Smile Direct Club Reports Third Quarter 2019 Financial Results

Nashville, Tennessee, UNITED STATES

NASHVILLE, Tenn., Nov. 12, 2019 (GLOBE NEWSWIRE) -- SmileDirectClub, Inc. (NASDAQ: SDC) today announced its financial results for the quarter ended September 30, 2019.

Third Quarter 2019 Financial Highlights

  • Third quarter total revenue increased $60.5 million, or 50.6%, over the third quarter of 2018, to $180.2 million.
  • Third quarter net loss of $(387.6) million.
  • Third quarter Adjusted EBITDA of $(45.2) million.
  • Third quarter diluted EPS of $(0.89).

Key Operating Metrics

  • Third quarter unique aligner shipments of 106,070, compared to 72,387 in the third quarter of 2018.
  • Average aligner gross sales price (“ASP”)1 of $1,788 compared to $1,773 in the third quarter of 2018.

“Post-IPO, our team is laser focused on execution. Our results for the quarter, all of which exceeded management’s expectations, are a testament to the strength and momentum of the underlying business,” said Kyle Wailes, SmileDirectClub’s CFO.

SmileDirectClub’s Chairman and CEO, David Katzman continued, “Q3 was a good quarter. We were able to demonstrate our ability to execute. We have an incredible team, the best I have ever worked with. Overall, our business is better positioned than ever to capitalize on the massive market opportunity in front of us, and we look forward to demonstrating that in the quarters to come.”

Business Outlook

Our guidance for the fiscal year 2019 is as follows:

  • Revenues are expected to be in the range of $750.0 million to $755.0 million, representing growth of 78% year-over-year at the mid-point of the range.
  • Adjusted EBITDA for the fiscal year is expected between $(73) million to $(80) million.

Conference Call Information

SmileDirectClub Third Quarter 2019 Conference Call Details
Date:Tuesday, November 12, 2019
Time:4:30 p.m. ET (1:30 p.m. PT)
Dial-In: 1-877-407-9208 (domestic) or 1-201-493-6784 (international)
Webcast: Visit “Events and Presentations” section of the company’s IR page at

A replay of the call may be accessed from 7:30 p.m. ET on Tuesday, November 12, 2019 until 11:59 p.m ET on Tuesday, November 26, 2019 by dialing 1-844-512-2921 (domestic) or 1-412-317-6671 (international) and entering the replay PIN: 136904923. An archived version of the call and a copy of the 2019 Q3 Results supplemental earnings presentation will also be available upon completion on the Investor Relations section of SmileDirectClub’s website at

Forward-Looking Statements

This earnings release contains forward-looking statements. All statements other than statements of historical facts may be forward-looking statements. Forward-looking statements generally relate to future events and include, without limitation, projections, forecasts and estimates about possible or assumed future results of our business, financial condition, liquidity, results of operations, plans, and objectives. Some of these statements may include words such as “expects,” “anticipates,” “believes,” “estimates,” “targets,” “plans,” “potential,” “intends,” “projects,” and “indicates.”

Although they reflect our current, good faith expectations, these forward-looking statements are not guarantees of future performance, and involve a number of risks, uncertainties, estimates, and assumptions, which are difficult to predict. Some of the factors that may cause actual outcomes and results to differ materially from those expressed in, or implied by, the forward-looking statements include, but are not necessarily limited to: our management of growth; the execution of our business strategies, implementation of new initiatives, and improved efficiency; our sales and marketing efforts; our manufacturing capacity, performance, and cost; our ability to obtain future regulatory approvals; our financial estimates and needs for additional financing; consumer acceptance of and competition for our clear aligners; our relationships with retail partners and insurance carriers; our R&D, commercialization, and other activities and expenditures; the methodologies, models, assumptions, and estimates we use to prepare our financial statements, make business decisions, and manage risks; laws and regulations governing remote healthcare and the practice of dentistry; our relationships with vendors; the security of our operating systems and infrastructure; our risk management framework; our cash and capital needs; our intellectual property position; our exposure to claims and legal proceedings; and other factors described in our filings with the Securities and Exchange Commission, including but not limited to our Quarterly Report on Form 10-Q for the quarter ended September 30, 2019.

New risks and uncertainties arise over time, and it is not possible for us to predict all such factors or how they may affect us. You should not place undue reliance on forward-looking statements, which speak only as of the date they are made. We are under no duty to update any of these forward-looking statements after the date of this earnings release to conform these statements to actual results or revised expectations. You should, therefore, not rely on these forward-looking statements as representing our views as of any date subsequent to the date of this earnings release.

About SmileDirectClub
SmileDirectClub, Inc. (NASDAQ: SDC) is the industry pioneer as the first direct-to-consumer med-tech platform for transforming smiles.  Through our cutting-edge teledentistry technology and vertically integrated model, we are revolutionizing the oral care industry.  SmileDirectClub’s mission is to unleash the power of people’s smiles to empower them to positively impact their place in the world.  SmileDirectClub was founded by Alex Fenkell and Jordan Katzman in partnership with Camelot Venture Group.  Available in the U.S., Canada, Australia, New Zealand, the UK, and Ireland.  SmileDirectClub is headquartered in Nashville, Tennessee.  For more information, visit

Investor/Media Contact:

Alison Sternberg
Vice President, Investor Relations 310-562-7297

SmileDirectClub, Inc.

Consolidated Balance Sheet

(in thousands)


 September 30
December 31,
Cash$547,563 $313,929 
Accounts receivable224,360 113,934 
Inventories14,633 8,781 
Prepaid and other current assets11,987 5,782 
Total current assets798,543 442,426 
Accounts receivable, non-current87,299 60,217 
Property, plant and equipment, net119,130 52,551 
Other assets6,269  
Total assets$1,011,241 $555,194 
Accounts payable$40,561 $25,250 
Accrued liabilities129,434 34,939 
Due to related parties1,128 20,305 
Deferred revenue24,893 19,059 
Current portion of related party debt 16,054 
Current portion of long-term debt29,737 1,866 
Total current liabilities225,753 117,473 
Long-term debt, net of current portion189,648 137,123 
Long-term related party debt 1,799 
Other long-term liabilities45,230 602 
Total liabilities460,631 256,997 
Commitment and contingencies  
Temporary Equity  
Redeemable Series A Preferred Units 388,634 
Permanent Equity (Deficit)  
Class A common stock, par value $0.0001 and 102,807,291 shares issued and outstanding at September 30, 2019 and 0 shares issued and outstanding at December 31, 201810  
Class B common stock, par value $0.0001 and 279,474,505 shares issued and outstanding at September 30, 2019 and 0 shares issued and outstanding at December 31, 201828  
Additional paid-in-capital441,855 57,497 
Accumulated deficit(88,296)(148,249)
Noncontrolling interest197,013  
Warrants 315 
Total permanent equity (deficit)550,610 (90,437)
Total liabilities, temporary and permanent equity (deficit)$1,011,241 $555,194 


SmileDirectClub, Inc.

Consolidated Statements of Operations

(in thousands, except share and per share amounts)


 Three months ended
September 30,
Nine months ended
September 30,
Revenue, net$168,663 $112,508 $522,529 $278,024 
Financing revenue11,522 7,158 31,185 16,706 
Total revenues180,185 119,666 553,714 294,730 
Cost of revenues39,125 25,837 111,363 67,704 
Cost of revenues—related parties2,310 10,098 13,652 28,608 
Total cost of revenues41,435 35,935 125,015 96,312 
Gross profit138,750 83,731 428,699 198,418 
Marketing and selling expenses131,263 57,210 340,409 143,667 
General and administrative expenses389,828 30,249 486,319 77,550 
Loss from operations(382,341)(3,728)(398,029)(22,799)
Interest expense4,291 4,352 11,607 9,283 
Interest expense—related parties 293 75 1,246 
Loss on extinguishment of debt32  29,672  
Other expense421 6,493 500 15,135 
Net loss before provision for income tax expense(387,085)(14,866)(439,883)(48,463)
Provision for income tax expense479 85 596 294 
Net loss(387,564)(14,951)(440,479)(48,757)
Net loss attributable to noncontrolling interest(299,268) (352,183) 
Net loss attributable to SDC Inc.$(88,296)$(14,951)$(88,296)$(48,757)
Earnings per share of Class A common stock:    
Weighted Average Shares Outstanding:    
Basic99,533,877N/A99,533,877 N/A
Diluted379,008,382N/A379,008,382 N/A


SmileDirectClub, Inc.

Consolidated Statements of Cash Flows

(in thousands)


 Nine months ended September 30,
Operating Activities  
Net loss$(440,479)$(48,757)
Adjustments to reconcile net loss to net cash used in operating activities:  
Depreciation and amortization16,237 4,966 
Deferred loan cost amortization1,496 461 
Accrued interest to related parties 884 
Fair value adjustment of warrant derivative 14,500 
Equity-based compensation332,759 13,626 
Loss on extinguishment of debt17,693  
Other non-cash operating activities1,783 3,305 
Changes in operating assets and liabilities:  
Accounts receivable(137,509)(97,005)
Prepaid and other current assets(6,205)(2,233)
Accounts payable(4,475)11,935 
Accrued liabilities45,880 9,926 
Due to related parties(19,177)306 
Deferred revenue5,834 8,869 
Net cash used in operating activities(192,015)(83,180)
Investing Activities  
Purchases of property and equipment—related party (4,722)
Purchases of property, equipment, and intangible assets(66,355)(15,231)
Net cash used in investing activities(66,355)(19,953)
Financing Activities  
IPO proceeds, net of discount and related fees1,285,759  
Repurchase of Class A shares and LLC Units(696,489) 
Repurchase of Class A shares to cover employee tax withholdings(81,603) 
Settlement of canceled awards(2,000) 
Issuance of Class A common stock6  
Proceeds from sale of Preferred Units, net 298,549 
Borrowings on long-term debt176,000 117,375 
Payments of issuance costs(6,127)(3,174)
Principal payments on long-term debt(159,047) 
Principal payments on related party debt(24,581)(34,376)
Net cash provided by financing activities492,004 378,374 
Increase in cash233,634 275,241 
Cash at beginning of period313,929 4,071 
Cash at end of period$547,563 $279,312 

Use of Non-GAAP Financial Measures

This earnings release contains certain non-GAAP financial measures, including adjusted EBITDA (“Adjusted EBITDA”). We provide a reconciliation of this non-GAAP financial measure to the most directly comparable GAAP financial measure below and in our Current Report on Form 8-K announcing our quarterly earnings results, which can be found on the SEC’s website at and our website at

We utilize certain non-GAAP financial measures, including Adjusted EBITDA, to evaluate our actual operating performance and for planning and forecasting of future periods.

We define Adjusted EBITDA as net loss plus depreciation and amortization, interest expense, income tax expense, adjusted to remove derivative fair value adjustments, loss on extinguishment of debt, equity-based compensation and certain other non-operating expenses such as IPO related costs and foreign currency adjustments. We use Adjusted EBITDA when evaluating our performance when we believe that certain items are not indicative of operating performance. Adjusted EBITDA provides useful supplemental information to management regarding our operating performance and we believe it will provide the same to members/stockholders.

We believe that Adjusted EBITDA will provide useful information to members/stockholders about our performance, financial condition, and results of operations for the following reasons: (i) Adjusted EBITDA would be among the measures used by our management team to evaluate our operating performance and make day-to-day operating decisions and (ii) Adjusted EBITDA is frequently used by securities analysts, investors, lenders, and other interested parties as a common performance measures to compare results or estimate valuations across companies in our industry.

Adjusted EBITDA does not have a definition under GAAP, and our definition of Adjusted EBITDA may not be the same as, or comparable to, similarly titled measures used by other companies. Adjusted EBITDA should not be considered in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. A reconciliation of Adjusted EBITDA to net loss, the most directly comparable GAAP financial measure, is set forth below.

SmileDirectClub, Inc.

Reconciliation of Net Loss to Adjusted EBITDA


(in thousands)Three months ended
September 30,
Nine months ended
September 30,
Net loss$(387,564)$(14,951)$(440,479)$(48,757)
Depreciation and amortization6,514 2,232 16,237 4,966 
Total interest expense4,291 4,645 11,682 10,529 
Income tax expense479 85 596 294 
Fair value adjustment of warrant derivative 5,876  14,500 
Loss on extinguishment of debt32  29,672  
Equity-based compensation324,497 5,754 332,759 13,626 
IPO related costs6,146  6,146  
Other421 617 502 635 
Adjusted EBITDA$(45,184)$4,258 $(42,885)$(4,207)

We define average aligner gross sales price ("ASP") as gross revenue, before implicit price concession and other variable considerations and exclusive of sales tax, from aligner orders shipped divided by the number of unique aligner orders shipped.