Improved Cash Flow Driven by Adjusted EBITDA and Capital Expenditure Strategies
NASHVILLE, Tenn., Aug. 08, 2022 (GLOBE NEWSWIRE) — SmileDirectClub, Inc. (Nasdaq: SDC), an innovative oral care company that has pioneered the first medtech platform for teeth straightening, has released its financial outcomes for the second quarter ending June 30, 2022. The results highlight the company’s ongoing commitment to enhancing customer accessibility to effective dental solutions while navigating market challenges.
Key Financial Metrics for the Second Quarter of 2022
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Total revenue reached $126 million, reflecting a 17.0% decline compared to Q1 2022 and a 27.8% decrease from the same period last year.
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Net loss reported at $(65) million, showing an improvement of $8 million over Q1 2022 and a decrease of $10 million year-over-year.
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Adjusted EBITDA stood at $(23) million, marking an $11 million improvement from the previous quarter, though it decreased by b million year-over-year.
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Diluted earnings per share (EPS) was reported at $(0.17), an enhancement of $0.02 from Q1 2022 but a decline of $0.03 compared to the prior year.
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Net cash used in operating activities was $(18) million, reflecting an improvement of $43 million over Q1 2022 and an increase of $13 million year-over-year.
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Free Cash Flow, defined as net cash used in operating activities less net cash used in investing activities, totaled $(36) million, marking an improvement of $41 million from Q1 2022 and $18 million from the previous year.
Operational Insights and Strategic Developments
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During the second quarter, unique aligner shipments totaled 62,705, which is a 17.8% decrease from the 76,254 shipments recorded in Q1 2022.
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The average aligner gross sales price (ASP) increased to $1,917, up from $1,890 in the first quarter of 2022.
“In spite of the challenges faced in top-line revenue, the cost control measures implemented in the first quarter have effectively reduced our expenses and mitigated impacts on our financial performance, leading to improved cash flow results in the second quarter,” stated David Katzman, Chief Executive Officer and Chairman of SmileDirectClub. “We acknowledge the necessity of reengaging top-line growth through innovative strategies for the long-term prosperity of our business.”
Katzman further emphasized, “A pivotal advancement in leveraging our technological innovations will be the launch of our mobile scanning application for 3D treatment planning, integrated into our proprietary SmileMaker Platform. This innovative smartphone-based scanning application employs AI technology that allows customers to easily scan their teeth using their smartphones, visualize their 3D draft treatment plan for their new smile, estimate the duration for teeth straightening, and make purchases within minutes of downloading our app. This technology fulfills our founders’ original vision of simplifying the initiation of treatment, setting us apart from other clear aligner options available in the market. This transformative advancement enhances the customer experience and significantly reduces the time gap between site visits and purchase decisions, which has been a challenge in the industry.
“This new market strategy shifts SmileDirectClub from a marketing-driven growth model to a technology-centric organization, supported by a pipeline of innovative solutions slated for future releases. Beyond our SmileMaker Platform, we will maintain our focus on executing our vital strategic growth initiatives, which include expanding our customer outreach through our Partner Network, investing in proprietary technologies and product innovations, developing and launching our SDC+ solution, and pursuing profitable expansion of SmileShops.”
Future Business Outlook and Vision
SmileDirectClub is dedicated to democratizing access to smiles that every individual loves and deserves by ensuring affordability and convenience for all. The company’s aspirational vision is to emerge as the “world’s leading oral health brand by empowering more individuals to experience the life-changing potential of a confident smile.” This vision transcends beyond just manufacturing and marketing clear aligners. Every strategic decision and investment made by the company is aimed at reinforcing and expanding this mission while enabling long-term growth prospects. To realize this vision, the company must extend its reach within and beyond its current customer base. This expansion hinges on the continuous introduction of transformative innovations across an extensive portfolio of both consumer-facing and non-consumer-facing solutions, focusing on the Partner Network, advancements in aligner products, SDC+, oral care solutions, and SmileShop expansion. SmileDirectClub possesses unique assets and disruptive innovations to challenge existing market players, the agility to adapt to customer needs, and a sustainable brand presence that resonates deeply with consumers.
The company has been granted 43 patents and continues to file additional patents for its innovations in areas such as orthodontic treatment planning, aligner manufacturing, smile scanning technologies, and its proprietary telehealth platform, among others. Numerous patents are currently pending, both domestically and internationally, covering technologies related to data capture, 3D imaging, intraoral scanning, monitoring, manufacturing, and consumer products. Furthermore, the company has successfully facilitated treatment for over 1.7 million customers, establishing the only end-to-end vertically integrated platform available at scale for consumers, while creating a dental Partner Network comprising 690 global practices that are either operational or in training. Additionally, SmileDirectClub products can be found in over 16,300 retail locations worldwide, maintaining its position as the leading brand in teledentistry with a notable 57% aided awareness.
As consumers explore options for teeth straightening, they typically engage in one or more actions: conducting online research to understand available choices, consulting with a dentist, or seeking recommendations from friends or family. According to the company’s research, consumers have identified that its product and customer experience closely mirrors that of Invisalign, while being more cost-effective and convenient. Furthermore, the research indicates that significantly fewer customers recommend other teledentistry platforms compared to those who endorse SmileDirectClub. The U.S. Brand Tracker’s first-quarter survey revealed a continued increase in the company’s unaided and aided brand awareness, setting it apart from competing teledentistry brands while closely aligning with Invisalign. Additionally, the pioneering telehealth platform of the company was recently honored by MedTech Breakthrough, receiving the “Best Telehealth Platform” award in 2022.
In addition to these investments aimed at creating the next generation of oral care solutions and influencing consumer decision-making, the company will persist in making strategic investments to penetrate new demographics and drive controlled growth, while adhering to its profitability objectives. Furthermore, favorable industry dynamics are emerging, characterized by wider acceptance of telehealth and teledentistry, minimal penetration against the overall addressable market, recent regulatory achievements that are expected to alleviate barriers to care access, and a growing market share for clear aligners within the industry.
Updated Full Year 2022 Financial Guidance
Challenges surrounding consumer spending escalated more rapidly than anticipated during the quarter, compounded by decreased stimulus, persistent high inflation, and a shift in discretionary spending towards services, resulting in unpredictable demand patterns and a lower overall expected demand for the remainder of the year.
For the year ending December 31, 2022, the company projects total revenue will fall within the range of $450 million to $500 million.
The full year 2022 cost and capital outlook includes (refer to the company’s supplemental earnings presentation for deeper insights into these assumptions):
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Gross margin projected to be within 69.5% to 71.5% as a percentage of total revenues.
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Adjusted EBITDA expected in the range of ($180 million) to ($140 million).
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Capital expenditures anticipated to be between $60 million to $70 million.
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One-time costs estimated to be in the range of million to million.
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Year-end cash balance projected to be between $120 million to $160 million
Revenue and expense guidance updates now incorporate contributions and investments for the accelerated expansion of the Partner Network and the SmileShop footprint.
Details for the Upcoming Conference Call
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SmileDirectClub Second Quarter 2022 Conference Call Details |
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Date: |
August 9, 2022 |
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Time: |
8:00 a.m. Eastern Time (7:00 a.m. Central Time) |
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Dial-In: |
1-877-407-9208 (domestic) or 1-201-493-6784 (international) |
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Webcast: |
Visit the “Events and Presentations” section of the company’s IR page at http://investors.smiledirectclub.com |
A replay of the call will be available on the same day starting from 11 a.m. Eastern Time on Tuesday, August 9, 2022, until 11:59 p.m. Eastern Time on Tuesday, August 16, 2022, by dialing 1-844-512-2921 (domestic) or 1-412-317-6671 (international) and entering the replay PIN: 13730975. A copy of the second quarter 2022 results supplemental earnings presentation, along with an archived version of the call, will also be accessible on the Investor Relations section of SmileDirectClub’s website at investors.smiledirectclub.com.
Understanding Forward-Looking Statements
This earnings release includes forward-looking statements. All statements beyond historical facts may be considered forward-looking. These statements typically relate to future events and encompass projections, forecasts, and estimates regarding potential or assumed future outcomes related to our business, financial standing, liquidity, operational results, plans, and objectives. Certain phrases such as “expects,” “anticipates,” “believes,” “estimates,” “targets,” “plans,” “intends,” “projects,” and “indicates” may indicate forward-looking statements.
While these statements reflect our current expectations made in good faith, they do not guarantee future performance and involve numerous risks, uncertainties, estimates, and assumptions that are challenging to predict. Factors that could cause actual outcomes to differ materially from those expressed or implied in forward-looking statements include, but are not limited to: ongoing assessments related to cyber incidents, significant legal, financial, and reputational risks stemming from such incidents and associated operational disruptions; the duration and impact of the COVID-19 pandemic and related containment measures; management of growth; execution of business strategies, introduction of new initiatives, and enhancement of efficiency; sales and marketing efforts; manufacturing capacity and performance; ability to secure future regulatory approvals; financial estimates and need for additional financing; consumer acceptance and competition for our clear aligners; relationships with retail partners and insurance carriers; research and development, commercialization, and other activities and expenses; methodologies, models, assumptions, and estimates used for financial statements, business decisions, and risk management; laws and regulations governing remote healthcare and dental practices; vendor relationships; security of operating systems and infrastructure; risk management frameworks; cash and capital requirements; intellectual property considerations; exposure to claims and legal proceedings; and other factors detailed in our filings with the Securities and Exchange Commission, including our Annual Report on Form 10-K for the year ended December 31, 2021, and our Form 10-Q for the period ended March 31, 2022.
New risks and uncertainties may arise over time, making it impossible for us to predict all potential factors and how they may affect us. It is advisable not to place undue reliance on forward-looking statements, which reflect our views only as of the date made. We are not obligated to update any forward-looking statements after this earnings release date to align with actual results or revised expectations. Therefore, you should not rely on these statements to represent our perspectives as of any date following this earnings release.
About SmileDirectClub
SmileDirectClub, Inc. (Nasdaq: SDC) is a pioneering oral care company and the creator of the first medtech platform for teeth straightening. Through its advanced telehealth technology and vertically integrated model, SmileDirectClub is transforming the oral care landscape. The mission of SmileDirectClub is to democratize access to a smile that every individual loves by offering affordability and convenience for all. For more information, please visit SmileDirectClub.com.
Investor Relations Contact:
Jesse Weaver
Global Head, FP&A and Investor Relations
Jonathan Fleetwood
Director, Investor Relations
[email protected]
Media Relations Contact:
Kim Atkinson
Senior Vice President, Global Communications
[email protected]
SmileDirectClub, Inc.
Consolidated Balance Sheets
(in thousands)
(unaudited)
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June 30, |
December 31, |
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2022 |
2021 |
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ASSETS |
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Cash |
$ |
158,264 |
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$ |
224,860 |
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Accounts receivable, net |
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166,528 |
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184,558 |
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Inventories |
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43,110 |
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40,803 |
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Prepaid and other current assets |
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23,816 |
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17,519 |
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Total current assets |
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391,718 |
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467,740 |
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Accounts receivable, net, non-current |
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Sienna Blake
Sienna Blake is a licensed aesthetic consultant and beauty writer specializing in cosmetic surgery advancements and non-invasive treatments. With a background in dermatology and over eight years of industry experience, Sienna is passionate about helping people achieve confidence through informed beauty decisions. She holds a Bachelor's degree in Health Sciences and regularly collaborates with top plastic surgeons to stay at the forefront of aesthetic innovations. Outside of her work, Sienna enjoys traveling, skincare research, and practicing Pilates.
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