Investors in dental group Smiles Inclusive don’t have much to grin about

Nearly a year since Burleigh-based dental group Smiles Inclusive floated after raising $35 million, the company is reeling from a cascading series of setbacks, misfires and own goals.

ROOT CANAL

The poor sods who believed the hype pumping up the Smiles Inclusive IPO and tipped in a few dollars don’t have much to grin about these days.

Indeed, they must feel like they’ve endured a financial root canal job.

Nearly a year since the Burleigh-based dental group floated after raising $35 million at $1 per share, the company is reeling from a cascading series of setbacks, misfires and own goals.

The stock, which plunged to just 10¢ at one point after half-year losses of $1.6 million unveiled last month, remains in the doldrums, closing yesterday at 17.5¢. About $50 million in capitalisation has gone up in smoke.

Smiles Inclusive CEO and founder Mike Timoney. Picture: Annette Dew

CEO and founder Mike Timoney has fallen on his sword along with his chief financial officer. The upheaval comes as the ASX fired off a “please explain’’ letter about market disclosure last month and NAB agreed to waive any breaches of debt covenants.

While former AACo top gun Tony McCormack has taken the reins as boss and is spearheading a rescue plan, there’s more pain on the horizon, with a forecast statutory loss of up to $1 million this year. That’s down from past guidance of a $2.3 million net profit.

 

TOOTH DECAY

It wasn’t always this way.

After more than a decade in the dental game, Timoney acquired 52 practices around the country in a scheme whereby dentists sold their clinics but kept some skin in the game as investors.

Trading under the banner of Totally Smiles, the business sought to compete with other aggregators in the $10 billion sector such as 1300Smiles. Today it has 56 clinics.

Backing the float was none other than Brisbane broking house Morgans, which acted as lead manager and underwriter, pocketing an estimated $1.75 million for its troubles.

Investors in Smiles Inclusive have been hit by falling share price.

Morgans analyst Scott Power, who invested in the company, remained relentlessly bullish on the group last year, slapping a price target as high as $1.40 shortly after it listed.

Even when dramas emerged in the September quarter, including the death of a practitioner and a legal skirmish over a mobile dental surgery business, Power kept his target at $1.43. It remained above $1 even as the stock sank to 30¢ by December, when further problems came to light.

Last week, following the disastrous half-year results which saw the stock lose more than half its value in one day, Power finally slashed his target price to just 14¢.

“It is a very unsettling time for investors,’’ he wrote to clients in a triumph of understatement.

Watching from the sidelines, one observer told City Beat it wasn’t surprising that Smiles Inclusive, which lost nearly $5 million in the last financial year, had suffered from the equivalent of tooth decay.

“The company had no trading history and was really just a bunch of 52 contracts to acquire individual small businesses at the time of listing,’’ he said.

 

SUGAR HIT

Remember Brad Sugars?

He’s the controversial Brisbane get-rich-quick spruiker who decamped to Las Vegas a few years ago to flog his seminars and books.

Illustration of Brad Sugars.

Well, with the help of a $1 million-plus marketing campaign, Sugars is hellbent on getting his latest screed “Pulling Profits’’ on the New York Times Best Seller List.

To pump up interest, he’s emailed all his contacts begging them to help him secure interviews and exposure on social media.

“I really need your help and the help of literally every single person I have ever met,’’ Sugars writes breathlessly. “I know it’s crazy but if you could help just a little.’’

Buy the book in the next 14 days and he’ll even throw in his $997 ProfitMASTERS training course.

This is the same bloke, of course, who put one of his Brisbane companies in liquidation in 2015 owing more than $1 million!