SmileDirectClub posted lower-than-expected quarterly results but said its business would benefit from growing consumer acceptance of teledentistry amid the coronavirus crisis.
For the first quarter, the company lost $107 million, or 28 cents a share, compared with a loss of $20.5 million in the year-ago period. Sales rose 11% to $197 million.
Analysts had expected a loss of 21 cents per share on revenue of $213 million. On news of the results, SmileDirect shares dropped 4.5% to $7.72 in trading Wednesday.
CEO David Katzman said sales would have come in at more than $235 million, beating estimates, if not for the COVID-19 pandemic, which forced SmileDirect to temporarily close all its stores outside Hong Kong last month.
“We leveraged our teledentistry platform, along with our completely remote kit business, to continue to serve our Club Members during these challenging times,” he said in a news release. “Our performance in the quarter, and more important, since then, validates the strength, durability and flexibility of our business model.”
SmileDirect, which went public last year, had the worst market debut in about two decades among IPOs that raised more than $500 million. It has faced criticism from health organizations that say its teeth-straightening practices violate dentistry regulations.
But Katzman told analysts Wednesday that the pandemic has cast “a positive spotlight” on the merits of telehealth.
“We’ve always first and foremost been a telehealth business and we’re excited to see the growing level of understanding and acceptance of the importance of telehealth, especially for dentistry,” he said, adding that SmileDirect will “continue to invest in our proprietary platform.”
The company has already updated its video chat feature to enable the dentist, using the customer’s smartphone, to zoom in on the customer’s mouth and illuminate it with the phone’s flashlight.
SmileDirect also announced Wednesday that it had entered into a new, five-year $500 million debt facility with HPS Investment Partners. “Given our uncertain times and the possibility of a COVID return in the fall, we felt it was prudent to strengthen our cash position while also minimizing shareholder dilution,” Katzman said.
Presley Ann/Getty Images for SmileDirectClub