© 2024 Alpha Spread Limited. All Rights Reserved.
www.alphaspread.com is not operated by a broker, a dealer, or a registered investment adviser. Under no circumstances does any information posted on www.alphaspread.com represent a recommendation to buy or sell a security. The information on this site, and in its related newsletters, is not intended to be, nor does it constitute, investment advice or recommendations. The information on this site is in no way guaranteed for completeness, accuracy or in any other way. In no event shall Alpha Spread Limited be liable to any member, guest or third party for any damages of any kind arising out of the use of any content or other material published or available on www.alphaspread.com, or relating to the use of, or inability to use, www.alphaspread.com or any content, including, without limitation, any investment losses, lost profits, lost opportunity, special, incidental, indirect, consequential or punitive damages. Past performance is a poor indicator of future performance.
You don't have any saved screeners yet
Intrinsic Value is all-important and is the only logical way to evaluate the relative attractiveness of investments and businesses.
Good morning, and welcome to dentalcorp Fourth Quarter and Full Year 2021 Results Conference Call. [Operator Instructions]
At this time, I would like to turn the call over to Nate Tchaplia, Chief Financial Officer of dentalcorp. Please go ahead, sir.
Thank you, operator, and good morning, everyone. Welcome to the dentalcorp Fourth Quarter and Full Year 2021 Results Conference Call. I'm joined here today by Graham Rosenberg, our CEO; and Guy Amini, our President.
Before we start, we would like to remind you that all amounts discussed on this call are denominated in Canadian dollars, unless otherwise indicated. Please note that the statements made during this call may include forward-looking statements and information and future-oriented financial information regarding dentalcorp and its business and disclosure regarding possible events, conditions or results that are based on information currently available to management, which indicate management's expectation of future growth, results of operations, business performance, business prospects and opportunities. Such statements are made as of the date hereof, and dentalcorp assumes no obligation to update or revise them to reflect events, disclosures or circumstances, except as required by applicable security laws.
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 the results discussed today. Given these risks and uncertainties, one should not place undue reliance on these statements and information. Please refer to the forward-looking statements and information and future-oriented financial informations section of our public filings, without limitation, our MD&A and our earnings press release issued today for additional information.
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 would now turn the call over to our Chief Executive Officer, Graham Rosenberg, for opening remarks. Graham?
Thank you, Nate, and good morning, everyone. We are pleased to be with you today to review dentalcorp's recent developments as well as our financial and operating results for the 3 months and year ended December 31, 2021. For today's call, I'm going to share a number of those developments with you. I will then hand the call over to Nate, who will discuss our financial results in detail for the reporting period, after which I will provide forward-looking remarks about how our business is trending.
With our clear market leadership and compelling financial profile, we believe that dentalcorp is well positioned to sustain its track record of double-digit growth as the only national platform in the $18 billion Canadian dental industry. A number of key metrics validate our continued confidence in our business.
In 2021, we continued our track record of delivering double-digit growth every year in our history. For the year ended December 31, 2021, dentalcorp generated approximately $1.1 billion of pro forma revenue and $216 million of pro forma adjusted EBITDA, underpinned by strong Same Practice sales growth and continued performance of our repeatable acquisition program.
All of this has been made possible by our deep and diverse network of 1,400-plus dentists, 1,700-plus dental hygienists and 4,100-plus supporting team members. Delivering the highest standards of care, our health care professionals support more than 1.7 million active patients and manage more than 4 million patient visits annually.
Turning to Slide 4. We remain disciplined in our approach to growth and intend to continue growing our business organically through accretive M&A and by driving greater efficiencies at both the corporate and practice level and, on a longer-term basis, through expansion into other geographies and verticals, which advance the health and well-being and vitality of North Americans.
On Slide 5, you will see that our vision to deliver the best patient experiences and clinical outcomes remain at our core. And with our sector leadership, dentalcorp is well positioned to extend our 10-year track record of double-digit growth in 2022 and beyond by continuing to leverage our proprietary technology stack, digital assets and repeatable acquisition program.
On Slide 6, you will see that our team works within the dental industry that is highly recurring and essential health care service that is cash pay and insulated from economic cycles and disintermediation by technology. General expenditures have experienced strong relative growth during periods of higher-than-average inflation. And accordingly, in the context of the current macro environment, management believes that dentalcorp's predictable cost structure, high margins, low commodity risk and minimal capital expenditures provide a constructive backdrop for the company's continued delivery of double-digit growth.
Turning to Slide 7. I'm delighted to report that our business again delivered double-digit growth with fourth quarter 2021 revenue of $273 million, up 21% over the same quarter last year, and adjusted EBITDA of $50.1 million, up 53% over the same quarter last year. dentalcorp generated full year revenue of $1.03 billion, an increase of 55% over 2020, and full year adjusted EBITDA of $191.8 million, an increase of 220% over 2020, which was obviously heavily impacted by COVID. And we generated fourth quarter 2021 adjusted EBITDA margins of 18.4%, up 3.9% from the fourth quarter of 2020.
With respect to acquisitions, during the fourth quarter, dentalcorp acquired 13 practice locations in the fourth quarter of 2021, which are budgeted to generate approximately $10.4 million in pro forma adjusted EBITDA. We believe that these acquisitions highlight the efficacy of our repeatable acquisition program, underpinned by our leadership and scale, which is driving incremental partnership opportunities from multi-location owners.
Same Practice sales growth for the fourth quarter of 2021 increased by 4.9% compared to the fourth quarter of 2020. All of our insourcing efforts continue to trend above expectations, as demonstrated by orthodontics insourcing, with 202 practices in the Ortho Acceleration Program up 54% from 131 at the end of the fourth quarter last year and still trending strong. The outcome of all of this, a strong quarter of free cash flow at $24 million.
As of December 31, 2021, dentalcorp owned 458 dental practices in Canada compared to 397 at December 31, 2020. Our M&A results have exceeded our expectations for 2021. And looking ahead, our pipeline is stronger than ever and includes several mid-market platforms, which uniquely benefit from dentalcorp's value proposition.
As previously disclosed, dentalcorp completed a bought deal offering for total gross proceeds of $115 million. These proceeds are specifically being used to support several accretive, larger platform acquisitions, which are all expected to close through the first and early in the second quarter of 2022.
We have also entered into a strategic alliance with Align Technology, bolstering our Invisalign clear aligners to Canadians nationwide through our Ortho Acceleration Program. And we are proud to have formed a new partnership with McGill University's Faculty of Dental Medicine and Oral Health Sciences. This partnership allows McGill to accelerate its commitment to digital dentistry by driving innovation in oral health sciences and providing cutting-edge learning for future-ready students, enabling them to deliver quality care to the communities that they will serve.
Overall, our quarterly and 2021 financial results demonstrate the strength in our business, particularly in a macro environment impacted by ongoing COVID-19 restrictions and variant outbreaks in many of our key markets. I'll now pass the call over to Nate, who will walk us through the details of the financial results, and then I will share some closing remarks before we open the call for questions. Nate?
Thank you, Graham. We believe that our fourth quarter results highlight our ability to continue to grow and the overall stability of our business.
Turning to Slide 8. Revenue for the 3-month period ended December 31, 2021, was $273 million compared to $226 million for the same quarter last year, representing an increase of 21%. The increase is attributable to our strong acquisitive growth throughout 2021, which gained momentum in the fourth quarter and has continued into 2022; organic growth, including a positive contribution from orthodontics insourcing, with 202 practices in the Ortho Acceleration Program versus 131 at the end of the fourth quarter last year; Same Practice sales growth of 4.9%, up over the fourth quarter 2020.
As you can see, we reported fourth quarter adjusted EBITDA of $50.1 million compared to $33 million in the same quarter last year. And we reported fourth quarter adjusted EBITDA margins of 18.4%, up 3.9% from the fourth quarter of 2020.
Towards the end of the fourth quarter, specifically the last 3 weeks of December, dentalcorp's business was adversely impacted by Omicron. The last 3 weeks of December are typically high-volume periods. However, we did not capture that upside in Q4 because, as we all know, Omicron meant that many Canadians had to continue working from home. Despite this, on a pro forma basis, our Q4 2021 revenue was $280 million, and our adjusted EBITDA was $52 million.
Turning to Slide 9. You can see that our net leverage and liquidity as of December 31, 2021 -- the company completed a bought deal offering for a total gross proceeds of $115 million in January 2022, which further strengthened our liquidity. On a net debt basis, inclusive of the raise, we are approximately 3.6x levered at the end of the fourth quarter. We ended the year with liquidity of $541.8 million comprised of $141.8 million in cash and $400 million in debt capacity under our $1.3 billion senior debt facility, of which $900 million was drawn at quarter end.
Looking ahead, we will have an abundant liquidity to support our acquisitive growth goals, while maintaining a strong balance sheet. We will also continue to evaluate scenarios to fortify our balance sheet if opportunities align with our long-term strategy.
Overall, we are very pleased with our fourth quarter 2021 results. Despite Omicron's impacts, factors are largely within our control, including closing accretive acquisitions, expanding our pipeline, increasing organic growth through our insourcing efforts and realizing ongoing operating efficiencies, we met or exceeded our expectations.
With that, I'll turn the call back to Graham to provide some closing remarks. Graham?
Thanks again, Nate. Turning to Slide 10. We remain very confident and excited about our business prospects going forward. When we went public in May, we told investors that we would scale the business by focusing on organic growth, acquisitive growth generated by our proven and repeatable acquisition program and the realization of ongoing operational efficiencies to achieve further margin expansion, all of which has resulted in consistent double-digit growth in revenues and adjusted EBITDA and translated into consistent growth in our free cash flow per share and underpinned by our judicious capital allocation methodology.
As we begin the new year, we expect to benefit from dentistry's resiliency as a highly recurring essential health care service. And despite experiencing Omicron-related headwinds in the first 6 weeks of 2022, we anticipate delivering modestly higher results in the first quarter of 2022 compared to our fourth quarter of 2021.
As discussed, we also strengthened our partnership with Align Technology to bolster our Invisalign offering to Canadians nationwide through our Ortho Acceleration Program. This expanded our partnership -- we'll also -- this expanded partnership also provide dentalcorp's network to exclusive benefits, dedicated learning opportunities and treatment planning support.
We continue to be very confident about the drivers that have sustained our double-digit growth, including our strong Same Practice sales growth, our infrastructure investments and our repeatable acquisition program, which is supported by our strongest acquisition pipeline ever. Our current pipeline includes more than 685 prospective opportunities, and more than 150 of those are currently in more advanced stages of discussions. The prospective opportunities and advanced stages of discussions have increased from 500 and 100, respectively, since the time of our IPO.
Before concluding the presentation, I wanted to address this week's announcement from the federal government. We believe that access to oral care is vital for the overall health and well-being of all Canadians. It has always been a core pillar of our corporate values. And throughout our young history, we've invested significant resources to advance this agenda.
While access to care rates in Canada are among the highest in the world, there are still [ numerous ] Canadians who face barriers to care. This week's joint Liberal and NDP announcement to expand government support programs to increase access for seniors and lower-income Canadians is nothing more than a recognition of this. As details are extremely limited. We're eager to learn more about the implementation.
And given the plethora of provincial programs already in place, we anticipate that this will likely be an expansion of these already existing programs. And our expectation is that this will increase the number of individuals able to visit a dentist and result in substantially higher government subsidy rates for dental providers who participate in these programs. We are in the process of engaging with various stakeholders to learn more, and we look forward to doing our part to ensure that even more Canadians can access quality care for their oral health care needs.
That concludes the formal part of our presentation. And before we open the call to questions, I would like to thank the dentalcorp team for all of your contributions in 2021 and so far this year. We are one of Canada's Best Managed Companies for a reason, and we are grateful for your efforts.
We will now open up the call to questions. Guy Amini, our President, Nate and myself are available to answer. Operator?
[Operator Instructions] And your first question will be from Michael Cherny at Bank of America.
Congratulations on a strong quarter. I want to get a little bit into, I guess, the 1Q results -- 1Q outlook, at least, and how to think through the pathway forward. I know you outlined the dynamics that you're seeing in play relative to the stay-at-home components and what that's doing in volumes. Is there any way to dive a little bit more into mix?
What type of volumes are you're seeing versus volumes that may have been pushed off? And whether it was from the early parts of COVID and the recovery or maybe some other shorter-term blips in the past, how do you expect that volume trend to move back towards normalization in terms of timing over the next coming quarters?
Michael, a good question and one that we continue to monitor closely. I think given the turbulence in the recovery through COVID and then the Omicron hit at the end of Q4 and the significant impact that we faced in the first 6 weeks of Q1, any volume pickups have not come through. Ultimately, what we are seeing is sequential monthly recovery, February over January and March over February, and are optimistic at the continued recovery through the balance of 2022 and the ability for us to continue, again, on our acquisitive and organic path through 2022.
Understood. And then maybe on the acquisitive side, you did 13, I think, in the release, or the filing said you've done 9 subsequently quarter-to-date, at least. As you think about where you sit right now in the pipeline, anything changing? Any curiosities around the timing of conversion?
Are practices more or less willing to work with you based on the fact that some of their volume levels have seen uncertainty? And how do you overcome any of those dynamics if they do exist in place?
Yes. No, it's -- we've established a methodology for underwriting, which has great precision, obviously, understanding the COVID recovery in our business and then being able to take a practical approach and discussions with prospective opportunities. As we look to the 13, we did have a very strong Q4 with some larger acquisitions that did take place.
Again, the 13, representing $10.6 million of acquired EBITDA and through to the start of Q1, again, that pace of acquisitions with our 685 total opportunities and 150-plus in more advanced stages, is our strongest pipeline ever. As far as the pacing of acquisitions, it continues to remain strong. I'm very confident, again, in the delivery of an acquisitive growth model that is going to be greater than expectations.
Next question will be from Steph Wissink at Jefferies.
I wanted to stay on the pipeline theme. And can you just talk a little bit about your comments regarding multi-clinic platforms? If you can share with us maybe some of the multiples that you see on a platform business versus a single clinic business.
And then, Nate, for you, just the P&L effect of that. Is there anything unique or different that we would need to be thinking about as it impacts the overall business model, if it's a multi-clinic or large-scale platform versus a single clinic?
Yes. So the larger platforms, we're uniquely positioned to partner with larger opportunities, given our fully built-out infrastructure scale and ability to integrate effectively and efficiently while promoting their continued desire for growth. As far as valuations, as we discussed through the last couple of quarters, they do command a slight premium. And that's ultimately a driver of what we are able to accomplish with them and our ability to continue their growth.
So from a total EBITDA valuation as a multiple, they're in the high single digits, low double digits. And through our cost synergies as well as our insourcing ability, we're able to continue to drive growth at those -- at a significant rate.
Okay. That's great. And then my second question is on the Ortho Acceleration Program and the new partnership with Align or the expanded partnership, talk a little bit about what you're seeing within the 200 clinics where you have that ortho.
What's the lift to the same clinic volumes? And how should we think about the rollout within the balance of the 450 clinics or so over the course of the next couple of years?
Hey, it's Guy here. I'll jump in on that one. We expect, notwithstanding the challenges that Omicron presented to start off the year, to continue our pace of rollout and implementation of the Ortho Acceleration Program across our network, consistent with the pace of 2021. We do expect to have a greater level of proficiency in terms of both the practices that have already been through the program plus new practices that will be put through the program in the year.
And by that, I mean, the practices that have been through it, we typically see both an increase in their case starts of Invisalign treatments immediately post going through the program, plus an increase in proficiency as they mature several months even thereafter. And so we should expect to see, and we do believe to see, an increased level of case starts out of those practices through the balance of this year. So we expect to see the same number, again, of practices that we put on the program as we did last year through 2022, and should see an increase in number of cases, both through those practices as well as prior practices, to get more and more proficient.
I think we've commented on the past in terms of the incremental driver of revenue that these -- that this program typically sees in our practice. Again, if you think of your average general practice being just north of $2 million of revenue, the average case of clearer line of therapy, typically Invisalign, being in the ballpark of $5,000 to $6,000. You typically see, on a run rate basis, an increase of at least 5% of Same Practice revenue increase as a result of the incremental cases of Invisalign that these programs will yield once again to put through the program and reach a maturity level of proficiency.
Next question will be from Patricia Baker at Scotiabank.
Actually, most of my questions have already been answered. And thanks very much, Graham, for talking to us about the implications of the new government program. But I just want to go back to -- and maybe I missed it, the expanded relationship with Align. So can you just clarify for me where you were before this relationship was expanded and where it's at?
It's Guy here, happy to speak to that. And again, we have historically always worked with Align on underpinning both the materials and equipment, including digital scanners that we rely on to underpin our Ortho Acceleration Program, together with other insourcing agendas that we have. This expanded partnership gives us enhanced benefits as it relates to the training, implementation and rollout of our Ortho Acceleration Program; enhanced alignment with Align on the training, again, the training of staff, as well as the access to proprietary materials to get practices, again, greater proficiency as it relates to delivering that treatment; and exclusive benefits for our network as it relates to both the cost side of the equation as well as access to, in particular, as it relates to delivering the program itself.
And so I don't want to go into too much detail. But again, building on both existing benefits that we're able to yield for our practitioners and our teams as well as proprietary access to greater materials to help us with the implementation and rollout of our OAP program.
Our next question will be from Doug Miehm at RBC Capital Markets.
First question has to do with margins, cost inflation and those types of items. Perhaps, Nate, you could walk us through. We saw gross margins a little bit lower this quarter versus last quarter, but your EBITDA margins ended up being a little bit higher than we were thinking anyway. Can you talk about what you see happening in your business right now from a cost inflationary standpoint?
Yes. As far as a cost inflationary perspective, I think it's important to note from a cost of the delivery of care, that is ultimately a variable expense from a cost of consumables and items that are used in, again, the delivery of patient care. Those remain generally consistent. We have long-term fixed contracts with our major vendors. With some of the smaller items, we aren't completely insulated. So we are seeing some increase.
But as an overall comment, we're able to continue to ultimately drive growth in our practices. Ultimately, the price increases that we benefit from in the setting of the fees by the provincial associations take into account the overall inflation and cost impact in the dental practice. And we're happy to say that, that more than offsets the costs. And we feel good about going into 2022 as far as our cost structure and the overall inflationary impact.
Okay. Great. Second question has to do with this potential national pharmacare platform. And thanks, Graham, for touching on that. So my question is one of when you think about the uninsured patients today, how would you contrast that where they're located relative to your footprint, what the opportunity is?
And then if you look at these individual potential patients and the likelihood of getting a certain amount of revenue per patient, is this a type of business that is margin dilutive? And are they the type of patients that you'd want within your system? Maybe you could touch on some of those items I just described.
It's Guy here. I think you mentioned national pharmacare, although that's in the cards, I think what was proposed is some sort of national subsidy for dental care. Again, just to reiterate what Graham had mentioned in his comments at the top, details are still relatively scant. And I believe, both the Liberal and NDP parties have yet to consult with both the provinces, which will be integral to delivery of health care, given the provinces' roles in the health care system more broadly, as well as both the lack of consultation with the dental industry itself on implementation.
So at this point, we're still very much in the dark as the government still figures out how exactly it's going to accomplish what it seeks to accomplish. But again, our expectations are that what they'll ultimately do with this mandate is expand existing provincial programs that target at-risk communities, whether they're youth, seniors or low-income individuals.
A lot of those programs, again, are geography agnostic but tied to income levels. If you look at our facility footprint, I can't comment too much on the geography of where those individuals are located, all I can say is there is capacity for increased volume that this program will likely yield as a result of more individuals being able to access dental care.
Today's programs across the nation, again, a variety of different approaches, but they typically tie reimbursement to existing fee guides. We anticipate the government will likely increase the rates for what those reimbursement levels are to, again, incentivize and facilitate more and more practices participating in these sorts of programs. And therefore, we do see it as being additive from both a volume and margin perspective.
So margin accretive?
Based off current levels today, yes.
Next question will be from Daryl Young at TD Securities.
Just with respect to some of the onetime costs that have come through in the last few quarters, I think you've had quite a few new initiatives on the go in terms of the PC Health relationship, the IT stack, adding some additional costs just to head office in terms of mapping up marketing and sales initiatives. So I'm just wondering if these are costs that we should expect to normalize in the next coming quarters? Or if there's more initiatives in the pipeline?
Yes. Ultimately, from an infrastructure perspective, we've been making, call it, the -- or completing our investments in our technology stack, mainly around our ERP and human resource management systems. Those are expected to continue and be complete somewhere in the neighborhood by the end of Q3, Q4. So those will continue through the balance of 2022 as it relates to our infrastructure investments, but those are onetime and don't expect those to continue beyond 2022.
Okay. Great. And then just for -- I think we're a couple of months now into the PC Health relationship. Are there any takeaways or learning or updates you can give us there?
It's Guy here. No material updates, other than to confirm that we are on track to meet our Q1 target of going live on the platform. Actually, it's live today. Again, we continue to see and are encouraged by Loblaw and Shoppers, in particular, as investments in the platform, as they continue to build it out, striking the right partnerships to draw more and more PC Health app users to the platform, which we continue to see as a potential tailwind for volumes from our perspective.
No material update beyond that. All to say is, again, we are on track with the launch in Q1 and expect to see additional developments and capabilities put through the platform as it relates to our hellodent pillar through the balance of the year.
And your next question will be from Stephen MacLeod at BMO.
Lots of great color, so a lot of my questions have been answered. But I just wanted to follow up on 2 things. The first one is the expanded partnership with Align Technology. Guy, you gave some great color around sort of what that means in terms of access to materials and training.
But I was just curious, is there anything in there that -- does this allow you to expand to more practices than you previously expected you could? Or does it allow you to expand on a more accelerated basis? And I'm just curious if you could give a bit of color around the pace and how it's impacted by this.
I think it's more of the latter versus the former, to be quite honest. I'm sorry, it's Guy here. We do expect, given the dedicated support that this enhanced partnership brings, we'll be able to not just maintain our pace from last year, but again, notwithstanding some of the challenges we faced earlier this year as it relates to Omicron, continue it and, if not, surpass it.
Okay. Great. And then just secondly to that, you mentioned in the press release, and Graham, you talked about in your prepared remarks, just how dental services expenditures has historically outpaced CPI. And you talked about it sort of being not impacted in an inflationary environment. Is that largely because of how the fee guides work? Or is there some other phenomenon that plays -- in play that's leading to that relationship?
Look, it's a -- I think it starts off with the fact that we have a highly variable cost structure and those variable inputs like dental [ draws ], via which our dentists get paid, are highly fixed. They've got a fixed variable cost structure. We have some long-term costs that are fixed on long-term contracts like rents and things like that.
At the same time, we are a central health care service. People keep coming back to the dentist. There is some price accretion in fee guides. But also the work that we've been doing via our insourcing agenda, our orthodontic insourcing agenda, implants are beginning and a few other services, that mix also drives increased margins and is an offset to any inflationary pressures inside of our cost structure.
But net-net, historically, and we're seeing it now, general expenditures have increased above CPI. We have a highly variable cost structure. We've got high margins. We've got [ a lot of ] CapEx inputs. We have no commodity risk. We've got long-term contracts with our -- on our supply side. We feel really good about the business in the current macro backdrop.
And your next question will be from Scott Fletcher at CIBC.
Just a couple of quick ones, I think, for Nate. The first is the average acquisition multiple picked up a little bit in the quarter. I know that the average practice size looks like it was a little bigger, but wondering if there's anything outside the larger practices on the multiple side?
No, Scott, I think you hit the nail in the head. Larger practices -- there were some larger opportunities that ultimately, again, are in those high single digits, low double digits, which do drive the valuations on an aggregate basis. Again, as we look forward through to Q1 and Q2, we're going to have a pacing of acquisitions that's going to be accelerated from what we've experienced historically and ultimately underpinned by larger platform acquisitions, which will have a similar multiple valuation, again, in the high single digits, low double digits.
So nothing -- no real changes on the standard sort of single-practice multiple?
As far as the single-practice multiples, again, those have historically continued to be in the high 7s, low to mid-8, and those continue at those similar valuations.
Right. And just to check, that's on an ASP basis rather than -- and on the IFRS number, it's sort of closer to the mid -- high 6?
That's correct?
Okay. And then one maybe similar question, given I'm here at the end of the list here. I noticed that in the adjusted EBITDA number, the COVID adjustment cost -- the COVID costs sort of came back a little bit. Can you just give us some color on what they were in the quarter, just on the specifics? And how -- if we should expect them to continue at that level in Q1?
So ultimately, and important to note, as far as COVID revenue and EBITDA adjustments for shutdown period and impact, we didn't have any of those adjustments in 2021. At the end of Q3 2020, those adjustments were dropped off. The costs that have been incurred in 2021 and that COVID adjustments are just related expenditures that are carryover from 2020 that ultimately have been added back. So no, I would not expect any continuation of those adjustments.
Next question will be from Tania Armstrong-Whitworth at Canaccord.
I think most of my questions have been asked here, but a couple for me. So on the bigger picture, I guess, with offices reopening and people coming back to work, we kind of do see where the dust is settling in terms of people permanently working from home. Are you seeing any shift in volumes from your, I guess, urban hub centers to more, I guess, suburban clinics? And will this impact your M&A strategy going forward at all?
Sorry, it's Guy here. One of the things we have seen, and I think it's a benefit or a by-product of our scale and our digital acquisition platform of patients, is that some of those patients who have relocated geographies as a result of the changing dynamics of remote work, hybrid work, et cetera, have found themselves back in our network through reattachment, which is again a benefit of both the hellodent platform and just our sheer geographic scale across the country. And so we -- from a certain perspective, are agnostic, whether they're coming to our downtown practices or more suburban practices.
We have always looked at demographic trends as it relates to where we think our accretive acquisitions are available. We do see strong recovery on a relative basis in some of the more harder-hit urban environments, including downtown Toronto, Calgary, et cetera. And we continue to expect to see pickup from that through the balance of the year. And we'll always continue to, again, as Nate mentioned, at the top, be judicious in our underwriting process around how we assess practices based on the geographic location and some of the volume trends we're seeing based on those locations.
Okay. Wonderful. And then on the gross profit margin, I think this was already brought up on a question. But I'm wondering, because we did see that downtick from, I think, 47% to 46% year-over-year, I'm wondering if some of those Same Practices that you were employing last year in place, like limiting the amount of volume that comes into your clinic, having to clean in-between sessions and utilize more PPE, that's causing that COGS line to tick up a little bit. Are these all still in place?
Yes.
And could we see like -- is there -- what I'm getting at is, really, is there the potential for margin expansion back to those 48% levels as these come off?
Yes. It's a great question, Tania. And I think what continues to drive our optimism through 2022 is those regulatory restrictions continue to remain in place, specifically around the fallow times. And the increase in both, call it, cleaning requirements, the use of PPE, of course, increased as Omicron hit headlines in December and, again, likely through the first 6 weeks of Q1. So all those same dynamics as it relates to regulatory restrictions and increased use of PPE, through periods where COVID increases and grabs headlines, ultimately, that as well has impacted us.
[Operator Instructions] And your next question will be from David Newman at Desjardins.
Very solid results and outlook, so congratulations. Just like circling back to the Liberal-NDP dental plan, the Universal Dental Care, I think you seem to suggest that there could be higher reimbursement. If the feds kind of have oversight of this program, and I know it's provincial jurisdiction on pricing, but do you think there could be a case where they could weigh in on pricing?
It's Guy here, David. Could they? Theoretically, I think we've seen a government try to do a whole bunch of things they don't typically do. Again, could they technically? Yes, full day. I don't think we expect it to happen that way or unfold that way. Again, given the importance of the provinces and given the nature of how the industry governs itself, we don't anticipate that to be the case.
Okay. And with rising rates, we're seeing PE taking a pause on acquisitions across a number of industries. And I'm just wondering, have you seen any curtailment of PE-driven M&A yet? And could this result in sort of private market valuations easing off a bit? And does this propel you to look at the U.S. and adjacent markets more seriously?
Yes. Thanks, David. It's interesting because all the PE guys we speak to and, obviously, we've been involved with a lot of them through the years, and beyond the [ atrocity ] that we deal with, we actually had a Board meeting yesterday, they're seeing valuations at levels that they've never seen. A rising interest rate environment -- rates are still historically at some of their lowest levels in decades, okay?
Private equity valuations for private pay health care providers, including everything from veterinary to -- you saw Shoppers' deal with Lifemark. Private equity is running full tilt on valuations. Health care is a very hot sector. Dental valuations in the U.S. and the private sector continue to accrete at pretty high rates.
We feel good about -- we don't see much of a dislocation between private and public. Maybe we see a bit of a dislocation sometimes between private and public. Private multiples continue to do -- to go up, everything from dental to optical to physio to veterinary. We continue to see continued accretion in valuations.
Okay. It sounds like you're watching it pretty closely here and poised to pounce if something is -- if this, in fact, plays out with the rising rates. Am I reading that right?
Yes.
Very good. And last one for me, guys, just on the implants. I think it was more of a 2022, '23 opportunity. And I'm interested, you had this deal with Align Technology. Is there something similar you could do on the implant side? And how is that rollout for the other $100 million opportunity going?
Don't steal our thunder just yet.
All right. And you're still on plan, on track for late 2022 to really start to ramp this up overall?
Yes.
Thank you. And at this time, Mr. Rosenberg, we have no further questions. Please proceed.
Great. Thank you, operator, and thank you, everyone, for your questions and your attendance. Really appreciate it. Always good to chat about our business. We remain very confident about the drivers that have sustained our double-digit growth over the last 10 years, our Same Practice sales growth, a strong March has been a sequential bump up over February and February over January, similar to the narrative that we've described.
Unfortunately, through the last few quarters vis-a-vis our bounce back from COVID periods, as we feel really good about the balance of this quarter and the rest of the year. I do want to highlight that because Omicron occurred very early in the year, we still do have time for the balance of the year to bring our patients back to those 2.3 to 2.5 visits that we target. And so it's never a good thing to have a COVID backdrop, but we think the fact that it's occurring early in the year gives us a real opportunity to deliver or even overachieve on the numbers that are out there by each of you on us. So we feel really good about that.
We feel really good about our acquisitive growth agenda. We're expecting a very strong quarter in Q1 and into Q2, a very deep pipeline, higher than it's ever been. We feel good about the business overall. And with the backdrops in terms of the macro environment vis-a-vis inflation, again, dentistry's outperformance. We feel that our cost structure and the other things that we've put in place play really nicely into that backdrop. So overall, very excited about the business for the remainder of the year and beyond.
Thank you, sir. Ladies and gentlemen, this concludes your conference call for today. Once again, thank you for attending. And at this time, we do ask that you please disconnect your lines. Have a good weekend.