SmileDirectClub (SDC) is scheduled to report results of its fourth fiscal quarter after the market close on Thursday, March 4, with a conference call scheduled for 4:30 pm EDT.
1. GUIDANCE: In November, SmileDirectClub said it continued to execute against its 20%-30% annualized revenue growth targets. At the time, the company stated that "Within the third quarter, the Company made meaningful progress against this plan and the associated future growth drivers; specifically, expanding the core customer acquisition channels, extending the value proposition to the teen demographic, and international expansion. On the cost side, the company turned AEBITDA profitable one quarter ahead of plan through continued advancement in automating its manufacturing and treatment planning operations, continued discipline around the deployment of marketing and selling dollars, and ongoing cost discipline across the business. The company expects to continue to see favorable industry dynamics with broader acceptance of telehealth and specifically teledentistry, minimal penetration against the total addressable market, no real competitor that provides an end-to-end vertically integrated platform for the consumer, and clear aligners gaining share in the overall industry."
2. PROFITABILITY WITH CONTROLLED GROWTH: On November 24, JPMorgan analyst Robbie Marcus hosted investor meetings with management. The conversations answered many of the remaining questions post the Q3 report, Marcus told investors in a research note. The company "more completely shifted the focus from purely one of growth toward more profitable growth that also ensures a highly positive customer experience," said the analyst. He's happy to see this tradeoff, and left the meetings with more confidence in the company's ability to operate on a structurally lower cost base. The story is "profitability with controlled growth," said Marcus.
3. EBITDA TRACKING TO MORE THAN DOUBLE: Wolfe Research analyst Steve Beuchaw upgraded SmileDirectClub to Outperform from Peer Perform with an unchanged price target of $16 on December 8. The company's EBITDA is tracking to more than double the consensus estimate in 2021, Beuchaw said. The analyst believes the Street continues to underestimate the implications of SmileDirectClub's business model pivot for better profitability. He sees a buying opportunity in the shares post the Q3 results selloff.
4. RETAIL PARTNERSHIP: SmileDirectClub announced on February 17 that Walgreens (WBA) is "the latest retail partner to carry its innovative, category-disrupting oral care line." The partnership will make SmileDirectClub's suite of products available at nearly 1,700 Walgreens locations across the U.S. and Walgreens.com, the company stated. "This month, Walgreens customers may find SmileDirectClub's products, including the company's best-selling bright on whitening products, whitening toothpaste, state-of-the-art electric toothbrush and replacement heads, and award-winning water flosser in the retail chain's oral care aisle. Walgreens' customers shopping in-store may also save up to $5 off SmileDirectClub oral care products by using a unique QR code coupon offer," SmileDirectClub added.
