What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-08-13 compared with 2026-05-14 · 117 added, 74 removed, 215 unchanged (47% of the section changed)

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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 three months ended March 31, 2026.

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 Months Ended March 31, 2026 Compared to Three Months Ended March 31, 2025

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.

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Three Months Ended

Six Months Ended

(in thousands)

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Depreciation and amortization

OPERATING INCOME

OPERATING INCOME (LOSS)

INTEREST EXPENSE - NET

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PROVISION/(BENEFIT) FOR INCOME TAX

NET INCOME (LOSS)

Total revenues for the three months ended March 31, 2026, increased $3.7 million, or 6.2%, to $62.7 million from $59.0 million for the three months ended March 31, 2025.

General Dentistry revenue increased $2.8 million, and multi specialty dentistry revenue was higher by $0.9 million, reflecting increased patient visits and clinical hours, the impact of acquisitions, and reimbursement growth through higher payor contractual rates.

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 Growth, 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 4.1%, or $2.4 million from the prior comparable period.

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.

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

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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 March 31, 2026 was $41.9 million, an increase of $6.3 million, or 17.6%, from $35.6 million for the three months ended March 31, 2025.

The increase is primarily attributable to the recognition of $3.7 million in share based compensation expense in the three months ended March 31, 2026, while no share based compensation expense was recorded in the three months ended March 31, 2025.

The remaining $2.6 million increase relates to an increase of $1.5 million in salaries, driven by increased headcount, including from acquired practices, annual salary increases, $0.4 million increase in benefit costs, $0.3 million in higher incentive compensation, and $0.3 million of contractor support.

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 March 31, 2026 was $4.3 million, an increase of $0.1 million, or 2.3% from $4.2 million for the three months ended March 31, 2025.

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 March 31, 2026 was $4.3 million, an increase of $0.3 million, or 7.0%, from $4.0 million for the three months ended March 31, 2025, attributable to increased capacity expansion and slightly higher leasing costs.

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.

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 March 31, 2026 was $3.8 million, an increase of $0.4 million, or 12.6%, from $3.4 million for the three months ended March 31, 2025 as a result of higher software and subscription costs, and volume-based MinnesotaCare provider taxes.

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 March 31, 2026 was $2.0 million, an increase of $0.1 million, or 3.5%, from $1.9 million for the three months ended March 31, 2025.

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 March 31, 2026 was $7.8 million, an increase of $0.9 million, or 13.2%, from $6.9 million for the three months ended March 31, 2025.

The increase in cost is primarily attributable to a $0.4 million increase in share based compensation expense, $0.4 million higher professional fees, $0.3 million higher marketing and travel, and $0.2 million increase in salaries and wages, offset in part by $0.5 million lower costs associated with preparing for our 2025 initial public offering.

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 for the three months ended March 31, 2026 remained flat compared to the three months ended March 31, 2025.

The recognized expense for both periods was $0.4 million.

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 March 31, 2026 was $0.1 million, a slight decrease from $0.3 million for the three months ended March 31, 2025.

This decrease was driven by a decrease in total interest-bearing debt

under our term loan and usage of line of credit over the year and an increase in interest income earned on money market funds.

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.

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 March 31, 2026 was $1.6 million compared to $0.6 million income tax expense for the three months ended March 31, 2025.

The change was due to lower taxable income, impacted by decreased operating earnings and increased tax benefits primarily related to share based compensation.

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 months ended March 31, 2026 and 2025:

Three Months Ended March 31,

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)

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% Increase/ (Decrease)

Increase/ (Decrease)

% Increase/ (Decrease)

Key Financial Measures

Net Income (Loss)

Patient Visits

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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 relating to our marketing, sales and advertising strategies and helps us with evaluating the effectiveness of those strategies.

In addition, it influences decision-making processes

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 March 31, 2026 were 178,527, an increase of 1.5% from 175,940 for the three months ended March 31, 2025.

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.

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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 March 31, 2026 was 4.1%, or 290 bps higher than the 1.2% Same Practice Revenue growth for the three months ended March 31, 2025.

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 .

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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 was stable with the retention rate for the three months ended March 31, 2026 at 90.1%, an increase of 90 bps from 89.2% for the three months ended March 31, 2025.

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.

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It also influences decision-making relating to matters such as appropriate staffing levels and recruiting needs.

Doctor count as of March 31, 2026 was 221, eighteen higher than the March 31, 2025 doctor count of 203.

Doctor count as of June 30, 2026 was 219, sixteen higher than the June 30, 2025 doctor count of 203.

Non-GAAP Financial Measures

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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.

activities as measures of liquidity, or any other performance measure derived in accordance with GAAP.

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.

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“General and Administrative Expense Percentage” is defined as General and Administrative expenses as a percentage of consolidated revenue.

Non-GAAP Financial Measures for the three months ended March 31, 2026 and 2025

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.

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For the three months ended

For the six months ended

Net Income (Loss) to Adjusted EBITDA

(in thousands)

Net income (loss) attributable to Park Dental Partners, Inc.

Net income attributable to Park Dental Partners, Inc.

Addback/(Deduct):

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Adjusted EBITDA Percentage

(1) Restructuring costs primarily consist of expenses incurred in connection with the Company’s initial public offering completed on December 4, 2025 and gains and losses from the disposal of equipment.

(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 March 31, 2026 was $4.7 million, a decrease of $0.7 million from the $5.5 million Adjusted EBITDA for the three months ended March 31, 2025, primarily due to the $1.0 million increase in general and administrative expenses after adjustment, offset in part by the $0.3 million increased Adjusted Gross margin.

The increase in general and administrative expenses after adjustments is due to a $0.4 million increase in professional fees, and a $0.2 million increase in salaries and wages after adjustments, and $0.3 million higher marketing and travel.

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.

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Adjusted EBITDA Percentage.

Adjusted EBITDA Percentage for the three months ended March 31, 2026 was 7.6%, a 170 basis point decrease from 9.3% for the three months ended March 31, 2025, attributable primarily due to an increase in general and administrative expenses after adjustments.

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.

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

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Adjusted Gross Margin.

Adjusted Gross Margin for the three months ended March 31, 2026 was $12.2 million, an increase of $0.3 million, or 2.6%, from $11.9 million for the three months ended March 31, 2025, attributable to increased revenue of $3.7 million, partially offset by a $2.5 million increase in salaries and wages after adjustments.

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.

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Adjusted Gross Margin Percentage.

Adjusted Gross Margin Percentage for the three months ended March 31, 2026 was 19.5%, a 70 basis point decrease from 20.2% for the three months ended March 31, 2025, primarily reflecting an increase in revenue.

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.

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

(in thousands, except share and per share amounts)

EARNINGS (LOSS) ATTRIBUTABLE TO COMMON SHAREHOLDERS:

EARNINGS ATTRIBUTABLE TO COMMON SHAREHOLDERS:

Share based compensation

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Adjusted Weighted Average Diluted Shares - Reconciliation

WEIGHTED-AVERAGE SHARES USED IN COMPUTING GAAP NET (LOSS) EARNINGS PER SHARE, DILUTED

WEIGHTED-AVERAGE SHARES USED IN COMPUTING GAAP NET EARNINGS PER SHARE, DILUTED

ADJUSTED WEIGHTED AVERAGE DILUTED SHARES USED IN COMPUTING ADJUSTED EARNINGS PER SHARE, DILUTED

ADJUSTED DILUTED EARNINGS PER SHARE:

(1) Income tax effect is based on an estimated long-term annual effective tax rate of 28% tax rate for the three months ended March 31, 2026 and 2025.

(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.

(2) Includes an additional 1,584,666 of weighted average dilutive shares and 92,100 of weighted average dilutive warrants for the three months ended March 31, 2026, that are excluded from a GAAP perspective due to the Company's net loss in that reporting period.

Adjusted Diluted EPS.

Adjusted Diluted EPS for the three months ended March 31, 2026 was $0.44, a $0.70 decrease from $1.14 for the three months ended March 31, 2025, primarily due to an increase in the weighted average dilutive securities used in computing adjusted diluted earnings per share due to the Company’s IPO in December 2025.

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 March 31, 2026 was 12.5%, a 80 basis point increase from 11.7% for the three months ended March 31, 2025.

This increase is attributable to higher share based compensation costs related to becoming a publicly-traded company in the fourth quarter of 2025, $0.4 million increase in professional fees, and a $0.2 million increase in salaries and wages, and $0.3 million higher marketing and travel, net of $0.5 million lower costs associated with our 2025 initial public offering.

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

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 March 31, 2026, and $25.2 million at December 31, 2025.

At March 31, 2026 and December 31, 2025, we had total outstanding borrowings under our debt arrangements of approximately $11.5 million and $12.0 million, respectively.

Unused availability under our line of credit was approximately $15 million at March 31, 2026.

We believe that our existing cash and our expected cash flows from operations will be sufficient to meet our cash needs for at least the next 12 months.

our offerings, and any investments or acquisitions we may choose to pursue in the future.

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.

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Cash flows from operating activities

Cash flows provided by operating activities were $5.0 million for the three months ended March 31, 2026, compared to $5.9 million for the three months ended March 31, 2025.

The $0.9 million decrease in cash flows provided by operating activities was due primarily to a decrease in changes in operating assets and liabilities of $2.7 million, offset in part by a $0.8 million increase in net income (loss) after adjustments for non-cash items.

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 $4.8 million and $3.1 million for the three months ended March 31, 2026 and 2025, respectively.

Cash used in investing activities increased due to $1.6 million higher consideration paid for business acquisitions and an increase of $0.6 million due to notes issued in the first quarter of 2026, offset in part by a $0.4 million decrease in premiums paid on life insurance.

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 three months ended March 31, 2026 were $1.1 million compared to $2.0 million for the three months ended March 31, 2025.

The $0.9 million change in finance cash usage reflected decreased checks issued in excess of cash of $0.7 million and a decrease of $0.2 million for share repurchases.

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.

Outstanding indebtedness

Amounts outstanding under our bank term loan were $9.3 million and $9.8 million at March 31, 2026, and December 31, 2025, respectively.

During the three months ended March 31, 2026 we made scheduled principal payments of $0.5 million.

At both March 31, 2026, and December 31, 2025, we had no outstanding balance under the line of credit.

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 provides for an accordion right to increase the term loan by an additional $10 million.

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%.

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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.

O n 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.

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make certain loans and investments;

dividends and redemptions;

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 March 31, 2026 and December 31, 2025 including the fixed charge coverage and cash flow leverage ratios.

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.

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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 have significant prepayment obligations.

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.

The management fees we receive from affiliated dental practices and their reimbursement to us of certain costs we incur on their behalf are our primary source of cash from operations.

Deferred Compensation — Our deferred compensation obligation, including current and non-current obligations was $69.8 million and $70.6 million at March 31, 2026 and December 31, 2025, respectively, and primarily consisted of active non-qualified deferred compensation plans and other inactive deferred compensation plans.

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-control event, as defined, or qualified planned in-service distributions.

Benefit payments to participants are available upon termination of employment, disability, death, unforeseeable emergencies, a change-in-

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.

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Participant accounts are credited with deferred compensation contributions and earnings thereon, as defined.

At March 31, 2026 and December 31, 2025, the total deferred compensation liability related to the non-qualified deferred compensation plans was $22.7 million and $23.0 million, respectively.

Deferred Compensation Plans – Inactive — Our affiliated dental practices have profession and executive deferred compensation plans, and have executed employment agreements with certain dentists, executives and professional employees.

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 March 31, 2026 and December 31, 2025, the total of these other inactive deferred compensation plans were $47.0 million and $47.6 million, respectively.

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.

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Recently adopted accounting pronouncements

The Company has not adopted any new accounting standards in the three months ended March 31, 2026.

The Company has not adopted any new accounting standards in the six months ended June 30, 2026.

Recently issued accounting pronouncements

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis