Pacific Smiles closes dental clinics, stands down workers

The ASX-listed dental chain said it would close 76 centres around Australia and stand down hundreds of staff.

Pacific Smiles will continue to perform emergency procedures.

Continued concerns around COVID-19 has bitten Pacific Smiles Group with hundreds of dentists and support staff set to lose their jobs on Tuesday.

The NSW-based dental chain, with operations in Queensland, Victoria, and the ACT said it would close 76 centres around Australia, as dentists have decided to stand down from non-emergency procedures while the coronavirus remains a threat.

However the company has opted to keep 17 clinics open due to the role they can play as regional “hubs” to continue to offer emergency care within their communities.

Chief executive Phil McKenzie said Pacific Smiles had enough cash reserves to see through the next six months without generating any business, but that keeping the remaining 17 centres open could help operations.

“We’ve taken the view that to have six months capacity at no fees is a right position to put the business in,” he said.

Depending on how COVID-19 and the dental industry response evolves, it is possible that the

remaining 17 centres will also close in coming weeks, he added.

Pacific Smiles previously announced it had approximately $19m of cash at the bank and Mr McKenzie said they were in discussions with the banks should they need more.

At the same time Pacific Smiles will delay the payment of its 2.4c interim dividend until 1 May 2020.

Shares in the dental group have collapsed in the market selloff to be down 63 per cent in recent weeks from $2.01 on 21 February to close at 74c on Monday.

Mr McKenzie said before the fallout from COVID-19 Pacific Smiles had been “travelling quite nicely” and the dental firm’s leadership team “were very pleased with what we were doing”.

Mr McKenzie has himself taken a 30 per cent pay cut, while other executive leadership team members have themselves taken a 20 per cent cut. Non-executive directors will lose 50 per cent of their salary and fees.

Many of the almost 600 dentists and support staff across Pacific Smiles have opted to stop practising, while others will be given the option to transfer to some of the remaining 17 centres.

The Australian Dental Association has adopted advice to restrict dental treatment to emergencies, which will stop many procedures conducted by dentists.

Mr McKenzie said they would prioritise centres that sit outside of shopping centres in case further restrictions result in shopping malls closing.

However, he said that they would look to close the remaining 17 centres if requirements changed or if they were unable to access the additional personal protective equipment staff needed to practice.

“We’ve been able to secure some supply for all of our centres and we’re going to be funnelling those into the 17 that will be trading,” he said.

Mr McKenzie said Pacific Smiles planned to pay all staff who would be laid off the equivalent of two weeks wages and any annual leave entitlements. However he said that an offer of a wage subsidy outlined by the Morrsion government on Monday would not stop the layoffs.

“We are dealing with a previously unimaginable set of circumstances across the healthcare industry and society in general,” he said.

“Sadly, all our stakeholders will make significant sacrifices in coming months, and none more so than those dentists and employees who won’t be able to work due to the shutdowns”.

“I look forward to the day when full trading can resume, and in the meantime, I will focus my energies on how we emerge from this crisis stronger than when we went in.”