SmileDirect Stocks Drop After Cybersecurity Incident, Financial Impact Revealed

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Shares of SmileDirectClub Inc. fell more than 7% in after-hours trading Monday afternoon, following the official disclosure of a cybersecurity incident and its financial repercussions. SmileDirectClub SDC revealed in a filing with the Securities and Exchange Commission that it was hit by an attack on April 14, causing a system outage. While the company did not disclose the exact nature of the attack, it did say that “no ransom was paid,” suggesting that it was a ransomware attack.

“At this time, the company is not aware of any data loss or other loss of assets as a result of the incident, including any exposure of customer or team member information,” the presentation reveals. “However, the incident has caused and may continue to cause delays and interruptions in parts of the company’s business, including treatment planning, manufacturing operations and product delivery.” SmileDirect said it expects to achieve a revenue impact of $ 10 million to $ 15 million in the current quarter as a result of the incident, although it expects the relevant insurance coverage to help cover some costs. The company revealed that it now expects $ 195 million to $ 200 million in second-quarter sales after subtracting the impact, which is less than average analyst expectations of $ 206.7 million, according to FactSet. SmileDirect also revealed preliminary results for its first quarter at the presentation. the consumer direct orthodontic company said it expects to report a first-quarter net loss of $ 95.6 million, or 25 cents a share, on sales of $ 199.5 million. On average, analysts expected a loss of 10 cents a share on sales of $ 196 million, according to FactSet. SmileDirect expects to fully report first quarter earnings on May 10. SmileDirect shares plunged more than 7% in after-hours trading on Monday, following a penny drop to $ 10.63 in the regular session. The stock has gained 53% last year, as the S&P 500 SPX has risen 47.7%.