Record Revenues and Adjusted EBITDA combine to deliver sustained margin expansion and double-digit free cash flow growth

Second Quarter 2024 Highlights

• Revenue of $399.8 million, an increase of 8.6% over the second quarter of 2023, with Same Practice Revenue Growth1 of 2.0%.
• Adjusted EBITDA1 of $73.9 million, an increase of 10.3% compared to the same period in 2023; Adjusted EBITDA Margin1 of 18.5%, an increase of 0.3% compared to the same period in 2023.
• Adjusted Net Income1 of $22.5 million, and Adjusted Free Cash Flow1 of $40.7 million, an increase of 21.1% compared to the same period in 2023.
• Net debt to PF Adjusted EBITDA after rent of 4.1x, a decrease of 0.2x from the first quarter of 2024.
• Acquired 9 new practices in the quarter, expected to generate $6.2 million in PF Adjusted EBITDA after rent1 at 6.6x, representing multiples 3% lower than the same period in 2023.

Third Quarter 2024 Outlook

• Revenue and Same Practice Revenue Growth1 for the third quarter of 2024 are estimated to increase by 8% to 10% ($363.9M to $370.6M) and 3.5% to 4.5%, respectively, over the third quarter of 2023.
• Adjusted EBITDA Margin1 for the third quarter of 2024 is estimated to be materially consistent with the third quarter of 2023.

(1) Non-IFRS financial measure, non-IFRS ratio, or supplementary financial measure. For comprehensive definitions and quantitative reconciliations, please refer to the "Non-IFRS and Other Financial Measures" section within this news release.

TORONTO--(BUSINESS WIRE)--Dentalcorp Holdings Ltd. ("Dentalcorp" or the "Company") (TSX: DNTL), Canada's largest and one of North America's fastest growing networks of dental practices, today announced its financial and operating results for the second quarter ended June 30, 2024. All financial figures are in Canadian dollars unless otherwise indicated.

"Our teams across the country delivered another outstanding quarter of results, with revenue and Adjusted EBITDA growth of approximately 9% and 10%, respectively, over the second quarter of 2023. We continued to realize operating leverage in the business, with our Adjusted EBITDA Margin expanding 0.3% over the second quarter of 2023 and sequentially for the fourth quarter in a row," said Graham Rosenberg, CEO and Chairman of Dentalcorp.

"In the second quarter, we generated record revenues of $399.8 million and Adjusted Free Cash Flow of $40.7 million, a 21.1% increase compared to the second quarter of 2023. This led to an accelerated pace of deleveraging, with leverage levels down for the third consecutive quarter to 4.1x, a reduction of 0.3x from the second quarter of 2023," Rosenberg added.

"We self-funded our acquisition program for the fifth consecutive quarter and deployed approximately $41 million into nine accretive acquisitions, which are expected to generate PF Adjusted EBITDA after rent of $6.2 million," Rosenberg continued.

With regard to the federal government's Canadian Dental Care Plan ("CDCP"), Nate Tchaplia, President and Chief Financial Officer, noted "on May 1, 2024, we began providing care to eligible patients under the CDCP. To date, we have treated over 20,000 CDCP patients and are pleased with the program's progression."

"The CDCP is significantly increasing access to dental care for Canadians, aligning with our patient-first approach. Over the short to medium term, we continue to expect the CDCP to have a neutral to slightly positive impact on our business," Tchaplia added.

"Consistent with our previous outlook, we expect to see SPRG continue to increase in the second half of 2024 to 4%+. Overall, we remain on track to meet our full-year targets for Adjusted EBITDA Margin expansion, acquisition pacing, Adjusted Free Cash Flow Per Share growth, and balance sheet deleveraging. Finally, we anticipate reducing our borrowing costs by 50 basis points before year-end," Rosenberg concluded.

Financial and Operating Results for the Second Quarter Ended June 30, 2024:

• Revenue of $399.8 million, representing an increase of 8.6% compared to the second quarter of 2023, driven in part by Same Practice Revenue Growth1 of 2.0%.
• Adjusted EBITDA1 of $73.9 million, a 10.3% increase over the second quarter of 2023, with Adjusted EBITDA Margin1 of 18.5%.
• Adjusted Net Income1 for the quarter was $22.5 million, a decrease of 36.6% from the second quarter of 2023.
• Adjusted Free Cash Flow1 for the quarter was $40.7 million, a 21.1% increase over the second quarter of 2023.
• Acquired 9 practices expected to contribute $6.2 million in PF Adjusted EBITDA after rent1.

(1) Non-IFRS financial measure, non-IFRS ratio, or supplementary financial measure. For comprehensive definitions and quantitative reconciliations, please refer to the "Non-IFRS and Other Financial Measures" section within this news release.

Consolidated Financial Results

Other Metrics

Conference Call Notification

The Company will hold a conference call to provide a business update on Thursday, August 8, 2024, at 8:30 a.m. ET. A question-and-answer session will follow the business update.

Non-IFRS and Other Financial Measures

As appropriate, we supplement our results of operations determined in accordance with IFRS with certain non-IFRS and other financial measures that we believe are useful to investors, lenders, and others in assessing our performance and which highlight trends in our core business that may not otherwise be apparent when relying solely on IFRS measures. These non-IFRS and other financial measures are described and reconciled to the closest applicable IFRS measure in further detail below. Our management also uses non-IFRS and other financial measures for purposes of comparison to prior periods, to prepare annual operating budgets, for the development of future projections and earnings growth prospects, to measure the profitability of ongoing operations and in analyzing our financial condition, business performance and trends, including the operating performance of the business after taking into consideration the acquisitions of dental practices, and to determine components of employee compensation. As such, these measures are provided as additional information to complement those IFRS measures by providing further understanding of our results of operations from management's perspective, including how we evaluate our financial performance and how we manage our capital structure. We also believe that securities analysts, investors, and other interested parties frequently use these non-IFRS and other financial measures and industry metrics in the evaluation of issuers. These non-IFRS and other financial measures are not recognized measures under IFRS and do not have a standardized meaning prescribed by IFRS and may include or exclude certain items as compared to similar IFRS measures, and such measures may not be comparable to similarly titled measures reported by other companies. Accordingly, these measures should not be considered in isolation nor as a substitute for analysis of our financial information reported under IFRS. For further information on non-IFRS and other financial measures, including the most directly comparable IFRS measures, composition of the measures, a description of how we use these measures, an explanation of how these measures are useful to investors and applicable reconciliations, refer to the "Non-IFRS and Other Financial Measures", "Non-IFRS Financial Measures", "Non-IFRS Ratios" and "Certain Supplementary Financial Measures" sections of management's discussion and analysis of operations for the three months ended June 30, 2024 (the "MD&A"), which is available on the Company's profile on SEDAR+ at .

EBITDA

"EBITDA" means, for the applicable period, net loss and comprehensive loss plus (a) net finance costs, (b) income tax recovery, and (c) depreciation and amortization. Management does not use EBITDA as a financial performance metric, but we present EBITDA to assist investors in understanding the mathematical development of Adjusted EBITDA. The most comparable IFRS measure to EBITDA is Net loss and comprehensive loss, for which a reconciliation is provided below.

Adjusted EBITDA

"Adjusted EBITDA" is calculated by adding to EBITDA certain expenses, costs, charges or benefits incurred in such period which in management's view are either not indicative of underlying business performance or impact the ability to assess the operating performance of our business, including: (a) net impact of unrealized foreign exchange gains and losses on non-cash balances, change in fair value of derivative instruments, and share of associate losses; (b) share-based compensation; (c) external acquisition expenses; (d) change in fair value of contingent consideration; (e) change in fair value of preferred shares; (f) strategic review costs; (g) other corporate costs; (h) loss on disposal of dental practices; and (i) short-term benefits. Adjusted EBITDA is a supplemental measure used by management and other users of our financial statements to assess the financial performance of our business without regard to the effects of interest, depreciation and amortization costs, expenses that are not considered reflective of underlying business performance, and other expenses that are expected to be one-time or non-recurring. We use Adjusted EBITDA to facilitate a comparison of our operating performance on a consistent basis from period to period and to provide for a more complete understanding of factors and trends affecting our business. The most comparable IFRS measure to Adjusted EBITDA is Net loss and comprehensive loss.

Adjusted EBITDA Margin

"Adjusted EBITDA Margin" means Adjusted EBITDA divided by revenue. We use Adjusted EBITDA Margin to facilitate a comparison of our operating performance on a consistent basis from period to period and to provide for a more complete understanding of factors and trends affecting our business.

Adjusted Free Cash Flow

"Adjusted free cash flow" is calculated by adding or subtracting from cash flow from operating activities: (a) external acquisition expenses; (b) strategic review costs; (c) other corporate costs; (d) short-term benefits; (e) repayment of principal on leases; (f) maintenance capital expenditure; and (g) changes in working capital. We use Adjusted free cash flow to facilitate a comparison of our operating performance on a consistent basis from period to period, to provide for a more complete understanding of factors and trends affecting our business, and to determine components of employee compensation. The most comparable IFRS measure to Adjusted free cash flow is cash flow from operating activities, for which a reconciliation is provided below.

Adjusted Net Income

"Adjusted net income" is calculated by adding to Net loss and comprehensive loss certain expenses, costs, charges or benefits incurred in such period which in management's view are either not indicative of underlying business performance or impact the ability to assess the operating performance of our business, including: (a) amortization of intangible assets; (b) share-based compensation; (c) change in fair value of contingent consideration; (d) change in fair value of preferred shares; (e) external acquisition expenses; (f) strategic review costs; (g) other corporate costs; (h) loss on disposal of dental practices; (i) short-term benefits; and (j) the tax impact of the above. We use Adjusted net income to facilitate a comparison of our operating performance on a consistent basis from period to period and to provide for a more complete understanding of factors and trends affecting our business. The most comparable IFRS measure to Adjusted net income is Net loss and comprehensive loss, for which a reconciliation is provided below.

PF Revenue

"PF Revenue" in respect of a period means revenue for that period plus the Company's estimate of the additional revenue that it would have recorded if it had acquired each of the dental practices that it acquired during that period on the first day of that period, calculated in accordance with the methodology described in the reconciliation table in "Reconciliation of Non-IFRS Measures". Given the highly acquisitive nature of our business, management believes PF Revenue is more reflective of our operating performance. We use PF Revenue to determine components of employee compensation. The most comparable IFRS measure to PF Revenue is revenue, for which a reconciliation is provided in the table below.

PF Adjusted EBITDA

"PF Adjusted EBITDA" in respect of a period means Adjusted EBITDA for that period plus the Company's estimate of the additional Adjusted EBITDA that it would have recorded if it had acquired each of the dental practices that it acquired during that period on the first day of that period, calculated in accordance with the methodology described in the reconciliation table below. Both creditors and the Company use PF Adjusted EBITDA to assess our borrowing capacity, which management believes, given the highly acquisitive nature of our business, is more reflective of our operating performance. We also use PF Adjusted EBITDA to determine components of employee compensation. The most comparable IFRS measure to PF Adjusted EBITDA is Net loss and comprehensive loss.

PF Adjusted EBITDA Margin

"PF Adjusted EBITDA Margin" means PF Adjusted EBITDA divided by PF Revenue. Both creditors and the Company use PF Adjusted EBITDA Margin to assess our borrowing capacity, which management believes, given the highly acquisitive nature of our business, is more reflective of our operating performance.

For investor inquiries:

Investor Relations
Nick Xiang
Senior Director, Corporate Finance
nick.xiang@dentalcorp.ca
(647) 220-4905

Media
Sebastien Bouchard
Vice President, Corporate Communications
sebastien.bouchard@dentalcorp.ca
(437) 216-0733