Smile Direct Club says profitability is the topmost priority for fiscal 2020

Smile
Direct Club said on Tuesday that its quarterly loss came out bigger than
expected in Q4. The online dental company attributed the greater loss to increased
investments in marketing its teeth aligners. The company also said that it now
targets controlled growth in fiscal 2020.

CFO Kyle Wailes was reporting quoting in his address to the analysts that profitability is the topmost priority for the dental company in 2020. He expressed confidence in already having devised a strategy to accomplish that.

Higher
Expenses In Q4 Stemmed From Inefficiency In Back-Office Process And Manufacturing
Operations

In
pursuit of its goal to be profitable by 2020’s fourth quarter, Smile Direct
Club revealed plans of optimizing production and expanding demand for the SmileShop
network. CEO David Katzman attributed the downbeat financial performance in the
recent quarter to higher expenses that stemmed from inefficiency in the back-office
process and manufacturing operations.

In
its guidance for fiscal 2020, the company said that it now expects $1 billion
to $1.10 billion in revenue and an adjusted EBITDA loss of $50 million to $75
million. Wall Street estimate for the company’s revenue in 2020 currently lies
above the mid-point of the aforementioned guidance.

In
the fourth quarter, Smile
Direct Club boasted 115,042 unique aligners shipped versus a much lower 76,372
in the same quarter last year. Expenses related to marketing and selling, on
the other hand, saw an over 100% increase in the recent quarter and were
reported at $141.1 million. Smile Direct Club noted $26.2 million of net loss
in the fourth quarter that was slightly higher than $26 million printed in 2018’s
Q4. In the quarter that ended on December 31^st, the online dental
company revealed 25 cents of loss per share versus a much lower 9 cents
expected, as per Refinitiv.

Smile
Direct Club Partnered With Walgreen Boots Alliance And CVS Health Corp

In order to hit its target of profitability in 2020, the company has partnered with prominent names in the niche of healthcare like Walgreen Boots Alliance and CVS Health Corp. An exclusive pack of oral care products has also been launched in Walmart stores (both traditional and online) last month.

Following Tuesday’s report, Smile Direct Club was seen trading 20% down in the stock marketing at $9.05 per share in after-hours trading. The company extended its loss on Wednesday and closed at $8.0 even that marks an around 4% loss in 2020 so far. In the initial public offering in September 2019, Smile Direct Club’s shares were priced at just over $18.0.