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SmileDirectClub Dives on Mixed Q2

By Eric Volkman – Aug 13, 2020 at 6:41PM

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Investors were not cheered by a far deeper-than-expected net loss.

SmileDirectClub's (SDC 1.66%) latest set of quarterly figures didn't make a lot of investors happy. This occurred despite the fact that the results -- published after market hours on Wednesday -- showed a top line that exceeded expectations.

For the dental-aligner specialist's Q2 of 2020, total revenue clocked in at $107 million. Although that represented a 45% decline year over year, it came in well above the average analyst estimate of $83 million.

As for profitability, the company's GAAP net loss was nearly $94.7 million ($0.25 per share), almost three times as steep as the Q2 2019 deficit of $32.4 million. On average, prognosticators tracking the stock were modeling an $0.11 per-share shortfall for the period.

A man inserting an aligner into his mouth.

Image source: Getty Images.

The coronavirus pandemic certainly had an effect on SmileDirectClub's performance during the quarter. After all, since the early part of this year, the healthcare concerns of most Americans had little to do with cosmetic dentistry. Additionally, the outbreak has had a deleterious effect on the labor market; it's very possible that many existing and potential SmileDirectClub clients no longer have the disposable income for aligners.

Nevertheless, the company sounded an optimistic note on its immediate prospects. It wrote in the earnings release, without elaboration, that it's "making good progress" toward its goal of profitability in earnings before interest, taxes, depreciation, and amortization (EBITDA) for the coming Q4.

It also wrote that, "As the low-cost provider with brand presence and no pricing pressure, and in an increasingly favorable climate for telehealth, the Company is well positioned to continue to gain share in the massively underserved market for clear aligners."

Investors don't seem to agree, though. They pushed SmileDirectClub shares down by nearly 16% on Thursday, a rate far steeper than the declines of the top stock indexes.

Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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