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SmileDirectClub (SDC) Q2 Earnings Miss Estimates, '23 View Up
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SmileDirectClub, Inc. reported a loss of 13 cents in the second quarter of 2023, narrower than the year-ago quarter’s loss of 17 cents. However, the reported figure was wider than the Zacks Consensus Estimate of a loss of 12 cents.
Revenues
Total revenues in the second quarter were $101.8 million, down 19.1% year over year. The figure missed the Zacks Consensus Estimate by 1.5%.
In the second quarter, the company shipped 46,774 unique aligner orders, down 21.6% sequentially. The quarter’s average aligner gross sales price came in at $1,976, up 1.4% on a sequential basis.
SmileDirectClub, Inc. Price, Consensus and EPS Surprise
Net revenues (related to retainers, whitening and other ancillary products) came in at $94.7 million, down 18.9% from the year-ago quarter’s levels. Our model projected a year-over-year decline of 22.5%.
Financing revenues (interests associated with the SmilePay program) in the reported quarter were $7.1 million, down 21.1% from the year-ago quarter’s levels. Our model estimated revenues to decline 5.9%.
Margins
The gross profit in the reported quarter was $72.9 million, down 20.5% from the prior-year quarter’s levels. The gross margin of 71.6% contracted 129 basis points (bps), driven by the deleveraging of fixed expenses on lower aligner volumes.
Marketing and selling expenses decreased 30.3% to $49.6 million. General and administrative expenses were $60 million, down 17.4% year over year. The company incurred an adjusted operating loss of $36.5 million in the quarter compared with the operating loss of $51.8 million in the year-ago quarter.
Financial Update
SmileDirectClub exited the second quarter of 2023 with cash and cash equivalents of $28.9 million compared with $93.1 million as of Dec 31, 2022.
The long-term debt (net of the current portion) at the end of the second quarter was $863.4 million compared with $849.4 million at the end of the fourth quarter of 2022.
The cumulative net cash used in operating activities at the end of the second quarter of 2023 was $50.4 million compared with $79.1 million in the year-ago period.
2023 Guidance
SmileDirectClub provided an updated outlook for 2023.
Total revenues from the core business are now expected in the range of $425-$475 million compared with the previously issued guidance in the band of $400-$450 million. The revised outlook includes contributions from the 2023 rollout of the SmileMaker Platform in the United States and the launch of the CarePlus solution. The Zacks Consensus Estimate for the same is pegged at $433.9 million.
The gross margin (as a percentage of total revenues) is expected in the range of 73%-76% (previously 72%-75%) for the full year.
Our Take
SmileDirectClub exited the second quarter of 2023 with both earnings and revenues missing estimates. The year-over-year decline in revenues was due to persistent macroeconomic headwinds, while the sequential decrease followed the typical seasonal trend from the first quarter to the second quarter.
A contraction of both margins does not bode well for the stock. Constraints related to consumer spending and sustained high inflation are likely to dent the overall demand in 2023 for SDC’s core business.
Meanwhile, the financial discipline demonstrated by the company resulted in the improvement of the bottom line amid challenging revenue trends. The raised revenue and gross margin guidance for the full year buoys optimism.
During the quarter, SDC launched the AI-powered SmileMaker Platform in the United States. The broader rollout of the CarePlus premium service offering is also expected by the end of August 2023.
Zacks Rank and Other Key Picks
SmileDirectClub currently carries a Zacks Rank #2 (Buy).
Some other top-ranked stocks in the broader medical space that have announced quarterly results are Abbott Laboratories (ABT - Free Report) , Elevance Health, Inc. (ELV - Free Report) and Intuitive Surgical, Inc. (ISRG - Free Report) .
Abbott, carrying a Zacks Rank of #2, reported a second-quarter 2023 adjusted EPS of $1.08, beating the Zacks Consensus Estimate by 3.8%. Revenues of $9.98 billion outpaced the consensus mark by 2.9%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Abbott has a long-term estimated growth rate of 5.1%. ABT’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 12.4%.
Elevance Health reported a second-quarter 2023 adjusted EPS of $9.04, beating the Zacks Consensus Estimate by 2.5%. Revenues of $43.38 billion surpassed the Zacks Consensus Estimate by 4.5%. It currently carries a Zacks Rank #2.
Elevance Health has a long-term estimated growth rate of 12.1%. ELV’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 2.8%.
Intuitive Surgical reported a second-quarter 2023 adjusted EPS of $1.42, beating the Zacks Consensus Estimate by 7.6%. Revenues of $1.76 billion surpassed the Zacks Consensus Estimate by 1.4%. It currently carries a Zacks Rank #2.
Intuitive Surgical has a long-term estimated growth rate of 14.5%. ISRG’s earnings surpassed estimates in three of the trailing four quarters and missed the same once, the average surprise being 4.2%.
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SmileDirectClub (SDC) Q2 Earnings Miss Estimates, '23 View Up
SmileDirectClub, Inc. reported a loss of 13 cents in the second quarter of 2023, narrower than the year-ago quarter’s loss of 17 cents. However, the reported figure was wider than the Zacks Consensus Estimate of a loss of 12 cents.
Revenues
Total revenues in the second quarter were $101.8 million, down 19.1% year over year. The figure missed the Zacks Consensus Estimate by 1.5%.
In the second quarter, the company shipped 46,774 unique aligner orders, down 21.6% sequentially. The quarter’s average aligner gross sales price came in at $1,976, up 1.4% on a sequential basis.
SmileDirectClub, Inc. Price, Consensus and EPS Surprise
SmileDirectClub, Inc. price-consensus-eps-surprise-chart | SmileDirectClub, Inc. Quote
Net revenues (related to retainers, whitening and other ancillary products) came in at $94.7 million, down 18.9% from the year-ago quarter’s levels. Our model projected a year-over-year decline of 22.5%.
Financing revenues (interests associated with the SmilePay program) in the reported quarter were $7.1 million, down 21.1% from the year-ago quarter’s levels. Our model estimated revenues to decline 5.9%.
Margins
The gross profit in the reported quarter was $72.9 million, down 20.5% from the prior-year quarter’s levels. The gross margin of 71.6% contracted 129 basis points (bps), driven by the deleveraging of fixed expenses on lower aligner volumes.
Marketing and selling expenses decreased 30.3% to $49.6 million. General and administrative expenses were $60 million, down 17.4% year over year. The company incurred an adjusted operating loss of $36.5 million in the quarter compared with the operating loss of $51.8 million in the year-ago quarter.
Financial Update
SmileDirectClub exited the second quarter of 2023 with cash and cash equivalents of $28.9 million compared with $93.1 million as of Dec 31, 2022.
The long-term debt (net of the current portion) at the end of the second quarter was $863.4 million compared with $849.4 million at the end of the fourth quarter of 2022.
The cumulative net cash used in operating activities at the end of the second quarter of 2023 was $50.4 million compared with $79.1 million in the year-ago period.
2023 Guidance
SmileDirectClub provided an updated outlook for 2023.
Total revenues from the core business are now expected in the range of $425-$475 million compared with the previously issued guidance in the band of $400-$450 million. The revised outlook includes contributions from the 2023 rollout of the SmileMaker Platform in the United States and the launch of the CarePlus solution. The Zacks Consensus Estimate for the same is pegged at $433.9 million.
The gross margin (as a percentage of total revenues) is expected in the range of 73%-76% (previously 72%-75%) for the full year.
Our Take
SmileDirectClub exited the second quarter of 2023 with both earnings and revenues missing estimates. The year-over-year decline in revenues was due to persistent macroeconomic headwinds, while the sequential decrease followed the typical seasonal trend from the first quarter to the second quarter.
A contraction of both margins does not bode well for the stock. Constraints related to consumer spending and sustained high inflation are likely to dent the overall demand in 2023 for SDC’s core business.
Meanwhile, the financial discipline demonstrated by the company resulted in the improvement of the bottom line amid challenging revenue trends. The raised revenue and gross margin guidance for the full year buoys optimism.
During the quarter, SDC launched the AI-powered SmileMaker Platform in the United States. The broader rollout of the CarePlus premium service offering is also expected by the end of August 2023.
Zacks Rank and Other Key Picks
SmileDirectClub currently carries a Zacks Rank #2 (Buy).
Some other top-ranked stocks in the broader medical space that have announced quarterly results are Abbott Laboratories (ABT - Free Report) , Elevance Health, Inc. (ELV - Free Report) and Intuitive Surgical, Inc. (ISRG - Free Report) .
Abbott, carrying a Zacks Rank of #2, reported a second-quarter 2023 adjusted EPS of $1.08, beating the Zacks Consensus Estimate by 3.8%. Revenues of $9.98 billion outpaced the consensus mark by 2.9%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Abbott has a long-term estimated growth rate of 5.1%. ABT’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 12.4%.
Elevance Health reported a second-quarter 2023 adjusted EPS of $9.04, beating the Zacks Consensus Estimate by 2.5%. Revenues of $43.38 billion surpassed the Zacks Consensus Estimate by 4.5%. It currently carries a Zacks Rank #2.
Elevance Health has a long-term estimated growth rate of 12.1%. ELV’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 2.8%.
Intuitive Surgical reported a second-quarter 2023 adjusted EPS of $1.42, beating the Zacks Consensus Estimate by 7.6%. Revenues of $1.76 billion surpassed the Zacks Consensus Estimate by 1.4%. It currently carries a Zacks Rank #2.
Intuitive Surgical has a long-term estimated growth rate of 14.5%. ISRG’s earnings surpassed estimates in three of the trailing four quarters and missed the same once, the average surprise being 4.2%.