- Revenue of $261 million for the
quarter
- Adjusted EBITDA(1) of $48.9
million, resulting in an Adjusted EBITDA margin of 19% for
the quarter
- Acquired 20 dental practices in the quarter, budgeted to
generate a total of $12 million in
annual Adjusted EBITDA(1
- Same Practice Sales Growth(1) of 345% compared with
the second quarter of 2020, and up over the second quarter of
2019
- Last-twelve-months PF Revenue(1) and PF
Adjusted EBITDA([1]) of $1,037
million and $207 million,
respectively, resulting in a PF Adjusted EBITDA(1)
margin of 20%
- Adjusted Free Cash Flow(1) of $26.0 million for the quarter
- Adjusted Net Income(1) of $13.6 million for the quarter
TORONTO, Aug. 10, 2021 /CNW/ - dentalcorp Holdings Ltd.
("dentalcorp" or the "Company") (TSX: DNTL), Canada's largest and fastest growing
network of dental practices, announced today its three and six
month financial and operating results for the period ended
June 30, 2021. All references to
dollar values in this press release are in Canadian dollars, unless
otherwise indicated.
"Our second quarter results came in higher than our
expectations, driven by our strong acquisition program, which has
surpassed our targets so far this year," said Graham Rosenberg, Chief Executive Officer of
dentalcorp. "Despite ongoing provincial and regulatory pandemic
restrictions, we continued to execute on our core strategies to
drive shareholder value, including accretive acquisitions, organic
growth - augmented by our insourcing agenda - and the realization
of ongoing operating efficiencies. We also continued to evaluate
opportunities to leverage our existing infrastructure in order to
deliver more value-added services to our 1.6 million active
patients nationwide."
Second Quarter Financial and Operating Results For the Three
Months Ended June 30, 2021
- Revenues for the second quarter of 2021 increased to
$261.1 million, up 390% over the
second quarter of 2020, and up 6% over the first quarter of 2021.
Second quarter 2021 revenues were higher compared to the same
period in 2020 due to more stringent pandemic restrictions in 2020,
plus strong second quarter 2021 acquisitive and organic growth
including a positive contribution from the Company's orthodontics
insourcing agenda. Same Practice Sales Growth was 345% compared
with the second quarter of 2020, and up over the second quarter of
2019.
- Second quarter Adjusted EBITDA increased to $48.9
million, up from ($0.1) million in
the second quarter of 2020, and up 3% over the first quarter of
2021 resulting in a second quarter Adjusted EBITDA margin increase
to 18.7% from (0.2%) in the second quarter of 2020.
- Adjusted Free Cash Flow(1) was $26.0 million for the second quarter compared
to ($33.9) million for the second quarter of 2020, and
$27.8 million in the first quarter of
2021.
- Adjusted Net Income for the second quarter of 2021 was
$13.6 million, compared
to ($24.6) million for the second quarter of 2020, and
$11.4 million in the first quarter of
2021.
- The Company acquired 20 dental practices during the quarter,
which are budgeted to generate a total of $12 million in annual Adjusted EBITDA, for a
total consideration of $77.6 million.
As at June 30, 2021, the Company
owned 431 dental practices in Canada compared to 374 practices at
June 30, 2020.
- In the second quarter, the Company completed its initial public
offering, raising gross proceeds of $718
million (including proceeds from the underwriter's exercise
of the over-allotment option). The Company also closed a concurrent
private placement of $232 million,
which resulted in the Company raising total gross proceeds of
$950 million.
- The Company ended the second quarter of 2021 with liquidity of
$661.6 million, comprised of
$261.6 million in cash, and
$400 million in debt capacity under
its $1.3 billion Senior Debt facility
(of which $900 million was drawn at
quarter end).
|
_________________________
|
|
1 A
Non-IFRS measure; see "Non IFRS Measures" below
|
Subsequent to Quarter End:
- The Company announced a strategic partnership with Loblaw
Companies Limited (TSX: L) to be the exclusive provider of dental
health services and oral care education for users of the PC
Health app. The strategic partnership will connect PC
Health app users with best-in-class oral health content from
some of the nation's top clinicians, while affording access to
dentalcorp's growing network of more than 430 dental practices
nationwide, including the opportunity to earn PC
OptimumTM points through digital oral health
programs.
- The Company acquired three dental practices, for a total
consideration of $12.4 million.
Consolidated Financial Results
|
Consolidated
Statements of Loss and Comprehensive Loss
|
Three month period
ended June 30
|
|
Six month period
ended June 30
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
|
$
millions
|
|
$
millions
|
|
$
millions
|
|
$
millions
|
|
|
|
|
|
|
|
|
|
Revenue
|
261.1
|
|
53.3
|
|
508.1
|
|
235.5
|
|
Cost of
revenue
|
135.1
|
|
27.5
|
|
260.6
|
|
120.5
|
|
Gross
Profit
|
126.0
|
|
25.8
|
|
247.5
|
|
115.1
|
|
|
|
|
|
|
|
|
|
Selling, general and
administrative expenses
|
87.9
|
|
27.1
|
|
171.2
|
|
91.0
|
|
Depreciation of
property and equipment
|
14.0
|
|
11.8
|
|
28.3
|
|
24.8
|
|
Depreciation of
right-of-use assets
|
6.3
|
|
5.2
|
|
12.1
|
|
10.2
|
|
Amortization of
intangible assets
|
18.3
|
|
16.4
|
|
36.1
|
|
32.6
|
|
Share-based
compensation
|
55.5
|
|
1.1
|
|
58.1
|
|
1.5
|
|
Operating
loss
|
(56.0)
|
|
(35.7)
|
|
(58.3)
|
|
(45.2)
|
|
|
|
|
|
|
|
|
|
Finance
costs
|
52.9
|
|
35.2
|
|
92.7
|
|
67.6
|
|
Finance
income
|
(0.2)
|
|
(0.4)
|
|
(0.4)
|
|
(1.1)
|
|
Foreign exchange
(gain) loss
|
(58.2)
|
|
(62.7)
|
|
(76.1)
|
|
69.7
|
|
Change in fair value
of derivative instruments
|
53.0
|
|
54.7
|
|
66.4
|
|
(39.5)
|
|
Change in fair value
of conversion option
|
(11.0)
|
|
(3.8)
|
|
(30.8)
|
|
(19.7)
|
|
Change in fair value
of contingent consideration
|
0.2
|
|
(1.3)
|
|
(3.8)
|
|
(11.2)
|
|
Share of associate
losses
|
0.1
|
|
–
|
|
0.1
|
|
–
|
|
Loss before income
taxes
|
(92.7)
|
|
(57.4)
|
|
(106.5)
|
|
(111.0)
|
|
Income tax
recovery
|
(2.7)
|
|
(9.4)
|
|
(7.5)
|
|
(11.0)
|
|
Net loss and
comprehensive loss
|
(90.0)
|
|
(48.0)
|
|
(99.0)
|
|
(99.9)
|
|
|
|
|
|
|
|
|
|
Other
Metrics
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Net
Income(a)
|
13.6
|
|
(24.6)
|
|
25.0
|
|
(26.8)
|
|
Adjusted
EBITDA(b)
|
48.9
|
|
(0.1)
|
|
95.4
|
|
31.6
|
|
|
|
|
|
|
|
|
|
Total Practices
(at period end)
|
431
|
|
374
|
|
431
|
|
374
|
|
|
|
(a)
|
For the definition of
Adjusted Net Income and a reconciliation to Net Income, see
Non-IFRS measures below.
|
|
(b)
|
For the definition of
Adjusted EBITDA and a reconciliation to Net Income, see Non-IFRS
measures below.
|
Outlook
Due to the anticipated easing of pandemic restrictions at
provincial and dental regulatory levels, and the Company's
continued focus on its core growth strategies, the Company
anticipates continued strong performance of its business moving
forward. The Company further anticipates ongoing growth from
accretive acquisitions, and same-store sales momentum due to the
execution of its strategic initiatives, including the insourcing of
new services such as orthodontics care.
Conference Call Notification The Company will hold a
conference call to provide a corporate update on Wednesday, August 11, 2021 at 8:30 a.m. ET. A question-and-answer session will
follow the corporate update.
|
LIVE CONFERENCE
CALL DETAILS
|
|
DATE:
|
Wednesday, August 11,
2021
|
|
TIME:
|
8:30 a.m.
ET
|
|
WEBCAST:
|
https://produceredition.webcasts.com/starthere.jsp?ei=1481343&tp_key=6b486ac00d
|
|
DIAL-IN
NUMBER:
|
416-764-8650 or
1-888-664-6383
|
|
REFERENCE
NUMBER:
|
08308297
|
|
|
|
REPLAY
|
|
|
DIAL-IN
NUMBER:
|
416-764-8677 or
1-888-390-0541
|
|
REFERENCE
NUMBER:
|
308297#
|
|
WEBCAST:
|
https://produceredition.webcasts.com/starthere.jsp?ei=1481343&tp_key=6b486ac00d
(available for two
weeks after the call)
|
Non-IFRS Measures
As appropriate, we supplement our results of operations
determined in accordance with IFRS with certain Non-IFRS financial
measures that we believe are useful to investors, lenders and
others in assessing our performance and which highlight trends in
our core business that may not otherwise be apparent when relying
solely on IFRS measures. Our management also uses Non-IFRS measures
for purposes of comparison to prior periods, to prepare annual
operating budgets, for the development of future projections and
earnings growth prospects, to measure the profitability of ongoing
operations and in analyzing our financial condition, business
performance and trends. As such, these measures are provided as
additional information to complement those IFRS measures by
providing further understanding of our results of operations from
management's perspective, including how we evaluate our financial
performance and how we manage our capital structure. We also
believe that securities analysts, investors and other interested
parties frequently use these Non-IFRS measures and industry metrics
in the evaluation of issuers. These Non-IFRS measures are not
recognized measures under IFRS and do not have a standardized
meaning prescribed by IFRS and may include or exclude certain items
as compared to similar IFRS measures, and such measures may not be
comparable to similarly titled measures reported by other
companies. Accordingly, these measures should not be considered in
isolation nor as a substitute for analysis of our financial
information reported under IFRS.
EBITDA
"EBITDA" means, for the applicable period, net loss and
comprehensive loss plus (a) finance costs, (b) income tax
expense (recoveries), (c) depreciation of property and equipment,
(d) depreciation of right-of-use assets, and
(e) amortization of intangible assets. We present EBITDA to
assist investors in understanding the mathematical development of
Adjusted EBITDA. Management does not use EBITDA as a financial
performance metric. For more information on how EBITDA is
calculated, see below.
|
Three month period
ended
June 30
|
|
Six month period
ended
June 30
|
|
|
|
2021
|
2020
|
|
2021
|
2020
|
|
$
millions
|
$
millions
|
|
$
millions
|
$
millions
|
|
Net loss and
comprehensive loss
|
(90.0)
|
(48.0)
|
|
(99.0)
|
(99.9)
|
|
Finance costs,
net
|
52.7
|
34.8
|
|
92.3
|
66.5
|
|
Income tax expense
(recoveries)
|
(2.7)
|
(9.4)
|
|
(7.5)
|
(11.0)
|
|
Depreciation of
property and equipment
|
14.0
|
11.8
|
|
28.3
|
24.8
|
|
Depreciation of
right-of-use assets
|
6.3
|
5.2
|
|
12.1
|
10.2
|
|
Amortization of
intangible assets
|
18.3
|
16.4
|
|
36.1
|
32.6
|
|
EBITDA
|
(1.4)
|
10.8
|
|
62.3
|
23.2
|
Adjusted EBITDA
"Adjusted EBITDA" is calculated by adding to EBITDA certain
expenses, costs, charges or benefits incurred in such period which
in management's view are either not indicative of underlying
business performance or impact the ability to assess the operating
performance of our business, including: (a) net impact of
foreign exchange and change in fair value of derivatives, and in
fair value of conversion option; (b) share based compensation;
(c) external acquisition expenses; (d) COVID-19 costs;
(e) change in fair value of contingent consideration;
(f) legacy transaction costs related to the sale of the
Company and concurrent recapitalization; and (g) other
corporate costs (consisting primarily of consulting costs related
to our recent enterprise resource planning implementation).
Adjusted EBITDA is a supplemental measure used by management and
other users of our financial statements, including the Specified
Shareholders, to assess the financial performance of our business
without regard to the effects of interest, depreciation and
amortization costs, expenses that are not considered reflective of
underlying business performance, and other expenses that are
expected to be one-time or non-recurring. We use Adjusted EBITDA to
facilitate a comparison of our operating performance on a
consistent basis from period to period and to provide for a more
complete understanding of factors and trends affecting our
business. In addition, Adjusted EBITDA is utilized by certain
financial institutions to measure borrowing capacity. Adjusted
EBITDA is not an IFRS measure. For more information on how Adjusted
EBITDA is calculated, see below.
|
Three month period
ended
June 30
|
|
Six month period
ended
June 30
|
|
|
|
2021
|
2020
|
|
2021
|
2020
|
|
$
millions
|
$
millions
|
|
$
millions
|
$
millions
|
|
EBITDA
|
(1.4)
|
10.8
|
|
62.3
|
23.2
|
|
Add:
|
|
|
|
|
|
|
Net impact of foreign
exchange, change in fair value of derivatives, change in fair value
of conversion option, and share of associate losses
|
(16.1)
|
(11.8)
|
|
(40.4)
|
10.5
|
|
Share based
compensation
|
55.5
|
1.1
|
|
58.1
|
1.5
|
|
External acquisition
expenses(1)
|
1.7
|
1.2
|
|
2.7
|
2.8
|
|
COVID-19
costs(2)
|
1.0
|
(0.8)
|
|
1.9
|
4.0
|
|
Change in fair value
of contingent consideration(3)
|
0.2
|
(1.3)
|
|
(3.8)
|
(11.2)
|
|
IPO costs
|
7.7
|
-
|
|
13.7
|
-
|
|
Other corporate
costs(4)
|
0.3
|
0.7
|
|
0.9
|
0.8
|
|
Adjusted
EBITDA
|
48.9
|
(0.1)
|
|
95.4
|
31.6
|
|
Adjusted EBITDA
Margin
|
18.7%
|
(0.2%)
|
|
18.8%
|
13.4%
|
|
1.
|
Represents advisory
fees, as well as other expenses paid to third parties, related to
acquisition activities which are excluded as these costs are
incurred only once in connection with each acquisition by the
Company and are not related to underlying business operations of
the Company.
|
|
|
|
2.
|
Represents costs
incurred as a result of the COVID-19 pandemic that are not expected
to recur, including enhanced employee benefits, retrofitting
expenses, payments to safety consultants and retention payments to
staff, net of subsidies received under the Canada Emergency Wage
Subsidy.
|
|
|
|
3.
|
Represents the
reversal of income (expense) recorded during the period, where such
income (expense) resulted from a difference between the actual
payment by us during such period under an earn-out and the
originally estimated amount of such payment.
|
|
|
|
4.
|
Represents costs that
are not expected to recur related, as applicable, to the
implementation of new corporate systems and vendor
consolidations.
|
Adjusted EBITDA Margin
"Adjusted EBITDA Margin" means Adjusted EBITDA divided by
revenue. Adjusted EBITDA Margin is not an IFRS measure.
PF Revenue
"PF Revenue" in respect of a period means revenue for that
period plus the estimated impact of the COVID-19 related closures
on the Company's revenue for that period plus the Company's
estimate of the additional revenue that it would have recorded if
it had acquired each of the practices that it acquired during that
period on the first day of that period, in each case calculated in
accordance with the methodology described in the reconciliation
table below.
|
|
LTM, June 30,
2021
|
|
|
(expressed in
millions of dollars)
|
|
Revenue
|
|
938.8
|
|
Add:
|
|
|
|
COVID-19
adjustment(5)
|
|
8.5
|
|
Acquisition
adjustment(6)
|
|
89.9
|
|
PF Revenue
|
|
1,037.2
|
|
|
|
|
5.
|
Revenue for the LTM
ended June 30, 2021 was impacted by the global COVID-19 pandemic.
Beginning on March 15, 2020, most practices within the Company's
network were limited to emergency-only services. The Company
estimates that the impact of the COVID-19 related closures on its
revenue for LTM ended June 30, 2021 was $8.5 million. For more
information on the methodology used by the Company to estimate this
impact, see the Company's MD&A for the three and six-month
periods ended June 30, 2021 filed on SEDAR.
|
|
|
|
6.
|
The Company regularly
acquires dental practices and estimates that if it had acquired
each of the practices that it acquired during the LTM period ended
June 30, 2021, it would have recorded additional revenue of $89.9
million. These estimates are based on the amount of revenue
budgeted by us to be earned by the relevant practices at the time
of their acquisition by us. There can be no assurance that if we
had acquired these practices on the first day of the applicable
fiscal period, they would have actually generated such budgeted
revenue, nor is this estimate indicative of future
results.
|
PF Adjusted EBITDA
"PF Adjusted EBITDA" in respect of a period means Adjusted
EBITDA for that period plus the estimated impact of the COVID-19
related closures on the Company's Adjusted EBITDA for that period
plus the Company's estimate of the additional Adjusted EBITDA that
it would have recorded if it had acquired each of the practices
that it acquired during that period on the first day of that
period, in each case calculated in accordance with the methodology
described in the reconciliation table below. PF Adjusted EBITDA is
utilized by certain financial institutions to measure borrowing
capacity.
|
|
LTM, June 30,
2021
|
|
|
(expressed in
millions of dollars)
|
|
Adjusted
EBITDA
|
|
178.7
|
|
Add:
|
|
|
|
COVID-19
adjustment(7)
|
|
5.0
|
|
Acquisition
adjustment(8)
|
|
23.0
|
|
PF Adjusted
EBITDA
|
|
206.7
|
|
|
|
|
7.
|
Adjusted EBITDA for
the LTM ended June 30, 2021 was impacted by the global COVID-19
pandemic. Beginning on March 15, 2020, most practices within the
Company's network were limited to emergency-only services. The
Company estimates that the impact of the COVID-19 related closures
on its Adjusted EBITDA for LTM ended June 30, 2021 was $5.0
million. For more information on the methodology used by the
Company to estimate this impact, see the Company's MD&A for the
three and six-month periods ended June 30, 2021 filed on
SEDAR.
|
|
|
|
8.
|
The Company regularly
acquires dental practices and estimates that if it had acquired
each of the practices that it acquired during the LTM period ended
June 30, 2021, it would have recorded additional Adjusted EBITDA of
$23.0 million. These estimates are based on the amount of
Practice-Level EBITDA budgeted by us to be earned by the relevant
practices at the time of their acquisition by us. There can be no
assurance that if we had acquired these practices on the first day
of the applicable fiscal period, they would have actually generated
such budgeted revenue, nor is this estimate indicative of future
results.
|
Same Practice Sales Growth
"Same Practice Sales Growth" in respect of a period means the
percentage change in revenue derived from Established Practices
(other than Legacy Specialty Practices) in that period as compared
to revenue from the same practices in the corresponding period in
the immediately prior year (or, where indicated, the corresponding
period in an earlier year). A practice will be deemed to be an
"Established Practice" in a period if it was operating as part of
dentalcorp for the entirety of the relevant period and for the
entirety of the corresponding period in the immediately prior year.
A "Legacy Specialty Practice" means a practice acquired prior to
mid-2014 using a legacy deal structure that is no longer utilized
today
Forward Looking Statements
This news release includes forward-looking information and
forward-looking statements within the meaning of applicable
Canadian securities legislation, including the Securities
Act (Ontario) (collectively,
"forward-looking statements"), which reflect management's
expectations regarding the Company's future growth, results from
operations (including, without limitation, future expansion and
capital expenditures), performance (both operational and financial)
and business prospects, future business plans and opportunities.
Wherever possible, words such as "plans", "expects", "scheduled",
"budgeted", "projected", "estimated", "timeline", "forecasts",
"anticipates", "suggests", "indicative", "intend", "guidance",
"outlook", "potential", "prospects", "seek", "strategy", "targets"
or "believes", or variations of such words and phrases or
statements that certain future conditions, actions, events or
results "will", "may", "could", "would", "should", "might" or
"can", or negative or grammatical versions thereof, "be taken",
"occur", "continue" or "be achieved", and other similar
expressions, have been used to identify forward looking statements.
Such forward-looking information includes, but is not limited to,
the forward-looking information related to the Canadian dental
industry; addressable markets for our services; expectations
regarding our revenue and our revenue generation potential; our
business plans and strategies; and our competitive position in our
industry.
Forward-looking statements are necessarily based upon
management's perceptions of historical trends, current conditions
and expected future developments, as well as a number of specific
factors and assumptions that, while considered reasonable by
management as of the date on which the statements are made, are
inherently subject to significant business, economic and
competitive uncertainties and contingencies which could result in
actions, events, conditions, results, performance or achievements
to be materially different from those projected in the
forward-looking statements. Such factors and assumptions include,
but are not limited to, the Canadian dental industry; our ability
to retain key personnel, our ability to maintain and expand
geographic scope; our ability to execute on our business plans and
strategies; our ability to obtain and maintain existing financing
on acceptable terms; changes in laws, rules, regulations and global
standards; the extent of the impact of COVID-19 on our operations
and overall financial performance and other factors listing under
the heading Risk Factors in the Company's supplemented PREP
Prospectus dated May 27, 2021. While
we consider these assumptions to be reasonable, many assumptions
are based on factors and events that are not within our control and
there is no assurance that they will prove to be correct.
By their nature, forward-looking statements are subject to
inherent risks and uncertainties that may be general or specific
and which give rise to the possibility that expectations,
forecasts, predictions, projections or conclusions will not prove
to be accurate, that assumptions may not be correct and that
objectives, strategic goals and priorities will not be achieved.
Known and unknown risk factors, many of which are beyond the
control of the Company, could cause actual results to differ
materially from the forward-looking statements. Such risks include,
but are not limited to, our potential inability to successfully
execute our growth strategy and complete additional acquisitions;
our dependence on the integration and success of our acquired
dental practices; the potential adverse effect of acquisitions on
our operations; our dependence on the parties with which we have
contractual arrangements and obligations; changes in relevant laws,
governmental regulations and policy and the costs incurred in the
course of complying with such changes; competition in the dental
industry; increases in operating costs; the risk of difficulty
complying with public company reporting obligations; and the risk
of a failure in internal controls.
Although we have attempted to identify important factors that
could cause actual actions, events, conditions, results,
performance or achievements to differ materially from those
described in forward-looking statements, there may be other factors
that cause actions, events, conditions, results, performance or
achievements to differ from those anticipated, estimated or
intended. There can be no assurance that forward-looking statements
will prove to be accurate, as actual results and future events
could differ materially from those anticipated in such statements.
Forward-looking statements are provided for the purpose of
providing information about management's expectations and plans
relating to the future, as at the date they are provided. The
Company disclaims any intention or obligation to update or revise
any forward-looking statements whether as a result of new
information, future events or otherwise, or to explain any material
difference between subsequent actual events and such
forward-looking statements, except to the extent required by
applicable law. Accordingly, investors should not place undue
reliance on forward-looking statements. All of the forward-looking
statements are expressly qualified by the foregoing cautionary
statements.
About dentalcorp
dentalcorp is Canada's largest
and fastest growing network of dental practices, committed to
advancing the overall well-being of Canadians by delivering the
best clinical outcomes and unforgettable experiences. dentalcorp
acquires leading dental practices, uniting its network in a common
goal: to be Canada's most trusted
healthcare network. Leveraging its industry-leading technology,
know-how and scale, dentalcorp offers professionals the unique
opportunity to retain their clinical autonomy while unlocking their
potential for future growth. Learn more
http://www.dentalcorp.ca
SOURCE dentalcorp