Dental group 1300 Smiles Limited (ASX: ONT) has reported a record full-year net profit today with its shares lifting 4.9% to trade at $7.05.
So What: 1300 Smiles is a group that owns and operates full-service dental facilities in New South Wales, South Australia and Queensland. The company provides marketing and practice management to dentists (many of whom are self-employed), allowing those dentists to focus on providing dental care to patients rather than the administrative aspects of running a business. In return, the dentists then pay 1300 Smiles for these services.
Earnings have been largely impacted in recent years after the Gillard government cut the Chronic Dental Disease scheme, but earnings were more normalised during the 2015 financial year.
Statutory revenues hit $36.6 million – an increase of 15% over the prior corresponding period – while over-the-counter revenue (OTC revenue), which captures the full-value paid by patients (i.e. it includes the dentists' share of revenues) rose 23% to $53.2 million – a new record for the company.
Source: Company report
Meanwhile, the group also posted a 32% increase in net profit after tax (NPAT) to $6.6 million. The result was bolstered by greater margins (indeed, the group's earnings before interest, tax, depreciation and amortisation (EBITDA) margin hit a nine-year high during the period), bolstered by the successful acquisition of BOH Dental.
The group's Managing Director, Daryl Holmes, said: "I believe our company has successfully adapted to the conditions now prevailing in our industry, and that our many initiatives have boosted our results in ways which are starting to show in our accounts but which have a long way to run yet."
All in all, shareholders should be pleased with the company's performance over the 2015 financial year, although it is imperative that the company continues to focus on growing its earnings per share. Still, with the shares currently changing hands for $7.05, 1300 Smiles could be a very reasonable pickup for long-term investors today.
