dentalcorp Holdings Ltd.

Good morning and welcome to the Dental Corps second quarter 2023 results conference call. Please note that all lines have been placed on mute to prevent any background noise. After the speaker's remark, there will be a question and answer session. If you would like to ask a question during this time, simply press the star and then the number one on your telephone keypad. If you would like to withdraw your question, do the same. Press star followed by the number one. At this time, I would like to turn the call over to Mr. Nate Chappellia, Chief Financial Officer of Dental Corp. Please go ahead, sir.

Thank you, operator, and good morning, everyone. Welcome to the Dental Corp second quarter 2023 results conference call. I'm joined here by Graham Rosenberg, our CEO, and Guy Amini, our president. Before we start, we would like to remind you that all amounts discussed on this call are denominated in Canadian dollars. Please note that statements made during this call may include forward-looking statements and information and future-oriented financial information regarding Dental Corp and its business and disclosure regarding possible events, conditions or results that are based on information currently available to management, which indicates management's expectations of future growth, results of operations, business performance, business prospects and opportunities. Such statements are made as the date hereof, and Dental Corp assumes no obligation to update or revise them to reflect events, disclosures, or circumstances except as required by applicable securities laws. Such statements involve significant risks and uncertainties and are not a guarantee of future performance or results. A number of these risks and uncertainties could cause the results to differ materially from results discussed today. Given these risks and uncertainties, one should not place undue reliance on these statements and information. Please refer to the forward-looking statements and information and future-oriented financial information section of our public filings. Without limitations, our MD&A and our earnings press release issue today additional information. For those of you who have dialed into the call, the company has prepared a series of slides to complement our prepared remarks. These slides are available on the Investor Relations section of our website in the Events and Presentations section. I will now turn the call over to our Chief Executive Officer, Graham Rosenberg, for opening remarks. Graham?

Thanks, Nate, and good morning, everyone. We're pleased to be with you today to review General Corp's recent developments as well as our financial and operating results for the three and six months ended June 30th, 2023. For today's call, I'm going to share a number of those developments with you, and then I will hand the call over to Nate, who will discuss our financial results in detail, after which I will provide some forward-looking remarks about how our business is trending. As a reminder, General Corp operates in a highly recurring essential healthcare industry, that is cash pay, resilient through economic cycles, and insulated from disintermediation by technologies. Importantly, Dental Corp expenditures have experienced strong relative growth during periods of higher than average inflation. And accordingly, in the context of the current macro environment, we believe that Dental Corp's favorable cost structure, high margins, low commodity risk, and negligible capital expenditures provide support for the company's continued delivery of balanced double-digit growth in the $20 billion Canadian dental industry. Our confidence Confidence in the business is reinforced by our second quarter and year-to-date results, which are above expectations and provide a constructive outlook for the third quarter and remainder of the year. I'm delighted with our results this quarter, during which we delivered record revenue performance. And as you'll see on slide three, this performance has been made possible by our deep and diverse network of close to 10,000 healthcare professionals across the country. Our teams continue to deliver the highest standards of care during the reporting period, supporting more than 2 million active patients and managing more than 5 million patient visits annually. You will see that we completed our second quarter in the June 3rd of 2023 with approximately $1.4 billion of last 12 months per former revenue and $266 million of pro forma adjusted EBITDA. Continue to slide four. you will see that a balanced approach to growth once again drove sustainable double-digit growth, and we intend to continue growing our business organically through a creative M&A and by driving overall business efficiencies and operating leverage over the medium to long term. This is a program and playbook that we have built over the last decade, and we believe we are able to adapt and thrive if there are any short or longer-term shifts in the broader economy. Moving on to M&A. We continue to demonstrate our leadership position in the Canadian dental industry by acquiring six practices in the second quarter for a total consideration of $34 million. These practices are expected to generate $5.6 million in pro forma adjusted EBITDA. What's most exciting for us is that the acquisitions during the reporting period were self-funded using cash on hand and equity consistent with our alignment with dentists through our acquisition model. During the quarter, and as part of Dental Corps' program to rationalize certain non-core, standalone specialty practices, we also completed the sale of three standalone orthodontic and specialty practices. We anticipate that the sale of these assets will have a positive impact on overall adjusted EBITDA margins, allowing us to reallocate resources to higher growth areas of the business. We are also encouraged to see in the second quarter and so far in the third quarter, Their practice valuations are declining in Canada as access to financing opportunities tighten up for many buyers across the industry. We remain well positioned and well capitalized as a partner of choice for independent dentists and will continue to be disciplined about the practices we acquire. On slide five, you can see that our business continues to convert a high percentage of EBITDA into free cash flow, evident in our steady deleveraging over the last three quarters. Without acquisitions, our business has the potential to drive our leverage down by a quarter to a half-term per annum to the mid to high ones over the medium term. On slide six, I am delighted to report that our business once again delivered double-digit growth, with second quarter 2023 revenue of $368 million, up 13%. over the same period in 2022 and adjusted EBITDA of $67 million, up 11% over the same quarter last year, with adjusted EBITDA margins coming in at 18.2%. We are also very encouraged that same practice revenue growth of approximately 5.5% for the quarter was driven by strong patient visits. During the quarter, we also delivered 19.3% growth in the EBITDA of our acquisitions over there, of our 2022 acquisitions, apologies, of their comparable performance, driven by our purchasing efficiencies and the effectiveness of our integration program, including the implementation of our industry-leading technology stack. The outcome of this was strong adjusted free cash flow for the quarter of approximately $33.6 million compared to $35.7 million in the second quarter of 2022, despite increased financing costs and driven by historical rate increases in the last 12 months. As we look ahead to the third quarter of this year, we anticipate continued growth with revenues estimated to increase by 9.5% to 10.5%, adjusted EBITDA margins materially consistent with the first half of this year, and same-practice revenue growth of 5% to 6% once again. We're also expecting to complete acquisitions representing pro forma adjusted EBITDA after rent of approximately $10 million through the balance of the year. I will now pass the call over to Nate, who will walk us through the details of our financial results, and then I will share some closing remarks before we open the call for questions. Nate?