Dentalcorp Reports Fourth Quarter and Full Year 2024 Results, Declares Inaugural Dividend

Revenue growth and margin expansion combine to drive robust Adjusted EBITDA and Adjusted Free Cash Flow per share growth

Fourth Quarter 2024 Highlights

• Revenue of $397.5 million, an increase of 9.7% from the fourth quarter of 2023, with Same Practice Revenue Growth (“SPRG”)¹ of 2.7%.
• Adjusted EBITDA¹ of $73.9 million, an increase of 12.3% compared to the same period in 2023; Adjusted EBITDA Margin¹ of 18.6%, an increase of 40 basis points over the same period in 2023.
• Adjusted Free Cash Flow¹ and Adjusted Free Cash Flow per Share¹ of $39.3 million and $0.20, an increase of 15.9% and 11.1%, respectively, over the same period in 2023; Adjusted Net Income¹ of $27.4 million.
• Net debt / PF Adjusted EBITDA after rent Ratio¹ of 3.8x, a decrease of 0.6x compared to the same period in 2023.
• Acquired 12 new practice locations which are expected to generate $10.3 million in PF Adjusted EBITDA after rent¹ at 7.2x, expanding Dentalcorp’s national footprint to 561 locations.

Full Year 2024 Highlights

• Revenue of $1,545.1 million, an 8.4% increase over the previous year, with SPRG¹ of 2.3%.
• Adjusted EBITDA¹ of $285.2 million, representing a 9.8% increase over the prior year; Adjusted EBITDA Margin¹ of 18.5%, an increase of 30 basis points over the prior year.
• Adjusted Free Cash Flow¹ and Adjusted Free Cash Flow per Share¹ of $151.8 million and $0.79, an increase of 19.3% and 16.2%, respectively, over the prior year.
• Acquired 30 new practice locations, expected to generate $21.4 million in PF Adjusted EBITDA after rent¹, expanding our operational footprint to 561 dental practices by year’s end and reinforcing our position as the partner of choice.
• Completed the year with substantial liquidity of $432.5 million, comprised of cash on hand and available undrawn debt capacity.

Full Year 2025 Outlook

• Revenue for the year is estimated to increase by 10.0% to 11.0% over fiscal 2024 (to between $1,699.6M and $1,715.1M), and SPRG¹ for the year is expected to be 3.0% to 5.0%.
• Adjusted EBITDA Margin¹ is estimated to increase by 20+ basis points over 2024 levels to approximately 18.7% and Adjusted EBITDA¹ is estimated to increase to between $317.8M and $320.7M.
• Expect to complete acquisitions representing PF Adjusted EBITDA after rent¹ of $25 million+.
• Pre-Tax Adjusted Free Cash Flow per Share¹ to grow by 15%+.

First Quarter 2025 Outlook

• Revenue and SPRG¹ for the first quarter of 2025 are estimated to increase by 8.0% to 9.0% (to between $402.2M and $405.9M) and 3.0% to 5.0%, respectively, over the first quarter of 2024.
• Adjusted EBITDA Margin¹ for the first quarter of 2025 is estimated to increase by 20 basis points from the first quarter of 2024 and Adjusted EBITDA¹ is estimated to increase to between $74.4M and $75.1M.
• Expect to complete acquisitions representing PF Adjusted EBITDA after rent¹ of $8 million+.

^(¹) Non-IFRS financial measure, non-IFRS ratio, or supplementary financial measure. For comprehensive definitions and quantitative reconciliations, please refer to the “Non-IFRS and Other Financial Measures” section within this news release.

TORONTO–(BUSINESS WIRE)–dentalcorp Holdings Ltd. (“Dentalcorp” or the “Company”) (TSX: DNTL), Canada’s largest and one of North America’s fastest growing networks of dental practices, today announced its financial and operating results for the fourth quarter and full year ended December 31, 2024. All financial figures are in Canadian dollars unless otherwise indicated.

“Our teams across the country delivered another year of exceptional results, with fourth quarter revenue and Adjusted EBITDA growth of approximately 10% and 12%, respectively, over the fourth quarter of 2023. Full year revenue and Adjusted EBITDA grew by approximately 8% and 10%, respectively, over the prior year. We continued to realize operating leverage across the business, with fourth quarter Adjusted EBITDA Margin expanding 40 basis points over the fourth quarter of 2023 to 18.6%, translating to full year 2024 Adjusted EBITDA Margin of 18.5%, exceeding our expectations,” said Graham Rosenberg, CEO and Chairman of Dentalcorp.

“We generated $151.8 million in Adjusted Free Cash Flow in 2024, translating to full year Adjusted Free Cash Flow per Share growth of 16%, in line with expectations,” Rosenberg continued. “This led to continued deleveraging, with our Net Debt / PF Adjusted EBITDA after rent Ratio decreasing to 3.8x, a reduction of 0.6x from the fourth quarter of 2023.”

“During 2024, we acquired 30 new practices that are expected to generate $21.4 million in PF Adjusted EBITDA after rent, at an average multiple of 7.0x, exceeding our expectations,” Nate Tchaplia, President and Chief Financial Officer said.

“With regards to the federal government’s Canadian Dental Care Plan (“CDCP”), we have treated over 80,000 CDCP patients with over 90% of our practices currently accepting CDCP patients. During the fourth quarter of 2024, SPRG was impacted by the deferral of appointments in the 19-64 age cohort as they awaited their official start date under the program,” Tchaplia continued.

“We are looking forward to a strong 2025, where we expect to see SPRG of 3.0% to 5.0%, an accelerated pace of M&A with acquisitions representing $25 million+ of PF Adjusted EBITDA after rent, Pre-tax Adjusted Free Cash flow per Share growth of 15%+, and another year of Adjusted EBITDA Margin expansion of 20+ basis points,” Rosenberg concluded.

Inaugural Dividend:

As part of the Company’s long-term strategy to maximize shareholder value, the Company’s Board of Directors (the “Board”) has authorized a dividend of $0.025 per Subordinate Voting Share and Multiple Voting Share, payable on April 22, 2025 to shareholders of record at the close of business on April 4, 2025.

“Our robust free cash flow enables us to maintain a strong M&A program and return capital to shareholders, all while deleveraging. This approach is consistent with our overall strategy of maximizing value for all of our shareholders, including those in our nationwide network of 10,000+ dentists, health care professionals, and support staff throughout the country,” said Rosenberg.

It is the intention of the Board to review the amount of the dividend on a quarterly basis. Future declarations will be dependent on, among other things, the prevailing business environment, the Company’s financial and operating results and financial condition, the need for funds to finance ongoing operations or growth initiatives, and other business conditions which the Corporation’s Board of Directors considers relevant.

Consolidated Financial Results

Other Metrics

Conference Call Notification

The Company will hold a conference call to provide a business update on Friday, March 21, 2025, at 8:30 a.m. ET. A question-and-answer session will follow the business update.

Non-IFRS and Other Financial Measures and Ratios

As appropriate, we supplement our results of operations determined in accordance with IFRS with certain non-IFRS and other financial measures and ratios that we believe are useful to investors, lenders and others in assessing our performance and highlighting 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 comparing to prior periods; preparing annual operating budgets; developing future projections and earnings growth prospects; measuring the profitability of ongoing operations; analyzing our financial condition, business performance and trends, including the operating performance of the business after taking into consideration the acquisitions of dental practices; and determining components of employee compensation. As such, these measures are provided as additional information to complement 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 ratios and industry metrics in the evaluation of issuers. These non-IFRS and other financial measures and ratios 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 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. For further information on non-IFRS and other financial measures and ratios, including the most directly comparable IFRS measures, composition of the measures, a description of how we use these measures, an explanation of how these measures are useful to investors and applicable reconciliations, refer to the “Non-IFRS and Other Financial Measures”, “Non-IFRS Financial Measures”, “Non-IFRS Ratios” and “Certain Supplementary Financial Measures” sections of management’s discussion and analysis of operations for the three months and year ended December 31, 2024, which is available on the Company’s profile on SEDAR+ at www.sedarplus.ca.

EBITDA

“EBITDA” means, for the applicable period, net loss and comprehensive loss plus (a) net finance costs, (b) income tax recovery, and (c) depreciation and amortization. Management does not use EBITDA as a financial performance metric, but we present EBITDA to assist investors in understanding the mathematical development of Adjusted EBITDA and Same Practice EBITDA Growth. The most comparable IFRS measure to EBITDA is Net loss and comprehensive loss, for which a reconciliation is provided below.

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 unrealized foreign exchange gains or losses on non-cash balances and share of associate losses; (b) share-based compensation; (c) external acquisition expenses; (d) change in fair value of financial instruments at fair value through profit of loss; (e) strategic review costs; (f) other corporate costs; (g) loss on disposal of dental practices; (h) loss on disposal and impairment of property and equipment and intangible assets; (i) loss on settlement of other receivables; (j) impairment of right-of-use assets; (k) post-employment benefits; and (l) short-term benefits. Adjusted EBITDA is a supplemental measure used by management and other users of our financial statements 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. The most comparable IFRS measure to Adjusted EBITDA is Net loss and comprehensive loss.

Adjusted EBITDA Margin

“Adjusted EBITDA Margin” means Adjusted EBITDA divided by revenue. We use Adjusted EBITDA Margin 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.

Adjusted Free Cash Flow

“Adjusted free cash flow” is calculated by adding or subtracting from cash flow from operating activities: (a) external acquisition expenses; (b) strategic review costs; (c) other corporate costs; (d) post-employment benefits; (e) short-term benefits; (f) repayment of principal on leases; (g) maintenance capital expenditure; and (h) changes in working capital. We use Adjusted free cash flow to facilitate a comparison of our operating performance on a consistent basis from period to period, to provide for a more complete understanding of factors and trends affecting our business, and to determine components of employee compensation. The most comparable IFRS measure to Adjusted free cash flow is cash flow from operating activities, for which a reconciliation is provided below.

Adjusted free cash flow per Share

“Adjusted free cash flow per Share” means Adjusted free cash flow divided by the total number of Shares on a fully diluted basis. Adjusted free cash flow per Share is utilized to determine components of employee compensation.

Pre-tax Adjusted Free Cash Flow

“Pre-tax Adjusted free cash flow” in respect of a period means Adjusted free cash flow less cash income tax (recovery) expense. We use Pre-tax Adjusted free cash flow to facilitate a comparison of our operating performance on a consistent basis from period to period, to provide for a more complete understanding of factors and trends affecting our business, and to determine components of employee compensation. The most comparable IFRS measure to Pre-tax Adjusted free cash flow is cash flow from operating activities.

Pre-tax Adjusted Free Cash Flow per Share

“Pre-tax Adjusted free cash flow per Share” means Pre-tax Adjusted free cash flow, divided by the total number of Shares on a fully diluted basis. Pre-tax Adjusted free cash flow per Share is utilized to determine components of employee compensation.

Adjusted Net Income

“Adjusted net income” is calculated by adding to Net loss and comprehensive loss 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) amortization of intangible assets; (b) share-based compensation; (c) change in fair value of contingent consideration; (d) external acquisition expenses; (e) strategic review costs; (f) other corporate costs; (g) loss on disposal of dental practices; (h) change in fair value of preferred shares; (i) loss on disposal and impairment of property and equipment and intangible assets; (j) loss on settlement of other receivables; (k) impairment of right-of-use assets; (l) loss on modification of borrowings; (m) post-employment benefits; (n) short-term benefits; (o) change in fair value of other financial liability; and (p) the tax impact of the above. We use Adjusted net income 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. The most comparable IFRS measure to Adjusted net income is Net loss and comprehensive loss, for which a reconciliation is provided below.

Contacts

For investor inquiries, please contact:

Investor Relations
Nick Xiang

Vice President, Corporate Finance

[email protected]
(416) 558-8338 x 866

Media
Sebastien Bouchard

Vice President, Corporate Communications

[email protected]
(437) 216-0733

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