Full year Results, page-9

@kinggee

As @MarsC said, i think this discussion has been had before? If memory serves, your basic hypothesis is that the company will blow up once the dentists all leave after their agreed post-acquisition service period (which is typically 5 years) ends.

As i've said before, that hypothesis doesn't appear to hold water because the majority of the company's practices have been owned longer than 5 years. I know this because they owned 24 practices at the end of FY12, and since then they did the following by year:

FY13: bought one (Adelaide), sold zero
FY14: bought two (Cammeray & Brisbane), sold zero
FY15: bought zero, sold two (Tweed Heads & Warana)
FY16: bought one (Brendale), sold one (Springwood)
FY17: bought five (Stanmore, Waterloo, Townsville, Chatswood, Bathurst), sold zero

There are therefore (24 + 9 - 3) = 30 practices in the group. Given ONT started with 24 practices 5 years ago, and sold three along the way, i can deduce that 21 of the group's 30 practices have been owned longer than 5 years.

Over that 5-year period, ONT has paid a cumulative (18.5 + 14.5 + 19.2 + 22.5 + 23.0) = 97.7 cents in dividends, and EPS has gone from 26.6cps to 30.7cps. They have achieved this despite two very large negative external shocks to their business, being:

1) The end of the CDDS scheme in FY13 (which was a ~20% overnight hit to revenue); and
2) The mining sector collapse, which disproportionately impacts ONT given their practices are primarily located in regional Queensland.

So i think they've done rather well in light of the above. I also struggle to see the impending collapse of the business as you do; in fact, i think you're going to be very disappointed in FY18 when all the acquisitions made in FY17 make a full year's contribution to earnings, and organic growth returns to their regional Queensland practices now that the worst of the mining downturn is over.