Pacific Smiles Group set to open wider
In the Media
September 10, 2015

From the merging of three Hunter Valley dental centres to the anticipated arrival of Pacific Smiles Group’s 50th dental centre there is excitement throughout the collective. The Newcastle Herald spoke with co-founder Alex Abrahams and CEO John Gibbs to learn of the success and further aspiration of Pacific Smiles Group.

Hunter-founded national dental services giant Pacific Smiles Group this month opens its 50th centre and has earmarked 200 future “potential trade areas” on its growth journey.

Co-founder and veteran dentist Dr Alex Abrahams says the centre milestone – which comes 12 years after the company was incorporated and almost a year after it listed – is unexpected.

“We’re a lot bigger than I ever dreamed we would be. Far bigger,” he says.

“I thought we might get to eight or 10 practices and we’d sail off into the sunset, but we were having too much fun.”

Pacific Smiles Group flickered around 2002, when Dr Abrahams and colleagues Dr Genna Levitch and Dr Alison Hughes threw around ideas for a new dentistry business model.

“Traditionally in professional practices you have a dentist or principal who owns and runs it and is the doer,” he says.

“I had been in partnership for 20 or 30 years where no-one really sat down and thought about who does what jobs in the place.

“There was no management structure, nothing that relied on people who were good at a job doing that job.”

They settled on a “three hats” model allowing dentists to stick to dentistry, managers to manage and owners to buy or sell shares, making the departure or arrival of new partners easier.

The group saw the value in organising the lease and furnishings of clinics, staffing, procurement, marketing, administration, IT and training in return for a service fee from dentists.

Greenhills and East Maitland Dental Centre, Lakes Dental Charlestown and Lakes Dental at Dora Creek (now Morriset) were the first.

In 2003, the first operating year, the group tried to pick the best out of the three practices to see what could be duplicated for a wider roll-out.

When Sydneysider John Gibbs was brought in as CEO in early 2004, the founders had a business plan but had no organisational clues.

Mr Gibbs, who had experience in setting up private hospitals and medical field, brought structure to the company, and with Dr Abrahams, new direction.

Under his guidance, the company moved to align with NIB, initially in its Hunter Street and George Street, Sydney, operations (it now has seven in its service).

Mr Gibbs says the company’s goal to be an expanding serviced facility provider has been steady, with some early lessons learned.

“We bought a number of practices over the years and we changed them to our dental centres and we learnt that that sets up conflict between [us] and the vendor dentist,” he says.

Their practice now is to study the demographic of potential trade areas, find office space to suit and engage dentists in the area.

The company dabbled as a registered training organisation to the external market before realising it wanted to use those resources for internal training only.

It listed on the ASX in November last year after long indicating that was the way forward.

“We didn’t need the money or have any of the original shareholders wanting to sell out or sell down, and when you rule those two out it really does beg the question, why list,” says Mr Gibbs.

But earlier capital raising exercises had heightened expectations and it soon “looked viable”.

Dr Abrahams and Dr Alison Hughes remain major shareholders and Pacific Smiles Group now has more than 270 dentists and over 700 support staff attending to more than 500,000 patient appointments each year.

Announcing its first half-year profit results last month, the company posted a $9.7 million net profit, up 31.9 per cent on the prior year.

It has forecast its 2016 earnings before interest, taxes, depreciation and amortisation (EBITDA) as being in the range of $20.3 to $22.3 million, with an expectation that future growth can be funded while maintaining a net cash position and dividend pay-out ratio in the range of 70-100 per cent of net profit.

Mr Gibbs says the company’s biggest challenges remain the fact more dentists are graduating – opening the group to both potential business and competition alike.

Another bugbear is the “general economic softness” in Australia and the fact dental work is seen by many as a discretionary need.

Mr Gibbs maintains the attention to consistency in customer services is unique. The company uses specialised training to ensure the “perfect patient experience” and consistency in its delivery.

Dr Abrahams says the business plan he and others wrote more than a decade ago still rings true.

“I can still drag it out and when I go through it we’ve just gone ‘tick, tick, tick’,” he says.

“You have to believe and follow a dream and a guiding light, and that’s what we did and continue to do.”

With the Groups 50th centre set to open late September it will be a milestone achievement. In each phase of the continual growth Pacific Smiles Group ensures patients both new and existing that the level of service and professional dentistry is set to continue!



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