Smiles Inclusive (ASX: SIL) shares are trading at close to record lows and management is pulling out all stops to improve shareholder sentiment ahead of the company's AGM on Thursday.
The company's market capitalisation is now only marginally higher than the $3.3 million it raised in October, following the confirmation late last month that it burned $1.25 million in cash in the first quarter.
In a Totally Smiles newsletter released yesterday, management sought to lift the mood by drawing attention to new initiatives including a "Brand Blueprint", a digital marketing review that will bring social media in-house, training programs and the hiring of new support staff.
At the same time, CEO Tony McCormack placed much of the blame for Smiles' woes on two unnammed individuals who are clearly Dr Arthur Walsh and Dr John Camacho.
Walsh and Camacho have repeatedly criticised the Smiles board over its corporate governance and the way it reports its finances.
"Smiles investors are being asked to invest based on false and misleading information. We also believe the true loss is closer to $40 million based on any reasonable assessment of goodwill impairment," Camacho said in the lead-up to the capital raising.
McCormack noted the initial approach to the company's joint venture partner (JVP) model was not a success and has left enduring and debilitating legacies, including "the ongoing public and private activities of two individuals directly approaching stakeholders with the intention to see the business fail".
"This has adversely affected the relationships and support provided by financiers, suppliers, investors and JVP," McCormack said.
"The effect has been debilitating with a shortage of operating capital, resources and expertise and resulted in an extended survival phase and has delayed recovery phase, unnecessarily."
"The period has involved the board and staff in maintaining the business, reviewing and fine tuning the business model and strategy for the future, assessing and changing suppliers, staff and some leaders, raising capital, maintaining, developing and extending relationships not to mention a swathe litigation and inappropriate contractual arrangements."
He also pointed to the formation of a JVP working group for discussing important issues and priorities for business development. The group currently comprises 16 volunteers representing half of Smiles' practices, of whom 11 members attended a marketing workshop in Brisbane on 24 October.
"The Group activity has not actively progressed as quickly as we would have liked due to my availability. Anyone wishing to join the Group is welcome," McCormack said.
The company has enlisted marketing agency Nick Did This (NDT) to develop a brand blueprint which will be circulated after review by the group and incorporated into marketing and communication activities.
"The results to date have been very exciting and those involved are keenly looking forward to launch of the underlying strategy," Smiles Inclusive said in the newsletter.
The newsletter noted the look, feel and functionality of the company website was "unacceptable" and it will be replaced, while Smiles has also been working with Health Engine and MyHealth1st to develop arrangements for acquiring new patients through their booking portals.
In an announcement after this story was initially published, Smiles let the market know it had reached a new material agreement with 1st Group (ASX: 1ST) to use the MyHealth1st platform for 55 dental practices.
"We are excited by the prospect of providing an improved digital engagement solution for our patients and increased appointments for our business," McCormack said.
"The Myhealth1st services will provide increased new patient acquisition, patient engagement services and an enhanced online patient booking experience and enable us to improve our operations through patient feedback and significant capabilities to reactivate past patients.
"These services will fit well with other initiatives we have underway."
1st Group co-founder and managing director Klaus Bartosch said the company had developed a unique capability in the healthcare market over the years with successful major deal wins.
"This deal also delivers on our key strategic priorities of driving revenue growth including annual recurring revenues and extending our leadership position in the key dental vertical," Bartosch said.
"With this additional scale, we have more than trebled our dental market presence this year, making dental one of our fastest growing categories today."
SIL shares were up 15 per cent to 3.8 cents each at 3:25pm AEDT.
Smiles also recently provided an upskilling opportunity to 15 practitioners from Queensland and Sydney undertaking the Moredent dental implantology course in Brisbane. This will be repeated for a further six practitioners in Melbourne soon.
Management believes dento-facial health & rejuvenation treatments may also become a future point of difference for the business, and discussions are underway with training academies specialising in the field.
The company also pointed to a payment plan review to consider using MiFund and Splitit as financial technology options.
The Gold Coast-headquartered company has fallen from grace since an April 2018 IPO was launched to fund an ambitious dental practice acquisition strategy. The company announced a $31 million loss for FY19, reporting late after previously announcing an unaudited loss of $19 million.Never miss a news update, subscribe here. Follow us on Facebook, LinkedIn, Instagram and Twitter.
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