzy startup amid a wave of digital health IPOs.

After selling shares to investors for $23 apiece, the stock closed down 28% at $16.67.

SmileDirectClub sold 58.5 million shares, raising $1.3 billion in the offering. At its closing price, the company was worth $6.4 billion.

Read more: SmileDirectClub’s IPO could make the startup’s top investors into billionaires.

The idea behind SmileDirectClub is to make straightening teeth more affordable by cutting out the steps of going in person to a dentist or an orthodontist to get braces or other alignments.

SmileDirectClub sells clear aligners, an alternative to what you might get from an orthodontist. While it typically costs $3,000 to $7,000 to get traditional braces or Invisalign-brand aligners, SmileDirectClub goes for a fraction of that – you can either pay $1,895 up front or $2,290 spread out over two years.

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In October, SmileDirectClub raised $380 million from the private-equity firm Clayton, Dubilier & Rice and the venture firms Kleiner Perkins and Spark Capital. The round valued the company at $3.2 billion, up from $275 million just two years earlier.

The company was started by Alex Fenkell and Jordan Katzman in 2014.

Smile Direct Club brightening

Foto: SmileDirectClub sells a teeth-whitening kit.sourceHollis Johnson/Business Insider

An unexpected turn for an otherwise white-hot digital health IPO run

Up until now, most of the digital health companies that have gone public in 2019 have had successful first days of trading. Diabetes-technology company Livongo surged in its first day of trading, closing up 36%. Gene-sequencing technology company 10x Genomics also made its debut on the public markets on Thursday, closing up 35%.

Read more: Buzzy digital health startup Livongo surged in its stock market debut as the 3-year digital health IPO drought comes to an end

The drop was an unexpected turn for the company, which had priced its shares at $23 apiece on Wednesday, above its initial range of $19-$22.

SmileDirectClub chief financial officer Kyle Wailes said that during the IPO road show, investors had questions about the market the company’s going for, which tends to skew more toward a broader market of people who want to make minor cosmetic fixed to their appearance.

Wailes said that those investors who signed on during the road show were supportive of the company’s growth as well as the margins the company has on its business.

“They were incredibly supportive of the growth we’ve had in the business over the last several years,” Wailes said.

According to the IPO filing, SmileDirectClub’s net loss widened from $33.8 million in the first half of 2018 to $52.9 million in 2018. The company increased its customer count from 22,000 in 2016 to about 246,000 in the first half of this year.