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Why SmileDirectClub Stock Is Soaring Today

By Keith Speights - May 6, 2020 at 11:22AM

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The direct-to-consumer oral care company landed a reimbursement deal with another big health insurer.

What happened

Shares of SmileDirectClub (SDC -3.70%) were soaring 13.5% higher as of 11:42 a.m. EDT on Wednesday. The big jump came after the oral care company announced a new partnership with Anthem (ANTM -1.86%). The large health insurer will provide in-network coverage for SmileDirectClub's clear aligner therapy beginning this month.

So what

It remains to be seen just how much of a boost the Anthem deal will provide to SmileDirectClub. However, the addition of another major health insurer covering its clear aligner products should lead to increased sales for the direct-to-consumer oral care company over time.

SmileDirectClub store

Image source: SmileDirectClub.

SmileDirectClub already has won coverage from two other big health insurers, UnitedHealth Group and Aetna, which is owned by CVS Health. David Katzman, SmileDirectClub's CEO, said, "The adoption of telehealth as a safe and efficacious way to receive dental care by the major U.S. insurance providers confirms that now more than ever, consumers expect a solution that allows them to receive care using remote technology that protects their health and safety."

Katzman's optimism could be on target. The COVID-19 pandemic has changed the way many Americans and many businesses view telehealth. SmileDirectClub's teledentistry approach, where customers can get clear aligners without having to go to a dentist's or orthodontist's office, just might catch on now in a greater way than it has in the past. The deals with big health insurers could increase the attractiveness of the company's business model.

Now what

Expanded coverage for SmileDirectClub's products is good. But significant revenue growth would be even better for the healthcare stock. We'll soon know if SmileDirectClub's sales have grown rapidly. The company is scheduled to announce its first-quarter results on May 13. 

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Stocks Mentioned

SmileDirectClub, Inc. Stock Quote
SmileDirectClub, Inc.
$1.04 (-3.70%) $0.04
Anthem, Inc. Stock Quote
Anthem, Inc.
$476.94 (-1.86%) $-9.04
CVS Health Corporation Stock Quote
CVS Health Corporation
$92.53 (-1.50%) $-1.41
UnitedHealth Group Incorporated Stock Quote
UnitedHealth Group Incorporated
$505.24 (-2.35%) $-12.16

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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