SmileDirectClub Drops Revenue by 19% in the Fourth Quarter of 2022... Yikes!

When you are not turning a profit and your revenue drops by 19% in three months, you gotta really, really try to put a positive spin on it.  I suppose that what professional spin doctors do because SmileDirectClub is really taking some financial hits.  The company, whose original plan was to let patients DIY their orthodontic treatment, has tried several different ways to turn things around, but are still struggling.

Their total revenue in 2022 was listed at $471 million, which is a big number, but that was a 26.2% drop for the previous year.  Then when you consider they also had a net loss of $69 million in the last 3 months of 2022, things just do not look rosy.

Yet, the professional spin doctors who wrote their recent press release on their financial results stated "Disciplined Cost Management Continues Driving Improved Cash Flow".  Here is part of the press release from GlobeNewswire:

Disciplined Cost Management Continues Driving Improved Cash Flow

 SmileDirectClub, Inc. (Nasdaq: SDC), the next generation oral care company with the first medtech platform for teeth straightening, today announced its financial results for the fourth quarter and year ended December 31, 2022.

For the full year 2022, our disciplined cost management allowed us to deliver a $58 million improvement in Net Loss and comparable Adjusted EBITDA even though we saw a decline in full year revenue, and despite a $17 million increase in Net Cash used in operating activities, we were able to deliver a $38 million improvement in free cash flow over 2021. The leverage that we have built in our operating model reflects a much more efficient organization that is better positioned to achieve profitability and execute at a high level on our mission to democratize access to a smile each and every person loves by making it affordable and convenient for everyone.

Fourth Quarter 2022 Financial Highlights

• Total revenue of $87 million, a 19.0% decrease from the third quarter of 2022 and a decrease of 31.5% over the prior year period.

• Net loss of $(69) million, consistent with the third quarter of 2022 and an improvement of $26 million over the prior year period.

• Adjusted EBITDA of $(47) million, an $18 million decrease over the third quarter of 2022, and an improvement of $14 million over the prior year period.

• Diluted EPS of $(0.18), consistent with the third quarter of 2022, and an improvement of $0.07 over the prior year period.

• Net cash used in operating activities was $(51) million, an increase of $27 million over the third quarter of 2022 and an increase of $8 million over the prior year period.

• Free Cash Flow defined as net cash used in operating activities less net cash used in investing activities of $(63) million, a decrease of $28 million from the third quarter of 2022 and an improvement of $16 million over the prior year period.

2022 Financial Highlights

• Total revenue of $471 million, a 26.2% decrease from the prior year.

• Net loss of $(278) million, an improvement of $58 million over the prior year.

• Adjusted EBITDA of $(135) million, a $1 million decrease from the prior year.

• Diluted EPS of $(0.71), an improvement of $0.16 over the prior year.

• Net cash used in operating activities was $(158) million, an increase of $17 million over the prior year.

• Free Cash Flow of $(210) million, an improvement of $38 million over the prior year.