RE:RE:RE:RE:RE:RE:RE:RE:RE:RE:RE:RE:RE:RE:RE:DNTL is Grossly Mispriced
dude, you're clearly personally motivated here. Yes, docs don't like "corporate" dentistry in Canada .... however they will sell for 12X ... cause docs, like most people are hypocrites. They likey the cashey. You know who also loves roll ups? The broader market. Whats going on in the PE space here. Billions of inflows. With a B. And it hasn't even really started in Canada ... what you are seeing is early days of the cycle, just the start Vision, Vet, funeral, auto, grocery, etc. Its the same story, just look South of the border to see what's gonna happen with dental in Canada. Its even easier in Canada, cause the doctors by and large don't own the dirt. Plus, there are no trademarks, primary market areas, entelrenched scale players, distilled supply chain and tougher franchise laws so few brands ... read un controlled market saturation and massive pipeline. Heres how the story goes. Sure, it might be different in Canada, with dental, but why? Its the same old situation. 1. Aging business owners with no succession plan. 2. Repeatable, protected and scaleable model 3. Corp money buys a few and makes money 4. PE and Pubcos see this, roll in, and roll up 5 multiples soar 6. Markets rock 7. Operating Efficiencies don't immediately evidence as M&A outpaces onboarding 8. Financial efficiencies plummet 9. SP plummets 10. Original owners of the Corp (read Rosenthal, amini, etc) move to "executive chair" roles and are replaced operationally by corporate executives that understand the model and the importance of same store metrics. Doctors as poor business people is a cliche for a reason. Having fine motor skills and the ability to memorise data doesn't make one a business savant. The amateur founders with vision get booted for professionals with expertise and the business recovers. 11. Same store efficiencies improve 12. Larger portions of the supply chain are brought into the controlled verticals 13. Operational efficiencies improve 15 sustainable competitive advantage is had 16. Financial efficiencies are had 17. Mom and pop becomes cottage industry 18. New entrants deliver more comp for the corps 19. Rinse repeat 20. Canadians get a better service level 21. Everyone gets rich(er) Its the same thing, every time, every market, over and over again. Yet you, some sed doc,that's just glimpsed 10 mins ago under the sheet and seen something he doesn't like or understand has figured it out? OK dude. The same thing happened to the DSO in the US. Exploded, then dropped, then fixed, now 10X stronger. Same for most Healthcare, most retail, most finance. Do you think practice culture is bad because the leadership doesn't know? Or is it more likely that they know, but dont care (yet)? At the early stage of rollups its ways the same ... a well financed head office is moving fast and rushing to stake up the claims. Once the field is laid, they will circle back and fix the stuff that they don't care about today. The docs always say its about patient care. But the only thing that moves them in the end is money. Patients it seems, after 2 cycles of seeing someone new, magically start to not care either. Then the lure of the shiny (corporately funded, mom and pop scorned) new practices lures them away. 123 goes to DCC, DCC goes to 123. Everyone laments, then they forget. Healthcare is retail. If you dont believe it, just ask Amazon ... or better yet, Telus Who wins in rollups? The fast money. And DCC and 123 are the fast money. Oh... have you looked at the dental school board compositions in Canada lately? Too late, the corps already have the supply side of that equation locked up too. Not saying buy or sell, opinion only, but this is a no Brainer long term hold in my eyes.