The Pacific Smiles Group Ltd (ASX: PSQ) share price is surging higher in Thursday trade after the ASX small cap released its first-half earnings result.
The result showed solid revenue and profitability growth as well as an upgrade to earnings guidance, sending Pacific Smiles shares as much as 9.68% higher this afternoon.
What does Pacific Smiles do?
Pacific Smiles operates over 90 dental centres across Australia and derives its revenues from fees charged to dentists occupying those practices.
According to the company's website, more than 500 dentists attend to approximately 770,000 patient appointments at Pacific Smiles centres each year.
Pacific Smiles has a current market capitalisation of $308 million on its current share price of $2.04 at the time of writing.
What did Pacific Smiles announce today?
In its interim results released to the ASX this morning, Pacific Smiles revealed a 14.5% increase in patient fees to $105.4 million. This relates to the patient fees generated by the dental practitioners working at dental centres owned and operated by Pacific Smiles.
Underlying revenue for the company was recorded as $68.3 million, up on the prior corresponding period (pcp) by 14.2%.
Same centre patient fees for Pacific Smiles grew by 9.4% while underlying earnings before interest, tax, depreciation and amortisation (EBITDA) came in at $12.9 million. The latter represented a 15% increase on the pcp.
Underlying net profit after tax was also reported to have grown, coming in 11.2% higher on the pcp at $5.0 million.
Meanwhile, corporate costs represented 6.8% of patient fees during 1H20, which was a slight increase on the 6.3% figure that was recorded in the pcp.
The company declared an interim dividend of 2.4 cents per share, fully franked. This compares to an interim dividend of 2.3 cents in the pcp.
New centres opened during the half-year
Pacific Centres reported the opening of 4 new dental centres during the six-month period. These new centres were located in Robina and Mitchelton in Queensland, and Epping and Ocean Grove in Victoria.
All of these four new dental centres were reported to be located within shopping centres and the company noted that the performance of these new centres has been pleasing so far.
These new openings bring the total number of Pacific Smiles Dental centres to 93 centres as at 31 December 2019.
Company outlook and pipeline
Pacific Smiles commented that it currently has a healthy pipeline of development opportunities for the second half of FY20, with at least 3 new Pacific Smiles centres scheduled to be opened during the second half.
The company has provided guidance for the second half of FY20, which indicates underlying EBITDA growth for FY20 of between 11% to 15% on FY19's result. This is higher than the previously guided range of 8% to 14% given by the company in a prior announcement.
