1300SMILES ready to pounce on rivals
TOWNSVILLE dental management group 1300SMILES is bracing for a new wave of industry consolidation as its reports a 1.8 per cent rise in net profit to $7.8 million in 2018-19.
Reporting the results yesterday, managing director Daryl Holmes said they were in an “extremely strong position” to make the most of the consolidation.
About 70 per cent of dental services in Australia were delivered in solo practices or very small partnerships and the business case for such structures continued to weaken in the face of stricter compliance and increasing costs, Mr Holmes said.
This was one of the reasons its ongoing organic growth, fuelled by attracting more dentists to practise in its facilities, remained solid, he said.
“I believe that 1300SMILES is in an extremely strong position to make the most of the major new wave of consolidation which appears to be heading our way,” Mr Holmes said.
The company had a low level of debt, a significantly expanded but largely undrawn bank facility of $60 million and access to equity capital from several keen major investors.
Mr Holmes said their accounts included significant spending on due diligence, legal and accounting which had not yet led to events they could announce to the market.
He also expected a looming wave of activity to bring a new twist – consolidation of the consolidators. “Industry observers can now point to a number of other dental service organisations and aggregators, some structured as listed companies, some controlled by private equity firms, and some assembled by opportunists keen to cash in on deals they had expected to turn over quickly and long ago,” Mr Holmes said.
“The results achieved by the many organisations which have sought to copy our business have been mixed to say the least.
“A few, sadly, have done so poorly as to risk tainting our entire industry.” 1300SMILES reported a 1.8 per cent rise in net profit after tax of $7.8 million on the back of 5.5 per cent growth in overthe-counter revenue to $58.9 million.
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1300SMILES owns and operates full-service dental facilities in NSW, South Australia and 10 major population centres in Queensland.
Its share price fell slightly to $6.18 yesterday, giving the company a market value of about $148 million. dividend 4.2 per per cent share to 25