Q3 2024 dentalcorp Holdings Ltd Earnings Call
And the answer session. If you would like to ask a question. During this time simply press Star then the number one on your telephone keypad. If you would like to withdraw your question. Please press star followed by the two at this time I would like to turn the call over to Mr. Nate sharply, our president and Chief Financial Officer of Dental Corp. Please go ahead Sir.
Nate Sharply: Thank you operator, and good morning, everyone welcome to the <unk> third quarter results Conference call I'm joined here by Graham Rosenberg our CEO.
Nate Sharply: Before we start we would like to remind you that all amounts discussed on this call are denominated in Canadian dollars unless otherwise indicated.
Nate Sharply: Please note that statements made during this call may include forward looking statements and information and future oriented financial information regarding dental Corp, and its business and disclosure regarding possible events conditions or results that are based on information currently available to management, which indicate managements' expectations of future growth results of operations business performance.
Nate Sharply: Business prospects and opportunities.
Nate Sharply: Such statements are made as the date hereof, and dental Corp assumes no obligation to update or revise them to reflect events disclosures or circumstances, except as required by applicable law.
Nate Sharply: Such statements involve significant risks and uncertainties and are not a guarantee of future performance or results. A number of these risks and uncertainties could cause results to differ materially from results discussed today given.
Nate Sharply: Given these risks and uncertainties, one should not place undue reliance on these statements and information.
Nate Sharply: Please refer to the forward looking statements and information and future oriented financial information section of our public filings without limitations, our MD&A and our earnings press release issued today for additional information.
Speaker Change: For those of you who have dialed into the call. The company has prepared a series of slides to complement our prepared remarks. These slides are available on the Investor Relations section of our website in the events and presentations section I will now turn the call over to our Chief Executive Officer, Graham Rosenberg for opening remarks Graham.
Graham Rosenberg: Thanks, Nate and good morning, everyone. We're pleased to be with you today to review <unk> recent developments as well as our financial and operating results for the three months ended September 32024 four.
Graham Rosenberg: For today's call I'm going to share a number of those developments with you and I will then hand, the call over to <unk>, who will discuss our financial results in detail after which I will provide forward looking remarks about how our business is trending.
As a reminder, dental cop operates in a highly recurring essential health care industry that is cash pay resilient through economic cycles and insulated from just seem to aviation by technologies Importantly tunnel expenditures have experienced strong relative growth during periods of higher than average inflation.
Graham Rosenberg: Accordingly, and in the context of the current macro environment, we believe that dental cops favorable cost structure high margins low commodity risk and negligible capital expenditures provide support for the Companys continued delivery of balanced double digit growth in the $22 billion Canadian industry.
Graham Rosenberg: Our confidence in the business is supported by our third quarter results, which met or exceeded our expectations and provide a constructive outlook for the remainder of the year.
Graham Rosenberg: As Youll see on slide three our results will be made possible by our deep and diverse network of over 10000 team members across the country. Our teams continued to deliver the highest standards of care during the reporting period as we support more than $2 3 million active patients, including 91% of patients who are recurring.
Graham Rosenberg: And manage over $5 4 million patient visits annually.
Graham Rosenberg: We completed our third quarter ended September 30 of 2024 with $155 billion of last 12 months pro forma revenue and $288 million on a pro forma adjusted EBITDA.
Graham Rosenberg: As you can see on the next side, we continued with our balanced approach to drive sustained double digit growth and we intend to continue growing our business organically through accretive mergers and acquisitions and by driving overall business efficiencies and operating leverage over the medium to long term.
During the quarter, we made an indirect investments internal innovation Alliance VC fund, which positions that will help to potentially benefit from a wide range of emerging innovations in dental technology and subsequent to the quarter. Following a very successful pilots, we announced a strategic partnership with video health that will allow <unk> to deploy AI technology.
Graham Rosenberg: Across our network.
Graham Rosenberg: This will allow us to benefit from enhanced accuracy and consistency and diagnoses and improved patient education. Among other benefits. This partnership marks a notable milestone internal clubs long term agenda and is expected to allow the company benchmarks for clinical excellence and business efficiencies through the years.
Graham Rosenberg: Advanced technology.
Graham Rosenberg: With respect to M&A, we acquired four practices in the quarter for total consideration of $60 million. These practices are expected to generate $2 3 million and pro forma adjusted EBITDA after rent.
Graham Rosenberg: Remain as is the best positioned in capitalized partner for independent dentists and will continue to be disciplined about the practices we acquire.
Graham Rosenberg: On slide five you will see that our business continues to operate with robust and extending expanding margins low capex requirements and capped interest rate exposure on 100% of our existing debt outstanding we.
We continue to convert a high steady percentage of our EBITDA into free cash flow in any given period and expect this conversion to increase as we continue to realize network wide operating leverage.
Over the last 12 months, our free cash flow conversion increased to 63%.
Graham Rosenberg: On an LTM basis in the quarter up from 58% in Q3 train train three.
Graham Rosenberg: On slide six as expected we completed the quarter at 4.0 times leverage down 0.4 times from the same time last year.
Graham Rosenberg: Q3, 2024, Mark support consecutive quarter of deleveraging. In addition, our bank leverage as calculated under our credit facilities dropped below four times during the quarter.
On slide seven you will see that for the sixth consecutive quarter, we self funded our position program and we continue to apply this disciplined approach to growth subsequent to the quarter, we entered into a blend and extend on our hedges for 100% or by existing debt through January 2028 aligned with the maturity of our <unk>.
Facilities.
Graham Rosenberg: When combined with the savings on our bank spread from deleveraging below four times as calculated under our credit facilities, we have an interest rates hitting up 6% through January 2028, compared to six 6% through may 2020 prior.
Graham Rosenberg: Prior to the hedge.
Graham Rosenberg: We expect to see a 6 million dollar annual improvement of approximately 4% increase to our annual adjusted free cash flow from these interest rate savings.
Graham Rosenberg: Turning to the next five you will see a comparison of valuation and free cash flow yields versus our peers at the end of the quarter, we were trading at a 37% discount to our total peer group and at the same time. We are currently trading at an eight 8% free cash flow yield compared to our total peer group of approximately three 1%.
Graham Rosenberg: Turning now to slide nine I am delighted to report that our business continued to deliver sorry delivered revenue of $375 $4 million in the quarter or third quarter of 2024 up 11, 4% over the same period in 2023, and adjusted EBITDA of $68 9 million up 13.
Graham Rosenberg: 1% over the same quarter last year.
Graham Rosenberg: Our adjusted EBITDA margin came in at 18, 4% an improvement of 30 basis points over Q3 of 2023.
Graham Rosenberg: Same practice revenue growth was strong at four 2% for the quarter and we delivered free cash flow per share of <unk> 19 for the quarter, representing an increase of 36, 4% over the same quarter last year.
Graham Rosenberg: The outcome of our operational efficiencies was a strong adjusted free cash flow for the quarter of $36 million up 37, 6% over the same quarter last year, enabling us to fund the entirety of our acquisition program with free cash flows for the second consecutive quarter.
Subsequent to the quarter end, we completed nine acquisitions that are expected to generate $8 5 million and pro forma adjusted EBITDA after rent, thereby substantially reaching our annual targets of $20 million in acquired EBITDA.
Graham Rosenberg: As we look to the fourth quarter of 'twenty 'twenty four we anticipate revenues to increase by at least 10% of the Q4 2023, while delivering three five to four 5% same types of revenue growth.
Graham Rosenberg: With active.
Graham Rosenberg: Adjusted EBITDA margins, increasing by 20 basis points over the fourth quarter of 2023.
Speaker Change: I will now pass the call over to <unk>, who will walk us through the details of our financial results and share some closing remarks before we open the call for questions.
Graham Rosenberg: Thank you Graham with.
Speaker Change: With regards to the Canadian dental care plan, we have now treated over 60000, <unk> patients and over 90% of our practices are accepting CDP patients under the CDC, we have and will continue to deliver services at rates that are consistent with our usual and customary fees, which ensures that the high quality of care that all of our patients receive both new.
Graham Rosenberg: And cold.
Graham Rosenberg: Based on the most recent information from the Canadian government, we expect that in 2025 patients between the ages of 18 to 64, who will be eligible to receive care under the CDP.
Graham Rosenberg: The start date has not yet been determined by the Canadian government.
Graham Rosenberg: Overall, we continue to see CDP as a favorable development for both the Canadian public and dental professionals and expect it to be modestly positive for dental Corp.
Graham Rosenberg: Our quarterly results, which met or exceeded expectations in all respects demonstrate the strength and predictability of our business.
Speaker Change: Turning to slide 10 revenue for the three months period ended September 30 of 2024, as grant mentioned was $375 million compared to $337 million for the corresponding period last year.
Speaker Change: Representing an increase of approximately 11% to.
Speaker Change: The increase is attributable to our continued acquisitive and organic growth, including an increase in the number of practices participating in the <unk> throughout the quarter as.
Speaker Change: As you can see we reported third quarter adjusted EBITDA of approximately $69 million compared to $61 million in the same quarter last year on a reported third quarter adjusted EBITDA margins of 18, 4%, representing 30 basis points of margin expansion year over year as we continue to realize operating leverage following our significant investments in corporate infrastructure throughout 2022.
Speaker Change: In 2023.
Looking forward, we continue to be confident about our ability to grow the business through acquisitions and organically.
Speaker Change: Turning to the next slide you can see our net leverage and liquidity as of September 32024.
Speaker Change: On a net debt basis, we were approximately 4.0 levered at the end of the third quarter deleveraging by 0.4 times over Q3 2023.
Speaker Change: As Graham alluded to earlier, we blended and extended the hedges on 100% of our existing debt through January 2028.
Speaker Change: Aligned with the maturity of our credit facilities.
Speaker Change: When combined with the savings on our banks for deleveraging, we are interest rates ceiling of 6% through January 2028, compared to six 6% through May 2026 prior to the hedge we expect to see 6 million annual improvement or approximately 4% to our adjusted free cash flow from the interest savings.
Speaker Change: Third quarter and last 12 months adjusted free cash flow was 36, and 146 million, respectively, which support our strong balance sheet position.
Speaker Change: We ended the third quarter of 2024 with liquidity of $425 million comprised of $72 million in cash and $353 million and undrawn debt capacity under our senior debt facilities.
Speaker Change: This quarter marks the fourth consecutive quarter increase in our interest coverage is defined by our last 12 months pro forma adjusted EBITDAR to rent divided by net interest expense, which currently sits at three five times up from three three times in Q2 2024.
Speaker Change: Overall, we were pleased with our third quarter 2024 results, we increased organic growth realized ongoing operating efficiencies and expanded margins.
Speaker Change: <unk> to Delever, the balance sheet completed accretive acquisitions for the year and continue to develop our pipeline.
Speaker Change: Turning to slide 12, we remain highly confident about our future opportunities as we look ahead to the remainder of Q4 2024, we expect to achieve same practice revenue growth of three five to four 5% for Q4, and we remain on track to meet or exceed our full year targets, an adjusted EBITDA margin expansion of 20 basis points to 18.
Speaker Change: 4%.
Speaker Change: 15% to 20% adjusted free cash flow growth per share and balance sheet deleveraging as previously discussed as of today, we have substantially met our 2020 for acquisition budget.
Speaker Change: Thank you all for joining our call today. This concludes the formal part of our presentation I would now like to open up the call for questions operator.
Okay.
Speaker Change: Thank you we will now begin our question and answer session. If you have dialed in and would like to ask a question. Please press star followed by the number one on your telephone keypad. If you would like to withdraw your question are one again.
Speaker Change: In order to accommodate everyone. We look back to ask you to please limit yourself to one question. Thank you. Our first question comes from the line of Brian <unk> with Jefferies. Please go ahead.
Speaker Change: Good morning. This is Meghan holds on for Brian. Thanks for taking the question guys and congrats on the quarter I noticed I feel a little early but can you speak to any headwinds in tailwind for 2025, and then just on the Q4 same practice revenue guide how much of that is coming from CDC patient volume versus underlying demand.
Speaker Change: Yeah.
Speaker Change: Great question.
Speaker Change: Let's start with 2025.
Speaker Change: And as mentioned earlier on the call.
As the <unk> continues to rollout theres still a little bit of uncertainty as to the timing around the 18 to 64 cohort and when they will become eligible as we saw at the beginning of this year there was slight disruption in both patient expectation as well as understanding how to kind of comply and make.
Use of the program I think we expect to have a little bit of disruption. If the program continues to rollout into 2025 again, there is no certainty that it will.
Speaker Change: The one positive here is all of our practices are call it 90% plus of our practices are now participating in the <unk>. So the disruption that we would've seen at the beginning of this year is going to be far reduced given that our practices.
Speaker Change: Have now been fully onboard into the program.
Speaker Change: As far as the guide for Q4 really being supported by the CCP patients I'd say, it's really back to normal as it relates to the patient flow and I think what we do see is for the 60% to 65, plus the ATM below and the disabled population that have now made use of the program and it would become eligible.
We've gone through.
Speaker Change: That education, both at our practices and with our patients and we expect that that patient flow to be consistent with what we've seen historically.
Speaker Change: Thank you.
Your next question comes from the line of Gary Ho Mishopin. Please go ahead.
Speaker Change: Thanks, and good morning.
Speaker Change: Maybe just going back to the EBITDA margin I guess two.
Speaker Change: Particularly strong and better than your guidance this quarter. Despite the partner's conference I think in the.
Speaker Change: Quarter anything to highlight that drove this outperformance of one time and then the second part on your Q4 guidance same same thing on the EBITDA margin, maybe a bit softer than what we were expecting any comments here are just some conservatism built in especially given you're just kind of last comment here that it could meet or exceed full year 18, 4% target.
Speaker Change: Yes.
It's a great question so as it relates really what the drivers are I think we continue.
Speaker Change: To see the significant operating leverage on the investments we've made in our corporate infrastructure those are coming through in a really amplified.
By the strong organic performance that we're seeing at our practices.
Speaker Change: As well as the EBITDA margin drop through so nothing outside of really executing on our strategy and realizing.
Speaker Change: The investments in our teams and technology that we've made over the last number of years.
Speaker Change: <unk> contributed to the outperformance in Q3 as it relates to Q4.
Speaker Change: What I'd say is we expect to be.
Speaker Change: At the upper end of our ranges that we put forward here.
The business continues again to see strong patient demand strong performance.
Speaker Change: And the margin expansion from from our operating leverage so don't expect to see a significant change from the performance that we've seen overall in Q3 going into finished the year strong in Q4.
Speaker Change: Okay perfect. Thank you.
Speaker Change: Your next question comes from the line of Dark meat.
Speaker Change: RBC capital markets. Please go ahead.
Speaker Change: Yeah. Thank you.
Speaker Change: Maybe Graeme when you think about self funding.
Speaker Change: Your model here, you have been able to do that for some time, but at some point, it's going to allow you to start to increase the cadence of acquisitions. If you chose to.
Speaker Change: Can you talk about how you think about that capital allocation right now.
Speaker Change: Yeah look we've.
Speaker Change: We obviously made a conscious effort to delever to a level that was satisfactory for for a company of our size in the public markets.
Speaker Change: And when we look back.
Speaker Change: <unk> spoken about $25 million to $30 million positive $30 million plus of M&A on an annual basis of any three year period. If you look back from the end of this year say $20 million change.
Speaker Change: Factory as we're in that range.
Speaker Change: We expect to continue to be able to be in that range over the medium term.
Speaker Change: While deleveraging.
Speaker Change: I think the the free cash flow generation of the self funding has aligned with deleveraging.
Speaker Change: This point in time, given the scale of business, but given that obviously continues to scale up in cloud with double digits.
Speaker Change: We feel that will continue to be able to delever, while increasing our acquisition pace. If we so choose.
Speaker Change: Maybe not totally self funding certainly deleveraging, while the volume here through the piece so whilst deleveraging of self funding has been synonymous with one another and necessary for each other if you will.
Speaker Change: So finally as being necessary to drive deleveraging given the economies and the level of that crowd today can probably talk about prepaid if we so chose.
Speaker Change: Whilst still deleveraging.
Speaker Change: Excellent and then.
Speaker Change: When you think about the free cash flow conversion as a percentage of Jamba time, which looks very strong over the last year obviously.
Speaker Change: Can you talk about where you could ultimately see that number over a three to five year period.
Speaker Change: Range perhaps.
Speaker Change: I think I think if we unpack really what the main the main driver is between our EBITDA and free cash flow, it's really our interest carry right.
Speaker Change: And as it sits today on nearly $1 billion of debt or just over $1 billion of debt at the 6% carries a call that now on a go forward basis somewhere in that $60 million Mark.
Speaker Change: Assume assume that to be continued to be flat right. So if we model out that 4% plus organic growth with a drop through to EBITDA. The leverage that we're going to be able to get on our corporate infrastructure and are call. It $25 million plus of acquired EBITDA youre going to see that that free cash flow conversion continue to increase at a <unk>.
Speaker Change: Rates consistent with what <unk> seen this year.
Speaker Change: The future.
Speaker Change: Excellent. Thank you.
Speaker Change: Your next question comes from the line of Scott <unk> with CIBC. Please go ahead.
Speaker Change: Good morning, I was just a quick follow up on the last question I think you've talked before but 25 being a year, where you're going to look at cash taxes can you sort of give us at least a rough overview of how cash taxes, and 25 are going to impact that free cash flow conversion of at least in that.
Speaker Change: The 25 basis.
Speaker Change: Yes.
Speaker Change: We're still we're still sitting on a.
Speaker Change: A considerable amount of tax losses as we enter into 2025 expectation is will it should become a taxpayer at the end of.
Speaker Change: At the end of the year, it's something that as we get a little bit more clarity will put buck will provide.
Speaker Change: The market with a better understanding but it is not to impact our ability to grow and fund our acquisitive program.
Speaker Change: Consistent or slightly elevated basis.
Speaker Change: Into 2025.
Speaker Change: Okay. Thanks, that's helpful. And then just a question on on the announcement.
Speaker Change: Using some of the AI tools in the clinics is there any sort of are.
Speaker Change: Financial or operational impact that will show up in the numbers or is this more like is this more of just a.
Speaker Change: Nice for the dentist to be able to rely on some new technology.
Speaker Change: Yes. So this is this is one of the most exciting things.
Speaker Change: That I know I've seen in my 10, plus years in the dental field on and speaking to.
Speaker Change: Many of our partner dentists.
Speaker Change: One of the most exciting things in their career that they've seen.
Speaker Change: I think it's one that's going to improve the standard of care is going to improve the opportunities to identify.
Speaker Change: Coaching moments and training moments, but what it will also allow us another tool for patient communications and patient education.
Speaker Change: This is something that we've piloted for 12 plus months.
Speaker Change: And a select group of our practices and we've seen significant call it operational benefits.
Speaker Change: And those practices, which we believe to be.
Speaker Change: Scalable as we roll it out to the balance of our network, it's not something that we've included.
Speaker Change: In our 2025 call it 4% plus organic guide, but it will be it will be accretive to them.
Speaker Change: Okay. Thank you.
Speaker Change: Your next question comes from line of David Quantity TD Securities. Please go ahead.
Speaker Change: Good morning.
Speaker Change: On the CDC P. I think in the past you guys have talked about kind of working through existing patients before taking on new ones. I'm curious where you are on that if you are taking on new ones and then just related to that in terms of the adult cohort coming on line for next year.
Speaker Change: Are you seeing any.
Speaker Change: Patients deferring their appointments and shell they expect to get coverage and doesn't know specific timing yet.
Speaker Change: Okay.
Speaker Change: Great question David.
Speaker Change: So so as it relates to taking on new patients are absolutely.
Speaker Change: We're through that.
So I would say is as we stand today for the most part we're <unk>.
Speaker Change: Seeing.
Speaker Change: We're seeing patient behavior across almost all of the cohorts b b consistent with with what our expectations would be.
Speaker Change: I think there is and has been.
Speaker Change: A slight elevation in cancellation and deferral rates through the year and we expect that.
Speaker Change: Maybe slightly ramp as we get into 2025, if there are any announcements around the expansion of the cohorts again.
Speaker Change: We sit here today outside of what.
Speaker Change: The federal government has shared with us.
Speaker Change: Is there going to expand the program.
Speaker Change: Data are uncertain and uncertainty created some uncertain behavior, but as we sit here today, there hasn't been any call it material shifts in patient volumes in patient behaviors, but that could change.
Speaker Change: Alright. Thanks.
Speaker Change: Your next question comes from the line of Stephen Stephen Macleod with BMO capital markets. Please go ahead.
Speaker Change: Thank you and good morning, good morning, guys.
Lots of great color. So far most of my questions have been answered I just wanted to follow up on a couple of things.
Speaker Change: Just with respect to can you just give an update as to where we stand in terms of pricing and inflation.
Speaker Change: And how you expect that to evolve as we sort of turned the page into 'twenty 'twenty five.
Speaker Change: Absolutely good thanks, Thanks for the question Stephen.
Speaker Change: I think overall from a from an inflationary perspective, I think we're all thankful that that that's come down here.
Speaker Change: In 2024, which has allowed us to catch up call. It on our overall price into cost match.
Speaker Change: As we sit and think about 2025 expectations.
What's been consistent in the dental industry and has allowed for the predictability of the business.
Speaker Change: Is that the provincial associations as you know a set price with reference to the prior year's inflation and Thats always been call it in that 2% to 3% range.
Speaker Change: Given that we've reverted close to normal levels of inflation in 'twenty four.
Our expectations would be in that range for pricing next year.
Okay. That's.
Speaker Change: That's helpful. Thank you and then.
Speaker Change: Just with respect to acquisitions I mean, Q3 was a bit light Q4 year to date, obviously very strong. So just wondering I mean is that just is that just timing related.
Speaker Change: Was there anything else going on and then I guess as we roll the calendar 'twenty 'twenty five.
Speaker Change: Would you still expect that $20 million plus number to be intact for next year.
Speaker Change: Yeah, absolutely, it's purely timing and that's why it's difficult to to have it spread evenly quarter over quarter. As we all know summer months are more difficult to get things done given given vacations and priorities of both the vendors as well as advisors.
Speaker Change: We are very pleased to notice we're complete.
Speaker Change: All of our $20 million plus of acquired EBITDA for the year.
Speaker Change: As we are speaking on this call today.
Speaker Change: With with some additional deals to close through the end of 2024. So we will be we will be ahead of our plan for 2024, and what this is allowing us to do.
Build a very strong pipeline going into 2025 with the expectation of continuing in that $20 million of plus and acquired EBITDA into next year.
Speaker Change: Okay.
Speaker Change: That's great glad to hear you.
Speaker Change: You walked through it today, which is which is great. Thanks, Mike I appreciate the color.
Steven: Thanks Steven.
Speaker Change: Your next question comes from the line of Daryl Young with Stifel. Please go ahead.
Speaker Change: Hey, good morning, everyone. Just one quick one for me with respect to the CVP.
Speaker Change: Any significant changes in the mix of services or or anything to call out there around the CDC patient versus a traditional patient.
Speaker Change: Terms of spend.
Speaker Change: I think there's really two types of CDP patient right. So it was one of the CCP.
Speaker Change: All the patients would be those that have been seeking dental care and paying out of pocket for years and years and years.
Speaker Change: Really those of those patients are.
Speaker Change: Just getting a little bit more.
Speaker Change: More money in their pocket to spend on additional services more comprehensive services, which is of course accretive accretive to the overall business for.
Speaker Change: The other patient, which ultimately is one that wasn't able to access or seek the care.
Speaker Change: Given given the support here, they're able to now go to the dentist.
Speaker Change: Some of these patients may not have gone to the dentist for many many years. So the type of care. They are receiving might be a little bit more emergent and comp comprehensive in nature.
So overall I would say.
Speaker Change: It's a positive contributor to the practices. We're happy that both patients are able to get access to the program and ultimately access to care that they do need.
Speaker Change: That's great thanks very much.
Speaker Change: Your next question comes from the line of Danielle Armstrong Mechanical Genuity. Please go ahead.
Speaker Change: Good morning, guys and congrats on the quarter.
Speaker Change: Question for me on the number of practices, we saw that tick down sequentially from $551 million to $550 million.
Speaker Change: 750.
Speaker Change: Despite the handful of tuck ins that you did in the quarter. Just wondering if there were any location consolidations during Q3 and whether that contributed to the better than expected margin that we saw.
B is something that you continue to look at and would continue to look at in 2025.
Speaker Change: Thank you Tony and Great question.
Speaker Change: Consolidations.
Speaker Change: It's something that we continue to evaluate its absolutely part of our strategy and one of our arms of growth, where we acquire practices.
Speaker Change: In areas, where we have practices with excess capacity.
Speaker Change: And bring their patients and teams.
Speaker Change: Two to operate in a more efficient and margin accretive way. So absolutely that is that is the reason for.
Speaker Change: Called the practice count.
Speaker Change: And as a positive contributor to our overall margin performance.
Speaker Change: Excellent. Thanks.
Speaker Change: Your next question comes from the line of Alan Smith Bank of America. Please go ahead.
Speaker Change: Hey, good morning, and thanks for taking my questions. This is dead serious large.
Speaker Change: I'm just sitting here Cai.
Speaker Change: Digesting your comments around the CCP it seems like it might be slightly more beneficial than prior expectations also saw that the comment.
Speaker Change: The Canadian government is increasing day initiatives.
The program it seems like they're being a little bit more advertising.
Speaker Change: Do you think that most of the <unk> benefit I guess in terms of volume with that.
Speaker Change: Kind of come to whereas the <unk> 64 population gets rolled out.
Speaker Change: Yes, I'm sorry, it back a step function change.
And volumes that's expected in 2025.
Speaker Change: And maybe a way to frame that if you look at organic patient growth.
Speaker Change: The 2% to 4% range.
Speaker Change: What would that look like with the CDC be fully rolled out you think.
Thank you.
Speaker Change: That's a good question, Dave So I think first off if we take a step back and really look at the two groups right. You have the 65, plus the <unk> 18, and below and the disabled population that's eligible today and that truly is.
Speaker Change: Call it the non working population.
Speaker Change: That would be at risk.
Speaker Change: Not having access to care Canadians and the working in the working age between $19 64.
Speaker Change: Predominantly we will have some type of either employer sponsored insurance coverage.
Speaker Change: Or other type of coverage, which we don't believe.
Speaker Change: <unk> rolled out to that group there is going to be a significant increase in volumes will it be accretive yes. It puts more dollars in their pocket to consume dentist trend for a group that is enabled to access care.
Speaker Change: We'll provide them that avenue to do so.
Speaker Change: I think if you look at the federal government's disclosures, what they are seeing and is that.
Speaker Change: Their expectations of of patient enrollment in volumes through the program are significantly below levels, where they thought they would be at this point in time, which shows up there is there is still some positive tailwind as it relates to the existing cohorts to get educate.
Speaker Change: And that put through the program.
Overall, it will be positive it continues to be positive, but it's still very much early days, but if we go back in the rear view when the program rolled out in May a very small number of dentists were participating in the program, which clogged up the opportunity for for patients too.
Speaker Change: To benefit themselves of the program. It was only call. It in mid July after the alternative pathway opened up where.
Speaker Change: The majority of dentist across Canada began to participate in the program. So we're only really a few months into it.
Speaker Change: Early days, but overall continues to be positive.
Speaker Change: Yeah.
Speaker Change: Great. Thank you.
Speaker Change: Again, if you'd like to ask a question. Please press star one.
Speaker Change: As there are no further questions at this time that concludes the Q&A session and today's conference call. Thank you all for participation you may now disconnect.