Mr. Graham Rosenberg reports

DENTALCORP REPORTS SECOND QUARTER 2023 RESULTS

Dentalcorp Holdings Ltd. has released its three-month and six-month financial and operating results for the period ended June 30, 2023.

"Our second quarter results included the highest quarterly revenue on record and were driven by 5.5-per-cent 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 [earnings before interest, taxes, depreciation and amortization] 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 of 2023 of $368.3-million, an increase of $41.3-million, or 12.6 per cent, over the second quarter of 2022. This increase was driven by incremental revenue from acquired practices and same-practice revenue growth.
• Same-practice revenue growth of 5.5 per cent compared with the second quarter of 2022, driven by overall demand for services, with LTM (last 12 months) same-practice EBITDA up 5.1 per cent.
• Adjusted EBITDA growth for acquisitions completed in prior period was 19.3 per cent 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-million in the second quarter of 2023, an increase of 10.9 per cent compared with the second quarter of 2022. Adjusted EBITDA margin of 18.2 per cent in the second quarter of 2023 was lower compared with 18.5 per cent 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 per cent compared with $24.2-million in the second quarter of 2022.
• Adjusted free cash flow for the quarter was $33.6-million, compared with $35.7-million in the second quarter of 2022.
• The company acquired six dental practices during the second quarter of 2023, representing $5.6-million in pro forma adjusted EBITDA, for total consideration of $34-million. As at June 30, 2023, the company owned 537 dental practices in Canada, compared with 526 practices at June 30, 2022. The number of practices owned as at June 30, 2023, included the divestiture of three stand-alone orthodontics and specialty practices as part of Dentalcorp's program to rationalize certain non-core stand-alone specialty practices. The company anticipates that the sale of these assets will have a positive impact on overall adjusted EBITDA margin, allowing it to reallocate resources to higher-growth areas of its business.
• The company ended the second quarter of 2023 without drawing on additional debt facilities in the quarter and with liquidity of approximately $778-million, comprising 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 per cent of the company's bank debt exposure, or $800-million, is carrying a fixed CDOR (Canadian-dollar offered rate) rate plus margin for an all-in cost of approximately 6.4 per cent.

Conference call notification

The company will hold a conference call to provide a business update on Friday, Aug. 4, 2023, at 8:30 a.m. ET. A question-and-answer session will follow the business update.

Live conference call details

Date:  Friday, Aug. 4, 2023

Time:  8:30 a.m. ET

Dial-in numbers:  1-888-660-6396 or 1-929-203-0889

Reference No.:  9097710

Replay -- available for two weeks after the call

Dial-in numbers:   1-800-770-2030 or 1-647-362-9199

Reference No.:  9097710

About Dentalcorp Holdings Ltd.

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 health care 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.

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