Release Date: March 03, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Pacific Smiles Group Ltd (ASX:PSQ) reported a 9% year-on-year increase in patient fees, reaching $160.3 million for the half year.
• The company achieved a 16.8% year-on-year growth in underlying EBITA, amounting to $16.3 million.
• Improved operating KPIs were noted, with declining cancellation rates and enhanced labor efficiency.
• The partnership with HBF continues to expand, with a new dental center opened, increasing the total HBF network to 10 centers.
• The company has successfully maintained a high patient net promoter score and improved employee turnover rates, indicating strong service levels and employee satisfaction.

Negative Points

• No dividend was declared for the half year, which may disappoint some investors.
• The company's statutory results showed a net loss of $2 million due to $9.9 million in takeover-related costs.
• Inflationary pressures and cost of living increases have impacted consumer spending habits, posing a challenge to growth.
• The company experienced cost increases in wage rates and occupancy rentals, which could pressure future profitability.
• Two dental centers were closed during the half year, which may indicate challenges in certain locations.

Q & A Highlights

• Warning! GuruFocus has detected 5 Warning Sign with ASX:PSQ.

Q: Can you provide an overview of Pacific Smiles Group's financial performance for the first half of FY25? A: The company reported a 9% year-on-year increase in patient fees, reaching $160.3 million. Underlying EBITA grew by 16.8% to $16.3 million. Despite inflationary pressures, the company maintained strong cash flow and improved operating KPIs, including reduced cancellation rates and enhanced labor efficiency. No dividend was declared for this half year. (Unidentified_1)

Q: How has the partnership with HBF progressed, and what are the future plans? A: The partnership with HBF continues to expand, with one new dental center opened in Midland and another in Cockburn, bringing the total to 10 centers. Utilization of the HBF network increased by 17.7%, and the partnership remains mutually beneficial. The focus is on continued growth and collaboration. (Unidentified_1)

Q: What are the key drivers behind the improved underlying EBITDA margin? A: The improvement in EBITDA margin was driven by a 10% increase in revenue, efficient cost management, and operational efficiencies. The margin rose from 16.1% to 16.6%, supported by higher patient volumes and effective labor and consumables controls. (Unidentified_2)

Q: How did the change in ownership impact the financial results? A: The statutory results showed a net loss of $2 million due to $9.9 million in costs related to the change of ownership and a $2 million expense for performance rights. However, the underlying net profit was $6.7 million, a 52% increase from the previous period. (Unidentified_2)

Q: What is the outlook for the remainder of FY25? A: The company reaffirms its full-year guidance, expecting patient fees between $310 to $318 million, representing 6.2% to 9% growth. Underlying EBITDA is forecasted to grow between 10.6% and 21.3%. The focus remains on organic growth and potential M&A opportunities under Genesis Capital's control. (Unidentified_1)

For the complete transcript of the earnings call, please refer to the full earnings call transcript.