What a difference two months can make.

In November, dental practice operator Smiles Inclusive (ASX:SIL) told investors that its 2019 full-year profit would be $2.3 million — but last week the company updated that figure to an expected loss of up to $1 million.

And shortly after that it found the ASX in the waiting room with a laundry list of questions.

ASX rules state that, if a company becomes ‘aware’ of information that a ‘reasonable person’ would believe could move the share price, either positively or negatively, it must announce that information to the market as soon as is practicably possible.

The bourse asked Smiles whether that reasonable person would believe the $3.3 million change in FY19 profit guidance would have an effect on the company’s share price, and, if so, when it became aware of the negative impact.

Smiles replied that it believed the difference would have a “material effect” on its shares, but that it only became aware of the difference after the market closed on February 28, the same day it announced the profit downgrade.

The company also says its business model is subject to fluctuation like few other public entities are.

“We consider that the market is aware that as a recent acquirer of a large number of dental practices, its earnings are subject to a number of sensitivities and risks which do not impact most other ASX listed entities,” chairman David Herlihy wrote in response.

“Until very recently, the board had considered the original FY19 guidance could be achieved by opportunities within the mobile dentistry practice that was temporarily closed as announced on 21 November 2018, through early reopening and opportunities within the practice not factored into guidance.

“This revised guidance factored in matters including trading during February, which was below expectation, previously unforeseen and uncertain costs such as litigation, delays implementing turnaround strategies, further realisation of acquisition and integration risks and other announced matters.

“The earnings downgrade was announced promptly and without delay once there was a reasonable degree of certainty that there would be a material difference from the FY19 guidance.”