dentalcorp Holdings Ltd T.DNTL

Alternate Symbol(s): DNTCF

Healthcare

dentalcorp Holdings Ltd. is a Canada-based consumer healthcare services company and provider of dental services in Canada. The principal activity of the Company, through its subsidiaries, is to provide health care services by acquiring and partnering with dental practices in Canada. It operates a network of over 551 dental practices, delivering patient experiences to over 2.3 million Canadians. Its network includes over 1,850 dentists, over 2,500 hygienists and over 5,550 auxiliary dental health professionals. Its wholly owned subsidiaries include dentalcorp Health Services Ltd., MWHE Holding Corp., 9520-3048 Quebec Inc. and 1348856 B.C. Ltd.

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dentalcorp Holdings Ltd

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Post by retiredcfon Aug 12, 2022 9:40am

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Post# 34891025

RBC

August 12, 2022

dentalcorp Holdings Ltd.
Q2/22 results: Results ahead of estimates

TSX: DNTL | CAD 10.78 | Outperform | Price Target CAD 18.00

Sentiment: Positive

Our initial view: dentalcorp reported Q2/22 revenues of $327.0MM (+16.7% q/q; +25.3% y/y), ahead of RBCe ($311.8MM) and consensus ($315.5MM). However, GMs of 48.6% in the quarter decreased q/q (49.6% in Q1) and were below RBCe (50.0%) and consensus (49.4%). Q2/22 adj. EBITDA of $59.8MM was ahead of RBCe ($57.3MM) and consensus ($57.2MM). The company anticipates to deliver double-digit revenue growth y/y in Q3/22. dentalcorp acquired 28 dental practices in Q2 for a total of $142.7MM (~8.9x IFRS EBITDA multiple) and now has 526 practices across Canada. We expect these results to be positive for dentalcorp’s shares.

Revenues above RBCe and consensus expectations; GMs declined q/q. dentalcorp reported Q2/22 revenues of $327.0MM (+16.7% q/q; +25.3% y/y), ahead of RBCe ($311.8MM) and consensus ($315.5MM). Gross margins of 48.6% in the quarter decreased q/q (49.6% in Q1) and were below RBCe (50.0%) and consensus (49.4%). dentalcorp reported same practice sales growth of +3.1% y/y in Q2 (vs. -3.3% y/y in Q1, impacted by Omicron). The company noted the same practice revenue growth was aided by the company's orthodontics insourcing initiative with 250 dental practices in the ortho acceleration program (vs. 217 end of Q1/22 and 178 at the end of Q2/21). The same practice revenue growth in Q2 was negatively impacted by the ongoing regulatory restrictions (increased wait time between procedures), practitioner absences and patient cancellations due to the pandemic. The company anticipates to deliver double-digit revenue growth y/y in Q3/22.

Ahead of expectations on adj. EBITDA. dentalcorp reported Q2/22 adj. EBITDA of $59.8MM on an IFRS basis, ahead of RBCe ($57.3MM) and consensus ($57.2MM). The EBITDA margin of 18.3% was up q/q (17.9%) and above consensus (18.1%) but marginally below RBCe (18.4%). Adj. FCF for Q2/22 was $41.7MM, up q/q ($40.4MM in Q1).

Acquired 28 practices ($16.1MM adj. EBITDA) in Q2 at an implied ~8.9x IFRS EBITDA multiple. dentalcorp acquired 28 dental practices in Q2/22 for total consideration of $142.7MM. The company expects the acquired practices to generate ~$16.1MM in annualized adj. EBITDA (implying an acquisition multiple of ~8.9x). This compares to $25.0MM of acquired EBITDA at an IFRS EBITDA multiple of ~8.8x in Q1/22. As of the end of Q2/22, dentalcorp owned 526 dental practices in Canada (vs. 500 practices end Q1/22). We view the growth in the number of acquired practices positively. The company noted total opportunities of more than 730 in its pipeline with 200+ opportunities in more advanced stages of negotiation.

Sufficient liquidity for future acquisitions. dentalcorp ended the June-22 quarter with ~$152.2MM in cash and ~$288.6MM in debt capacity under its $1.3B senior debt facility (of which ~$1.0B was drawn at quarter-end).

Conference call. Today at 8:30AM ET (Dial-in: 416-764-8650 or 1-888-664-6383; Reference Number: 6623-7116; Webcast link (here).