dentalcorp Holdings Ltd
TSX:DNTL
Earnings Call Analysis
Q4-2023 Analysis
dentalcorp Holdings Ltd
The company closed the fourth quarter of 2023 on a strong note with reported pro forma revenue of approximately $1.5 billion for the last 12 months and a pro forma adjusted EBITDA of $274 million. They continue to grow organically and through strategic acquisitions, expecting to thrive in various economic conditions.
With 12 practices acquired in Q4 for $65 million, expected to generate $9.3 million in adjusted EBITDA after rent, the company capitalized on declining practice valuations, which were down 6% quarter-over-quarter and 27% annually. These acquisitions reinforce the company's position as a prominent player in the market.
Experiencing revenue growth of 9.4% to $362.2 million in Q4 and an 8.6% rise in adjusted EBITDA to $65.8 million compared to last year, the company is set for a robust full year 2024 with expected revenue growth of 9.5% to 10.5% and same practice revenue growth exceeding 4%. Adjusted EBITDA margins are projected to expand by over 20 basis points.
The company ended the fourth quarter with substantial liquidity of $392 million, which is expected to support their growth ambitions. They maintained their leverage at approximately 4.4 times, consistent with the third quarter, ensuring stability and financial flexibility.
Looking forward, the company plans to continue its balanced growth approach, with expectations of sustained double-digit increases in revenue, EBITDA, and free cash flow per share. The growth strategy will be self-funded, primarily using the company's robust free cash flow, thus minimizing additional debt dependency.
The company is observing improvements in the labor market, with better availability of dental professionals and wage stabilization. This positive shift is anticipated to bolster operational efficiency and support the business's overall performance in the coming year.
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Good morning, and welcome to dentalcorp's Fourth Quarter and Full Year 2023 Results Conference Call. [Operator Instructions]. At this time, I'd like to turn the call over to Mr. 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 Fiscal 2023 Results Conference Call. I'm joined here by Graham Rosenberg, our CEO.
Before we start, we would like to remind you that all amounts disclosed and 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 the date hereof, and dentalcorp assumes no obligation to update or revise them to reflect events, disclosures or circumstances, except as otherwise required by applicable securities 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 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 information 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 will now turn the call over to our Chief Executive Officer, Graham Rosenberg for opening remarks. Graham?
Thanks, Nate, and good morning, everyone. We're pleased to be with you today to review dentalcorp's recent developments as well as our financial and operating results for the 3 and 12 months ended December 31, 2023.
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 Nate, who will discuss our financial results in detail, after which I will provide some forward-looking remarks about how our business is trending.
As a reminder, dentalcorp operates in a highly recurring essential health care industry that is cash pay, resilience through economic cycles and insulated from disintermediation by technologies. More importantly, dentalcorp expenditures have experienced strong relative growth during periods of higher-than-average inflation.
Accordingly, and in the context of the current macro environment, we believe that dentalcorp's [ favorable ] cost structure, high margins, low commodity risk and negligible capital expenditures provide support for the company's continued delivery of balanced double-digit growth in the $22 billion Canadian dental industry. Our confidence in the business is supported by our fourth quarter and full year results, which met our expectations and provide a constructive outlook for the coming year.
I am very pleased with our results for this quarter for which our base business results were modestly ahead of expectations and included strong practice level performance, underpinned by strong patient volumes with acquisitions that met our expectations for the full year.
On Slide 3, you will see that this performance has been made possible by our deep and diverse network of nearly 10,000 health care practitioners across the country. Our teams continue to deliver the highest standards of care during the reporting period, supporting more than 2.1 million active patients and managing over 5.1 million patient visits annually. You'll see that we completed the fourth quarter ended December 31, 2023, with approximately $1.5 billion of last 12 months pro forma revenue and $274 million of pro forma adjusted EBITDA.
On the next slide, you will see that we continued with our balanced approach to drive sustained double-digit growth, and we intend to continue growing our business organically through accretive measures and acquisitions and by driving overall business efficiencies and operating leverage over the medium-to-long term. This is a program that we meticulously built over the last decade and we believe we are able to thrive in any economic climate.
With respect to M&A, we acquired 12 practices in the fourth quarter for a total consideration of $65 million, these practices are expected to generate $9.3 million in pro forma adjusted EBITDA after rent. We are also encouraged to see that practice valuations continued to decline, down 6% in the fourth quarter 2023 over the same period last year and 27% lower in the full year 2023 compared to 2022, all driven by the tightening of access to financing opportunities for many buyers across the industry.
We remain the best positioned and capitalized player in the market as the partner of choice for independent dentists and we'll continue to be disciplined about the practices we acquire.
Moving to Slide 5, you can see that our business continues to convert a high percentage of EBITDA into free cash flow. Without acquisitions, our business has the potential to drive our leverage down by [ 0.25 to 0.5 turn ] per annum to the mid-to-high [ ones ] over the medium term.
On the next slide, you can see a comparison of valuation and free cash flow yields versus our peers. Since our IPO, we have seen a decline of over 10x in our enterprise value to LTM EBITDA trading multiple compared to our Canadian consolidated network -- consolidated peer group of 3.3x. And our health care peer group across North America of just under 6x. At the same time, we are currently trading at a 10.4% free cash flow yield compared to our Canadian consolidated peer group of only 3.2% yield and our health care peer group of only a 4% yield.
On Slide 7, I'm pleased to report that our business delivered robust growth with revenue of $362.2 million in the fourth quarter of 2023, up 9.4% over the same period in 2022 and adjusted EBITDA of $65.8 million up 8.6% over the same quarter last year, with adjusted EBITDA margins coming in at 18.2%. We're extremely encouraged that same practice revenue growth was 6.7% for the quarter and 6.5% for the year, driven by strong patient visits. In addition, we have completed the vast majority of our planned corporate investments, which helped drive strong practice level performance in both the base business and our recent acquisition cohorts.
The outcome was a strong adjusted free cash flow for the quarter of approximately $33.9 million compared to $30.1 million in the fourth quarter of 2022, despite increased financing costs driven by the historical rate increases we've experienced over the last 24 months, which are now -- from which we are now protected as 100% of our debt is capped through May 2026.
As we look ahead to the full year 2024, we anticipate continued growth with revenues estimated to increase by 9.5% to 10.5%, same practice revenue growth of 4% plus and adjusted EBITDA margin expansion of 20 plus basis points. We are also expecting to complete acquisitions representing pro forma adjusted EBITDA after rent of approximately $20 million plus in 2024, continuing on our balanced approach to strategic growth, and we are expecting adjusted free cash flow per share growth of 15% to 20%, as the company continues to self-fund a significant part of our acquisitive growth.
As we look to the fourth quarter of 2024, we anticipate revenues to increase by 4.5% to 5% of the Q1 2023 and same practice revenue growth of 2% to 2.5% as we lap a very strong and robust Q1 2023, which saw record volumes from a rebound in patient volumes due to a heavy flu season at the end of 2022. We expect adjusted EBITDA margins to remain consistent with those levels we experienced in 2023 during that first quarter.
I will now pass the call over to Nate, who will cut through the details of our financial results, and then I will share some closing remarks before we open the call for questions. Nate?
Thank you, Graham. The diversity in our dentist base allowed us to deliver on our quarterly results and demonstrates the strength and predictability of our business.
Turning to Slide 8. Revenue for the 3-month period ended December 31, 2023, as Graham mentioned, was $362 million compared to $331 million for the corresponding period last year, representing an increase of approximately 9.4%. The increase is attributable to our strong acquisitive and organic growth, including a positive contribution from the continued strong patient demand.
As you can see, we reported fourth quarter adjusted EBITDA of approximately $65.8 million compared to $60.6 million in the same period last year and reported fourth quarter adjusted EBITDA margins of 18.2%. Same practice revenue growth was 6.7% over the same period in 2022 and 6.5% on a last 12-month basis.
Looking forward, we continue to be confident about our ability to grow the business through acquisitions and organically.
Turning to the next slide. You can see that our net leverage and liquidity as of December 31, 2023. On a net debt basis, we are approximately 4.4x levered at the end of the fourth quarter, consistent with Q3 2023. We ended the fourth quarter 2023 with liquidity of $392 million, comprised of $39 million in cash and $353 million in undrawn debt capacity under our senior debt facilities. Fourth quarter and last 12 months adjusted free cash flow was $34 million and $127 million, respectively, which supports our strong balance sheet position.
On the debt side of the ledger, we increased the hedge portion of our bank debt from 75% to 100%. The debt exposure is carrying a fixed CDOR rate plus margin for an all-in cost of 6.65%.
Turning to the next slide. You can see our 2024 capital allocation program. We are committed to growing on a self-funded basis using free cash flow and expect little to no debt drawn for our 2024 acquisition strategy. Overall, we're pleased with our fourth quarter 2023 results. We increased organic growth, in part to our in-sourcing efforts created ongoing operating efficiencies, closed accretive acquisitions and continue to develop our pipeline.
With that, I'll turn the call over to Graham to provide some closing remarks. Graham?
Thanks, Nate. Turning to Slide 11. You will see that we will remain highly confident about our opportunities going forward.
Fiscal 2024 is shaping up to be an exciting year for dentalcorp, and we don't anticipate slowing down, thanks to our continued same practice revenue growth of over 4% plus and our disciplined approach to acquisitions. In tandem with this momentum, we are diligently keeping abreast of the developments related to the Canadian dental care plan. As we prepare for us to roll out in May, our team is actively updating our processes and ensuring that our practices are equipped to address patient needs.
It's important to note, however, that there are still several unknowns regarding the specifics of the plan and its full impact on the dental sector. We are monitoring these developments closely, we're committed to adapting swiftly to ensure that we continue to provide the highest standard of care to our patients and support to our teams across the country.
We believe that our balanced approach to growth to managing the business will continue to drive sustained double-digit growth in revenue, EBITDA and free cash flow per share and deleveraging throughout 2024 and beyond.
I'd like to thank you all for taking the time to join our call today. This concludes the formal part of our presentation, and I would like to open the call to questions. Operator?
[Operator Instructions] We'll go first to Brian Tanquilut at Jefferies.
You have Taji Phillips on for Brian. So maybe first to start with the guidance. Obviously, we have the footprint for Q1. But maybe if you can talk about the expected cadence of earnings and obviously, implied in the guidance, there's a step-up in margin expansion. I see in the slide deck that you kind of have these 3 levers played out between labor, procurement and technology platforms to help drive that. Maybe if you can talk about the magnitude of each and where you see the most opportunity for upside?
Thanks for the question. Really what our main driver and focus here on driving operating leverage. And let's talk about really the last 24 months first, which will set the base for what we're to expect in the future.
There's 2 things that really happened over the last 2 years. One is you had inflationary cost increases that affected multiple areas of the practice. And given the pricing dynamics in the dental industry, that the price that is received in 1 year is always with reference to the inflationary growth in the prior period.
So 2022 significant inflation, 2023 received the price to offset some of that inflationary growth. 2023, of course, the inflation, albeit cooled down slightly, we were still in a higher elevated inflationary period than what we would otherwise experience historically. That price hasn't come in until 2024. So as inflation cools down, and we continue to benefit from the positive dynamics of the dental industry, -- at the practice level, all those items that you mentioned, whether it would be from the procurement, technology as well as labor, all those cost items will allow for expansion of margin at the practice level.
However, what we're very excited about as well as over the last 24 months, we've made significant investments in our technology stack with upgrades to our ERP system, our HRIS system, which helps us manage our labor pool of 10,000-plus individual across the country. Those investments now will allow for us to significantly grow the business without any meaningful step-ups.
So the operating leverage that we're going to be able to drive from our corporate infrastructure is going to be one of the main contributors to the overall margin expansion that we'll experience at the enterprise level.
Great. Really appreciate the color, Nate. And then, Graham, maybe a question for you. I know back at our conference, we had talked about the opportunities in orthodontics and implants, right? Maybe just an update on where that stands today? How much of opportunity have you realized? And how much more runway is there to realize there?
Yes. We have significant runway available to us still. Orthodontics, I'd say, we have about 1/3 of our practices operating at a reasonable clip in terms of their in-sourcing agenda. So we've got another 2/3 to go. We're currently running at around $40 million to $50 million of orthodontic revenue out of our GP practices up significantly over the last couple of years since we started the program. So we see a significant upside potential in that regard, at least another $50 million to $80 million plus over the long term.
And at the same time, on our implant agenda, which is driven a lot by technology advancements, which are making it easier for general dentists to provide implant technology to their patients as well as an aging population driving demand for more permanent solutions to their -- to them losing their teeth is an opportunity that we have just begun to forge our way forward on with training and development programs for our dentists.
And we're at the very early innings of that. So we think that it's an opportunity over the medium-to-long term, at least equal to the orthodontic opportunity. Early stages, a long runway for growth.
We'll move next to Allen Lutz at Bank of America.
One for Nate. Seeing practice growth was 2.5% in 2022. And then you obviously saw the big step-up in '23 to 6.5%. And now you're talking about 4% plus. As we think about the drivers of the step-up in 2023, you benefited from a strong flu and then I think there was a tailwind there from Omicron in 2022 that benefited in 2023.
As we think about this 4% plus number for 2024, you talk about that as an intermediate term driver. Should we think about 4% plus as kind of the steady state growth algo for same practice revenue? And then how should we think about the composition of that 4%-plus growth between volume and price?
Yes, the 4% plus is the way that we think about it internally from our expectations on a go-forward basis, really as the business and the investments we've made in our technology and our playbooks and the maturation of our ability to enhance the training and capabilities of our clinicians across our network, that gives us confidence in that figure on a long-term basis.
From a composition perspective, as mentioned, to -- on the previous question. If we think about how the pricing dynamics work in the industry, it's been over the last 40-plus years, if you draw a line of what CPI is in any one year, the following year, that's really what the price is determined to be. So inflation was roughly, fall in that 3% range in 2023. So I think of price being in an approximately around that 3% level.
As we look to the additional components, whether it's driving ultimately new patients, expansion of services and expansion of frequency, that's going to make up an additional, call it, 100 and 150 basis points of growth in any given year. So the components really would be price, plus 100 to 150 basis points, which is comprised of additional services frequency and volumes.
Great. Really appreciate that color. And then just a quick model question around seasonality. The flu is impacting 1Q, I get that. Are there any other seasonal dynamics between 2023 and 2024 to call out as we think about the model over the course of 2024?
No, no. No, I think that's exactly. It's just the -- the flu from last year impacting kind of Q1 here, when you think about it in that range. But outside of that, 2023 was representative from a seasonal perspective.
We'll go next to George Doumet at Scotiabank.
Graham and Nate. Can you talk a little bit about what trends you're seeing in the labor market, when it comes to dentists and hygienists? And more generally, how should we think about cost inflation at the practice level for '24 versus '23?
Look, in terms of availability, we're starting to see things move to the positive on the supply side on the dentists side of things as well as the dental assisting side of things with schools catching up in terms of their graduating classes and a lot of programs that we have with those schools are starting to accrue our benefits. Hygiene continues to be tight and we continue to find ways to collaborate with schools and be creative around how we bring those folks in.
So I'd say on the cost side, it's in line with where we thought things would be for 2024. We've just put through our price increases in the past couple of weeks. We're not sensing a lot of negative feedback in terms of what we proposed, and so things are currently in line with our expectations. But there is still upward pressure on labor costs, which will continue -- we expect to continue to experience for the balance of the year, but are able to manage accordingly.
Yes. And just to build on that slightly, what -- what Graham was speaking to primarily around the hygiene side is there's many hygienists left the profession in and around the COVID period with the hygiene schools and the accreditation taking, call it, anywhere between 2 to 4 years.
So we really are on the tail end now of the replenishment of the Hygiene pool across the country. We are seeing time to fill come down significantly. We are seeing sequentially now as far as hourly wage rates go, hiring at rates that were lower than the peak that was experienced over the last 24 months.
So I'd say sitting here today, looking back over the last 24 months, we're in a far better position today than we were at any point in the last 24-month period and quite confident of the continued improvement of the labor availability, wage rates and time to fill in our business.
And when you look to the pipeline for 2024, how would you expect purchase multiples pacing and perhaps composition of deals to be any different, if at all -- difference at all in 2023?
Yes. So no real difference, expectation of really that continued balanced approach to our growth, focusing on growth being funded through our free cash flow generation in that $20 million to $25 million range of after rent EBITDA. As it relates to the timing, always very difficult to predict when acquisitions will take place, as you saw roughly half of our acquisitions for 2023 took place in Q4. So we're very confident that the repeatability and predictability and looking at the pacing of how we did it in '23 is not going to be too dissimilar.
From a valuation perspective, the market continues to look at us as the partner of choice from a valuation perspective in that 7x to 7.5x range, really what we experienced in '23 is, again, from a modeling perspective, what and how we think about it internally.
Okay. So if I can just squeeze one quick one in here. I think the longer-term algorithm to deleverage 0.1 turns per quarter, I guess, just under 0.5 a turn a year. Should we expect that pace in 2024?
Yes. And again, that's going to be driven from an overall total dollar of debt. Our expectations that will remain consistent maybe with slight drawdowns. But through acquisition of practices being primarily funded through free cash flow that will increase our EBITDA and drive the deleveraging of the business.
We'll take our next question from Stephen MacLeod at BMO Capital Markets.
Just a couple of follow-up questions here. Just in terms of -- just a follow-up on the last question about acquisitions. Can you give a little bit of color on sort of what you're expecting in Q1 for acquisitions?
If we think about roughly the average pacing of the $20 million, break that down across the quarters. Generally speaking, Q2 and Q4 see slightly increased volumes of acquisition closing. So I'd say, if you take 60% to 65% of acquisitions in Q2, Q4 and then Q1 and Q3 would be called in that 35% range split even.
Okay. That's helpful. Just thinking about the Canadian dental plan. I know, Graham, you talked a little bit about it in your prepared remarks. Obviously, some unknowns out there. But just convert -- like would you expect it to be a net positive to the business. And I'm wondering if you can just give a little bit of color as to sort of how you expect that to impact volumes and earnings going forward?
Look, the headlines are that we believe it to be net neutral to modestly positive. We have a -- I'd say about 20% of our patients are 65 plus. We don't have the income distributions -- sorry, I apologize 10% of 65 plus. We don't have the income distribution. So that $90,000 headline below which people have coverage, assuming that they don't have employer-sponsored coverage is unknown.
We know the insurance piece, but we don't know the -- their income piece. So we're going to have to navigate through that, but we think that, that is a net positive because it's going to cost them less to go to the dentist. And in terms of folks that don't go to the dentist, we think -- we see it as a net positive. So we're in the midst of managing our volumes and our capacity utilizations. And as we learn more about the plan for which there are still several details unknown. We'll be able to provide more color.
Okay. That's great. And then finally, just nice to see expectations for EBITDA margin improvement in fiscal '24, leveraging some of those corporate investments. And you mentioned in your prepared remarks, you said before too that those -- those investment -- that investment plan is largely complete. So just confirming, is this something we should expect even beyond 2024? Just all those investments are in place, the infrastructure is built, you're just now levering and building on that going forward?
Absolutely. I think the way to think about it is we're going to grow the business from a top line and EBITDA perspective in double digits year in and year out. However, our corporate infrastructure will continue to grow. It's not going to be static. It will grow, but at more of an inflationary rate. So there's going to be significant leverage on that investment that has been made.
Next, we'll go to Daryl Young at Stifel.
First question, just a bit of a clarification around the free cash flow guide. Quite a strong number and I appreciate the addition to your guidance. But is that a fully baked number after rent expense after working capital and all in?
It's fully baked after rent. The one comment around working capital is we do report our adjusted free cash flow without the impact of working capital. Working capital was actually a net benefit of roughly $9 million in cash contribution in 2023. So if you were to include working capital, our figures would actually be even stronger. But it is fully baked for rent without the impact of working capital.
Got it. And then just second, around the federal dental plan, it's going to complicate the operating environment for the independent dentists. Are you seeing any indications that it could actually be a benefit for your value proposition and increased number of dentists looking to sell?
I wouldn't say it's going to be a driver for vendors to make that move. I think it will be a benefit for our network, just given some of the, call it, additional administrative changes that would need to take place, right? There's going to be a learning curve as to how to implement this plan and how to ensure that we're providing the patients the best service and operating in the most efficient manner.
Given, again, our corporate infrastructure and the teams that we have deployed across the country to support our practices, we do feel very confident in our ability to get our practices up the curve, when the time is right to do so and to serve the patient base that ultimately this plant would benefit. So our positioning, our infrastructure and our teams give us that advantage. But I don't see this having such a negative impact at all where it would drive vendors to start looking to sell their business.
That's good color. Congrats on a good finish to the year.
And our next question comes from Scott Fletcher at CIBC.
A clarification question on the guidance. The full year '24 guide is calling for 9.5% to 10.5% revenue growth, which would sort of be equal to the total growth in '23 at the midpoint. But you have the acquired EBITDA total and same practice sales growth slightly down year-on-year. So is the dynamic there largely just due to the timing of M&A with 2023 being backloaded in terms of M&A? Or is there anything else to explain the top line growing at the same rate, but some slightly lower on the M&A and the same practice sales?
Yes. There's 2 things impacting. Obviously, the number that you're multiplying the growth against is larger, right, given the growth that we experienced '23 over '22. So that figure, that starting point figure is larger. And second to that is, you nailed that, the growth and from an acquisition perspective was backloaded in '23. So the contribution to reported revenue and reported EBITDA wasn't as large as obviously the total acquisitive number. But no, nothing really to discuss other than those 2 points.
Okay. That helps. And then just a question, it looks like you repaid -- you actually made a repayment on the credit facility in the quarter. It looks like that in the capital allocation priorities in '24. Should we expect sort of -- is that a one-off in the quarter? Or should we expect any repayments?
That was just a one-off. We were sitting with some excess cash and obviously looking to minimizing our financing expenses. And obviously, we just paid down some debt. As we see opportunities to limit our total debt carrying costs, we'll do so. And as you saw, we just refinanced again in January, gave back some capacity, which lowered our standby fees and decreased our total finance charges on an annual basis by roughly $2 million plus and locked in our interest expense over the next while until May '26.
So very focused on, again, driving that free cash flow and doing all things possible to optimize our capital structure and spend.
We'll go next to David Kwan at TD Securities.
I wanted to also get a clarification on the guide. But for Q1, will you talk about the adjusted EBITDA margin guidance being in line with 2023, are you talking about Q1 2023 or for the full year? I know we're kind of slowing here, as [ Chair ], but I just want to get a clarification.
We're talking about rounding differences, David. It's -- it would be on a full year basis.
Okay. Perfect. And then on -- is it only to the M&A plans, you talked about kind of looking to spend within your free cash flow for this year. Are there any scenarios like if multiple fell below that target range of 7.5x where you might get more aggressive on the M&A front and then draw down on your credit facility?
I wouldn't say that we would become more aggressive and draw down on our credit facility. I'd say if multiples go down, and we continue to support valuations obviously coming down, as that's going to drive return on invested capital for us. But we would be able to acquire more at lower valuations. Right now, our focus and our strategy is to continue to drive our acquisitive growth funded predominantly from our free cash flow, and we're going to stick to that through 2024.
And is that the plan going forward then to kind of spend within free cash flow? Because I think you've talked about historically.
Okay. Okay. And the last question, and Graham, you talked about some unknown details as it relates to the Canadian dental care plan. Can you talk about what some of those key details are that you're unaware of?
Like my understanding is I think pricing is at least expected to be in line with the noninsured health benefits program. But I don't know what other key things are still up in the air?
Look, it's in particular around administration of the plan and our connection between the intermediary and the administrative for the plan, which is Sun Life and so we just worked into some of those details, which are yet unknown.
The governments move quickly with this program. And they're a little bit behind in certain areas, in particular, around administration. So we're working closely with the various parties to make sure that we're in sync for the beginning -- for the launch of the program, which is still scheduled to be beginning of May.
We'll go next to Gary Ho at Desjardins Capital Market.
So when I look at your revenue guidance for '24 and assume you achieved your 18.4% EBITDA margin that implies a 10% to 15% EBITDA growth. But you did provide a 15% to 20% free cash flow per share guidance growth.
Just wondering the 5 percentage point delta, how are you able to better convert your EBITDA to free cash flow? Or is there some kind of onetime in the prior year free cash flow we should normalize? Just want your thoughts on the faster free cash flow per share growth versus the EBITDA growth?
Look, it's all for a lower number. And as we grow our EBITDA, our cost of carrying debt remains the same, right, in terms of pure dollars, because our debt number is remaining flat. We're using free cash flow to fund our acquisition activity. And so you get leverage to be -- to get a multiplier effect to your free cash flow per share.
Okay. And then my other question is when I look at your Q1 outlook comment, just remind me, do you get all your -- within your practices when you put through your new fee guide, do all those come through on Jan 1? Or are they implemented throughout January and February? Just want to gauge that 2% to 2.5% percent same practice revenue growth. Can you -- wondering if you can break down the price versus volume that you've seen so far in Q1?
Yes, that's a good question. So no, not all provinces are implemented Jan 1. I'd say, roughly 30% to 35% do begin in February. What I will say is as you come through the holidays, and the prices and put it in January, that ultimately doesn't really start probably until the third week of January as well.
So I'd say, again, 30% to 35% would be from February forward, and that would be, call it, a midpoint in February implementation with the, call it, 65% to 70% of the other provinces really happening at the end of January. So really being in place for roughly 2/3 of the quarter.
So as we stand today, all your practices would have put through the new fee guideline?
Yes. As we stand today here in March, March would be call it the first month that all the practices will have the increased pricing.
And that does conclude today's question-and-answer session and today's conference call. Thank you for your participation. You may now disconnect.