Gold Coast dental group Smiles Inclusive announces trading pause after half of the company’s value was wiped out this morning

Gold Coast listed dental practice group Smiles Inclusive has announced a trading halt after a horror morning on the stockmarket.

GOLD Coast listed dental practice group Smiles Inclusive has announced a trading halt after more than half the company’s value was wiped out this morning following disappointing half-year results.

The share price for the company, which listed at $1 a share in at April last year and was previously valued at close to $60 million, plunged 52 per cent to 13.5c, wiping more than $8.69 million off the market capitalisation.

Shortly afterwards Smiles announced a trading halt while it clarifies the status of its $36 million senior finance facility with National Australia Bank, which has been drawn down by $16.6 million. Smiles is in danger of breaching its agreement with NAB and the bank has not provided a waiver to its covenants.

Founding CEO Mike Timoney has stepped down as CEO in the wake of the poor performance, with Smiles announcing Tony McCormack has taken on the role of chief operating officer.

Mike Timoney has stepped down as CEO of Smiles Inclusive. Picture: Annette Dew

Late last night Smiles released its half-year results, reporting an after-tax loss of $1.59 million on practice revenue of $16.1 million.

The company blamed a number of operational issues for the loss.

They included the nondisclosure of a court case by a practice vendor, the unexpected deaths of a practitioner and business manager, delays in branding, failure to put practitioner monitoring and staff rostering systems in place and additional integration and stamp duty costs.

SMILES FOUNDER WANTS TO CHANGE DENTAL INDUSTRY

SUBSCRIBE TO THE GOLD COAST BULLETIN — JUST $1 FOR THE FIRST 28 DAYS

Mr Timoney said management had been distracted by legal proceedings and the deaths of the practitioner and business manager.

“The impact of a number of significant events over the past six months drew management attention away from ensuring that key processes and systems were firmly bedded down,” he said in an ASX statement.

“We are however now fully committed to this and to continuing the organic growth initiatives previously outlined and executing additional operational efficiencies.”

Smiles said it continues to believe the fundamentals of the business, which was started to consolidate practices in a highly fragmented market under one group, are sound.

“The board is confident that it will deliver a substantial improvement in business performance over times,” it said.

Smiles is forecasting a full-year loss of between $500,000 and $1 million.

Smiles listed last year after acquiring a portfolio of 52 practices under a partnership model with individual dentists who sold their clinics but remained investors in the business.