November 12, 2019 / 9:18 PM / 23 days ago

SmileDirectClub sees more losses for the year; shares slump

(Reuters) - SmileDirectClub Inc (SDC.O), in its first results since going public in September, reported a bigger quarterly loss on Tuesday as expenses rose and the teeth alignment company pointed toward more losses for the year.

The company’s shares were down nearly 8% at $10.20 in extended trading, after closing down 6.50%, way below its IPO price of $23.00.

SmileDirectClub became the latest in a run of startups, including Uber Technologies Inc (UBER.N) and Peloton Interactive (PTON.O), to receive a subdued reception from stock market investors this year.

The results underscore the challenge faced by high-growth but loss-making companies to turn profitable and appease investors.

The online dental company said it expects fiscal 2019 adjusted losses before interest, tax, depreciation and amortization to be between $73 million and $80 million.

Analysts on average expected adjusted loss before interest, tax, depreciation and amortization to be $73.8 million, according to IBES data from Refinitiv.

The company, however, expressed confidence in its long-term plans and expects to expand into more countries through next year.

“Post-IPO, our team is laser focused on execution,” Chief Financial Officer Kyle Wailes said.

SmileDirectClub also said it expects full-year revenue between $750 million and $755 million.

Patients through the company’s tele-dentistry model can either get a 3D imaging of their teeth at the company’s 300+ retail stores or by using an impression kit online. The custom-made aligners are shipped directly to them.

Last month, short-seller firm Hindenburg Research accused the company of “carelessly cutting corners” and “putting customer safety at risk”. SmileDirectClub denied the accusations.

Net loss attributable to the company widened to $88.3 million in the third quarter ended Sept. 30 from a loss of $14.9 million, a year earlier.

A total of 106,070 clear aligners were shipped in the quarter compared to 72,387 a year earlier.

About two-thirds of its customers chose to pay through SmilePay, which allows customers to make monthly payments, down from 68% in 2018.

Marketing and selling expenses more than doubled to $131.3 million in the quarter. The company also reported equity-based compensation of $324 million in the quarter.

Total quarterly revenue, however, rose 50.6% to $180.2 million.

Reporting by Trisha Roy in Bengaluru; Editing by Shounak Dasgupta

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