Park Dental Partners, Inc. Common Stock Q4 FY2025 earnings call

• Recognized doctors and team members as greatest asset, majority of shares held by them. Launched employee stock purchase plan in January. - Described as dental resource organization with 54 years of combined operations, providing business support services to affiliated practices. Doctors play central role in management. - Growth strategy: increase number of doctors by adding to existing, acquiring, and opening de novo practices. Focus on building market density, disciplined M&A with cultural fit. - Fourth quarter results: record revenue and adjusted EBITDA, same practice revenue growth 5.8% for the year, revenue growth 6.4%, patient retention 89.9%. - Invested in people with 3 new learning and development platforms, and in technology with implementation of Overjet AI tool and upgrade of workforce management system. - Growth in 2025 included opening multi-specialty de novo practice in Rochester, MN and 3 practice acquisitions, with entry into Arizona market.

Fourth quarter revenue was $61.2 million, up 7.5% year-over-year. General practice revenue was $44.7 million, up 6.2%; multi-specialty practice revenue was $16.5 million, up 11.3%. Full-year revenue was $244.5 million, up 6.4%. General practice revenue was $179 million, up 4.8%; specialty practice revenue was $65.5 million, up 11%. Same practice revenue growth was 6.3% in Q4 and 5.8% for the full year. Multi-specialty revenue is growing faster than general dentistry due to expansion of specialty services, smaller revenue base, and increased patient demand for specialties. IPO transaction costs were $2.7 million in 2025, and Q4 had $8.8 million non-cash share-based compensation expense related to pre-IPO restricted shares vesting.

• 2026 outlook includes completed acquisitions and de novo practice, expects full-year 2026 revenue $254 million to $258 million, same practice revenue growth 3.5% to 5%, adjusted EBITDA $21 million to $23 million (8.3% to 8.9% of revenue). - Prioritizes disciplined approach with focus on fit, culture, returns, and long-term value creation. Plans to update outlook quarterly incorporating completed acquisitions.

Q: Maybe just the first question, Pete, if you could talk a little bit about that robust pipeline, maybe how it compares to 6 to 12 months ago?

A: Sure. Thank you, Mike. I would just say, as we look at our pipeline, you saw some of that yield coming late last year with a couple of closings and then right off the bat here in January with another one in Tucson. I would say good momentum coming into the year. Really looking forward to expanding in Arizona now that we've entered that market, got some great doctors, Dr. Holmes, Dr. Romero, looking forward to working with those teams to identify more opportunities for growth in Arizona beyond Minnesota and Wisconsin.

Q: Can you remind us the team you have working on M&A and looking at these opportunities? How significant is that team?

A: Last year, actually brought back Jason Halupnick, who was with us. Jason leads that effort for us, and he's responsible for half of the deals that we've closed over time. Jason is supported by an analyst and our overall leadership team is deeply involved, including myself in driving that inorganic growth.

Q: Then maybe lastly, if we looked at the sales cycle for these -- the 3 acquisitions you've done, the 2 at the end of '25 and the early '26. How would you describe the length of that sales cycle? Is it many months, a couple of months from when you maybe initially talk to them to when you can get a transaction done? How has that trended, the sales cycle?

A: Yes. It varies, as you can imagine, by the size of the transaction, how many owners might be involved. It could be a couple of months in some of the larger opportunities, you can imagine developing relationships for years in your pipeline.

Q: Then maybe just lastly for me. The 3 acquisitions you've announced were single or 2-doc locations. How does the pipeline look from, I don't know, 6 docs or 5-plus doctors? Is there a couple of those or some of those in the pipeline, too?

A: Yes. I would say, as we described on our roadshow last year, there are different size opportunities, and we're continuing to pursue all of those categories.

Q: CJ, congratulations on hosting your first quarterly update call as a public company. Maybe first up for me and sticking to the pipeline of opportunities. Could you remind us -- so when you go in and acquire a practice, maybe talk a little bit about how you're able to go in, implement some new efficiency programs and how long it typically takes before you're able to get those new practices up to company margins?

A: Matt, thanks for the question. This is CJ. Happy to answer it. Consistent with Pete's comments around the size and shape of certain acquisitions, I'd say it depends. We have practices we've acquired where we're achieving -- that are operating very efficiently and effectively, and we're hitting that run rate in 3 months. Then we have other ones that we may be investing in. As Pete said in the roadshow and subsequent to that, our strategy is to operate multi-doctor practices. In the instances and where you're seeing single doctor practice acquisitions, oftentimes, we're looking at how do we add that second doctor or that third doctor. That process does take a little bit of time. It could be 12 to 18 months before we're up to #2 or #3. It's going to depend on finding the right talent fit for that area. What we can confirm is that every deal that we do, we're excited about the opportunity for growing it into the future. I'd say that getting there is going to vary based on deal, but you can think of the quick ones being in that 0 to 3-month range and then some taking longer. We're also looking at how do we set the practice up for success in the long term by growing it out to be a multi-doctor practice.

Q: Thank you for the update on the software. I find that really an interesting opportunity, quite frankly. The software platforms that you described, are those something that you will sell independent of even your own practices? If so, does that create an entry into potential practice acquisitions down the road where maybe you've gotten in with the software and they get comfortable with you and decide, boy, that would make sense for us to be part of the Park Dental platform.

A: Yes. Great question, Matt. We feel like our technology and software stack is best-in-class. It is a great I'd say, selling point for doctors to look at joining our organization because they're surrounded with the best tools that there are out there. Our goal with those is to allow our doctors and our team members to be efficient, to be effective, to practice at the top of their license. In doing so, we're focused internally right now on those tools and technologies to help drive our organization forward. We're not currently evaluating turning those external, but we do find a tremendous amount of value, both operationally in deploying them and then also as Pete and others are having those conversations from an M&A perspective, we feel like we can go in with our chin up around the tools and technology we surround our teams with and have great conversations with potential doctors.