TORONTO - dentalcorp Holdings Ltd. ('dentalcorp' or the 'Company') (TSX: DNTL), Canada's largest, and one of North America's fastest growing networks of dental practices, announced today its three and six month financial and operating results for the period ended June 30, 2023.

All references to dollar values in this press release are in Canadian dollars, unless otherwise indicated.

'Our second quarter results included the highest quarterly revenue on record, and were driven by 5.5% Same Practice Revenue Growth, as well as the successful execution of our repeatable acquisition program,' said Graham Rosenberg, founder and Chief Executive Officer. 'We also reduced leverage for the second consecutive quarter, demonstrating our continued disciplined approach to growth. These results are a testament to the hard work and commitment to patient care of our nearly 10,000 team members across Canada.'

'Our year to date results provide a solid backdrop for sustained double digit growth in the third quarter of 2023 over the same period last year driven by Same Practice Revenue Growth and the strong performance of our 2022 acquisition cohort,' added Mr. Rosenberg. 'Adjusted EBITDA Margin is expected to remain steady with the first half of this year, with solid practice-level performance offsetting labour inflation. Finally, with lower acquisition multiples, we expect to continue reducing leverage, consistent with our balanced approach to growth.'

Financial and Operating Results for the Three and Six Months Ended June 30, 2023

Revenue for the second quarter 2023 of $368.3 million, an increase of $41.3 million or 12.6% over the second quarter 2022. This increase was driven by incremental revenue from acquired practices, and Same Practice Revenue Growth.

Same Practice Revenue Growth of 5.5% compared to the second quarter 2022, driven by overall demand for services, with LTM Same Practice EBITDA up 5.1%.

Adjusted EBITDA Growth For Acquisitions Completed in Prior Period was 19.3% over comparable performance, driven by overall demand for services, pricing increases, the Company's insourcing initiatives, and the excellence of the Company's integration program.

Adjusted EBITDA increased to $67.0 million in the second quarter 2023, an increase of 10.9% compared to the second quarter of 2022. Adjusted EBITDA Margin of 18.2% in the second quarter 2023 was lower compared to 18.5% during the corresponding period in 2022 due to inflationary labour pressures.

Adjusted net income for the quarter was $35.5 million, an increase of 46.7% compared to $24.2 million in the second quarter of 2022.

Adjusted free cash flow for the quarter was $33.6 million, compared to $35.7 million in the second quarter 2022.

The Company acquired six dental practices during the second quarter 2023, representing $5.6 million in PF Adjusted EBITDA, for total consideration of $34 million. As at June 30, 2023, the Company owned 537 dental practices in Canada, compared to 526 practices at June 30, 2022. The number of practices owned as at June 30, 2023, included the divesture of three standalone orthodontics and specialty practices as part of dentalcorp's program to rationalize certain non-core standalone specialty practices. The Company anticipates that the sale of these assets will have a positive impact on overall Adjusted EBITDA Margin, allowing it to re-allocate resources to higher growth areas of its business.

The Company ended the second quarter 2023 without drawing on additional debt facilities in the quarter and with liquidity of approximately $778 million, comprised of approximately $104 million in cash, and $674 million in undrawn debt capacity under the senior debt facilities. Approximately $1.1 billion of the Company's senior debt facilities were drawn at quarter end. Approximately 75% of the Company's bank debt exposure, or $800 million, is carrying a fixed CDOR rate plus margin for an all-in cost of approximately 6.4%.

Non-IFRS and Other Measures

As appropriate, we supplement our results of operations determined in accordance with IFRS with certain non-IFRS and other 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 and other financial 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, including the run-rate of the business after taking into consideration the acquisitions of dental practices. 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 and other financial measures and industry metrics in the evaluation of issuers. These non-IFRS and other financial 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.

Forward-Looking Information

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, future financial outlook, our ability to sustain momentum in our business and advance our strategic growth drivers, results from operations (including, without limitation, future expansion and capital expenditures), performance (both operational and financial) and business prospects, future business plans, opportunities and our goals for the third quarter of 2023 for Revenue, Same Practice Revenue Growth, PF Adjusted EBITDA after rent, acquisition multiples realizable for practice acquisitions and Adjusted EBITDA margins. 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 North American dental industry; addressable markets for the Company's services; expectations regarding its revenue and its revenue generation potential; its business plans and strategies; its competitive position in its industry and its expectations regarding double-digit growth, and the information and statements under 'Outlook' relating to our goals for the third quarter of 2023 for Revenue, Same Practice Revenue Growth, PF Adjusted EBITDA after rent, acquisition multiples realizable for practice acquisitions and Adjusted EBITDA Margin.

The purpose of disclosing such forward-looking information is to provide investors with more information concerning the financial results that the Company currently believes are achievable based on the assumptions below. Readers are cautioned that the information may not be appropriate for other purposes. While these targets are based on underlying assumptions that management believes are reasonable in the circumstances, readers are cautioned that actual results may vary materially from those described above.

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 materially different from those projected in the forward-looking statements. Such factors and assumptions include, but are not limited to, the following assumptions for the remainder of 2023 and the medium-term, as applicable: the Company's business, operations and capital structure continuing as currently maintained, that the Company's acquisition program continues without any divestitures of non-core assets or re-deployment of capital of the Company, the Company's ability to realize pricing increases, an increase in patient visit volumes in the third quarter of 2023, reductions in previously imposed industry wide regulatory restrictions, the impact of the investments the Company has made in its marketing and talent teams and the upgrades to its core information technology systems; the Company's ability to continue to make and integrate acquisitions at attractive valuations including a reduction in acquisition purchase multiples as compared to prior periods, the impact of corporate investments made in 2022 and 2023 on the Company's operations, including the Company's corporate infrastructure and technology stack, including its new Human Resource Information system and ERP system, the Company benefiting from its unhedged borrowings due to future and forecasted rate decreases, the expansion of service offerings and frequency of patient visits which contribute to optimal patient care, the Company's ability to mitigate anticipated supply chain disruptions, geopolitical risks, inflationary pressures and labour shortages, ability to expand service offerings and generate cash flow, no changes in the competitive environment or legal or regulatory developments affecting our business; visits by patients to our Practices at the same rate as current visits; no further COVID-19 related significant restrictions and other factors listed in the Company's Annual Information Form dated March 23, 2023 and the MD&A under 'Risk Factors'. While the Company considers these assumptions to be reasonable, many assumptions are based on factors and events that are not within its 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, the Company's potential inability to successfully execute its growth strategy and complete additional acquisitions; its dependence on the integration and success of its acquired dental practices; the potential adverse effect of acquisitions on its operations; its dependence on the parties with which the Company has 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 the Company has 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 one of North America's fastest growing networks 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.

Contact:

Tel: 416.558.8338

Email: investors@dentalcorp.ca

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