Park Dental Partners (PARK) grows Q2 2026 sales but EPS drops sharply
Park Dental Partners, Inc. reported modest top-line growth but sharply lower GAAP profitability for the quarter and year-to-date ended June 30, 2026. Revenue rose to $66.2 million for the quarter and $128.9 million for six months, up 5.1% and 5.6% year over year, driven by higher clinical hours, acquisitions and improved reimbursement rates. Same practice revenue increased 2.3% for the quarter and 3.2% year-to-date, with patient visits and patient retention essentially flat to slightly positive.
GAAP net income fell to $1.3 million for the quarter (down 47.5%) and $1.0 million year-to-date (down 76.8%) as share-based compensation of $7.1 million and higher operating costs compressed margins; diluted EPS declined to $0.22 for the quarter and $0.16 for six months. Adjusted EBITDA was relatively stable at $7.4 million for the quarter and $12.2 million year-to-date, but margins narrowed. The company maintained a solid cash balance of $24.4 million, total assets of $186.3 million, and shareholders’ equity of $29.8 million, while carrying $11.0 million of long-term debt, $69.2 million of deferred compensation and significant lease obligations. It agreed to acquire Village Family Dental DSO in 2026 for approximately $29.9 million in cash, 474,535 restricted shares valued at $9.2 million, and up to $6.9 million in contingent consideration.
Positive
- Revenue grew 5.6% year-to-date to $128.9 million, with Same Practice Revenue up 3.2%, indicating underlying demand resilience despite flat patient visit growth.
- The company signed an agreement to acquire Village Family Dental DSO for $29.9 million cash, 474,535 shares valued at $9.2 million and up to $6.9 million contingent, expanding into North Carolina.
- Leverage appears moderate with long-term debt of $11.0 million versus $29.8 million of equity and $24.4 million in cash, and no borrowings on the $15 million revolving line of credit.
Negative
- GAAP profitability deteriorated: quarterly net income fell 47.5% to $1.3 million, year-to-date net income declined 76.8% to $1.0 million, and diluted EPS dropped from $2.33 to $0.16.
- Adjusted EBITDA margin compressed from 10.7% to 9.4% year-to-date, as higher salaries, benefits and general and administrative expenses outpaced revenue growth.
- The company carries a large deferred compensation liability of $69.2 million and $11.0 million of long-term debt, including subordinated notes with an effective interest rate of 24.5%.
- One third-party payor accounts for about 30% of revenue and 26% of receivables, indicating customer concentration risk.
Key Figures
Key Terms
Adjusted EBITDA financial
Same Practice Revenue financial
Subordinated notes payable financial
Deferred compensation financial
Variable interest entities financial
Right of use asset financial
Earnings Snapshot
FAQ
How did Park Dental Partners (PARK) perform financially in Q2 2026?
What were Park Dental Partners (PARK) results for the first six months of 2026?
How is Park Dental Partners (PARK) using non-GAAP metrics like Adjusted EBITDA?
What major acquisition did Park Dental Partners (PARK) announce in 2026?
What is the debt and liquidity position of Park Dental Partners (PARK)?
How concentrated is Park Dental Partners’ (PARK) payer base?
How are Park Dental Partners’ (PARK) same practice metrics trending?
AI-generated analysis. How Rhea-AI works. Not financial advice.
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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
(Mark one)
Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
For the quarterly period ended
or
Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
For the transition period from to
(Commission File Number)
(Exact name of registrant as specified in its charter)
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(Jurisdiction of Incorporation) | (Registrant’s telephone number) |
(I.R.S. Employer Identification No.) | |
(Address of principal executive offices)
Securities registered pursuant to Section 12(b) of the Act:
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Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
The |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically, every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act.
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Large accelerated filer | ☐ | Accelerated filer | ☐ |
☒ | Smaller reporting company | ||
| Emerging growth company | ||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
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Common Stock | Common Shares, par value of $0.0001 per share |
Outstanding Shares at August 13, 2026 |
Table of Contents
PARK DENTAL PARTNERS, INC. AND SUBSIDIARIES
TABLE OF CONTENTS
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PART I -- FINANCIAL INFORMATION | | |
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Item 1. | Financial Statements (unaudited) | 2 |
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| Condensed Consolidated Balance Sheets | 2 |
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| Condensed Consolidated Statements of Operations | 3 |
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| Condensed Consolidated Statements of Shareholders' Equity (Deficit) | 4 |
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| Condensed Consolidated Statements of Cash Flows | 5 |
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| Notes to Condensed Consolidated Financial Statements | 6 |
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Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 22 |
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Item 3. | Quantitative and Qualitative Disclosures About Market Risk | 34 |
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Item 4. | Controls and Procedures | 34 |
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PART II -- OTHER INFORMATION | | |
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Item 1. | Legal Proceedings | 36 |
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Item 1A. | Risk Factors | 36 |
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Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 36 |
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Item 3. | Defaults Upon Senior Securities | 36 |
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Item 4. | Mine Safety Disclosures | 36 |
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Item 5. | Other Information | 36 |
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Item 6. | Exhibits | 37 |
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| Signatures | 38 |
Table of Contents
PART I -- FINANCIAL INFORMATION
Item 1.Financial Statements
PARK DENTAL PARTNERS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)
(in thousands, except share and per share amounts)
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| | At June 30, | | At December 31, | ||
| | 2026 | | 2025 | ||
ASSETS |
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CURRENT ASSETS: |
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Cash and cash equivalents | | $ | | | $ | |
Accounts receivable – net of allowance | |
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Dental supplies | |
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Income taxes receivable | |
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Prepaid expenses and other current assets | |
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Total current assets | |
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OTHER ASSETS: | |
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Property and equipment – net | |
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Cash surrender value of life insurance | |
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Intangible assets – net | |
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Goodwill | |
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Deferred income taxes | |
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Lease right of use asset | |
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Total other assets | |
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TOTAL ASSETS | | $ | | | $ | |
LIABILITIES AND EQUITY | |
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CURRENT LIABILITIES: | |
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Accounts payable and other accrued liabilities | | $ | | | $ | |
Payroll, benefits and short-term deferred compensation | | | | | | |
Accrued taxes | |
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Current debt | |
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Current portion of lease liability | |
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Deferred revenue and other current liabilities | | | | | | |
Total current liabilities | |
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LONG-TERM LIABILITIES: | |
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Lease liability | |
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Deferred compensation | | | | |
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Long-term debt | |
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Other long-term liabilities | |
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Total long-term liabilities | |
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Total liabilities | | $ | | | $ | |
Commitments and contingencies (Note 13) | |
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SHAREHOLDERS’ EQUITY: | |
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Common stock, $ | | $ | | | $ | |
Additional paid-in capital | |
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Treasury stock | |
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Accumulated shareholders’ deficit | |
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Total shareholders’ equity | |
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TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | | $ | | | $ | |
See accompanying notes to the condensed consolidated financial statements.
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PARK DENTAL PARTNERS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
(in thousands, except share and per share data)
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| | Three Months Ended | | Six Months Ended | ||||||||
| | June 30, | | June 30, | ||||||||
| | | 2026 | | | 2025 | | 2026 | | 2025 | ||
REVENUE | | $ | | | $ | | | $ | | | $ | |
COST OF SERVICES |
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Salaries and benefits |
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Dental supplies and Laboratory fees |
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Office occupancy |
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Other practice expenses | | | | | | | |
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Depreciation |
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TOTAL COST OF SERVICES |
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GROSS MARGIN |
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General and administrative expenses |
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Depreciation and amortization |
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OPERATING INCOME (LOSS) |
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INTEREST EXPENSE - NET |
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INCOME (LOSS) BEFORE TAX |
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PROVISION/(BENEFIT) FOR INCOME TAX |
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NET INCOME |
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Earnings per share: |
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Basic |
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Diluted |
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Basic weighted-average number of common shares outstanding |
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Diluted weighted-average number of common shares outstanding |
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See accompanying notes to the condensed consolidated financial statements.
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PARK DENTAL PARTNERS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (DEFICIT) (unaudited)
(in thousands)
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| | | PDPI | | | | | | Accumulated | | | Additional | | | Total |
| | | Common | | | Treasury | | | Shareholders’ | | | Paid-in | | | Shareholders’ |
| | | Stock | | | Stock | | | (Deficit) | | | Capital | | | Equity / (Deficit) |
Balances - December 31, 2025 |
| $ | |
| $ | ( |
| $ | ( |
| $ | |
| $ | |
Share based compensation |
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Net income (loss) |
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Balances - March 31, 2026 |
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Share based compensation |
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Net income (loss) |
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Balances - June 30, 2026 |
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| $ | ( |
| $ | ( |
| $ | |
| $ | |
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| | | PDPI | | | | | | Accumulated | | | Additional | | | Total |
| | | Common | | | Treasury | | | Shareholders’ | | | Paid-in | | | Shareholders’ |
| | | Stock | | | Stock | | | (Deficit) | | | Capital | | | (Deficit) |
Balances - December 31, 2024 |
| $ | |
| $ | ( |
| $ | ( |
| $ | |
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Share repurchase |
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Net income (loss) |
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Balances - March 31, 2025 |
| $ | |
| $ | ( |
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Share repurchase |
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Net income (loss) |
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Balances - June 30, 2025 |
| $ | |
| $ | ( |
| $ | ( |
| $ | |
| $ | ( |
See accompanying notes to the condensed consolidated financial statements.
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PARK DENTAL PARTNERS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
(in thousands)
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| | Six Months Ended | ||||
| | June 30, | ||||
| | 2026 | | 2025 | ||
CASH FLOWS FROM OPERATING ACTIVITIES: |
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Net income | | $ | | | $ | |
Adjustments to reconcile net income to net cash flows from operating activities: | |
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Depreciation and amortization | |
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Deferred income taxes | |
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Change in cash surrender value of life insurance | |
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Loss on disposal of property and equipment | |
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Noncash lease expense | |
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Share based compensation | |
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Changes in operating assets and liabilities | |
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Accounts receivable | |
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Income taxes receivable | |
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Prepaid expenses and other current assets | |
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Accounts payable and other accrued liabilities | |
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Payroll, benefits and deferred compensation | | | | | | |
Accrued taxes | |
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Deferred revenue and other liabilities | | | | | | |
Net cash flows from operating activities | |
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NET CASH FLOWS USED IN INVESTING ACTIVITIES: | |
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Purchases of property and equipment | | $ | ( | | $ | ( |
Life insurance premiums paid | |
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Payments for purchases of dental practices | |
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Loans to related parties evidenced by promissory notes | | | ( | | | — |
Net cash flows used in investing activities | |
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CASH FLOWS USED IN FINANCING ACTIVITIES: | |
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Gross borrowings on line of credit | | $ | — | | $ | |
Gross repayments on line of credit | |
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Dental practice purchase payments on deferred notes | |
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Net change in checks issued in excess of cash balances | |
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Payments of long-term debt | |
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Payments of capital lease obligation | |
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Cash paid for share repurchase | |
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Net cash flows used in financing activities | |
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NET CHANGE IN CASH AND CASH EQUIVALENTS | |
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CASH AND CASH EQUIVALENTS – Beginning of period | |
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CASH AND CASH EQUIVALENTS – End of period | | $ | | | $ | |
SUPPLEMENTAL CASH FLOW INFORMATION: | |
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Schedule of interest and income taxes paid (received): | | | | | | |
Interest | | $ | | | $ | |
Income taxes | | | ( | | | |
Non-cash transactions: | | | | | | |
Purchases of property and equipment in accounts payable | | | | | | |
See accompanying notes to the condensed consolidated financial statements.
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PARK DENTAL PARTNERS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
(Amounts in thousands, except share and per share amounts)
Nature of Business — We are a dental resource organization that provides administrative and other business support services to affiliated general and multi-specialty dental practices. We currently have exclusive long-term agreements with the following affiliated dental practices — PDG, P.A., Dental Specialists of Minnesota, PLLC and Orthodontic Specialists of Minnesota, PLLC, (together “affiliated dental practices”). We currently support
Basis of presentation — The accompanying condensed consolidated financial statements, including the balance sheet as of June 30, 2026, statements of operations and statements of stockholders’ equity, for the three and six months ended June 30, 2026 and 2025, and statements of cash flows for the six months ended June 30, 2026 and 2025, are unaudited. The condensed consolidated financial statements and accompanying notes are presented as permitted by Form 10-Q and do not contain certain information included in the Company’s annual consolidated financial statements and notes. The information included in this Quarterly Report should be read in conjunction with Part I, Item 2 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and consolidated financial statements and notes thereto for the fiscal year ended December 31, 2025 included in the Company’s Annual Report. In the opinion of management, these condensed financial statements reflect all adjustments, which include normal recurring adjustments, necessary for the fair statement of the Company’s financial position as of June 30, 2026 and the results of operations and cash flows for the six months ended June 30, 2026 and 2025. The financial data and other information disclosed in these notes related to the three and six months ended June 30, 2026 and 2025 are also unaudited. The results for the three and six months ended June 30, 2026 and 2025 are not necessarily indicative of results to be expected for the year ending December 31, 2026, any other interim periods, or any future year or period.
Segment Reporting — We manage our operations on a company-wide basis, rather than at a product or business unit level, thereby making determinations as to the allocation of resources as
Our chief executive officer and chairman is the chief operating decision maker (“CODM”). The CODM uses financial information at the consolidated level, including net income, gross margin, and Adjusted Earnings Before Interest, Tax, Depreciation and Amortization (“Adjusted EBITDA”), to assess performance and make key operating decisions, including approving annual operating plans, expanding into new markets, or pursuing business acquisitions. Net income and Adjusted EBITDA are used to monitor our actual results against our budget, as well as trends compared to historical performance, which are the CODM’s primary considerations to assess performance. There are no segment managers held accountable by the CODM for operating results at levels or components below the consolidated unit level. The measure of segment assets is reported on the balance sheet as total consolidated assets and our CODM
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allocates assets at that level. The CODM has overall responsibility and accountability for the profitability and cash flows of the Company.
Specified Expense Items — Significant expense information provided to the CODM is consistent with our condensed consolidated statements of operations, as supplemented by the specified expense items provided to the CODM and disclosed in the table below:
| | | | | | | | | | | | |
| | For the three months ended | | For the six months ended | ||||||||
| | June 30, | | June 30, | ||||||||
| | 2026 | | 2025 | | 2026 | | 2025 | ||||
| | (in thousands) | | (in thousands) | ||||||||
Salaries and Benefits | | | | | | | | | | | | |
Doctor compensation and benefits | | $ | | | $ | | | $ | | | $ | |
Clinical team member salaries and benefits | |
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Total Salaries and Benefits | | $ | | | $ | | | $ | | | $ | |
Other Practice Expenses | |
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MinnesotaCare tax | | $ | | | $ | | | $ | | | $ | |
Other expenses of practices(1) | |
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Total – Other Operating expense | | $ | | | $ | | | $ | | | $ | |
| (1) | Other expenses of practices include software and subscription costs, repairs and maintenance costs, recruiting, travel and entertainment, insurance, and other operating costs. |
Other Current Liabilities and Other Long-Term Liabilities — Other current liabilities and other long-term liabilities include insurance and patient refunds, finance lease obligations, deferred rent, and practice acquisition notes. Practice acquisition notes are generally payable between
A summary of the activity for the Company’s estimated liability for outstanding practice acquisition notes for the six months ended June 30, 2026 and 2025, were as follows:
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| | 2026 | | 2025 | ||
| | (in thousands) | ||||
Practice acquisition notes – January 1 | | $ | | | $ | |
Additions related to acquisitions | |
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Reinstatement | | | — | | | |
Payments advanced to seller | | | ( | | | ( |
Practice acquisition notes – June 30 | | $ | | | $ | |
Revenue Recognition — Our affiliated dental practices generate their revenue from services provided to patients. Generally, dental practices bill patients and third-party payors after the services are performed. Revenue is recognized as performance obligations are satisfied. Patient care service revenue is reported at amounts that reflect the consideration affiliated dental practices estimate to be entitled in exchange for providing patient care. These consideration amounts are due from patients and third-party payors (including dental insurers and government sponsored programs), and others and include variable consideration. Our affiliated dental groups determine the transaction price, which involves significant estimates and judgment, based on standard charges for goods and services provided, reduced by contractual allowance provided to third-party payors, discounts provided to uninsured patients in accordance with our policy and implicit price concessions based on its historical collection experience for each patient portfolio based on payor classes and service types. We regularly review data about these major payor sources of revenue in evaluating the sufficiency of the contractual allowance and implicit price concessions. Performance obligations are determined based on the nature of the
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services provided. For general dental care services, the performance obligations are satisfied as the patient simultaneously receives and consumes the benefits provided as the services are performed. Revenue from performance obligations satisfied over time is recognized based on total expected or actual services allocated to each performance obligation. Generally, performance obligations satisfied over time relate to patients receiving orthodontic services. For these services we measure the performance obligation from initial execution of the contract to the point when there are no further services required for the patient. Typically, revenue is recognized within 12-months of the commencement of services. In addition, our affiliated dental practices offer a direct-to-consumer dental care subscription for patients without dental insurance, which provides reduced costs for patient care over a 12-month period. Materially all deferred revenue at the end of a fiscal year is recognized within the subsequent 12-month period. The subscription revenue is deferred and recognized over the period of care. We believe that these methods provide an accurate depiction of the transfer of services over the term of the performance obligation based on the inputs needed to satisfy the obligations.
Per the administrative resource agreements, Park Dental Partners, Inc. bills the affiliated dental practices for business and administrative services. However, this revenue and related expenses are eliminated in the financial statement consolidation process.
Our affiliated dental practices have agreements with third-party payors that typically provide for payments at amounts less than standard established charges. A summary of the payment arrangements with major third-party payors consists of the following:
| ● | Medicaid: services are generally paid at prospectively determined rates per charge, per occasion of service, or per covered member. |
| ● | Commercial insurance: payment agreements with certain insurance carriers provide for payment using prospectively determined rates per charge, discounts from established charges, and fee schedules. |
Our patient service revenue, net of allowances, implicit price concessions and discounts, recognized from these major payor sources and patients were as follows:
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| | For the three months ended | | For the six months ended | ||||||||
| | June 30, | | June 30, | ||||||||
| | 2026 | | 2025 | | 2026 | | 2025 | ||||
| | (in thousands) | | (in thousands) | ||||||||
Third-party payors | | $ | | | $ | | | $ | | | $ | |
Patients | |
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Total all payors | | $ | | | $ | | | $ | | | $ | |
Patient Receivables and Credit Policy — Patient accounts receivable are uncollateralized patient obligations that are stated at the amount we expect to collect from outstanding balances. These obligations are primarily from local patients most of whom are insured under third-party payor agreements. Park Dental Partners, Inc. provides billing and collection services on behalf of the affiliated dental practices. Park Dental Partners, Inc. bills third-party payors on the patients’ behalf, or if a patient is uninsured, the patient is billed directly. Once claims are settled with the third-party payors, patients are billed for the remaining balance. Payments on accounts receivable are applied to the specific claim identified on the remittance advice or statement. Park Dental Partners, Inc. and its affiliated dentists have a policy of assessing a finance charge of
Carrying amounts of accounts receivable are reduced by contractual allowances and implicit price concessions that reflect management’s best estimate of the amounts that will not be collected. We provide for contractual adjustments under terms of third-party reimbursement agreements through a reduction of gross revenue and a credit to a contractual valuation allowance. In addition, we provide for probable uncollectible amounts, primarily for uninsured patients and amounts patients are personally responsible for, through a reduction in gross revenue and a credit to a valuation allowance based on our assessment of historical collection experience, trends for each of its major payor sources of revenue, and the current status of individual accounts. Balances that are still outstanding after we have used reasonable
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collection efforts are written off through a charge to the valuation allowance and credit to patient accounts receivable. Contractual allowances, concessions, and reserves for uncollectible accounts were $
Deferred Revenue — Deferred revenue is comprised of performance obligations satisfied over time which have not yet been completed, primarily related to orthodontic and dental subscription services.
A summary of the Company’s changes in deferred revenue for the six months ended June 30, 2026 and 2025, were as follows:
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| | 2026 | | 2025 | ||
| | (in thousands) | ||||
Deferred revenue - January 1 | | $ | | | $ | |
Recognition of prior deferred revenue in the current period | |
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Deferral of revenue | |
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Deferred revenue - June 30 | | $ | | | $ | |
Recently Adopted Accounting Pronouncements — The Company has not adopted any new accounting standards in the three and six months ended June 30, 2026.
Recently Issued Accounting Pronouncements — In November 2024, the FASB issued ASU 2024-03, Income Statement-Reporting Comprehensive Income- Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses (“ASU 2024-03”), which requires the disaggregation, in the notes to the financial statements, of certain cost and expense captions presented on the face of the Company’s Statement of Operations, to provide enhanced transparency to investors. The update may be applied either prospectively or retrospectively. ASU 2024-03 is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted. We are currently evaluating the impact ASU 2024-03 will have on our disclosures.
During the six months ended June 30, 2026, our affiliated dental practices acquired
The results of operations and financial condition of the acquired entities have been included in our condensed consolidated results as of the date of acquisition. For the three and six months ended June 30, 2026 and 2025, the acquired entity’s impact on revenues and net earnings were not material. Unaudited pro forma revenues and net earnings for the three and six months ended June 30, 2026 and 2025, as if the business combinations had occurred on the first of the year, were immaterial for the periods.
Goodwill arising from acquisitions consists largely of the synergies and economies of scale expected from increased revenue and cost reductions. We anticipate that acquired goodwill will be deductible for tax purposes.
The following table summarizes the consideration paid, assessment of assets acquired and liabilities assumed, and resulting goodwill. Management’s measurement of the fair values of acquired assets and assumed liabilities and purchase price allocation is preliminary and subject to finalization when valuations and final assessments of the fair value of acquired assets and assumed liabilities are completed in the measurement period (up to one year from the
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acquisition date). There can be no assurance that such final assessments will not result in material changes from the preliminary purchase price allocations, and such changes may result in changes in the opening balance sheet value of goodwill. The Company’s estimates and assumptions are subject to change during the measurement period as the Company finalizes the valuations of certain tangible and intangible assets acquired, and liabilities assumed. We expect to complete the purchase price allocation for the 2026 acquisitions during fiscal year 2026.
Acquisitions completed in the six months ended June 30, 2026 and 2025:
| | | | | | |
| | As of June 30, | ||||
| | 2026 | | 2025 | ||
| | (in thousands) | ||||
Dental supplies | | $ | | | $ | |
Property and equipment | |
| | |
| |
Right of use lease asset | | | | | | |
Patient lists | |
| | |
| |
Goodwill | |
| | |
| |
Right of use lease liability | | | ( | | | ( |
Liabilities assumed | | | ( | | | ( |
Assets acquired and liabilities assumed | | $ | | | $ | |
Total purchase price | | $ | | | $ | |
Issuance of amounts due to sellers – acquisitions | |
| ( | |
| ( |
Cash paid in business combinations | | $ | | | $ | |
On August 7, 2026, Park Dental Partners, Inc., entered into an agreement to acquire Village Family Dental DSO and affiliate with the Village Family Dental professional practices for approximately $
Disaggregated Revenue Information — We view the following disaggregated disclosures as useful to understanding the composition of revenue:
| | | | | | | | | | | | |
| | For the three months ended | | For the six months ended | ||||||||
| | June 30, | | June 30, | ||||||||
| | 2026 | | 2025 | | 2026 | | 2025 | ||||
| | (in thousands) | | (in thousands) | ||||||||
General dentistry | | $ | | | $ | | | $ | | | $ | |
Multi-Specialty dentistry | |
| | |
| | |
| | |
| |
Revenue | | $ | | | $ | | | $ | | | $ | |
Financial instruments that potentially subject us to possible credit risk consist principally of accounts receivable and cash deposits in excess of insured limits.
Accounts receivable consist of amounts due from patients, their insurers, or governmental agencies for health care provided to the patients. The majority of patients are from Minnesota, Wisconsin, and Arizona.
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The mix of receivables from patients and third-party payors are as follows:
| | | | | | |
| | As of | ||||
| | June 30, 2026 | | December 31, 2025 | ||
| | (in thousands) | ||||
Patients |
| | % | | | % |
Third-party payors |
| |
| | | |
Totals |
| | % | | | % |
One third-party payor and their affiliated entities accounted for approximately
Accounts receivable from one third-party payor and their affiliated entities accounted for approximately
We maintain a depository relationship with
| | | | | | |
| | As of | ||||
| | June 30, 2026 | | December 31, 2025 | ||
| | (in thousands) | ||||
Land | | $ | | | $ | |
Buildings | |
| | |
| |
Computer equipment | |
| | |
| |
Furniture and fixtures, and signage | |
| | |
| |
Dental equipment | |
| | |
| |
Leasehold improvements | |
| | |
| |
Total property and equipment | |
| | |
| |
Less accumulated depreciation | |
| | |
| |
Property and equipment – net | | $ | | | $ | |
Depreciation expense in the condensed consolidated statement of operations was $
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Changes in the carrying amount of Goodwill for the six months ended June 30, 2026 and 2025, consisted of the following:
| | | | | | |
| | 2026 | | 2025 | ||
| | (in thousands) | ||||
Goodwill | | | | | | |
Balance – January 1 | | $ | | | $ | |
Goodwill acquired | |
| | |
| |
Measurement period adjustments | | | | | | — |
Balance - June 30 | | $ | | | $ | |
| | | | | | | | | |
| | June 30, 2026 | |||||||
| | Gross Carrying | | Accumulated | | Net Carrying | |||
| | Amount | | Amortization | | Value | |||
| | (in thousands) | |||||||
Amortizable intangible assets: | | | | | | | | | |
Trademarks | | $ | | | | | | $ | — |
Patient lists | |
| | |
| | |
| |
Total intangible assets | | $ | | | $ | | | $ | |
| | | | | | | | | |
| | December 31, 2025 | |||||||
| | Gross Carrying | | Accumulated | | Net Carrying | |||
| | Amount | | Amortization | | Value | |||
| | (in thousands) | |||||||
Amortizable intangible assets: | | | | | | | | | |
Trademarks | | $ | | | $ | | | $ | — |
Patient lists | |
| | |
| | | | |
Total intangible assets | | $ | | | $ | | | $ | |
Trademark and patient list amortization expense was $
Amortization expense on amortizable intangible assets for each of the next five years and thereafter is as follows:
| | | |
| | (in thousands) | |
Remaining 2026 | | $ | |
2027 | |
| |
2028 | |
| |
2029 | |
| |
2030 | |
| |
Thereafter | |
| |
Total | | $ | |
Our interim tax provision is determined using an estimate of the annual effective tax rate, adjusted for discrete items, if any, which are taken into account in the relevant period. Each quarter, we update an estimate of the annual effective tax rate, and if the estimated tax rate changes, we make a cumulative adjustment.
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We recorded an income tax (benefit) of $(
The changes in the effective tax rate for the three and six months ended June 30, 2026 compared to the prior year are primarily driven by higher discrete deductible expenses associated with vesting of share awards in the three and six months ended June 30, 2026.
At June 30, 2026, we had a $
Long-term debt consisted of the following:
| | | | | | |
| | As of | ||||
| | June 30, 2026 | | December 31, 2025 | ||
| | (in thousands) | ||||
Bank term loan | | $ | | | $ | |
Subordinated notes payable | |
| | |
| |
Notes payable to former dentist shareholders for the redemption of shares | |
| | |
| |
Totals | |
| | |
| |
Less – current maturities | |
| | |
| |
Long-term portion | | $ | | | $ | |
Scheduled principal payments on long-term debt at June 30, 2026, are summarized as follows:
| | | |
| | (in thousands) | |
Remaining 2026 | | $ | |
2027 | | | |
2028 | | | |
2029 | | | |
2030 | | | — |
Thereafter | | | |
Total | | $ | |
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Bank Term Loan
The Company maintains a $
Subordinated Notes Payable
The Company has outstanding subordinated notes payable with principal due at maturity and interest payable quarterly through October 1, 2037. Interest on the notes is equal to the greater of (i)
Notes Payable – Former Dentist Shareholder
The Company has issued notes payable to former dentist shareholders in connection with the redemption of shares occurring prior to the Company’s initial public offering. The notes are payable in equal monthly installments, with
Park Dental Partners, Inc. and its affiliated dental practices have
| ● | Active Deferred Compensation Plans: |
Non-qualified Deferred Compensation Plan — The non-qualified deferred compensation plan provides participants the opportunity to defer compensation on a pretax basis. Participants are immediately
At June 30, 2026, the total deferred compensation liability related to the non-qualified plan was $
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At December 31, 2025, the total deferred compensation liability related to the non-qualified plan was $
| ● | Deferred Compensation Plans — Inactive: |
We have several deferred compensation plans which have been closed to new participants and service crediting which are described collectively as Deferred Compensation Plans — Inactive.
Professional Employee Compensation Plan (the ‘PEC Plan’) — The PEC Plan provided for a deferred compensation benefit to certain employees of affiliated dental practices in the event of separation from service. The PEC Plan was frozen as of December 31, 2022, and
Equity Accumulation Plan (the ‘Accumulation Plan’) — The Accumulation Plan provided for benefit payments to participants after termination of employment because of death, permanent disability or attainment of age 65. Alternatively, the vested value of the participant’s account is paid following termination of employment at or after age
Phantom Equity Plan (‘Phantom Plan’) — The Phantom Plan provided certain clinical and nonclinical leaders with phantom equity awards. The plan provides for participants to receive benefits upon termination of employment, disability, death, a change-in-control event, as defined, or via a qualified in-service distribution election. The plan provides for annual installment payments over five years after separation of service, or upon in-service distribution election. The Phantom Plan was closed to new participants and service crediting or earnings in 2022.
At June 30, 2026 and December 31, 2025, the total deferred compensation liability related to the phantom equity plan was $
The balance of Deferred compensation – Inactive, which includes the PEC Plan, Accumulation Plan, and the Phantom Plan, was $
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| | | | | | | | | | | | |
| | Deferred Compensation – Inactive | ||||||||||
| | As of June 30, 2026 | ||||||||||
| | Professional | | | | | | | | | | |
| | Employee | | Equity | | | | | Deferred | |||
| | Compensation | | Accumulation | | Phantom | | Compensation Plans – | ||||
| | Plan | | Plan | | Equity Plan | | Inactive | ||||
| | (in thousands) | ||||||||||
Deferred compensation | | $ | | | $ | | | $ | | | $ | |
Payroll, benefits and short-term deferred compensation | |
| | |
| | |
| | |
| |
Total Liability | | $ | | | $ | | | $ | | | $ | |
| | | | | | | | | | | | |
| | Deferred Compensation – Inactive | ||||||||||
| | As of December 31, 2025 | ||||||||||
| | Professional | | | | | | | | | | |
| | Employee | | Equity | | | | | Deferred | |||
| | Compensation | | Accumulation | | Phantom | | Compensation Plans – | ||||
| | Plan | | Plan | | Equity Plan | | Inactive | ||||
| | (in thousands) | ||||||||||
Deferred compensation | | $ | | | $ | | | $ | | | $ | |
Payroll, benefits and short-term deferred compensation | |
| | |
| | |
| | |
| |
Total Liability | | $ | | | $ | | | $ | | | $ | |
Park Dental Partners, Inc. shares are comprised of
Restricted stock units granted commencing in June 2026 do not carry voting rights unless and until settled in shares of common stock.
In connection with the Company's initial public offering completed on December 4, 2025, the Company issued warrants to the underwriter’s representative to purchase up to
The following table summarizes unrestricted common shares outstanding:
| | | | | |
| | | | | |
|
| As of | |||
| | June 30, 2026 | | December 31, 2025 | |
Total Common unrestricted shares | | |
| | |
Restricted shares (“RSs”) — Restricted Park Dental Partners, Inc. shares issued prior to our initial public offering (“IPO”) vested
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Subsequent to our IPO we have changed our accounting policy regarding the vesting of restricted share awards. As a result of this policy change, share based compensation related to those awards granted after our IPO is recognized using the straight-line recognition method.
Restricted stock awards granted after the IPO and before June 2026 vest at the rate of
The following table summarizes activity in unvested restricted stock awards and RSUs for the six months ended June 30, 2026:
| | | | | |
| | | | Weighted | |
| | Number of | | Average Grant | |
| | RSs | | Date Fair Value | |
| | (in thousands) | | | |
Unvested awards - January 1 |
| | |
| |
RSs and RSUs granted | | | | | |
Awards vested |
| ( | |
| |
Awards forfeited | | ( | | | |
Unvested awards - June 30 |
| | | $ | |
The following table summarizes the mix of unvested restricted stock awards and restricted stock units outstanding as of June 30, 2026:
| | |
| | Number of |
| | RSs |
| | (in thousands) |
Restricted share awards | | |
Restricted share units | | |
Total | | |
Unrecognized compensation expense related to outstanding restricted stock awards and restricted stock units at June 30, 2026 was approximately $
Unrestricted Stock Grant —There were
Employee Stock Purchase Plan (“ESPP”) — The Company maintains an Employee Stock Purchase Plan that allows eligible employees to purchase shares of common stock at a discount through payroll deductions over offering periods. The ESPP was approved in 2025, and up to
Subsequent to June 30, 2026, the Company issued
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The following table sets forth the computation of basic and diluted earnings per share attributable to common shareholders:
| | | | | | | | | | | | |
| | For the Three Months Ended | | For the Six Months Ended | ||||||||
| | June 30, | | June 30, | ||||||||
| | 2026 | | | 2025 | | 2026 | | 2025 | |||
| | (in thousands, except per share amounts) | ||||||||||
Net income available to PARK common shareholders |
| $ | | | $ | | | $ | | | $ | |
Earnings per share attributable to PARK common shareholders: |
|
| |
|
| |
|
| | |
| |
Basic |
| $ | | | $ | |
| $ | | | $ | |
Diluted |
| $ | | | $ | |
| $ | | | $ | |
Weighted-average number of common stock shares outstanding |
|
| | |
| |
|
| | |
| |
Dilutive impact of share based awards and warrants |
|
| | |
| — |
|
| | |
| — |
Weighted-average number of common stock shares outstanding – diluted | |
| | |
| |
|
| | |
| |
Anti-dilutive restricted stock excluded from diluted EPS computation | |
| — | |
| |
|
| — | |
| |
Operating Leases
The Company leases all but one of its locations. Excluding renewal options that are not reasonably certain to be exercised, our leases have remaining contractual terms that range from
Lease Cost — Lease cost has been included within Office occupancy on our condensed consolidated statements of operations and consisted of the following:
| | | | | | | | | | | | |
| | For the Three Months Ended | | For the Six Months Ended | ||||||||
| | June 30, | | June 30, | ||||||||
| | 2026 | | 2025 | | 2026 | | 2025 | ||||
|
| (in thousands) | | (in thousands) | ||||||||
Lease Cost |
| $ | |
| $ | |
| $ | | | $ | |
Lease cost associated with operating leases and short-term leases (i.e., leases with an initial term of 12 months or less) is recognized on a straight-line basis from the date we take possession of the property through the end of the lease term. Variable lease payments not recognized in the measurement of operating lease liabilities are expensed as incurred.
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Operating Right of Use Assets and Lease Liabilities — Operating right of use assets and lease liabilities included on our condensed consolidated balance sheets were as follows:
| | | | | | |
| | As of | ||||
| | June 30, 2026 | | December 31, 2025 | ||
| | (in thousands) | ||||
Lease right of use assets – operating leases | | $ | | | $ | |
Lease liabilities: | |
| | |
| |
Current operating leases | | $ | | | $ | |
Non-current operating leases | |
| | |
| |
Total lease liabilities | | $ | | | $ | |
Remaining Lease Terms and Discount Rates — We are required to recognize right of use assets and lease liabilities for our operating leases. In order to establish our lease obligation, we are required to determine the incremental borrowing rate, which is used to discount future lease payments. The incremental borrowing rate is defined as the rate of interest that a lessee would have to pay to borrow over a similar term, with similar security, the funds necessary to purchase the underlying asset in a similar economic environment. Since the interest rate implicit in our lease contracts is typically not readily determinable, we reviewed existing debt financing arrangements and the types of leases as well as the lease term and type of collateral to calculate the incremental borrowing rate.
The weighted-average remaining lease terms and discount rates associated with our operating lease liabilities were as follows:
| | | | | | | |
| | | As of | ||||
| | | June 30, 2026 | | December 31, 2025 | ||
Weight-average discount rate-operating leases | | | | % | | | % |
Weight-average remaining lease term-operating leases | | | years | | years | ||
Supplemental Cash Flow Information — Supplemental cash flow information associated with our operating leases is as follows:
| | | | | | | | | | | | |
| | For the Three Months Ended | | For the Six Months Ended | ||||||||
| | June 30, | | June 30, | ||||||||
| | 2026 | | 2025 | | 2026 | | 2025 | ||||
| | (in thousands) | | (in thousands) | ||||||||
Non-cash information – right of use assets obtained in exchange for lease liabilities – operating leases | | $ | | | $ | | | $ | | | $ | |
| | | | | | | | | | | | |
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Maturities of Operating Lease Liabilities — Scheduled minimum lease payments under noncancelable operating leases with initial or remaining lease terms in excess of one year at June 30, 2026, are summarized as follows:
| | | |
| | (in thousands) | |
Remaining 2026 | | $ | |
2027 | |
| |
2028 | |
| |
2029 | |
| |
2030 | |
| |
Thereafter | |
| |
Total lease payments | |
| |
Less liability accretion | |
| ( |
Present value of lease liabilities | | $ | |
Legal Contingencies — We and our affiliated dental practices have been named as a defendant in lawsuits from time to time in the normal course of business, primarily for employment liability, alleged negligence in care or general liability and contractual business disputes. At the present time, we do not believe any pending lawsuits will have a material adverse effect on our operating results, cash flows, liquidity or financial position
In 2024, multiple claims were filed against us in state and federal courts in Minnesota based on a data breach event. Subsequently, certain of the claims were dismissed; however, the putative class action suit in Minnesota District Court entitled, In re Park Dental Data Breach Litigation, Case No. 27-CV-24-12335, Fourth Judicial District, County of Hennepin, State of Minnesota continues. We presently believe the settlement of this matter is probable. We expect the settlement, net of insurance recoveries, will have an immaterial impact to our financial results as we anticipate the costs to settle will be fully recovered under our insurance policy coverage.
Our affiliated dental practices employ dentists, contract with payors, and provide dental services to patients in Minnesota, Wisconsin, and Arizona. Park Dental Partners, Inc. provides a wide range of support services to the affiliated dental practices. Activities include but are not limited to operational support of clinical facilities, marketing, information technology infrastructure, and the sourcing and managing of dental plan contracts.
We evaluated whether we have a variable interest in our affiliated dental practices, whether the practices are VIEs, and whether we have a controlling financial interest in them. We have concluded that we have variable interests in the affiliated dental practices on the basis of our Administrative Resources Agreements which provide for reimbursement of costs and management fees payable to us in exchange for providing management and administrative services related to the growth of the patient population, development of all necessary policies and operating procedures, including development and implementation of clinical practice guidelines, and quality assurance and utilization management programs. We have concluded that the success or failure of the dental resource organization (DRO) in conducting these support activities will most significantly impact the economic performance of our affiliated dental practices. In addition, our variable interests in these practices provide us with the right to receive benefits that could potentially be significant. We also note there are no assets of the affiliated dental practices that cannot be used to settle obligations of the Company, and there are no liabilities of the affiliated dental practices for which creditors do not have recourse to the general credit of Park Dental Partners, Inc. as the primary beneficiary. The single member of each of the respective affiliated dental practices is a shareholder of Park Dental Partners, Inc. As a result of this analysis, Park Dental Partners, Inc. concluded that it is the primary beneficiary of the affiliated dental practices and therefore consolidates their balance sheets, results of operations and cash flows. We perform a qualitative assessment of VIEs on an ongoing basis to determine if we continue to be the primary beneficiary.
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The combined assets and liabilities of the affiliated dental practices of PDG, TDS and The Dental Specialists Orthodontics which are included within the condensed consolidated financial statements of Park Dental Partners, Inc. are as follows:
| | | | | | |
| | As of | ||||
| | June 30, 2026 | | December 31, 2025 | ||
| | (in thousands) | ||||
TOTAL ASSETS | | $ | | | $ | |
TOTAL LIABILITIES | | $ | | | $ | |
Due to the nature of the minority ownership in the affiliated dental practices, whereby a single designated doctor holds one share of the affiliate entity, but has no right to receive any economic benefit, or interest in the profits generated by the affiliated dental practices, we have not assigned any value to the non-controlling interests in the condensed consolidated operations.
We have lease agreements with entities that are minority owned by certain practicing dentists and officers of the Company. Total lease liabilities for these properties were $
As described in Note 9 — Long-term debt, we have outstanding subordinated notes payable. A portion of these subordinated notes are due to certain related parties, the principal balance of which is $
In connection with the vesting of certain equity awards upon the consummation of the Company’s initial public offering, the Company made loans to
We have evaluated events occurring subsequent to the date of the condensed consolidated financial statements through August 13, 2026, which is the date the condensed consolidated financial statements were issued.
On July 13, 2026, the Company issued
On August 7, 2026, Park Dental Partners, Inc., entered into an agreement to acquire Village Family Dental DSO and affiliate with the Village Family Dental professional practices. Refer to Note 2 – Acquisitions for further information.
No other events have occurred that would require adjustments to disclosures in the consolidated financial statements.
******
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Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations.
FORWARD-LOOKING STATEMENTS
The following discussion and analysis of the Company’s condensed consolidated financial condition and results of operations should be read along with the condensed consolidated financial statements and the accompanying notes thereto included elsewhere in this Quarterly Report on Form 10-Q (this “Quarterly Report”). We generally identify forward-looking statements by terminology such as “may,” “will,” “should,” “expects,” “plans,” “anticipates,” “could,” “intends,” “target,” “projects,” “contemplates,” “believes,” “estimates,” “predicts,” “potential” or “continue” or the negative of these terms or other similar words, although not all forward-looking statements contain these words. These statements are only predictions. The information, except for historical information, contained in this discussion and analysis or set forth elsewhere in this Quarterly Report includes forward-looking statements that involve risks and uncertainties. Actual results may differ materially from those contemplated by such forward-looking statements because of, among other things, potential risks and uncertainties, such as:
| ● | Regulatory and compliance risk, including state dental corporate practice of dentistry and fee-splitting restrictions, HIPAA and other privacy/cybersecurity obligations, and evolving healthcare and labor regulations; |
| ● | Reimbursement risk, including risks related to payer mix, reimbursement rates, audit/recoupment activity, enrollment and collections timing, and dependence on significant third-party payors; |
| ● | Our ability to identify, acquire, integrate and effectively support affiliated practices and to execute de novo expansion, and the risk of undiscovered liabilities in acquisitions; |
| ● | Dependence on affiliated dental practices and their clinical performance; our ability to attract, hire and retain dentists, specialists and hygienists; and risks related to ownership transitions of affiliated entities; |
| ● | Competition for patients and clinicians in our markets and the impact on patient volumes and staffing; |
| ● | Macroeconomic conditions, inflation and interest rates, and our geographic concentration, particularly in the Minnesota area. |
You should review Part I, Item 1A “Risk Factors” in our Annual Report on Form 10-K filed with the U.S. Securities and Exchange Commission (“SEC”) for the year ended December 31, 2025 for a discussion of a number of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis or set forth elsewhere in this Quarterly Report. The Company assumes no obligation to publicly release the results of any revisions or updates to these forward-looking statements to reflect future events or unanticipated occurrences.
Overview
As a dental resource organization (“DRO”), Park Dental Partners, Inc. provides comprehensive business support services including clinical team members, administrative personnel, facilities and equipment to our affiliated general and multi-specialty dental practices in Minnesota, Wisconsin and Arizona. Our network of affiliated dental practices employs 219 dentists, and consists of 1,028 hygienists, dental assistants, and patient care coordinators that support affiliated dentists in operating their dental practices across 87 practice locations. Our network of affiliated dental practices has been operating for over fifty years, beginning with the establishment of the general dentistry group in 1972. The mission of our affiliated dental practices since inception has been to ensure patients enjoy the benefits of a lifetime of good oral health. This mission continues to be the driving force behind our organization today.
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Critical Accounting Policies and Estimates
Management’s discussion and analysis of financial condition and results of operations is based upon our condensed consolidated financial statements, which have been prepared in accordance with GAAP. The preparation of our condensed financial statements in conformity with GAAP requires us to make estimates, judgments and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses in the reporting period. Our actual results may differ from these estimates.
The critical accounting policies affected most significantly by estimates, assumptions and judgments used in the preparation of the Company’s condensed consolidated financial statements are described in Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report. On an ongoing basis, the Company evaluates the critical accounting policies used to prepare its condensed consolidated financial statements, including, but not limited to, those related to business acquisitions. There have been no material changes in these critical accounting policies and estimates during the six months ended June 30, 2026.
Results of Operations
Three and Six Months Ended June 30, 2026 Compared to Three and Six Months Ended June 30, 2025
The following table sets forth, for the periods indicated, our condensed consolidated statements of operations and certain other information. Amounts may not add to the totals due to rounding.
| | | | | | | | | | | | |
| | Three Months Ended | | Six Months Ended | ||||||||
| | June 30, | | June 30, | ||||||||
(in thousands) | | 2026 | | 2025 | | 2026 | | 2025 | ||||
Condensed Consolidated Statements of Operations: | | | | | | | | | | | | |
REVENUE |
| $ | 66,212 | | $ | 62,998 | | $ | 128,907 | | $ | 122,035 |
COST OF SERVICES |
| | | | | | | | | | | |
Salaries and benefits |
| | 42,114 | | | 37,096 | | | 84,009 | | | 72,733 |
Dental supplies and Laboratory fees |
| | 4,444 | | | 4,337 | | | 8,782 | | | 8,576 |
Office occupancy |
| | 4,375 | | | 4,086 | | | 8,660 | | | 8,090 |
Other practice expenses |
| | 3,836 | | | 3,610 | | | 7,670 | | | 7,015 |
Depreciation |
| | 1,928 | | | 1,963 | | | 3,891 | | | 3,859 |
TOTAL COST OF SERVICES |
| | 56,698 | | | 51,092 | | | 113,013 | | | 100,273 |
GROSS MARGIN |
| | 9,514 | | | 11,906 | | | 15,894 | | | 21,762 |
General and administrative expenses |
| | 7,836 | | | 7,380 | | | 15,676 | | | 14,308 |
Depreciation and amortization |
| | 422 | | | 374 | | | 842 | | | 752 |
OPERATING INCOME (LOSS) |
| | 1,256 | | | 4,152 | | | (624) | | | 6,702 |
INTEREST EXPENSE - NET |
| | (137) | | | (334) | | | (258) | | | (671) |
INCOME (LOSS) BEFORE TAX | | | 1,119 | | | 3,818 | | | (882) | | | 6,031 |
PROVISION/(BENEFIT) FOR INCOME TAX | | | (230) | | | 1,248 | | | (1,841) | | | 1,894 |
NET INCOME | | $ | 1,349 | | $ | 2,570 | | $ | 959 | | $ | 4,136 |
Revenues
Total revenues for the three months ended June 30, 2026, increased $3.2 million, or 5.1%, to $66.2 million from $63.0 million for the three months ended June 30, 2025. General Dentistry revenue increased $2.4 million, and multi specialty dentistry revenue was higher by $0.8 million, reflecting increased clinical hours, the impact of acquisitions, and reimbursement growth through higher payor contractual rates. Revenue from acquisitions contributed approximately $1.3 million for the quarter over the prior year’s comparable quarter. Same Practice Revenue, as defined as dental practice locations that have been operating for at least 13 full months prior to the end of a given period and which have not been closed, or sold during such periods, increased approximately 2.3%, or $1.4 million from the prior comparable period.
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Total revenues for the six months ended June 30, 2026, increased $6.9 million, or 5.6%, to $128.9 million from $122.0 million for the six months ended June 30, 2025. General Dentistry revenue increased $5.1 million, and multi specialty dentistry revenue was higher by $1.8 million, reflecting increased clinical hours, the impact of acquisitions, and reimbursement growth through higher payor contractual rates. Revenue from acquisitions contributed approximately $2.0 million for the six months period over the prior year’s comparable period. Same Practice Revenue increased approximately 3.2%, or $3.8 million from the prior comparable period.
Cost of Services
Salaries and Benefits. Salaries and benefits consist principally of affiliated dentist compensation, clinical team member compensation and related benefit costs.
Salaries and benefits for the three months ended June 30, 2026 was $42.1 million, an increase of $5.0 million, or 13.5%, from $37.1 million for the three months ended June 30, 2025. The increase is primarily attributable to the recognition of $2.8 million in share based compensation expense in the three months ended June 30, 2026, while no share based compensation expense was recorded in the three months ended June 30, 2025. The remaining $2.2 million increase relates to an increase of $1.5 million in salaries, driven by increased headcount, including from acquired practices, annual salary increases, $0.3 million deferred compensation costs, $0.2 million of contractor support, and a net increase in benefits and taxes of $0.1 million.
Salaries and benefits for the six months ended June 30, 2026 was $84.0 million, an increase of $11.3 million, or 15.5%, from $72.7 million for the six months ended June 30, 2025. The increase is primarily attributable to the recognition of $6.5 million in share based compensation expense in the six months ended June 30, 2026, while no share based compensation expense was recorded in the six months ended June 30, 2025. The remaining $4.8 million increase relates to an increase of $3.1 million in salaries, driven by increased headcount, including from acquired practices, annual salary increases, $0.5 million of contractor support, $0.3 million of incentive compensation, $0.3 in deferred compensation costs, and a net increase in benefits and taxes of $0.5 million, mainly due to $0.3 million increased taxes, and $0.2 million of paid family medical leave.
Dental supplies and Laboratory Fees. Dental supplies and laboratory fees consists of variable costs associated with our affiliated dental practices providing dental services.
Dental supplies and laboratory fees expense for the three months ended June 30, 2026 was $4.4 million, an increase of $0.1 million, or 2.5% from $4.3 million for the three months ended June 30, 2025. The increase was due to a $0.1 million increase in dental supply expenses.
Dental supplies and laboratory fees expense for the six months ended June 30, 2026 was $8.8 million, an increase of $0.2 million, or 2.4% from $8.6 million for the six months ended June 30, 2025. The increase was due to a $0.3 million increase in dental supply expenses, offset in part by a $0.1 million decrease in laboratory fees.
The increase in dental supply expense for both the three and six months ended June 30, 2026 was primarily attributable to higher production resulting from acquisitions completed since the prior comparable periods.
Office occupancy expenses. Office occupancy expenses include lease costs and other physical practice location expenses.
Office occupancy expense for the three months ended June 30, 2026 was $4.4 million, an increase of $0.3 million, or 7.1%, from $4.1 million for the three months ended June 30, 2025.
Office occupancy expense for the six months ended June 30, 2026 was $8.7 million, an increase of $0.6 million, or 7.0%, from $8.1 million for the six months ended June 30, 2025.
The increase for both periods was primarily due to increased capacity expansion and slightly higher leasing costs.
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Other practice expenses. Other practice expenses include MinnesotaCare provider taxes, software and subscription costs, repairs and maintenance costs, recruiting, travel and entertainment, insurance and other operating costs.
Other practice expense for the three months ended June 30, 2026 was $3.8 million, an increase of $0.2 million, or 6.3%, from $3.6 million for the three months ended June 30, 2025 as a result of higher software and subscription costs, and volume-based MinnesotaCare provider taxes.
Other practice expense for the six months ended June 30, 2026 was $7.7 million, an increase of $0.7 million, or 9.3%, from $7.0 million for the six months ended June 30, 2025 as a result of $0.4 million higher software and subscription costs, $0.1 million due to volume-based MinnesotaCare provider taxes and $0.1 million increased travel and entertainment costs.
Cost of Services Depreciation Expense. Cost of services depreciation expense encompasses depreciation associated with practice related assets such as dental equipment, leasehold improvements, furniture and fixtures and computer equipment.
Practice depreciation expense for the three months ended June 30, 2026 was $1.9 million, a decrease of $0.1 million, or 1.8%, from $2.0 million for the three months ended June 30, 2025.
Practice depreciation expense for both the six months ended June 30, 2026 and 2025 was $3.9 million.
General and Administrative
General and administrative expenses consist of costs of our centralized billing offices and call-centers, marketing and advertising expenses, regional management expenses, executive and senior management, and centralized functions, such as accounting, finance, team member relations, information technology, operations, real estate and other similar functions.
General and administrative expense for the three months ended June 30, 2026 was $7.8 million, an increase of $0.4 million, or 6.2%, from $7.4 million for the three months ended June 30, 2025. The increase in cost is primarily attributable to $0.6 million higher professional fees, a $0.2 million increase in share based compensation expense, $0.2 million of increased insurance costs, and $0.1 million increase in salaries and wages, offset in part by $0.8 million lower costs associated with preparing for our 2025 initial public offering.
General and administrative expense for the six months ended June 30, 2026 was $15.7 million, an increase of $1.4 million, or 9.6%, from $14.3 million for the six months ended June 30, 2025. The increase in cost is primarily attributable to $0.9 million higher professional fees, a $0.6 million increase in share based compensation expense, $0.3 million increase in salaries and wages, $0.3 million of increased insurance costs, $0.2 million higher marketing costs, and a $0.2 million net increase in benefits and taxes, offset in part by $1.3 million lower costs associated with preparing for our 2025 initial public offering.
Depreciation and Amortization
Depreciation and amortization expenses are related to our non-practice related investments in long-lived assets such as computer equipment, furniture and fixtures, and amortization of intangible assets.
Depreciation and amortization expense remained stable for the three and six months ended June 30, 2026, when compared to the three and six months ended June 30, 2025. The recognized expense for the three and six months ended was $0.4 million and $0.8 million, respectively, in both years.
Interest Expense, net
Net interest expense for the three months ended June 30, 2026 was $0.1 million, a slight decrease from $0.3 million for the three months ended June 30, 2025.
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Net interest expense for the six months ended June 30, 2026 was $0.3 million, a decrease of $0.4 million from $0.7 million for the six months ended June 30, 2025.
The decrease for both the three and six months ended was driven by an increase in interest income earned on money market funds and a decrease in total interest-bearing debt under our term loan and usage of line of credit over the year.
Provision for Income Taxes
Income tax benefit for the three months ended June 30, 2026 was $0.2 million compared to $1.2 million income tax expense for the three months ended June 30, 2025.
Income tax benefit for the six months ended June 30, 2026 was $1.8 million compared to $1.9 million income tax expense for the six months ended June 30, 2025.
The change for the three and six months ended June 30, 2026 compared to the prior comparable periods was primarily driven by higher discrete deductible expenses associated with vesting of share awards in the three and six months ended June 30, 2026.
Key Financial Measures, Performance Indicators and Non-GAAP Financial Measures
In assessing the performance of our business, we consider a variety of financial measures and performance indicators that directly or indirectly impact our revenue and profitability. The key financial and Non-GAAP financial measures and performance indicators we use are set forth below, as of and for the three and six months ended June 30, 2026 and 2025:
| | | | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended June 30, | | | | | | | | Six Months Ended June 30, | | | | | | | ||||||||
(in thousands, except per share amounts, percentages, patient visits, and doctor count) | | 2026 | | 2025 | | Increase/ (Decrease) | | % Increase/ (Decrease) | | 2026 | | 2025 | | Increase/ (Decrease) | | % Increase/ (Decrease) | ||||||||
Key Financial Measures | | | | | | | | | | | | | | | | | | | | | | | | |
Revenue | | $ | 66,212 | | $ | 62,998 | | $ | 3,214 | | | 5.1% | | $ | 128,907 | | $ | 122,035 | | $ | 6,872 | | | 5.6% |
Gross Margin | | $ | 9,514 | | $ | 11,906 | | $ | (2,392) | | | (20.1)% | | $ | 15,894 | | $ | 21,762 | | $ | (5,868) | | | (27.0)% |
Net Income | | $ | 1,349 | | $ | 2,570 | | $ | (1,221) | | | (47.5)% | | $ | 959 | | $ | 4,136 | | $ | (3,177) | | | (76.8)% |
Diluted EPS | | $ | 0.22 | | $ | 1.45 | | $ | (1.23) | | | (84.8)% | | $ | 0.16 | | $ | 2.33 | | $ | (2.17) | | | (93.3)% |
Patient Visits | |
| 185,569 | |
| 185,189 | |
| 380 | | | 0.2% | |
| 364,096 | | | 361,129 | |
| 2,967 | | | 0.8% |
Same Practice Revenue Growth | | | 2.3% | | | 5.8% | | | (350) | bps | | (60.3)% | | | 3.2% | | | 3.6% | | | (40) | bps | | (11.1)% |
Patient Retention Rate | | | 90.3% | | | 89.7% | | | 60 | bps | | 0.7% | | | 90.3% | | | 89.7% | | | 60 | bps | | 0.7% |
Doctor Count | | | 219 | | | 203 | | | 16 | | | 7.9% | | | | | | | | | | | | |
Non-GAAP Measures(1) | | | | | | | | | | | | | | | | | | | | | | | | |
Adjusted EBITDA | | $ | 7,421 | | $ | 7,552 | | $ | (131) | | | (1.7)% | | $ | 12,166 | | $ | 13,017 | | $ | (851) | | | (6.5)% |
Adjusted EBITDA Percentage | | | 11.2% | | | 12.0% | | | (80) | bps | | (6.7)% | | | 9.4% | | | 10.7% | | | (130) | bps | | (12.2)% |
Adjusted Gross Margin | | $ | 14,673 | | $ | 14,085 | | $ | 588 | | | 4.2% | | $ | 26,878 | | $ | 25,985 | | $ | 893 | | | 3.4% |
Adjusted Gross Margin Percentage | | | 22.2% | | | 22.4% | | | (20) | bps | | (0.9)% | | | 20.9% | | | 21.3% | | | (40) | bps | | (1.9)% |
Adjusted Diluted EPS | | $ | 0.66 | | $ | 1.88 | | $ | (1.22) | | | (64.8)% | | $ | 1.11 | | $ | 3.02 | | $ | (1.91) | | | (63.3)% |
General and Administrative Expense Percentage | | | 11.8% | | | 11.7% | | | 10 | bps | | 0.9% | | | 12.2% | | | 11.7% | | | 50 | bps | | 4.3% |
| (1) | Non-GAAP Measures are defined in the “Non-GAAP Financial Measures Definitions” section. For a reconciliation of Adjusted EBITDA to net income, Adjusted Gross Margin to Gross Margin, and Adjusted Diluted EPS to Diluted EPS, to the most directly comparable GAAP measures, see the “Non-GAAP Financial Measures” section. |
Revenue Related Financial Measures and Performance Indicators
Patient Visits. A patient visit is counted when service is provided to a patient at one of our affiliated dental general dentistry practices. Measuring the year-over-year change in patient visits helps us to evaluate how the affiliated dental practices are performing. It also helps with evaluating demand for services which influences decision-making relating to matters such as appropriate staffing levels and recruiting needs. In addition, it influences decision-making processes
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relating to our marketing, sales and advertising strategies and helps us with evaluating the effectiveness of those strategies. Further, with respect to continuing care patient count, it allows us to evaluate the ability of affiliated dentists to encourage patients to complete their diagnosed dental treatment plans.
Patient visits for the three months ended June 30, 2026 were 185,569, an increase of 0.2% from 185,189 for the three months ended June 30, 2025.
Patient visits for the six months ended June 30, 2026 were 364,096, an increase of 0.8% from 361,129 for the six months ended June 30, 2025.
Same Practice Revenue Growth. Same practice revenues represent total revenues for same dental practice locations that have been operating for at least 13 full months prior to the end of a given period and which have not been closed, or sold during such period. Measuring the year-over-year change in same practice revenues allows us to evaluate how affiliated dental practices are performing. We believe various factors affect comparable practice revenues, including patient demand for dental services, economic trends, dentist and hygienist staffing levels, availability of dentists and hygienists, pricing, competition, visibility and accessibility of the dental practices, quality of the tenants surrounding the dental practices, clinical hours and the level of patient service provided inside and outside of the dental practices.
Same Practice Revenue Growth for the three months ended June 30, 2026 was 2.3%, or 350 bps lower than the 5.8% Same Practice Revenue Growth for the three months ended June 30, 2025.
Same Practice Revenue Growth for the six months ended June 30, 2026 was 3.2%, or 40 bps lower than the 3.6% Same Practice Revenue Growth for the six months ended June 30, 2025.
Patient Retention Rate. Patient retention rate is calculated by counting patients that remain active at the beginning and end of a twelve-month period. Active patients are defined as general dentistry patients having been seen by our affiliated dental practices within the past 36 months, or last 18 months for patients under the age of 18. Patients who have not been seen by our affiliated dental practices within these time periods are removed from our active patient lists. This methodology is aligned with ADA clinical procedure codes, and is consistent with treatment protocols for new patients, before being considered an active patient again. Measuring the year-over-year and quarter-over-quarter change in patient retention allows us to evaluate the recurring nature of patient visits at the dental practices and affiliated dentists which influences decision-making around matters such as appropriate levels of staffing, recruiting, advertising and facility expansion opportunities.
Patient retention rate was 90.3% for both the three and six months ended June 30, 2026, an increase of 60 bps from 89.7% for both the three and six months ended June 30, 2025.
Doctor Count. Dentists operating in one of our affiliated dental practices are included in this calculation, which includes both full and part-time dentists. Measuring the year-over-year and quarter-over-quarter change in dentist count allows us to evaluate the production capacity of affiliated dental practices. It also influences decision-making relating to matters such as appropriate staffing levels and recruiting needs.
Doctor count as of June 30, 2026 was 219, sixteen higher than the June 30, 2025 doctor count of 203.
Non-GAAP Financial Measures
This report contains “non-GAAP financial measures” that are financial measures that either exclude or include amounts that are not excluded or included in the most directly comparable measures calculated and presented in accordance with accounting principles generally accepted in the United States (“GAAP”). Specifically, we make use of the non-GAAP financial measures “Adjusted EBITDA,” “Adjusted EBITDA Percentage,” “Adjusted Gross Margin,” “Adjusted Gross Margin Percentage,” “Adjusted Diluted EPS,” and “General and Administrative Expense Percentage,” collectively known as “the Non-GAAP Financial Measures”.
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We present the Non-GAAP Financial Measures as supplemental measures of financial performance that are not required by, or presented in accordance with, GAAP. We believe these non-GAAP measures assist investors and analysts in comparing our operating performance across reporting periods on a consistent basis by excluding items that we do not believe are indicative of our operating performance. Management believes the Non-GAAP Financial Measures are useful to investors in highlighting trends in our operating performance, while other measures can differ significantly depending on long-term strategic decisions regarding capital structure, the tax jurisdictions in which we operate, and capital investments. Management uses the Non-GAAP Financial Measures to supplement GAAP measures of performance in the evaluation of the effectiveness of our business strategies, to make budgeting decisions, and to compare our performance against that of other peer companies using similar measures. Management supplements GAAP results with non-GAAP financial measures to provide a more complete understanding of the factors and trends affecting the business than GAAP results alone provide.
The Non-GAAP Financial Measures are not recognized terms under GAAP and should not be considered as alternatives to net income (loss) or gross margin as measures of financial performance or cash provided by operating activities as measures of liquidity, or any other performance measure derived in accordance with GAAP. Additionally, these measures are not intended to be measures of free cash flow available for management’s discretionary use, as they do not consider certain cash requirements such as interest payments, tax payments, and debt service requirements. Because not all companies use identical calculations, the presentation of these measures may not be comparable to other similarly titled measures of other companies and can differ significantly from company to company. All measurements are provided with a reconciliation from a GAAP measurement.
Non-GAAP Financial Measures Definitions
“Adjusted EBITDA” is defined as net income (loss) adjusted to exclude interest expense (income), net, provision for (benefit from) income taxes, depreciation and amortization, share based compensation, discretionary shareholder bonuses, non-qualified deferred compensation expenses, and restructuring costs.
“Adjusted EBITDA Percentage” is defined as Adjusted EBITDA as a percentage of consolidated revenue.
“Adjusted Gross Margin” is defined as Gross Margin excluding depreciation expense, share based compensation, discretionary shareholder bonuses, non-qualified deferred compensation expenses, and restructuring costs.
“Adjusted Gross Margin Percentage” is defined as Adjusted Gross Margin as a percentage of consolidated revenue.
“Adjusted Diluted EPS” is defined as Diluted EPS adjusted to exclude share based compensation, restructuring costs, non-qualified deferred compensation expenses, and the income tax effect of those adjustments at our estimated long-term annual effective tax rate.
“General and Administrative Expense Percentage” is defined as General and Administrative expenses as a percentage of consolidated revenue.
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Non-GAAP Financial Measures for the Three and Six Months Ended June 30, 2026 and 2025
The following table contains a reconciliation of our net income (loss) attributable to Park Dental Partners, Inc. determined in accordance with GAAP to Adjusted EBITDA:
| | | | | | | | | | | | |
| | For the three months ended | | For the six months ended | ||||||||
Net Income (Loss) to Adjusted EBITDA | | June 30, | | June 30, | ||||||||
(in thousands) | | 2026 | | 2025 | | 2026 | | 2025 | ||||
Net income attributable to Park Dental Partners, Inc. |
| $ | 1,349 | | $ | 2,570 |
| $ | 959 | | $ | 4,136 |
Addback/(Deduct): | | | | | | | | | | | | |
Provision/(Benefit) for income taxes | |
| (230) | |
| 1,248 | |
| (1,841) | |
| 1,894 |
Interest expense, net | |
| 137 | |
| 334 | |
| 258 | |
| 671 |
Depreciation and amortization | |
| 2,350 | |
| 2,337 | |
| 4,733 | |
| 4,611 |
EBITDA | | $ | 3,606 | | $ | 6,489 | | $ | 4,109 | | $ | 11,312 |
Adjustments: | |
| | |
| | |
| | |
| |
Share based compensation | | | 3,035 | | | - | | | 7,059 | | | - |
Restructuring costs(1) | | | 347 | | | 893 | | | 405 | | | 1,376 |
Deferred compensation(2) | | | 433 | | | 170 | | | 593 | | | 329 |
Adjusted EBITDA | | $ | 7,421 | | $ | 7,552 | | $ | 12,166 | | $ | 13,017 |
Adjusted EBITDA Percentage | |
| 11.2% | |
| 12.0% | |
| 9.4% | |
| 10.7% |
| (1) | Restructuring costs for the three and six months ended June 30, 2026 primarily consist of expenses related to acquisition legal costs. Restructuring costs for the three and six months ended June 30, 2025 primarily consist of expenses incurred in connection with the Company’s initial public offering. |
| (2) | Deferred compensation costs primarily consist of expenses incurred with the Company's inactive deferred compensation arrangements. |
Adjusted EBITDA. Adjusted EBITDA for the three months ended June 30, 2026 was $7.4 million, a decrease of $0.2 million from the $7.6 million Adjusted EBITDA for the three months ended June 30, 2025, primarily due to the $0.7 million increase in general and administrative expenses after adjustment, offset in part by the $0.6 million increased Adjusted Gross margin. The increase in general and administrative expenses after adjustments is due to a $0.3 million increase in professional fees, a $0.2 million increase in insurance expenses, and $0.1 million higher marketing costs.
Adjusted EBITDA for the six months ended June 30, 2026 was $12.2 million, a decrease of $0.8 million from the $13.0 million Adjusted EBITDA for the six months ended June 30, 2025, primarily due to the $1.7 million increase in general and administrative expenses after adjustment, offset in part by the $0.9 million increase in Adjusted Gross margin. The increase in general and administrative expenses after adjustments is due to a $0.6 million increase in professional fees, increased salaries and wages of $0.3 million, a $0.3 million increase in insurance expenses, $0.2 million higher marketing costs, and a $0.2 million net increase in benefits and taxes.
Measuring the year-over-year change in Adjusted EBITDA allows us to evaluate the overall operating performance of affiliated dental practices on a consistent basis. It also influences our decision-making process on allocation of resources and helps us evaluate the effectiveness of our strategies.
Adjusted EBITDA Percentage. Adjusted EBITDA Percentage for the three months ended June 30, 2026 was 11.2%, a 80 basis point decrease from 12.0% for the three months ended June 30, 2025.
Adjusted EBITDA Percentage for the six months ended June 30, 2026 was 9.4%, a 130 basis point decrease from 10.7% for the six months ended June 30, 2025.
The decrease in Adjusted EBITDA percentage for both the three and six months ended June 30, 2026 is primarily attributable to an increase in general and administrative expenses after adjustments.
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The following table contains a reconciliation of our Gross Margin determined in accordance with GAAP to Adjusted Gross Margin
| | | | | | | | | | | | |
| | For the three months ended | | For the six months ended | ||||||||
Gross Margin to Adjusted Gross Margin | | June 30, | | June 30, | ||||||||
(in thousands) | | 2026 | | 2025 | | 2026 | | 2025 | ||||
Gross Margin |
| $ | 9,514 | | $ | 11,906 |
| $ | 15,894 | | $ | 21,762 |
Addback: | | | | | | | | | | | | |
Share based compensation | |
| 2,798 | |
| - | |
| 6,463 | |
| - |
Restructuring costs | |
| - | |
| 46 | |
| 37 | |
| 109 |
Deferred compensation | |
| 433 | |
| 170 | |
| 593 | |
| 255 |
Depreciation | |
| 1,928 | |
| 1,963 | |
| 3,891 | |
| 3,859 |
Adjusted Gross Margin | | $ | 14,673 | | $ | 14,085 | | $ | 26,878 | | $ | 25,985 |
Adjusted Gross Margin Percentage | |
| 22.2% | | | 22.4% | | | 20.9% | | | 21.3% |
Adjusted Gross Margin. Adjusted Gross Margin for the three months ended June 30, 2026 was $14.7 million, an increase of $0.6 million, or 4.2%, from $14.1 million for the three months ended June 30, 2025, attributable to increased revenue of $3.2 million, partially offset by a $2.0 million increase in salaries and wages after adjustments, $0.3 million of increased other practice expenses after adjustments, and $0.3 million higher office occupancy costs.
Adjusted Gross Margin for the six months ended June 30, 2026 was $26.9 million, an increase of $0.9 million, or 3.4%, from $26.0 million for the six months ended June 30, 2025, attributable to increased revenue of $6.9 million, partially offset by a $4.5 million increase in salaries and wages after adjustments, $0.7 million of increased other practice expenses after adjustments, and $0.6 million higher office occupancy costs.
Measuring the year-over-year change in Adjusted Gross Margin allows us to evaluate the profitability of affiliated dental practices and their performance. It also influences our decision-making process related to cost management strategies and helps us evaluate the effectiveness of those strategies.
Adjusted Gross Margin Percentage. Adjusted Gross Margin Percentage for the three months ended June 30, 2026 was 22.2%, a 20 basis point decrease from 22.4% for the three months ended June 30, 2025.
Adjusted Gross Margin Percentage for the six months ended June 30, 2026 was 20.9%, a 40 basis point decrease from 21.3% for the six months ended June 30, 2025.
The decrease in Adjusted Gross Margin Percentage for both the three and six months ended June 30, 2026 is primarily attributable to an increase in revenue.
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The following table contains a reconciliation of our Diluted EPS determined in accordance with GAAP to Adjusted Diluted EPS:
| | | | | | | | | | | | |
| | For the three months ended | | For the six months ended | ||||||||
Diluted EPS to Adjusted Diluted EPS | | June 30, | | June 30, | ||||||||
(in thousands, except share and per share amounts) | | 2026 | | 2025 | | 2026 | | 2025 | ||||
EARNINGS ATTRIBUTABLE TO COMMON SHAREHOLDERS: | | $ | 1,349 | | $ | 2,570 | | $ | 959 | | $ | 4,136 |
Adjustments: | | | | | | | | | | | | |
Share based compensation | | | 3,035 | | | - | | | 7,059 | | | - |
Restructuring costs(1) | | | 347 | | | 893 | | | 405 | | | 1,376 |
Deferred compensation(2) | | | 433 | | | 170 | | | 593 | | | 329 |
Income tax effect of the Adjustments(3) | | | (1,068) | | | (297) | | | (2,256) | | | (477) |
ADJUSTED NET INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS | | $ | 4,096 | | $ | 3,336 | | $ | 6,760 | | $ | 5,364 |
| |
| | |
| | |
| | |
| |
Adjusted Weighted Average Diluted Shares - Reconciliation | |
| | |
| | |
| | |
| |
WEIGHTED-AVERAGE SHARES USED IN COMPUTING GAAP NET EARNINGS PER SHARE, DILUTED | | | 6,235,305 | | | 1,772,662 | | | 6,091,899 | | | 1,777,942 |
ADJUSTED WEIGHTED AVERAGE DILUTED SHARES USED IN COMPUTING ADJUSTED EARNINGS PER SHARE, DILUTED | | | 6,235,305 | | | 1,772,662 | | | 6,091,899 | | | 1,777,942 |
| | | | | | | | | | | | |
ADJUSTED DILUTED EARNINGS PER SHARE: | | $ | 0.66 | | $ | 1.88 | | $ | 1.11 | | $ | 3.02 |
| (1) | Restructuring costs for the three and six months ended June 30, 2026 primarily consist of expenses related to acquisition legal costs. Restructuring costs for the three and six months ended June 30, 2025 primarily consist of expenses incurred in connection with the Company’s initial public offering. |
| (2) | Deferred compensation costs primarily consist of expenses incurred with the Company's inactive deferred compensation arrangements. |
| (3) | Income tax effect is based on an estimated long-term annual effective tax rate of 28% tax rate for the three and six months ended June 30, 2026 and June 30, 2025. The Company's estimated long-term annual effective tax rate excludes certain non-cash items such as share based compensation arrangements, and is used in order to provide consistency across periods. |
Adjusted Diluted EPS. Adjusted Diluted EPS for the three months ended June 30, 2026 was $0.66, a $1.22 decrease from $1.88 for the three months ended June 30, 2025.
Adjusted Diluted EPS for the six months ended June 30, 2026 was $1.11, a $1.91 decrease from $3.02 for the six months ended June 30, 2025.
The decrease for both the three and six months ended June 30, 2026 was primarily attributable to the increase in the weighted average dilutive securities used in computing adjusted diluted earnings per share due to the Company’s IPO in December 2025, partially offset by an increase in adjusted net income.
General and Administrative Expense Percentage. General and Administrative Expense Percentage for the three months ended June 30, 2026 was 11.8%, a 10 basis point increase from 11.7% for the three months ended June 30, 2025. This increase is attributable to a $0.6 million increase in professional fees, $0.2 million higher share based compensation costs related to becoming a publicly-traded company in the fourth quarter of 2025, a $0.2 million increase in insurance costs, net of $0.8 million lower costs associated with our 2025 initial public offering and increased revenue.
General and Administrative Expense Percentage for the six months ended June 30, 2026 was 12.2%, a 50 basis point increase from 11.7% for the six months ended June 30, 2025. This increase is attributable to a $0.9 million increase
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in professional fees, $0.6 million higher share based compensation costs related to becoming a publicly-traded company in the fourth quarter of 2025, $0.3 million increase in salaries and wages, $0.3 million increase in insurance costs, and increased marketing costs of $0.2 million, net of $1.3 million lower costs associated with our 2025 initial public offering and increased revenue.
Liquidity and Capital Resources
We finance our operations and growth through a combination of cash provided by operating activities and borrowings under our revolving loan facility. Cash and cash equivalents was $24.4 million at June 30, 2026, and $25.2 million at December 31, 2025. At June 30, 2026 and December 31, 2025, we had total outstanding borrowings under our debt arrangements of approximately $11.0 million and $12.0 million, respectively. Unused availability under our line of credit was approximately $15 million at June 30, 2026 and December 31, 2025. In addition, subject to the terms of the credit agreement and the lender’s consent in its sole discretion, we may request increases in the revolving commitment of up to an aggregate additional $10.0 million
We believe that our existing cash and our expected cash flows from operations will be sufficient to meet our cash needs for operations for at least the next 12 months. Over the longer term, our future capital requirements will depend on many factors, including our growth rate, the timing and extent of our dental services expenditures, the continuing market acceptance of our offerings, and any investments or acquisitions we may choose to pursue in the future. In the event that we need to borrow funds or issue additional equity, we cannot be assured that any such additional financing will be available on terms acceptable to us, if at all. In addition, any future borrowings may result in additional restrictions on our business and any issuance of additional equity would result in dilution to investors. If we are unable to raise additional capital when desired and on terms acceptable to us, our business, results of operations, and financial condition could be materially and adversely affected.
Cash flows from operating activities
Cash flows provided by operating activities were $9.7 million for the six months ended June 30, 2026, compared to $9.2 million for the six months ended June 30, 2025. The $0.5 million increase in cash flows provided by operating activities was due primarily to a $2.6 million increase in net income after adjustments for non-cash items, offset in part by a net decrease in changes in operating assets and liabilities of $2.1 million.
Cashflows used in investing activities
Our investing activities are primarily related to capital expenditures for practice growth and expansion, replacing obsolescent assets, and adding capital improvements in existing facilities and technology related projects.
Cash flows used in investing activities were $8.2 million and $5.8 million for the six months ended June 30, 2026 and 2025, respectively. Cash used in investing activities increased due to increased purchases of property and equipment of $0.8 million, $1.6 million higher payments for purchases of dental practices, and $0.6 million of loans to related parties evidenced by promissory notes, offset in part by a $0.6 million reduction in life insurance premiums paid.
Cashflows used in financing activities
Cash flows used in financing activities primarily reflect our borrowings and repayments under our current and prior credit facilities which were refinanced in March 2024, and amended subsequently in February 2026.
Cash flows used in financing activities for the six months ended June 30, 2026 were $2.3 million compared with $3.2 million for the six months ended June 30, 2025. The $0.9 million decrease primarily reflected the absence of $0.4 million of pre-IPO share repurchases, a $0.3 million decrease in checks issued in excess of cash balances and a $0.2 million decrease in dental practice payments.
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Outstanding indebtedness
Amounts outstanding under our bank term loan were $8.8 million and $9.8 million at June 30, 2026, and December 31, 2025, respectively. During the three and six months ended June 30, 2026 we made scheduled principal payments of $0.5 million and $0.9 million, respectively. At both June 30, 2026, and December 31, 2025, we had no outstanding balance under the line of credit.
On March 27, 2024, we entered into a new credit agreement which amended the existing agreement and provided for a new $13.0 million term loan and amended the line of credit to $15.0 million from the prior $23 million. The term loan matures in March 2029 and carries an interest rate equal to the one-month SOFR rate plus 2.10%. The amended agreement also permits us to request an increase in the revolving commitment of up to an additional $10 million, subject to the terms of the credit agreement. The amended line of credit extended the maturity from March 2024 to March 2027 and carries an interest rate equal to the one-month SOFR rate plus 2.00%.
On February 13, 2026, the Company entered into an amendment to its credit agreement. The amendment extends availability under the line of credit to March 27, 2029, updates certain financial covenants and definitions, and provides consent for the formation of a new subsidiary.
On April 30, 2026, the Company entered into a second amendment to the credit agreement that added the Company’s Arizona subsidiary as a co-borrower and modified certain subsidiary and acquisition-related provisions
The agreement requires, among other things, that we comply with a minimum fixed charge coverage ratio and a total cash flow leverage ratio. In addition, the agreement contains standard negative covenants that, among other things, limit our ability to undertake individual business combinations in excess of specified limits; incur and pay certain indebtedness; create, incur, or assume certain liens and negative pledges; sell, lease, convey, transfer or otherwise dispose of certain assets; liquidate or dissolve any of our subsidiaries; make certain loans and investments; make certain dividends and redemptions; substantially change the nature of our business; and effect certain changes in ownership or control beyond specified thresholds.
We were in compliance with all covenants specified in the credit agreement at June 30, 2026 and December 31, 2025 including the fixed charge coverage and cash flow leverage ratios. We believe, based on our current financial forecasts and trends, that we will remain compliant with all covenants for the foreseeable future.
Our obligations under the credit facilities are secured by a first priority lien on substantially all of our tangible and intangible assets and the tangible and intangible business assets of the affiliated dental practices.
In addition to the aforementioned credit facilities, we have secured notes payable of $2.2 million due to related parties and certain current and former shareholders. The principal is due at maturity and interest is due quarterly through October 1, 2037. Interest is equal to the greater of 14% of the principal balance or an amount based on a formula using average dentist compensation or a formula based on total revenue. The effective interest rate for 2026 is 24.5% compared to 25.7% in 2025. The notes are secured by all of our business assets and the affiliated dental practices and are subordinated to the bank term loan and the line of credit. The notes are subject to significant prepayment restrictions.
Our primary sources of liquidity are cash provided by operations and available borrowings under our revolving loan facility. At the consolidated level, our principal source of operating cash is collections of patient-service revenue by our affiliated dental practices.
Deferred Compensation — Our deferred compensation obligation, including current and non-current obligations was $71.6 million and $70.6 million at June 30, 2026 and December 31, 2025, respectively, and primarily consisted of active non-qualified deferred compensation plans and other inactive deferred compensation plans.
Non-qualified Deferred Compensation Plans — We and our affiliated dental practices utilize non-qualified deferred compensation plans that provide participants the opportunity to defer compensation on a pretax basis. Benefit payments to participants are available upon termination of employment, disability, death, unforeseeable emergencies, a change-in-
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control event, as defined, or qualified planned in-service distributions. The agreement provides eligible participants the option to receive payment in a lump sum distribution or up to five annual installments. Participants are immediately 100% vested in their voluntary deferred compensation contributions. Participants are fully vested in employer credits after five years of service. Participant accounts are credited with deferred compensation contributions and earnings thereon, as defined. At June 30, 2026 and December 31, 2025, the total deferred compensation liability related to the non-qualified deferred compensation plans was $24.9 million and $23.0 million, respectively.
Deferred Compensation Plans – Inactive — Our affiliated dental practices have professional and executive deferred compensation plans, and have executed employment agreements with certain dentists, executives and professional employees. These agreements provided for the creation of deferred compensation balances for eligible employees in the event of separation from service. These plans were frozen prior to January 1, 2024. At June 30, 2026 and December 31, 2025, the total of these other inactive deferred compensation plans were $46.7 million and $47.6 million, respectively. This deferred compensation value is fixed and non-interest bearing. The deferred compensation balances are generally to be paid over a period of five years from the date of the participants separation from the groups, subject to certain limitation. One plan, comprising the significant majority of the balance has an annual maximum cap on payments at 2% of the respective Company’s annual adjusted gross revenue, as defined in the agreements.
Recently adopted accounting pronouncements
The Company has not adopted any new accounting standards in the six months ended June 30, 2026.
Recently issued accounting pronouncements
Refer to Note 1 to the Company’s condensed consolidated financial statements for a discussion of recently issued but not yet adopted accounting pronouncements.
Item 3.Quantitative and Qualitative Disclosures About Market Risk
As a “smaller reporting company,” as defined in Rule 12b-2 of the Exchange Act, we are not required to provide the information called for by this Item.
Item 4.Controls and Procedures
Limitations on Effectiveness of Controls and Procedures
In designing and evaluating our disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints, and that management is required to apply judgment in evaluating the benefits of possible controls and procedures relative to their costs.
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our principal executive officer and principal financial officer, evaluated, as of the end of the period covered by this Quarterly Report on Form 10-Q, the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act). Based on that evaluation, our principal executive officer and principal financial officer concluded that, as of June 30, 2026, our disclosure controls and procedures were effective to provide reasonable assurance that information required to be disclosed by the Company in reports that it files or submits under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms, and is accumulated and communicated to management, including its principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.
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Changes in Internal Control over Financial Reporting
There were no significant changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the quarter ended June 30, 2026 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Limitations on Effectiveness of Controls and Procedures
Our management, including our Chief Executive Officer (principal executive officer) and our Chief Financial Officer (principal accounting and financial officer), does not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent or detect all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. These inherent limitations include the realities that judgments in decision making can be faulty, and that breakdowns can occur because of a simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people or by management override of the controls. The design of any system of controls is also based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in conditions, or the degree of compliance with policies or procedures. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.
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PART II -- OTHER INFORMATION
Item 1. Legal Proceedings
We and our affiliated dental practices have been named as a defendant in lawsuits from time to time in the normal course of business, primarily for employment liability, alleged negligence in care or general liability and contractual business disputes. We do not believe any pending lawsuits will have a material adverse effect on our operating results, cash flows, liquidity or financial position.
In 2024, multiple claims were filed against us in state and federal courts in Minnesota based on a data breach event. Subsequently, certain of the claims were dismissed; however, the putative class action suit in Minnesota District Court entitled, In re Park Dental Data Breach Litigation, Case No. 27-CV-24-12335, Fourth Judicial District, County of Hennepin, State of Minnesota continues. We presently believe the settlement of this matter is probable. We expect the settlement, net of insurance recoveries, will have an immaterial impact to our financial results as we anticipate the costs to settle will be fully recovered under our insurance policy coverage.
Item 1A. Risk Factors
In addition to the other information set forth in this Quarterly Report, you should carefully consider the risk factors and other cautionary statements described in “Item 1A. Risk Factors” in our Annual Report, which could materially affect our business, financial condition or future results. There have been no material changes to the risk factors described in our Annual Report.
Item 2.Unregistered Sales of Equity Securities and Use of Proceeds
Issuer Purchases of Equity Securities
The Company did not repurchase any of its common stock during the quarter ended June 30, 2026.
There have been no material changes in the use of proceeds from our initial public offering as previously disclosed in our Annual Report.
Item 3. Defaults Upon Senior Securities
Not applicable.
Item 4.Mine Safety Disclosures
Not applicable.
Item 5.Other information
(c)Insider Trading Arrangements
During the quarter ended June 30, 2026, none of our directors or officers, as defined in Rule 16a-1(f) under the Exchange Act,
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Item 6.Exhibits
Exhibit No. | Description | Form | Exhibit | Date Filed with the SEC |
2.1 | Transaction Agreement, dated as of August 7, 2026, by and among Park Dental Partners, Inc., Ryan & Associates LLP, Ryan, James, Wiles, Patel, and Olsen, D.D.S., PLLC, Ryan, James, Wiles, Patel & Olsen LLP, Ryan, James & Associates LLP and the beneficial owners named therein. | 8-K | 2.1 | 08/10/2026 |
3.2 | Fourth Amended and Restated Articles of Incorporation of Park Dental Partners, Inc. | S-1 | 3.2 | 09/03/2025 |
3.3 | Bylaws of Park Dental Partners, Inc., dated October 31, 2023. | S-1 | 3.3 | 09/03/2025 |
3.4 | Amendment No. 1 to Bylaws of Park Dental Partners, Inc., dated December 4, 2024. | S-1 | 3.4 | 09/03/2025 |
10.1 | Amended and Restated Credit Agreement, dated March 27, 2024, by and among Park Dental Partners, Inc., certain affiliated borrower entities, and U.S. Bank National Association. | S-1 | 10.1 | 09/03/2025 |
10.2 | Amendment Agreement, dated as of February 13, 2026 (effective January 1, 2026), by and among Park Dental Partners, Inc., certain affiliated borrower entities, and U.S. Bank National Association. | 8-K | 10.1 | 02/19/2026 |
10.3 | Second Amendment Agreement, dated as of April 30, 2026, by and among Park Dental Partners, Inc., certain affiliated borrower entities, and U.S. Bank National Association. | 10-Q | 10.3 | 05/14/2026 |
31.1 | Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | | | Filed herewith |
31.2 | Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | | | Filed herewith |
32.1 | Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | | | Furnished herewith |
32.2 | Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | | | Furnished herewith |
101.INS | Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. | | | Filed herewith |
101.SCH | Inline XBRL Taxonomy Extension Schema Document. | | | Filed herewith |
101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document. | | | Filed herewith |
101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document. | | | Filed herewith |
101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document. | | | Filed herewith |
101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document. | | | Filed herewith |
104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). | | | Filed herewith |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| PARK DENTAL PARTNERS, INC. |
Date: August 13, 2026 | |
| /s/ Christopher Bernander |
| Christopher Bernander, Chief Financial Officer |
| (Duly Authorized Officer, Principal Financial Officer and Principal Accounting Officer) |
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