IBIS World estimates that Pacific Smiles has only 2% of the market.
That being the case, one would think that BGH Capital would be able to lock it in, if it wanted to, without triggering competition concerns.
As for HBF, it bought Pacific Smiles in much happier times and at $2.60 per share. The stock ended at $1.26 on Monday, down 57% year-to-date.
10 times multiple
BGH Capital’s transactions set some easy price precedents. Studying Abano Healthcare and 1300 Smiles, independent experts Caliber Partners and Grant Thornton listed previous deals at around 10 times EBITDA. They said that Pacific Smiles could be worth 13 to 15 times, which would be similar to the offer of 1300 Smiles.
Pacific Smiles guided an underlying EBITDA of $24-27 million in fiscal 2023, which is lower than what it saw in 2020 and 2021 but better than the shock of $11.3 million. dollars last year.
At the midpoint, and using the 13 to 14 times multiples, Pacific Smiles could be worth around $355 million based on enterprise value. The company has approximately $100 million in debt.
Shareholders would likely say it’s worth more, given earnings are still recovering from last year’s lockdowns, the company’s plans to restore dividends, some new center openings, and more.