The 1300 Smiles (ASX:ONT) share price sank today despite results

The 1300 Smiles Ltd (ASX: ONT) share price closed down today, despite the company reporting a significant lift in its earnings.

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The 1300 Smiles Limited (ASX: ONT) share price fell into negative territory before closing today, despite what appeared to be solid results from the dental facility operator. After today’s performance, 1300 Smiles share price is sitting at $7.05, down 2.35% for the day.

So, what has investors grinning and grimacing from the company’s half-year results today?

Profitability worth smiling about

Investors may have been put off by the minuscule 1.2% growth in revenue for 1300 Smiles. However, this figure represents the statutory revenue for the period which takes into account various accounting considerations. The company also provides ‘over-the-counter’ (OTC) revenue, which reflects the total amount of money paid by patients for services. This figure increased by 8% to $34.8 million for the half.

The managing director’s letter highlighted online booking as a significant contributor to boosting revenue and cost control during the period. Notably, such online bookings for patient appointments grew by 79% to 2,199 over the last year. Online appointments accounted for an average of 11.53% of total appointments over the past 13 months.

The company delivered a net profit after tax (NPAT) of $5.9 million, which is an increase of 35% on the prior corresponding period. Consequently, 1300 Smiles also is increasing its interim dividend by 9% to 14.5 cents. The high profitability level has set a record for the company in terms of its earnings per share (EPS) attributable to shareholders of 25 cents.

Keeping the balance sheet clean

During the half, 1300 Smiles experienced a 42% increase in cash inflows from operating activities. This increased cash allowed the company to reduce debt levels by 30%, down to $10.5 million from $15 million.

Significant cash outflows in investing activities include the company acquiring a third dental practice in Bundaberg to expand its footprint.

Furthermore, the company ended the half with just over $5.2 million in cash and cash equivalents. Based on the interim dividend of 14.5 cents and the company’s 21.31 million shares outstanding, nearly $3.1 million will be paid out on 18 March.

1300 Smiles share price snapshot

Despite the impacts of COVID-19 throughout the last year on physical forms of business, the 1300 Smiles share price managed to climb 12.1% in this time. That’s certainly something shareholders can smile about. For comparison, the S&P/ASX 200 Index (ASX: XJO) has fallen nearly 3% over the last year. 

At the close of today, the company’s market capitalisation is $171 million.

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Motley Fool contributor Mitchell Lawler has no position in any of the stocks mentioned. The Motley Fool Australia has recommended 1300SMILES Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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