Exclusive: SmileDirect CFO Says Company 'Executing Very Well' On Long-Term Goals

SmileDirectClub, Inc. SDC is an oral care company that embraces medical technology to provide affordable alternatives to expensive orthodontist services.

The company also sells everyday dental care products like electric toothbrushes and teeth whitening systems.

On Friday, SmileDirectClub CFO Kyle Wailes was a guest on Benzinga's "Power Hour" show to talk about the company's growth plans.

SmileDirect's Profit Outlook: SmileDirect reported an EBITDA profit in the third quarter of 2020, which implies the company beat its own projection of achieving a profit in the fourth quarter, Wailes said.

The company followed up its profitable third quarter with another profit in the fourth quarter, and management is projecting a third consecutive profitable quarter in the first quarter of 2021.

Perhaps more important, SmileDirect is "executing very well" against its longer-term targets while building an infrastructure to generate a 25% to 30% EBITDA margin in the coming years, the CFO said.

Part of the company's growth plans include new market expansions. SmileDirect operates in 12 countries, and it has identified a "handful" of new markets it will target in 2021 and beyond to address what could prove to be a very underserved $1-trillion global market, Wailes said. 

"We are in the early stages of a massive opportunity, and being international is an important part of that." 

Related Link: Recap: SmileDirectClub Q4 Earnings

The Largest 3D Printing Manufacturer: SmileDirect is the largest 3D printing manufacturer in the U.S. The digital file of a customer's scan is loaded to a 3D printer to generate a mold of the user's teeth.

SmileDirect partners with HP Inc HP to help power its products.

The existing relationship with HP and its advanced infrastructure allow for the possibility of "look at other avenues" and "ancillary services" over time, the CFO said.

SmileDirect's MetLife Partnership: SmileDirect partnered with MetLife in late 2020 to provide in-network orthodontic treatment.

SmileDirect claims that it can help customers recoup $1,000 out of a total out-of-pocket cost of just under $2,000.

In contrast, the same $1,000 reimbursement would seem less significant when consumers have to pay $5,000 at a competing firm.

SmileDirect is now partnering with self-insured employers to cover adult orthodontic coverage. This has historically been an overlooked segment, as orthodontic work is mostly associated with teens and younger people.

"It's a great benefit for our club members," he said.

Addressing A Bear: A Benzinga YouTuber viewer asked how the company addresses claims that its products and services are targeted to people that can't afford to get proper dental care from a professional orthodontist.

This notion is "not true," as the company provides a very safe and effective alternative with a proven record, Wailes said. 

He highlighted a 2019 clinical study conducted by Dr. Marc Ackerman, director of orthodontics at Boston Children's Hospital, that concluded SmileDirect is just as effective as the more expensive alternative.

Such criticism is to be expected in an industry that faces disruption, as it takes time for people to understand the business and opportunity.

See also: Orthodontic Insurance

The company has already debunked another bear thesis that it can't be profitable or that its balance sheet is in a poor position, he said.

"A lot of those questions we executed on over time and I think we checked those boxes," he said. "We just need to execute quarter-in, quarter-out to prove them."