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For the past 25 years, Dr. Amin Shivji, founder of 123Dentist and prominent leader in the Canadian dental industry, has been partnering with dentists, either buying clinics or building clinics.
Up until 2017, 123Dentist, originally branded West Coast Dental Clinic, had grown to about 70 clinics locally contained within approximately 300 kilometers in British Columbia, Canada. In 2017, the group decided to launch a national brand and basically equity-financed most of it themselves. They quickly accumulated 70 clinics nationally.
In the summer of 2019, 123Dentist raised $425 million, including $300 million in committed growth capital and a further $125 million accessible from both equity and debt partners, including Peloton Capital Management.
Considered the largest majority Canadian-owned network of dental practices, even at the beginning of the COVID-19 pandemic, 123Dentist continued to grow. In March 2020, they welcomed We Care Dental, its 13 practices and over 200 team members across the Greater Toronto area. With this recent addition, the 123Dentist family expands its reach to over 175 supported practices and 2,500 employees in Ontario, British Columbia, Alberta, Manitoba, and Quebec.
“123Dentist and We Care have similar values and approaches to clinical autonomy and patient care which will make for a seamless transition. By joining a large national network, we will continue to keep our teams and patients at the center of everything we do, while leveraging the scale and access to greater resources that 123Dentist brings to its partners. We look forward to the future success of We Care and 123Dentist as we become part of such a respected dentist and patient-oriented organization.” -Dr. Vikas Soota, President, We Care Dental
Along with the multi-practice addition of We Care Dental, 123Dentist also added three new financial institutions to its syndicated credit facility led by Royal Bank of Canada and Bank of Montreal, with an additional $180 million in capital to support its future growth, bringing its financial partners to ten institutions. 123Dentist is now best positioned to build on its dentists first strategy across Canada.
With this injection of strategic capital, 123Dentist will accelerate its expansion across Canada to complement its existing network of practices in Ontario, British Columbia, Alberta, Manitoba, and Quebec; and further strengthen its back office, marketing, and operational capabilities for its partners.
Canada generally lags behind the USA by about 10-12 years. Looking back at the US dental market 10-12 years ago, a very small percentage of the market was occupied by DSOs. It is very much the same in Canada right now. Currently, about 3 to 4% of the market is occupied by DSOs, whereas in the US it is in the neighborhood of 25%.
There are many similarities between the Canadian and US dental markets. The sentiment towards this dental support model is similar to the US, however, that sentiment is changing with the new dental school graduates. Their dental student debt is similar to the US. These Millennials want a work-life balance and many feel that owning 100% of their own business is just too overwhelming. They just don’t care about the financial benefits as much as previous generations did. So, although the sentiment towards this dental support model could be considered raw, it is changing.
Despite similar patterns between the US and Canada, there are some notable differences. Canadians refer to the group dentistry industry as corporate dentistry. Dental insurance is quite different in Canada and, generally speaking, the clinics in Canada have somewhat better margins.
Like in the US, some Canadian dentists are concerned that a corporation will take over the dentists’ lives and make practicing dentistry with autonomy difficult. 123Dentist offers a hybrid model that provides ownership at the clinic level for partners. They help the dentist on the backend, but the dentists can still be an owner and have a voice. It has a similar model to US-based Pacific Dental Services (PDS).
With many deals in the pipeline, 123Dentist’s goal is to acquire between 35 and 45 general dentistry clinics a year. But for them it is not just about adding locations, it is ensuring the integration process is fine-tuned and the ownership component is there. An embedded ownership component is vital for them to ensure as they always want to have an owner on-site. Their dentists can own 20-30% at the clinic level and they receive monthly dividends. Prior to the investment from Peloton, they were almost 100% owned by dentists.
“Because of my history with the partnership model, I knew long ago that in order for these businesses to be successful, ownership at the clinic level was very important. Our goal is to have a dentist owner at every clinic because it will make the clinic more successful. The reason is very simple. You know if you walk into any store in this world, if the owner is there, you get different treatment than if somebody’s just working.” – Dr. Amin Shivji, CEO, 123Dentist
123Dentist currently has administrative offices in three Canadian cities: Toronto, Vancouver, and Montreal. Having a location in Toronto, which is a Canadian financial epicenter, is crucial for them because it is where all of the private equity groups are, therefore it helps them to attract the right finance talent. At some point, all three of the corporate dental locations will encompass all administrative functions and support services.
123Dentist executive team:
Dr. Amin Shivji, CEO
Chris Fregren, CFO
Ali Bozorgzad, EVP
Aaron Lipton, EVP, Operations
Dr. Sam Kherani, CDO
Karim Shivji, VP, Leasing
Mark Bourck, VP Procurement
Pierre Vigneault, Special Advisor, Quebec
Dr. Howard Rocket, Sr., Corporate & Corporate Development
Chris Parsons, Dir., Partnership Development (BC)
Jon Founk, Dir., Partnership Development (AB & SK)
Cam Chabot, Dir, Partnership Development (MB & SK)
Sources: Financial Post, 123Dentist
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