DSO Deal Roundup – April 2021

When Group Dentistry Now started in 2014, there was certainly not as much M&A and de novo activity in the dental industry as there is now. In fact, it was uncommon to find documentation of this activity. In our early days we felt fortunate to publish deals a couple of times a month.

Fast forward to 2021 and we find it challenging to cover all of the new DSO formations, practice acquisitions and new practice buildouts that are occurring while still providing the balanced content you’ve grown to rely on. Our DSO Deal Roundup keeps you up-to-date on the latest DSO deal activity and includes an exclusive synopsis. April was a busy month!

If you don’t see your deals, practice acquisitions or de novos, but would like us to include them in the DSO Deals update, please send your press to [email protected].

Of course, we still will continue to feature in-depth articles on DSOs, but with the level of activity in the industry, we want to make sure we cover as much as possible.

April 2021

Guardian Dentistry Partners Expands Florida Presence
Guardian Dentistry Partners (GDP) announced the addition of Dental Designs of Plantation to its steadily expanding network. This marks the third Florida practice to partner with Guardian. Dr. John Sarris founded Dental Designs of Plantation in 2016. Founded by a group of passionate dentists and a family office, Guardian Dentistry Partners is an emerging Dental Partnership Network Founded in 2018 by a group of passionate dentists and a family office, Guardian has expanded rapidly and now supports dental entrepreneurs in Florida, Michigan, New Jersey, North Carolina, Pennsylvania, Texas and Virginia. Guardian Dentistry Partners was featured on GDN’s Emerging Dental Groups To Watch In 2020 list.

Tend Raises $125M in Series C Funding Led by Addition
Launched in 2019, Tend, a DSO serving more than 20,000 patients and 256 team members across six locations throughout New York City, has raised an additional $125 million in Series C funding. Addition led the round, with participation from existing investors including GV, Juxtapose, Redpoint and Zigg Capital. After its launch in October 2019, Tend has rapidly grown to with plans to expand across the U.S. Tend will use the new funding to expand their footprint nationally, invest in technology and patient experience and launch a suite of comprehensive services and oral care products. Over the course of 2021, Tend will increase the number of locations from six in New York City to 20, including new market entries in Washington D.C. and Boston.

Houlihan Lokey Advises Children and Teen Dental Group
Houlihan Lokey announced that Children and Teen Dental Group (C&TDG), a portfolio company of MSouth Equity Partners (MSouth), has been acquired by a family office. Founded in 2015 and based in Alpharetta, Georgia, C&TDG is a pedodontic and orthodontic-focused dental support organization (DSO), supporting offices across Alabama, Georgia, Florida, and Pennsylvania. The company has been affiliated with 23 locations since its founding in 2011.

Aspen Dental opens 100th practice in Florida
The grand opening of the newest Jacksonville location marks the 100th Aspen Dental practice in Florida. Headquartered in East Syracuse, New York, Aspen now has 885 practices across 42 states. Aspen Dental-branded dental practices are independently owned and operated by licensed dentists. The DSO is privately held and was founded in 1998.

Aspen Dental Management Inc. Receives 2021 FutureEdge 50 Award from International Data Group’s CIO
Aspen Dental Management Inc. (ADMI), has been named an honoree of the 2021 Future Edge Award from the International Data Group (IDG) CIO. This prestigious award is bestowed upon 50 worldwide companies recognized for having established information technology initiatives that advance business results and impact for the future. ADMI received the award in recognition of its achievements in developing a voice-activated periodontal charting product (VAPC).

Halle Capital Management Announces Investment in Planet Smile Partners, a Newly Formed Dental Service Organization Focused on Pediatric Dentistry and Orthodontics
In conjunction with Halle’s investment, PSP will initially partner with a New York-based group of dental practices currently known as Dentistry for Children Westchester (DFC Westchester). Dr. Gary Heitzler, Founder of DFC Westchester, will serve as CEO of Planet Smile Partners and will be responsible for scaling its platform and leading its strategic business initiatives. Founded by experienced dentists, orthodontists, and former DSO executives, Planet Smile Partners intends to continue partnering with pediatric and orthodontic-focused practices in the Northeast to become a leading regional DSO.

Dental365 Expands Further in Northern New Jersey and Opens New Location in Shoreham, NY
Dental365 opened its fourth office in New Jersey, expanding just west of the Hudson River, in Englewood Cliffs, NJ. They also added a Shoreham, NY location. Dental365 was featured on Group Dentistry Now’s Emerging Groups to Watch in 2017 list. Since then, the growing DSO has been featured many times on GDN’s website. Most recently, the group’s inspiring CEO joined the GDN podcast to explain his unique, fast-growing, affordable and exceptional DSO. Dental365 has locations throughout New York, Connecticut and New Jersey.

Absolute Dental & Orthodontics Completes 2 Practice Expansions in Southern Nevada
Absolute Dental Group LLC  has completed the expansion of two practices located in Las Vegas, NV.  In addition to the physical expansion, the practices were modernized with the latest dental technology to improve the patient experience. Beginning with one practice in 2002, Absolute is headquartered in Las Vegas and is Nevada’s largest branded DSO with 28 affiliated dental practices.

Firmament-Backed GPS Dental Completes Three Add-On Acquisitions in Q1 2021
GPS Dental LLC, an Arkansas-based DSO backed by The Firmament Group, has partnered with three dental practices: ADC of Joplin (Joplin, MO), Hermitage Dental Group (Nashville, TN), and Walnut Ranch Dental Spa (Ardmore, OK). These partnerships represent a continuation of GPS’s strategy to grow through synergistic relationships in the Southern and Midwestern United States. GPS is led by Dr. Hunter Smith and Dr. William Little, who co-founded the Company in 2015. Firmament initially invested in GPS in December 2020 and has provided additional capital to support the Company’s acquisitions during the past quarter.

Smile Brands Welcomes New Affiliate Santa Ana Dental Group in Santa Ana, California
Dr. David Cashman founded Santa Ana Dental Group in 1985. Today, Dr. Cashman leads a staff of thirty-seven team members from their growing Santa Ana location. Founded by Steve Bilt and based in Irvine California, Smile Brands Inc. provides business support services to 650 affiliated offices across 30 states. The organization’s award-winning culture has made it the only dental support organization on Glassdoor’s Best Places to Work list for the past three years.

Burmeister Atteberry Family & Cosmetic Dental Joins Smile Brands
Dr. Chad Burmeister founded Burmeister Atteberry Family & Cosmetic Dental in Decatur, Illinios in 2001 and he currently leads a staff of nine. The existing dental team and staff will remain with the office and the business will continue to operate under the name Burmeister Atteberry Family & Cosmetic Dental.

Canadian Orthodontic Partners Receives Growth Investment from Pamlico Capital
Pamlico Capital announced that it has completed a growth investment in Canadian Orthodontic Partners (COP) alongside current shareholders. Headquartered in Toronto, COP is the largest orthodontics-focused specialty DSO in Canada. In less than five years, it has completed over 25 affiliations and has scaled to serve more than 30,000 patients across over 60 clinics in eight provinces. The specialty DSO is orthodontist-founded and -led.

Hunter Street and Healy Capital Acquire Dental Support Organization Platform Kirkpatrick Dental Group
Hunter Street Partners, a Minneapolis-based alternative investment management firm, has partnered with Healy Capital Partners to acquire Kirkpatrick Dental Group, a growing dentistry platform with multiple practices in Tennessee and Georgia. Founded in 2007 by Dr. Jason Kirkpatrick, the Kirkpatrick Dental Group is a DSO that currently owns and operates eight locations. With over 8,000 dentists in Tennessee and Georgia, the company has significant expansion prospects in the region. Peakstone served as exclusive financial advisor to Kirkpatrick Dental Group

Western Dental Opens New Office in Los Angeles
Western Dental & Orthodontics announced the opening of its newest office in Lincoln Heights, a suburb of northeast Los Angeles. The Lincoln Heights office is comprised of 12 treatment rooms, including four dedicated to root canal treatments and pediatric dentistry. Western Dental (with its supported affiliates, including Brident Dental & Orthodontics and Vital Smiles) provides accessible, affordable oral health care, serving approximately 3 million patient visits annually in 332 affiliated offices throughout California, Texas, Arizona, Nevada and Alabama.

Pacific Dental Services, LLC — Moody’s assigns B1 CFR to Pacific Dental Services, LLC; outlook stable
Moody’s Investors Service assigned a B1 Corporate Family Rating (CFR) and B1-PD Probability of Default Rating to Pacific Dental Services, LLC (PDS). Moody’s also assigned a B1 rating to the company’s proposed first lien senior secured revolver and term loan B. The rating outlook is stable. Proceeds from the $600 million term loan B will be used to refinance the company’s existing debt and pay fees and expenses. The company will maintain an accordion feature on the term loan, the greater of $170 million and 100% of EBITDA, which can be used to fund new office growth. Moody’s expects that PDS will continue to have negative free cash flow in 2021 and 2022 given the company’s rapid expansion, which is predominantly through new office openings. Beyond 2022, Moody’s anticipates that PDS will begin to generate positive free cash flow. PDS has added nearly 200 offices since 2017. PDS expects to open another 50 new clinics in 2021 and 100 new clinics annually thereafter.

HEARTLAND DENTAL, LLC — Moody’s upgrades Heartland Dental, LLC’s CFR to B3, stable outlook
Moody’s Investors Service (Moody’s) upgraded the ratings of HEARTLAND DENTAL, LLC (Heartland), including the Corporate Family Rating to B3 from Caa1, the Probability of Default Rating to B3-PD from Caa1-PD, the first lien senior secured debt rating to B2 from B3, and the senior unsecured notes to Caa2 from Caa3. The outlook is stable. The upgrade reflects Heartland’s return of patient volumes to near pre-pandemic levels, and reduced debt/EBITDA to around 7.0x for the twelve months ended December 31, 2020. At the same time, Heartland has improved liquidity with $245 million cash balance as of December 31, 2020, and an undrawn $135 million revolver. Heartland’s liquidity was bolstered from CARES Act funding, reduction in variable costs, a $200 million add-on term loan and a $122 million dollar equity raise in August 2020. Moody’s considers the equity raise, which came from both owner dentists and the private equity sponsor, to be a positive governance factor. The stable outlook reflects Moody’s expectation that this level of leverage, along with the company’s ability to reduce variable costs and growth capital expenditures if necessary, position the company well to withstand the potential for further stress from the coronavirus pandemic and/or an operating set-back. Moody’s expects Heartland to continue to be aggressive with its growth strategy, which will likely result in break-even to modestly negative free cash flow due to elevated growth capital expenditures.

Turnstone Midco 2 Limited — Moody’s places IDH’s ratings on review for upgrade
Moody’s Investors Service has placed on review for upgrade the ratings of UK dental services operator Turnstone Midco 2 Limited (IDH), including the Caa2 corporate family rating (CFR) and the Caa2-PD probability of default rating (PDR). Concurrently, the rating agency has also placed on review for upgrade the Caa2 ratings on the backed senior secured notes due 2022 and the Ca rating on the backed senior secured second lien notes due 2023, both issued by IDH Finance plc, which is wholly-owned by IDH. The outlook of both entities changed to ratings under review from negative. Moody’s has placed all ratings on review for upgrade following the announcement that the company’s majority shareholders had reached a binding sale agreement with an entity controlled by a financial sponsor for the sale of 100% of the business. As of 31 December 2020, the company’s dental practice business, (my)dentist, had 595 dental practices. IDH treats over 4 million patients every year. In the twelve months ended December 2020, IDH generated GBP543 million of revenues and GBP46 million of EBITDA before exceptional items (before IFRS 16 impact).

Park Dental Acquires New Office in Edina
Stone & Johnson at Edinborough Dental in Edina has joined the Park Dental family, becoming its 47th Twin Cities’ location. The dental office has been renamed Park Dental Edinborough Way. Keith Johnson, the proprietor of Stone & Johnson and a practicing dentist for more than 40 years, will remain with Park Dental Edinborough Way. He is a graduate of the University of Minnesota School of Dentistry and Bethel College. Founded in 1972, Park Dental is a dental group practice with dozens of practice locations throughout the Twin Cities and Western Wisconsin.

Riccobene Associates Family Dentistry Opens Newest Location in Bolivia, NC
Riccobene Associates Family Dentistry, based out of the Research Triangle region, was founded in 2000 by Dr. Michael Riccobene. The DSO began more than 20 years ago in Selma, NC and employs over 75 dentists. With 30+ practices, Riccobene Associates’ strategy is to continue its rapid growth in North Carolina and into adjacent states through de novo openings and add-on affiliations.

Rock Mountain Capital Announces Significant Minority Investment in Spark Orthodontics
Rock Mountain Capital (RMC) announced that it has made a significant minority investment in Spark Orthodontics (Spark), a specialty orthodontics platform with 10 locations in rural/suburban Pennsylvania. The investment will support the company’s growth strategy focused on acquiring additional practices and locations in Pennsylvania and in new markets. Spark was founded in 2010 by Dr. Jason Hartman, D.M.D., M.S. The company has grown through a mix of acquisitions and de novos.  In 2012, Dr. Hartman was named One of America’s “Top 40 Dentists Under Age 40″ by Incisal Edge Magazine.

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