dentalcorp (DNTL) Q3 2024 earnings summary

Executive summary

• Achieved double-digit growth in revenue, Adjusted EBITDA, and Adjusted Free Cash Flow in Q3 2024, with margin expansion and further deleveraging.

• Q3 2024 revenue was CAD 375.4 million, up 11.4% year-over-year, and Adjusted EBITDA was CAD 68.9 million, up 13.1%.

• Over 2.3 million active patients supported, with 91% recurring, and more than 5.4 million annual patient visits.

• Operates the largest national network of dental practices in Canada, with 550 practices as of Q3 2024.

• Recognized as a leader in a $22bn essential, resilient, private cash-pay healthcare sector and awarded one of Canada's Best Managed Companies for eight consecutive years.

Financial highlights

• Last 12 months' pro forma revenue reached CAD 1.55 billion; pro forma Adjusted EBITDA was CAD 288 million.

• Adjusted Free Cash Flow for the period was CAD 146 million, with cash flow from operating activities at CAD 188 million.

• Free cash flow conversion increased to 63% on an LTM basis, up from 58% in Q3 2023.

• Net leverage at 4.0x, down 0.4x year-over-year; fourth consecutive quarter of deleveraging.

• Liquidity at quarter-end was CAD 425 million, including CAD 72 million in cash and CAD 353 million in undrawn debt capacity.

Outlook and guidance

• Q4 2024 revenue expected to increase 8%-10% year-over-year, with 3.5%-4.5% same practice revenue growth.

• Adjusted EBITDA margin for Q4 2024 expected to expand by 20 basis points over Q4 2023.

• Full year targets include 18.4% Adjusted EBITDA margin, 15%-20% adjusted free cash flow per share growth, and continued deleveraging.

• Acquisition pipeline remains strong, with CAD 20 million+ in acquired EBITDA targeted for 2024 and 2025.

• Expects continued self-funded growth with little to no additional debt financing required for operations and acquisitions.