On January 24, SmileDirectClub Inc. (SDC) announced strategic actions to increase the company’s profitability. Following the announcement, the stock advanced further in the after-hours.

During regular trading, the stock fluctuated between $1.7550 and $1.9900 at 11.46 million shares. SDC closed the session at $1.9900 with a slight gain of 2.05% on Monday. Consequent to the announcement, the stock saw an upsurge, by adding a further 11.06% in the after-hours. Hence, SDC was trading at $2.21 apiece at an after-hours volume of 2.93 million shares.

The dental services provider, SmileDirectClub Inc. has a market capitalization of $757.34 million. Currently, the company has 119.14 million shares outstanding in the market. Furthermore, SDC stock has declined by 15.32% year to date while it lost 85.10% last year.

SDC’s Strategic Actions

Based on the continued impact of macroeconomic factors on consumers, SDC has decided on certain strategic measures for improving profitability. Further, these actions were decided upon after the company conducted an evaluation of its business.

The planned actions include:

• Its professional channel, SmileDirectClub Partner Network expansion.
• Innovations for aligner products to encompass the teen and higher-household income demographics.
• Focus on its oral care product business.
• Growth of SmileShop in markets as consumer demand is increasing.
• Pausing of expansion into new international markets for allowing recovery from the pandemic and macroeconomic pressures.
• Suspension of operations on Mexico, Spain, Germany, Netherlands, Austria, Hong Kong, Singapore, and New Zealand.
• Scaling of operations in the U.S., Canada, U.K., Ireland, France, and Australia.
• Reduction of the workforce for alignment with operating structure tailored to the focused countries.

Expected Impact of the Actions

Moreover, SDC’s expected year-over-year cost and capital savings as a result of the above-mentioned changes and actions are estimated to be $120 million approx. in 2022. Additionally, a $25 million one-time recognition cost is expected between Q4 2021 and 2022. Out of this, $3 million are expected to be booked in Q4 2021, and the remaining in 2022. This includes lease buyout, asset impairments due to closure of regional operations, employee-related costs like severance and retention payments, etc.

In addition, the company also confirmed the previously issued guidance of $630-$650 million for full-year 2021 revenue.

Q3 Financial Highlights

SDC had a net loss of $89 million (0.23/diluted share) on revenue of $138 million in the third quarter of 2021. Therefore, the total revenue decreased by 18.3% year over year, and net loss went down by 105.6% year over year.