How a $35m IPO bought 52 dental clinics in one go, why the roll-up collapsed into administration within three years, and what acquirers can learn.
Smiles Inclusive Ltd (ASX: SIL) was an Australian dental services company that operated a network of dental clinics under the Totally Smiles brand. It pursued a roll-up strategy in the fragmented dental industry.
Smiles Inclusive's growth strategy centred on acquisitions. The company raised capital to buy 52 dental practices at IPO and more thereafter, structuring deals so that former owner-dentists retained a stake and profit-share in their clinics.
It entered voluntary administration in late 2020 and was delisted from the ASX in 2022 after a prolonged suspension. The company's dental practice assets were sold in early 2021 to a private healthcare investor.
An investor who bought at the April 2018 IPO ($1.00 per share) saw the stock's value collapse to near zero by 2020. No dividends were ever paid. The Totally Smiles clinics continue to operate under new ownership, but public shareholders were left with a worthless business.
November 2025, when this case study was first published. Figures and company status reflect information available at that date.
Smiles Inclusive was co-founded by Mike Timoney, a Gold Coast-based entrepreneur with a dental industry background. Timoney had earlier built and sold another dental clinic group (Dental Partners, later Maven Dental) in 2013, giving him experience in practice consolidation.
The company was incorporated in 2017 and fast-tracked its growth to list on the Australian Securities Exchange on 27 April 2018. Its IPO raised $35m. This capital, combined with a bank debt facility, funded the acquisition of clinics.
At the time of the IPO, Smiles Inclusive started with 52 clinics (the initial acquisitions). Over the next year the portfolio grew modestly, reaching 56 clinics by mid-2019. Beyond a slight increase in site count, growth stalled as the company ran into integration problems.
By 2019 Smiles Inclusive had started shrinking, selling off a few practices to raise cash and focus on core clinics. Timoney and the first chairman were ousted by shareholders in 2019 amid poor results, and subsequent CEOs had short tenures as the crisis deepened before the company went into administration.
Like many healthcare roll-ups, Smiles Inclusive followed a strategy that included four elements.
Smiles Inclusive operated as a national dental group under the "Totally Smiles" brand. All acquired clinics were rebranded to present a consistent identity.
By combining the earnings of 50+ clinics, the group had meaningful scale from day one. Acquisitions were the engine of the business model. The initial bulk acquisition gave it a national footprint, and the plan was to keep acquiring clinics over time to expand market share and leverage overheads. Actual performance diverged greatly from forecasts once the business was operating.
The core principle was "partnering with dentists, not displacing them." The company generated revenue from dental treatments provided at its clinics, with income split between Smiles Inclusive and local dentists under a joint venture model. For example, Smiles Inclusive might own 60% of a clinic and the dentist 40%, with profits split in that proportion (specific terms varied).
Smiles Inclusive charged the practices service fees for central services such as marketing campaigns, IT systems and administrative support. Clinics operating under one corporate structure were expected to generate higher margins than they would independently, due to the economies of scale of a centralised back office.
In theory, this playbook can work if it fosters a culture where dentists focus on patients while a central team handles admin, marketing, supplier negotiations and technology upgrades to "modernise" traditionally small clinics.
The joint venture approach meant owner-dentists had a vested interest in growing their practice's profits (since they still got a share), aligning their incentives with the company.
Dentists were also meant to benefit from being part of a larger group with better resources and career development than standalone practices. The reality fell short. Internal culture suffered when promised support didn't materialise, and some dentists felt disempowered by corporate management.
The company's mandate was to consolidate the fragmented dental industry and become a leading national dental group. No single player had over 5% market share, and Smiles Inclusive saw this fragmentation as an opportunity. It aimed to acquire both single clinics and small chains, then integrate them under one brand.
Smiles Inclusive would buy majority control, inject capital as needed (for new equipment or renovations), implement its branding and systems, and thereby boost each clinic's growth and profitability, in theory.
Smiles Inclusive paid roughly 1.2–1.3× annual revenue for the clinics on average. The total price for the initial 52 practices was about $66m, against roughly $52m combined revenue (the prospectus forecast $51.9m revenue for FY17, pre-acquisition).
Rather than growing one clinic at a time organically (which is slow in healthcare), Smiles Inclusive bought dozens of businesses at IPO.
Smiles Inclusive targeted established dental practices that:
The timeline tells an interesting story. After the initial acquisitions, integrating 52 independent dental clinics into one company proved far more challenging than anticipated. The post-acquisition phase was marked by operational chaos and culture clashes before the eventual demise of the company.
In April 2018, Smiles Inclusive completed the acquisition of 52 dental practices simultaneously with its IPO.
From mid-2018 the focus was on integrating the newly acquired practices. No further acquisitions closed in 2018 after the IPO. Instead, the company invested in rebranding signage, rolling out a centralised IT system and hiring support staff for the head office.
Early signs of integration stress appeared. In October 2018, Smiles issued a trading update revising down its first-quarter performance and trimming FY19 guidance. It still added a few greenfield initiatives (a mobile dentistry division and four new sites).
After a series of profit downgrades, an investor revolt led to an extraordinary general meeting (EGM). On 22 May 2019, shareholders voted to remove founder Mike Timoney as a director, along with Chairman David Herlihy.
The new management formulated a "Turnaround Plan" focused on cost reduction and stabilising existing operations. Any thought of acquiring more clinics was shelved; conserving cash became the priority. Integration issues (disparate systems, cultural clashes) were addressed by standardising processes and cutting corporate overhead.
In August 2019, Smiles Inclusive released unaudited FY19 results showing a loss of $18.9m for the year. The board cited "unsuccessful integration of the business, a breakdown of relationships with some joint venture partners, and operational issues" as causes of the poor performance.
In late 2019, in a bid to raise cash and shed underperforming sites, Smiles Inclusive sold two dental practices to a competitor. Within 18 months of its IPO, the company had started undoing its expansion by selling assets: a clear signal the acquisition-led strategy had faltered.
Early 2020 brought continued operational challenges, compounded by COVID-19, which forced the temporary closure of dental clinics nationwide in April. Under a forbearance deal with NAB, Smiles had a deadline of 11 September 2020 to repay $12m of its debt (over half the outstanding). It missed the deadline and announced plans for an $8m capital raise in October 2020 to partially repay the bank. Before the rights issue could proceed, Smiles Inclusive was placed into voluntary administration. The board appointed Deloitte as administrators, as the company could not meet its debts, and its remaining valuable assets were auctioned or negotiated for sale.
On 3 March 2022, the ASX formally delisted Smiles Inclusive under listing rule 17.12, because its securities had been suspended for over two years.
Smiles Inclusive started with a sizeable war chest (over $60m of combined debt and equity available). But aggressive acquisitions and higher-than-expected costs burned through the cash rapidly. By one year in, the company was effectively undercapitalised: very little cash, lots of goodwill on the balance sheet, and lots of debt. The financing structure (a high initial debt load relative to actual earnings) left no margin for error.
When earnings missed forecasts badly, the leverage became crushing. Smiles Inclusive overleveraged its roll-up. Ultimately, the capital strategy (heavy use of debt, then dilutive emergency equity) resulted in severe dilution and then collapse, with lenders and new buyers picking up the pieces.
The primary source of acquisition funding was the IPO itself. Smiles raised $35m in equity in April 2018. After IPO costs, about $27m was available to deploy. This covered roughly 40% of the $66m outlay for the initial clinics, with the rest financed by debt.
Smiles Inclusive arranged a $36m debt facility with National Australia Bank (NAB) to help fund acquisitions and provide working capital. This likely consisted of a term loan for the acquisition payments and perhaps a revolving working capital line. The interest burden, while not huge at first, became significant as earnings turned negative.
To shore up its finances, Smiles launched a non-renounceable rights issue to existing shareholders in October 2019. The offer was priced at $0.16 per share, a steep discount to the IPO price that reflected the stock's decline. It raised $3.3m net of costs: a lifeline to keep the company solvent a little longer.
Through acquisitions, Smiles Inclusive went from essentially zero revenue (as a new company) to a ~$50m revenue company overnight. The expectation was that this revenue would grow under Smiles' management. That did not happen. By FY20, combined revenue (unaudited) may have grown a little with additional months of operation and minor expansion, but any growth was likely wiped out by clinic sales and COVID closures. Revenue did not scale beyond the initial acquisition boost.
The acquisitions were supposed to be profitable: the prospectus forecast NPAT of $5.8m in FY18. In reality, Smiles never generated a profit. FY18 (a partial year) came in below forecast; the company warned of a cash flow shortfall and ended up essentially break-even at EBITDA (excluding one-off costs). FY19 was disastrous, with a statutory net loss of $18.9m. A large part of that was a non-cash goodwill impairment ($13.7m), effectively admitting the acquisitions were overvalued.
EBITDA margin collapsed under Smiles Inclusive. The clinics themselves likely maintained decent margins (dental practices often have 15–20% EBITDA margins individually), but corporate overhead and integration troubles dragged consolidated EBITDA negative.
Smiles Inclusive floated at $1.00 per share in April 2018. After a brief uptick to around $1.10 on debut, the price started sliding as early results missed forecasts. By July 2018, when the company announced it would miss its prospectus cash flow target, the stock had dropped to about $0.90.
In early 2019, profit downgrade warnings and the brewing board fight sent the stock into freefall. By March 2019 it was trading around $0.30–0.40. By late 2019, SIL shares were in penny-stock territory, around $0.10 or less. The last traded price before suspension in early 2020 was around 3.5 cents, before the shares went to zero.
Chart (bubbles): Smiles Inclusive share price at key points
Source: Deal Advisory analysis. Late 2019 shown at $0.10; the shares traded at or below that level.
In January 2021 Genesis Capital, a Sydney-based private equity firm specialising in healthcare, was selected by the administrators as the successful bidder for Smiles Inclusive's operating assets. This included the majority of the dental practices (often referred to as the "Totally Smiles Dental Group" assets). Genesis agreed to take on the clinics and certain liabilities, providing continuity for the dental businesses. The administrators and creditors approved the transaction.
Genesis Capital acquired 26 practices outright from Smiles' subsidiary Totally Smiles Pty Ltd. In parallel, 21 practices were sold to individual purchasers (likely back to the original dentists or to third parties). A handful of clinics (approximately a dozen) were still unsold at that time, but ultimately the majority of clinics found new owners.
Genesis Capital continues to run those dental clinics privately. It retained the Totally Smiles brand and allowed key dentist partners to hold an interest in the new structure, hoping to avoid the mistakes Smiles made.
For the Smiles Inclusive corporate entity, the sale meant it had no operating assets left. The administrators used the proceeds to pay creditors as far as they would go. Unsecured creditors (possibly including some of the dentists who were owed money) received only cents on the dollar. The company itself was eventually removed from the stock exchange.
Smiles Inclusive's journey underscores that acquisitions are not a shortcut to success. They can just as easily fast-track a company to failure if fundamental business principles are not respected.
Growth by acquisition must be accompanied by integration capability, cultural harmony and prudent financial management. Without those, buying 50 companies at once might only multiply your problems 50-fold. Smiles Inclusive paid the price for that lesson, and its experience will likely be studied as a case of how not to manage a roll-up.
Acquiring 50+ small businesses at once is extremely challenging to integrate. Smiles Inclusive underestimated the complexity of unifying systems, cultures and processes across dozens of clinics. The promised synergies did not materialise; instead, integration was "unsuccessful" and led to unexpected costs and disruption.
The Smiles Inclusive story shows that in service industries, people are the real assets. The joint venture dentist partners were supposed to be the company's strength, but many became disillusioned and disengaged due to relationship breakdowns and poor communication from head office. This led to lost productivity and even open conflict.
Smiles Inclusive was chasing a real market opportunity. The Australian dental industry is highly fragmented and was ripe for consolidation, and demand drivers like an ageing population and increased dental spending are genuine. In theory, a well-executed roll-up could succeed (others, like 1300Smiles and Pacific Smiles, had done well). Smiles is a case where poor execution turned a promising opportunity into a failure.
Smiles Inclusive's fate underlines the danger of overly optimistic projections and high leverage. The company paid prices for acquisitions that assumed certain earnings and growth, and took on significant debt expecting rising profits. When reality missed forecasts by a wide margin, the goodwill had to be written off and the debt became unsustainable.
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