SmileDirectClub’s shares skid after first earnings report since IPO

SmileDirectClub’s shares skid after first earnings report since IPO

Jordan Katzman, co-founder of SmileDirectClub Inc., left, and Alex Fenkell, co-founder of SmileDirectClub Inc., watch traders during the company’s initial public offering (IPO) at the Nasdaq MarketSite in New York, Sept. 12, 2019.

Michael Nagle | Bloomberg | Getty Images

Online dentistry company SmileDirectClub’s third-quarter revenue jumped by 50% over the last year, even as its losses swelled, the company said in its first earnings report since going public two months ago.

The company’s shares, which closed down 6.5% on Tuesday, seesawed in after-hours trading. The stock plunged by as much 10% after initially rising on the news.

Here’s what the company reported, compared with Wall Street estimates:

  • Loss per share: 89 cents
  • Revenue: $180.2 million vs. $165.4 million as forecast by Refinitiv consensus estimates

Given inconsistencies with outstanding share counts for a recently public company’s first quarterly report, CNBC does not compare earnings per share figures with EPS consensus estimates.

SmileDirectClub reported a third-quarter net loss of $387.6 million, or a loss of 89 cents per share. That includes a $299.3 million loss from SmileDirectClub’s non-controlling interest in SDC financial. The company posted a net loss of $14.95 million in the year-ago quarter.

Sales rose to $180.2 million, up 50% from $119.7 million in the year-ago quarter. Wall Street analysts were expecting the company to report revenue of $165.4 million.

The company shipped 106,070 teeth aligners in the quarter, up from 72,387 in the same period last year. The average price of the aligners sold rose to $1,788, up from $1,773 in the year-ago quarter.

“Post-IPO, our team is laser focused on execution,” SmileDirectClub Chief Financial Officer Kyle Wailes said in a statement. “Our results for the quarter, all of which exceeded management’s expectations, are a testament to the strength and momentum of the underlying business.”

For the full year, SmileDirectClub anticipates revenue of between $750 million and $755 million.

SmileDirectClub made its public debut in September. Shares slid 28% on its first day of trading, making it the worst initial public offering of the year for a so-called unicorn, or a start-up valued above $1 billion. SmileDirectClub’s shares are trading at around $11, well below its $23 per share IPO price.

The start-up, founded in 2014, sells teeth aligners directly to consumers on its website and in its “SmileShops” starting at $1,895 for a two-year plan. Founders Fenkell and Jordan Katzman say they want to disrupt the orthodontics industry with less expensive teeth-straightening treatments, convenience, and splashy television and social media advertisements.

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