OTIS Dental is raising a Crowd SAFE at an $8 million valuation with 10% discount. This price is a bit high given OTIS’ current revenue traction — though the company has developed a competitive moat with proprietary mouth guard molding processes and retail partnerships. Therefore, OTIS Dental’s price rating is middle-of-the-road.

Bruxism is most common among children and adolescents. Up to 50% of young people grind their teeth at night. However, only 8% of middle-aged adults grind their teeth, and bruxism only affects 3% of older adults. Assuming that the target market for OTIS Dental is primarily middle-aged adults (many children grow out of bruxism by the time they develop adult teeth, so they have less need for treatment), just 26 million American adults have a need for OTIS night guards. In accordance, the global market for sleeping bruxism treatment is estimated to hit just $168.74 million by 2023. This means that OTIS Dental’s potential market upside is limited, given that dentists will likely always control a large portion of that market. OTIS Dental’s market rating is therefore quite low. 

OTIS Dental was founded by Andrew Lee, a registered dental hygienist. Lee graduated from the California Institute of Integral Studies with a BA in Interdisciplinary Studies and later gained an MBA in Healthcare Management and Biotechnology from IE Business School. He also completed training as a dental hygienist and practiced as a hygienist and clinical advisor at the University of California, San Francisco before transitioning to private practice. Lee was inspired to found OTIS Dental after he suffered an attack that left him with PTSD-induced bruxism. 

OTIS Dental’s broader team includes several part-time advisors with dental and consumer dental products experience, including Rishi Gupta, DDS (Chief Dental Officer), and Brendan Carberry, who has six years of experience working at Invisalign. 

OTIS Dental’s team has significant dental experience, and founder Andrew Lee holds a relevant MBA in healthcare management. Therefore, OTIS’s team score is moderately high.

OTIS Dental’s product is highly differentiated from consumers’ current night guard choices. Bruxism sufferers can either obtain a cheap and ineffective plastic mouth guard from drug stores or pay hundreds of dollars for their dentist to engineer a more effective, custom-fit guard. OTIS provides a high-quality product at an accessible price, following in the footsteps of Smile Direct Club and other successful companies providing consumers more direct power over their dental products. Therefore, OTIS Dental’s differentiation score is one of its strongest.

OTIS Dental generated very little revenue before 2020. Audited financials show that OTIS generated just $11,885 in revenue in 2018 and operated at a net loss of over $22,000. Concerningly, financials for 2019 were worse: OTIS made $8,786 in revenue and lost $83,942. However, OTIS reports having generated $300,000 to date. The vast majority of this revenue — roughly $275,000 — presumably has been made in 2020 alone based on previous revenue numbers. That’s a very significant year-over-year revenue increase, likely due to OTIS’ launch in Walgreens in spring 2020. 

OTIS Dental’s financial performance this year is strong, but investors should be wary of meager revenue between 2018-2019 and a decline in performance last year. These factors net out to a performance rating that is middle-of-the-road.

OTIS Dental is operating in a very niche market. There are only about 26 million adult Americans who experience bruxism. A large portion of those likely do not need treatment or have already found a reasonably-effective night guard from their local drug store or dentist. While OTIS Dental seems to be emulating the DTC dental model of Smile Direct Club and other at-home teeth straightening services, their product covers a significantly smaller market than those successful brands. 

OTIS mentions that more dental products are in the long-term product pipeline (and a teeth whitening kit is currently for sale on the company’s website). However, raise materials do not specify what those other products might be or how OTIS would pivot its strategy to include additional use cases. All together, OTIS’s revenue potential is limited, and investors may not reap a satisfactory return.

OTIS Dental’s product is clearly differentiated, even if it exists within a niche market. With proper marketing campaigns and additional retail partnerships, OTIS could take its place among the growing ranks of DTC dental brands cutting out the expensive dentist to create high-quality products shipped to consumers’ homes. Product expansion will almost certainly be necessary to achieve significant revenue, but OTIS has already expanded to offer teeth whitening trays as well as bruxism night guards. 

While OTIS’ revenue performance in recent years was not outstanding, the company has grown significantly this year despite COVID challenges. Retail partnerships with Walgreens and Target are certainly the cause, and enduring partnerships with those and other sellers could prove even more of an asset if and when OTIS begins selling additional products.

OTIS Dental currently sells custom-fit night guards to treat nighttime teeth grinding. While the company took a couple of years to come into its own, 2020 has seen dramatic revenue growth thanks to partnerships with Walgreens and Target. 

However, teeth grinding is a rather niche issue that only affects a limited number of Americans. While OTIS’ guards are differentiated from cheap drugstore options or expensive dentist molds, there may not be enough consumer demand to spur significant revenue growth (at least without more products). Therefore, OTIS Dental has been rated a Neutral Deal. 

For questions regarding the KingsCrowd staff pick or ratings for this company, please reach out to support@kingscrowd.com. 

Analysis written by Katy Dolan.