Ready to move higher., page-10

Lots of what you have stated show a surface uunderstanding of the industry but very little depth.

Can I ask what you actual involvement is with the dental industry?

Firstly, look at the entire portfolio of practices and consider how many are actually billing 1million plus. You have 52 practices. A few are very high turnover (eg indooroopilly which is easily 3mil+ and the others bought off that owner aren’t small either). There are very few practices that could actually be doing 1mil plus when you look at the revenue of the entire group and take away a few large practices and divide the rest of the revenue by what remains.

Further, I’ve dealt with many retiring dentists in terms of apparaising their practices or acting on behalf of those buying. I myself have owned over 15 practices. Retiring dentists rarely think the way you do. They want liquidity on day one of exit. Further, the old guys are very against corporate dentistry generally. They won’t be in partnership with corporates. The ones that do sell serve out the minimum period then move on. And they only sell to corporates if there are no buyers for them privately. That’s only practices in the 2mil plus range.

Any practice that’s doing less than a mil will not get touched by any of the incumbent corporates that exist. It speaks volumes to me that Smiles mopped up these practices without any caution at all. They literally just bought everything to fill their required number of practices.

The other flaw in your statement is you are assuming growth will come. Like it’s some sort of inevitability. You are disregarding the fact that many of the owners that have sold already tried lots of things and when they couldn’t lift revenue, selling was a great way out. There are many practices that smiles bought that were passed up by private dentists (some of which I analyzed because clients of mine were interested in them).

This makes up a far greater demographic of the practices that Smiles bought than the 1m+ practices you talk about.

Further, if you are somewhat connected to the dental industry, you would understand remuneration of dentists and what is standard.

Tell me, have you looked at the financial report?

What do you think about the fact there is 7.3mil of patient receipts and gross revenue and ONLY 1.2-1.3mil of direct costs (payments to dentists/contractors etc). What percentage is this? Thoughts?

This is a sinking ship imho. The model had the potential to be good but Mike bought dud practices with very little due diligence and ignored significant negative factors in a bid to bolster the number of practices at listing.

Happy to answer peoples questions.