dentalcorp: Keeping Debt Under Control Will Create Credibility

Summary

  • dentalcorp's aggressive M&A previously strained its balance sheet, but management has since prioritized free cash flow and leverage improvement.
  • Recent results show stable gross margins, controlled expenses, and strong underlying free cash flow (including growth capex but excluding M&A) of about C$0.17 per share quarterly.
  • Debt is now under control, with a net debt/EBITDA ratio declining to a manageable 3.4x, supporting future growth without excessive risk.
  • With EBITDA growth expected and leverage improving, I am more confident in dentalcorp's outlook and may add to my long position.
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Smiling Healthcare Professional in a Dental Clinic Setting

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Introduction

I was the first person to cover dentalcorp (TSX:DNTL:CA) (OTCPK:DNTCF) here on Seeking Alpha, and I thought the business model of acquiring privately owned dental practices and rolling them up in one structure was an interesting business

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This article was written by

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The Investment Doctor is a financial writer, highlighting European small-caps with a 5-7 year investment horizon. He strongly believes a portfolio should consist of a mixture of dividend and growth stocks.

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Analyst’s Disclosure:I/we have a beneficial long position in the shares of DNTL:CA either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

I may add to this position, but I am in no rush.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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