Effective Cost Management Enhances Cash Flow
Updates Midpoint of 2022 Revenue and Adjusted EBITDA Forecast
NASHVILLE, Tenn., Nov. 07, 2022 (GLOBE NEWSWIRE) — SmileDirectClub, Inc. (Nasdaq: SDC), a pioneering oral care company featuring the first medtech platform dedicated to teeth straightening, disclosed its financial outcomes for the third quarter ending September 30, 2022. This quarter’s results highlight the company’s commitment to innovation and customer service excellence.
Key Financial Metrics for the Third Quarter of 2022
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Total revenue reached 7 million, reflecting a 15.1% decline compared to the second quarter of 2022 and a 22.5% decrease from the same period last year.
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Reported a net loss of $(70) million, an increase in losses of $4 million over the second quarter of 2022, but a notable improvement of $20 million compared to the previous year.
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Adjusted EBITDA stood at $(30) million, down by $7 million from the second quarter of 2022, yet improved by $24 million year-over-year.
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Recorded a diluted EPS of $(0.18, a slight decline of $0.01 from the second quarter of 2022, but an improvement of $0.05 over the last year.
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Net cash utilized in operating activities totaled $(24) million, up by $6 million from the prior quarter but showing a substantial improvement of $15 million from the same period last year.
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Free Cash Flow, calculated as net cash used in operating activities minus net cash used in investing activities, was $(35) million, reflecting an improvement of $1 million from the second quarter of 2022 and an impressive improvement of $29 million year-over-year.
Strategic Operating Metrics and Highlights
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The company shipped 52,367 unique aligners in the third quarter, marking a 16.5% decrease from the 62,705 shipments recorded in the second quarter of 2022.
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The average gross sales price (ASP) for aligners in the third quarter was $1,902, showing a slight decrease from $1,917 in the prior quarter.
“Our dedicated team achieved financial results that align with our revised projections discussed during our second-quarter call. We are raising our full-year 2022 midpoint guidance for revenue and adjusted EBITDA due to strong customer engagement driven by enhanced marketing efficiencies. Our rigorous cost management strategy has enabled us to achieve improved year-over-year results, even amidst challenges in revenue growth,” stated David Katzman, Chief Executive Officer and Chairman of SmileDirectClub. “In this quarter, we made significant strides in our growth initiatives. Notably, our innovative SmileMaker mobile scanning app for 3D treatment planning is on schedule for a test launch in the fourth quarter, with a broader rollout planned for early 2023. Our in-person premium aligner option, SmileDirectClub Care+, is set for a test market introduction in the first quarter of 2023. This offering is gaining traction within the dental community as we expand our partner network, adding 260 new partners in the third quarter, demonstrating increasing interest from providers even before the official launch of Care+.”
Future Business Outlook for SmileDirectClub
SmileDirectClub is committed to democratizing access to beautiful smiles for everyone by ensuring affordability and convenience. The company aspires to be recognized as the world’s premier oral health brand by helping individuals realize the transformative power of a confident smile. The vision of SmileDirectClub extends beyond simply manufacturing and marketing clear aligners; it encompasses every decision and investment aimed at supporting and expanding this mission and fostering long-term growth potential. To achieve this vision, the company must broaden its reach within and beyond its current customer base. This involves continuous introduction of innovative solutions across a comprehensive portfolio of consumer-facing and non-consumer-facing products, focusing on enhancing the Partner Network, innovating aligner products, developing Care+, and launching advanced oral care solutions. SmileDirectClub’s unique assets and commitment to innovation position it to disrupt established market players while remaining adaptable to customer needs, thus fostering a sustainable brand presence in the minds of consumers.
The company has secured 46 patents and is actively pursuing additional patents for its innovations in orthodontic treatment planning, aligner production, smile scanning technologies, its proprietary telehealth platform, and numerous other fields. With many more patents pending both domestically and internationally, the company is addressing various technologies related to data capture, 3D imaging, intraoral scanning, monitoring, and manufacturing processes as well as consumer products. Furthermore, SmileDirectClub has successfully treated over 1.8 million customers, establishing the only end-to-end vertically integrated platform for consumers at scale. The company has developed a Dental Partner Network comprising 950 global practices that are either operational or in training, and its oral care products are available at more than 16,300 retail locations worldwide, while maintaining the leading position in teledentistry with a remarkable 58% aided brand awareness. The demand for dental professionals to join the SmileDirectClub Partner Network remains robust, with 260 new partners welcomed in the third quarter and a strong pipeline of additional practice interests even prior to the Care+ launch.
When people consider options for teeth straightening, they often engage in various research methods: searching online for solutions, consulting with their dentist, or asking friends and family for recommendations. According to research conducted by the company, customers have indicated that the product and overall experience offered by SmileDirectClub closely matches that of Invisalign, yet at a more competitive price point and with greater convenience. Additionally, studies show that significantly fewer customers are likely to recommend alternative teledentistry brands compared to the high level of satisfaction expressed by SmileDirectClub users. A recent consumer brand survey in the first quarter confirmed that SmileDirectClub’s brand awareness continues to rise, surpassing its teledentistry competitors and approaching the recognition levels of the category originator, Invisalign. Moreover, the company’s groundbreaking telehealth platform was honored by MedTech Breakthrough, receiving the award for “Best Telehealth Platform” in 2022.
In addition to these strategic investments aimed at pioneering the next generation of oral care and influencing consumer choices, the company plans to make deliberate investments in reaching new demographics to drive sustainable growth while concurrently focusing on its profitability objectives. Lastly, favorable industry trends are contributing to a growing acceptance of telehealth, particularly in the teledentistry sector, with minimal penetration against the total addressable market, recent regulatory victories reducing barriers to access, and an increasing market share for clear aligners within the broader industry.
Updated Full-Year 2022 Financial Guidance
Continued challenges related to consumer spending and persistent inflation levels are influencing our overall demand expectations for the remainder of the year. Our third-quarter performance aligns with our forecasts, and with only two months remaining in the year, we are refining our full-year 2022 projections.
For the fiscal year ending December 31, 2022, the company anticipates total revenue to be between $470 million and $500 million.
The anticipated costs and capital outlook for the full year of 2022 include (please refer to the company’s supplemental earnings presentation for further details on these assumptions):
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Gross margin estimated to range between 70.5% to 71.5% of total revenues.
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Adjusted EBITDA projected in the range of ($155 million) to ($135 million).
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Capital expenditures expected between $55 million and $60 million.
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One-time costs anticipated between $20 million and $25 million.
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Year-end cash balance projected to be between $110 million and $130 million
The year-end cash forecast includes an estimated $60 million to $70 million from external funding, primarily sourced from the utilization of the outstanding HPS facility.
Conference Call Details for Third Quarter 2022
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SmileDirectClub Third Quarter 2022 Conference Call Information |
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Date: |
November 8, 2022 |
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Time: |
8:00 a.m. Eastern Time (7:00 a.m. Central Time) |
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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 at 11 a.m. Eastern Time on Tuesday, November 8, 2022, until 11:59 p.m. Eastern Time on Tuesday, November 15, 2022, by dialing 1-844-512-2921 (domestic) or 1-412-317-6671 (international) and entering the replay PIN: 13733253. Additionally, a copy of the third quarter 2022 results supplemental earnings presentation and a recorded version of the call, once completed, will be accessible on the Investor Relations section of SmileDirectClub’s website at investors.smiledirectclub.com.
Understanding Forward-Looking Statements
This earnings release may contain forward-looking statements. Any statements beyond historical facts may be considered forward-looking, including projections, forecasts, and estimates about potential or assumed future business outcomes, financial health, liquidity, operational results, plans, and goals. Such statements may include terms like “expects,” “anticipates,” “believes,” “estimates,” “targets,” “plans,” “potential,” “intends,” “projects,” and “indicates.”
While these statements represent our current, good faith expectations, they are not a guarantee of future performance and encompass numerous risks, uncertainties, estimates, and assumptions that are challenging to predict. Some factors could cause actual outcomes and results to differ materially from those expressed or implied in these forward-looking statements, including, but not limited to: ongoing evaluations related to cyber incidents, significant legal, financial, and reputational risks arising from such incidents and their operational disruptions; the duration and impact of the COVID-19 pandemic and associated containment measures; our management of growth; execution of our business strategies, implementation of new initiatives, and enhancements in efficiency; our marketing and sales efforts; our manufacturing capacity and performance; our ability to secure future regulatory approvals; our financial projections and need for further financing; consumer acceptance and competition for our clear aligners; our relationships with retail partners and insurance companies; our R&D, commercialization, and other spending; the methods, models, assumptions, and estimates we employ to prepare our financial statements, make business decisions, and manage risks; legal regulations governing remote healthcare and dentistry practices; vendor relationships; the security of our operating systems; our risk management strategies; our cash and capital requirements; our intellectual property position; our exposure to legal claims and proceedings; and other factors outlined in our filings with the Securities and Exchange Commission, including, but not limited to, our Annual Report on Form 10-K for the year ended December 31, 2021, and our Form 10-Q for the period ended September 30, 2022.
About SmileDirectClub, Inc.
SmileDirectClub, Inc. (Nasdaq: SDC) is a revolutionary oral care company and the innovator behind the first medtech platform specifically designed for teeth straightening. Through its advanced telehealth technology and vertically integrated business model, SmileDirectClub is reshaping the oral care landscape. The company’s mission is to make it possible for every individual to access a smile they love by offering affordable and convenient solutions. For more details, please visit SmileDirectClub.com.
Contact Information for Investor Relations:
Jesse Weaver
Senior Vice President, Finance and Treasury
Jonathan Fleetwood
Director, Investor Relations
[email protected]
Contact Information for Media Relations:
Kim Atkinson
Senior Vice President, Global Communications
[email protected]
SmileDirectClub, Inc.
Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)
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September 30, |
December 31, |
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2022 |
2021 |
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ASSETS |
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Cash |
$ |
120,181 |
$ |
224,860 |
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Accounts receivable, net |
152,531 |
184,558 |
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Inventories |
44,242 |
40,803 |
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Prepaid and other current assets |
21,085 |
17,519 |
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Total current assets |
338,039 |
467,740 |
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Accounts receivable, net, non-current |
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