SDC - SmileDirectClub adds 13% as Q1 revenue beats consensus

2023-05-10 11:27:17 ET

Shares of SmileDirectClub ( NASDAQ: SDC ) added ~13% on Wednesday after the clear aligner maker reported better-than-expected revenue for Q1 2023 and reaffirmed full-year guidance, drawing positive remarks from Morgan Stanley.

Despite a ~21% YoY decline, SmileDirectClub's ( SDC ) topline improved ~38% from the preceding quarter to $119.8M amid plans to reach EBITDA profitability and record positive cash flow run rates by the year-end.

"Our core business continued to perform well despite the continuing macroeconomic challenges," Chief Executive David Katzman remarked, highlighting the rollout of its SmileDirectClub CarePlus product in four key U.S. markets.

"This initial launch has been well received, and we are planning the second wave of additional markets by the end of the third quarter," he added.

Driven by cost-saving initiatives, SDC's net loss fell ~10% YoY to $65.7M while negative adj. EBITDA declined ~23% YoY to $26.5M, and the cash level reached $59.1M marking a ~37% drop from 2022 year-end.

Morgan Stanley analyst Erin Wright welcomes the results, arguing that SDC's EBITDA indicated only a slight miss while its volumes and sales exceeded expectations. Wright, who has an Equal Weight rating on the stock, is upbeat about the sequential volume improvement and the company's reaffirmed guidance.

More on SmileDirectClub

• SmileDirectClub shares jump ~15% after hours on cost-cutting plans
• SmileDirectClub: Circling The Drain?

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