Pacific Smiles Group Limited (ASX:PSQ) released a trading update to the market and confirmed that trading was below expectations in May and June (month to date). It revised its same centre patient fee growth for FY2018 and now expects a growth of 5 per cent (previous guidance of greater than 5 per cent) and total fee growth of 11 per cent (previous guidance 10-15%). Further, it is expected that EBITDA (underlying) growth will now be in the range of 2-4 per cent as compared to its previous guidance of approximately 10 per cent.
Almost 58 per cent of revenue was contributed from same centres which were opened in FY2010 and prior and have also recorded year to date same centre patient fee growth of 2.3 per cent as compared to growth of 9.2 per cent for the balance of the same centre portfolio. The Group witnessed a roll-out of the new nib Dental Care Centres and new facilities got opened in Erina, Greenhills, Brisbane and Canberra. This weaker than expected top line performance led to lower than expected earnings. Expenses were in line with the plan. Though these newer dental centres continued to ramp as per expectations.
The Group will release its full year results on 23 August and will issue updated FY2019 guidance on that date. As of now, the Group is expecting a patient fee growth to be in the range of 10-15 per cent, same centre patient fee growth greater than 5 per cent and with an underlying EBITDA growth of at least 10 per cent in FY19. It is expected that new nib Dental Care Centres will perform well in FY2019 and will further grow their share in the market. With this PSQ’s long term strategy with a target of opening at least 250 dental centres in Australia, predominantly via organic roll-out will remain unchanged. After this revision of Guidance for FY18, the stock price slipped by 8.6 per cent and was trading at $1.6 (as on 28 June 2018; 15:45 PM AEST).
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