The company had reported a 13 per cent increase in first-half net profit late last year and, apart from a newsletter in January and the appointment of a new director in February, has not communicated with shareholders.
But chief executive Richard Keys dismisses the suggestion that Abano has been slow to update shareholders that conditions in Australia have worsened from the first half.
Sales through Australian practices owned 12 months or more were down 1.6 per cent at the end of February compared with being down 1.2 per cent at the end of November.
"That's something we're very good at, communicating. I don't think we've changed how we communicate with shareholders" and the new forecast ebitda is down only about 7 per cent from analysts' forecasts, Keys says.
Forsyth Barr analyst Chelsea Leadbetter had been forecasting $36.6m ebitda. Craigs Investment Partners analyst Stephen Ridgewell have been forecasting $35m.
"Australia is below our expectations. The last couple of months have been softer than what they were in the first six months."
Keys says increased competition for practices in Australia has driven purchasing multiples higher than has been the case historically.
"We do not see it delivering the appropriate return for shareholders."
Abano's Australian practices had been concentrated in Queensland and northern New South Wales when the mining downturn hit a few years ago and it has since bought more practices in the rest of NSW and in Victoria. These two states have now been impacted by falling house prices, Keys says.
The decline in Abano's share price accelerated after Fisher Funds revealed in October last year that it had sold its 8.8 per cent stake in the company after previously having been a staunch supporter.
Fisher sold at prices between $7.78 and $9.43 per share between February and October last year but the bulk of the shares sold at the lower price.
A partial takeover offer priced at $9.84 per share by former dissident shareholders Peter Hutson, his wife Anya and James Reeves failed in March 2017 after gaining less than 2 per cent of the shares they didn't already own. In August of that year, those shareholders sold their 19 per cent stake at $8.85 per share.
In late 2016, independent adviser Grant Samuel had valued Abano shares at $9.95-11.96 each.
Abano operates under the Lumino brand in New Zealand and Maven in Australia.
Abano has bought two practices, both in New Zealand, since November, taking the total to 239 dental practices."
It has 116 in Australia. It bought 11 practices in Australia in the first half and three in New Zealand for a total of $31.6m – that was a 71 per cent increase on purchases in the previous first half.
"Given this change in acquisition focus, Abano does not see a need to raise capital in the foreseeable future. Selective acquisition growth will continue in New Zealand as the national network is completed," the company says.
The new policy will reduce direct and indirect acquisition costs by about $1.8m a year.
Abano says it has identified a number of initiatives to lift the performance of the Australian dental group and improve usage of its existing capacity across both networks and has already started implementing them.
"The board has a prudent and careful approach to management of funds and believes the change in strategy will ensure we are focused on lifting the performance of the existing business and investing new capital when we are confident we can obtain a satisfactory return," chair Pip Dunphy says.
"Given this change, we will review Abano's KPIs, set in 2016 for the three years to 2020, and will update the market in due course."
