Yahoo Finance SmileDirectClub (SDC) Q1 Earnings Miss, Gross Margin Up
SmileDirectClub, Inc. SDC reported a loss of 16 cents in the first quarter of 2023, narrower than the year-ago quarter’s loss of 19 cents. However, the reported figure was wider than the Zacks Consensus Estimate of a loss of 14 cents.
Revenues
Total revenues in the first quarter totaled $119.8 million, down 21% year over year. The figure topped the Zacks Consensus Estimate by 9.6%.
In the first quarter, the company shipped 59,645 unique aligner orders, up 43.9% sequentially. The quarter’s average aligner gross sales price came in at $1949, down 0.6% on a sequential basis.
Net revenues (related to retainers, whitening and other ancillary products) came in at $112.8 million, down 20.8% from the year-ago quarter’s levels. Financing revenues (interests associated with the SmilePay program) in the reported quarter were $6.9 million, down 24 % from the year-ago quarter’s levels.
Margins
The gross profit in the reported quarter was $86.9 million, down 19.9% from the prior-year quarter’s levels. The gross margin of 72.5% expanded 94 basis points (bps).
SmileDirectClub, Inc. Price, Consensus and EPS Surprise
SmileDirectClub, Inc. price-consensus-eps-surprise-chart | SmileDirectClub, Inc. Quote
Marketing and selling expenses decreased 25% to $72 million. General and administrative expenses were $65.2 million, down 7.9% year over year. The company incurred an adjusted operating loss of $50.5 million in the quarter compared with the operating loss of $58.9 million in the year-ago quarter.
Financial Updates
SmileDirectClub exited the first quarter of 2023 with cash and cash equivalents of $59.1 million compared with $93.1 million at the end of fourth-quarter 2022.
The long-term debt (net of current portion) at the end of the first quarter was $860.2 million compared with $849.4 million at the end of fourth-quarter 2022.
The cumulative net cash flow used in operating activities at the end of first quarter 2023 was $32.6 million compared with $61.3 million in the year-ago period.
2023 Guidance
SmileDirectClub reaffirmed its guidance for 2023, previously provided on Feb 28, 2023.
SDC expects total revenues from the core business in the range of $400-$450 million, excluding anticipated revenues from the rollout of the SmileMaker Platform in the United States or the launch of the CarePlus program. The Zacks Consensus Estimate for the same is pegged at $426.9 million.
The gross margin (as a percentage of total revenues) is expected in the range of 72-75% for the full year.
Our Take
SmileDirectClub exited the first quarter of 2023 on a mixed note, with revenues beating estimates and earnings missing the same. During the quarter, the company made progress on its key growth initiatives with the successful launch of the hybrid in-person and remote premium aligner product, SmileDirectClub CarePlus, in four key U.S. pilot markets. The company’s innovative SmileMaker mobile scanning app for 3D treatment planning continues to perform well in Australia. The year-over-year decline in revenues was due to persistent macroeconomic headwinds, stemming from high inflation that impacted the company’s customer base.
Zacks Rank and Key Picks
SmileDirectClub currently carries Zacks Rank #4 (Sell).
Some better-ranked stocks in the broader medical space that have announced quarterly results are Edwards Lifesciences Corporation EW, Intuitive Surgical, Inc. ISRG and Johnson & Johnson JNJ.
Edwards Lifesciences, carrying a Zacks Rank #2 (Buy), reported first-quarter 2023 adjusted earnings per share (EPS) of 62 cents, beating the Zacks Consensus Estimate by 1.6%. Revenues of $1.46 billion outpaced the consensus mark by 4.7%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Edwards Lifesciences has a long-term estimated growth rate of 6.8%. EW’s earnings surpassed estimates in two of the trailing four quarters, missed the same in one and broke even in the other, the average being 1.2%.
Intuitive Surgical, having a Zacks Rank #2, reported first-quarter 2023 adjusted EPS of $1.23, which beat the Zacks Consensus Estimate by 3.4%. Revenues of $1.70 billion outpaced the consensus mark by 6.9%.
Intuitive Surgical has a long-term estimated growth rate of 13%. ISRG’s earnings surpassed estimates in two of the trailing four quarters and missed the same in the other two, the average being 1.9%.
Johnson & Johnson reported first-quarter 2023 adjusted earnings of $2.68 per share, beating the Zacks Consensus Estimate by 6.8%. Revenues of $24.75 billion surpassed the Zacks Consensus Estimate by 5%. It currently carries a Zacks Rank #2.
Johnson & Johnson has a long-term estimated growth rate of 5.5%. JNJ’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 3.9%.
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