PE HUB Healthcare Wire Highlights, 10.10.19

GPs get creative on dental deals M&A

Hello from Iowa City!

I’m back in my hometown for a few days, reuniting with old friends and family. Of course, that also means college football and a weekend full of tailgating. Watch for me on the 35-yard line Saturday night as Iowa takes on Penn State. Go Hawks!

Before I sign off for the next few days, here’s your healthcare rundown:

It’s well known that dental has long remained an attractive segment for investment. Gryphon Investors’ Smile Brands, which I’m told is headed to the first rounds of its process, is no exception. The company is anticipated to field significant interest from buyout funds, sources have said.

Read my full story for financial and adviser info.

While new dental opps along with other multisite segments characterized as “retail health” remain attractive areas for investment, the space arguably isn’t as sexy as other specialties right now. That’s partly because folks have realized that the same-store growth profile in dental is not nearly as appealing as the potential seen in segments like vet care.

Vet care assets, as I’ve written about recently, are commanding among the highest deal multiples in the retail health universe as of late, fueled by unbelievably strong macro trends: tremendous space for consolidation, cash-pay dynamics, millennials’ obsession with their pets, as well as medical advancements and longer-living pets.

In dental, it seems you may have to get a little more creative. That might mean a different view in terms of what the C-suite needs as platforms get larger and larger, one source told me. Some believe these assets as they scale require a multi-site healthcare operator, not just a seasoned dental industry executive, this person said.

Smile Brands falls into that category. CEO Steve Bilt is certainly a veteran in the dental industry, having co-founded the company in 1998. But Bilt has also demonstrated he can buy and successfully combine and scale assets whether good or bad to begin with, this person said. Bilt also previously held leadership positions at Vivra, an operator of kidney dialysis clinics, and SCRC, a provider of speech, occupational and physical therapy.