Pacific Smiles Group Limited – 2018 Full Year Results
Pacific Smiles Group Limited (ASX: PSQ) (“Pacific Smiles” or “the Company”) today announced its
financial results for the full year ended 30 June 2018.
Key Financial Highlights
The key financial highlights from the result include:
Patient Fees generated by the dentists working at dental centres owned and operated by
Pacific Smiles were $164.5m, up 12.0% on the prior period
Same Centre Patient Fees grew 5.1% for the period
Revenue of $104.5m, up 14.3% on the prior period
EBITDA (underlying) of $21.5m
, up 2.9% on the prior period
NPAT (underlying) of $9.3m1
, down 9.7% on the prior period
10 new dental centres opened, comprising 9 Pacific Smiles Dental Centres and 1 nib Dental
Care Centre, bringing the total to 80 centres as at 30 June 2018
Final dividend of 3.8 cps (fully franked) declared bringing full year dividends to 6.1 cps (FY17
As Pacific Smiles continues to scale up and grow its presence via an expanding network of dental
centres, various business initiatives are undertaken to continually improve the quality of the business
and its competitive advantage in the market. During FY18, the significant business initiatives that
were delivered included:
Acquisition of Everything Dentures and Sculpt Lab
Expansion of the nib Dental Care Centre network to advantage from the changes to the nogap
Roll-out of 10 new dental centres in Figtree and Shellharbour in the Illawarra, Balgowlah in
Sydney, Gungahlin and Woden in the ACT, Leopold, Greensborough and Glen Waverley in
Victoria and Buddina and Runaway Bay in Queensland
A total of 14 additional chairs commissioned in existing centres to meet patient demand
Remodelled and upgraded new graduate dentist mentoring and training program
Pacific Smiles Group Limited (ASX: PSQ)
Level 1, 6 Molly Morgan Drive, Greenhills NSW 2323
PO Box 2246 Greenhills NSW 2323
P: 02 4930 2000 • F: 02 4930 2099
ABN 42 103 087 449 / ACN 103 087 449
Launch of business intelligence systems linked to data warehouse
Implementation of new arrangements for IT help desk and servicing
Improvement of systematic patient communications to drive improvements in frequency of
Total patient fees for FY 2018 were $164.5m, representing growth of 12% for the period, compared to
our guidance at the beginning of FY 2018 of 10-15% growth.
Same centre patient fees growth improved to 5.1% compared to the prior year of 3.8%. Same centre
patient fees growth was 3.3% in H1 2018. Trading improved in H2 2018 with same centre patient fee
growth of 6.8% achieved. Despite the improvement in the second half, we were expecting higher
growth in May and June especially in the context of lower growth in the prior period.
Patient volumes at the Parramatta dental centre were steady following the right-sizing in October
2017, which is a pleasing result. The ex-DEP centres in Parramatta and Town Hall are showing
improved performance, however they continue to generate margins below the level expected of
centres of their size and maturity. The Parramatta dental centre restructure resulted in the $2.3m oneoff
impact of redundancy and impairment costs.
EBITDA for the year was $21.5m (underlying), up by 2.9% on the prior year result of $20.9m
(underlying). EBITDA to Patient Fees margin decreased from 14.2% to 13.1%. The key drivers were:
IT investment - approximately $600k of incremental IT expenditure related to data connectivity
and network infrastructure to support PSQ's "cloud first" IT roadmap
Cohort mix – the proportion of centres in ramp up phase (i.e. faster growing but lower margin)
increased as a percentage of the total. In FY 2018 the cohort of centres opened FY 2011 to
FY 2016 inclusive comprised 38% of the total compared to 32% in FY 2017
Labour efficiency – our mature centre cohort recorded patient fee growth of 2.0%, with
expenses growing at approximately 4%. In future we are aiming to improve labour matching to
the level of patient activity, through various initiatives including improved business intelligence
New centres opened in FY 2017 increased EBITDA and are performing in line with other cohorts.
EBITDA was impacted by start-up losses from 10 new centres opened in FY 2018 (FY 2017: 12), with
5 opening in the second half of the financial year, of which 3 were in June 18.
Higher depreciation costs associated with the rollout strategy of new centres, resulted in the
underlying NPAT decreasing by 9.7% to $9.3m compared to $10.3 million for the prior year.
Pacific Smiles continues to report high levels of patient satisfaction, with Net Promoter Score results
above 75, a pleasing result and high by most benchmarks.
Capital expenditure was $13.8m for the year, including $8.3m on 10 new centres, $1.1m for centre
upgrades at Greenhills and Bribie Island and $0.5m for the Brisbane CBD centre rebranding to nib.
The balance includes equipment replacements, commissioning of 14 additional surgeries in existing
centres and IT infrastructure investments.
The Board has declared a final fully franked dividend of 3.8 cents per share to be paid on 5
2018. The record date for this dividend is 20th September 2018.
Pacific Smiles provides the following update regarding the outlook for FY 2019, which is consistent
with the update provided in June:
EBITDA for FY 2019 is expected to be at least 10% up on prior year
Total patient fee growth of 10% to 15%
Same centre patient fee growth of >5% (same centre patient fee growth is approximately
9.3% for the first 7 weeks of FY 2019)
Opening at least 10 new dental centres, with a strong pipeline, including 4 sites already
committed for FY 2019
Dividend policy pay-out ratio in the range of 70-100% of NPAT for FY 2019
On 7 August 2018 Pacific Smiles announced the appointment of Mr Philip McKenzie as Chief
Executive Officer and Managing Director, effective 29 October 2018. Mr McKenzie will succeed Mr
John Gibbs who has been in the leadership team at Pacific Smiles for the past 14 years, 11 of those
in the capacity of CEO and Managing Director.
Mr McKenzie brings to Pacific Smiles a pedigree of organic rollout allied healthcare experience and
also a strong consumer background both in Australia and internationally. Mr McKenzie’s passion for
purposeful culture and driving results through people was identified as an excellent fit for Pacific
Bob Cameron AO, Chairman of the Board said: “On behalf of the Board, staff, dentists and all
shareholders, we sincerely thank John Gibbs for his outstanding role in getting Pacific Smiles to
where it is today as one of the most successful organic rollout dental models in the world. John’s
extreme integrity and hard work have been hallmarks of his time leading the business. We look
forward to John’s ongoing input as he facilitates the transition to a new leader “.
Pacific Smiles is also pleased to announce the appointment of Mr Hilton Brett to the Board as Nonexecutive
Director. Mr Brett has recently retired from his role as joint CEO of ASX listed retailer
Accent Group, a business with 450 retail outlets and $800m of sales. With 12 years as an integral part
of Accent’s successful growth, Mr Brett brings deep operational expertise to the Board, including
direct experience in building teams, systems and processes to support the rollout of a large multi-site
courtesy of Bell Direct
( DYOR )
i hold PSQ
i MIGHT add extras if the share dips enough
( i also hold AX1 ' free-carried )
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