Benesch’s DSO Intelligence Bi-Monthly Report: May – July 2022 – Corporate and Company Law


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KEY ISSUES

Court Square Capital acquisition of West Coast Dental could
fuel M&A in Calif. and neighboring states

The acquisition was reportedly valued around $250 million and
plans for the acquisition include accelerating new de novo clinic
openings in Los Angeles, which industry experts say could
potentially fuel M&A throughout California and neighboring
states. Ongoing fragmentation in the dental sector space has
persisted despite a strong private equity appetite for scaled dental platforms. The
aging population, a steady, repeat customer base has been a barrier
to more dental platforms scaling at an efficient pace, however that
could be about to change.

West Coast Dental has 40 multi-specialty dental and orthodontic
offices across California, employing 130-plus general and
specialist dentists. Court Square plans to invest in digital
marketing that could fuel the continued market growth, tapping into
the growing demand for dental cosmetic procedures and technological
developments that present significant opportunity despite the
continued COVID- 19-related closures and cancellations that have
been pervasive in the industry since 2020.

According to a June 2022 poll from the American Dental
Association’s Health Policy Institute, dental practices are
reporting that their schedules are only 86% full in June (compared
to 88% in March 2022) and only 16% have confidence in the U.S.
economic recovery. In order to counter these challenges, dental
practices say staff recruitment is a priority for dental
practitioners and hiring dental hygienists presents the most
significant challenge for dentists. Other challenges include paying
raises for dental teams, which dental practices say have commonly
been in the 4-6% range for dental teams in the past year. The
potential for increased M&A activity in the sector has the
potential to be part of the solution to coping with ongoing
scheduling and staffing concerns by optimizing efficiency through
growing platforms at scale and benefiting from more efficient
processes to solve the most persistent challenges for dental
practices.

Sources: Axios, Research and Markets, American Dental
Association

CMS proposes to pay for more dental services in 2023, as dental
groups push for greater access for vulnerable patients

Dental groups, including The American Academy of Pediatric
Dentistry, American Dental Association and the American Association
of Oral and Maxillofacial Surgeons are asking the CMS to improve
access to dental surgeries for children and adults with special
needs and disabilities. The groups sent a joint letter to Meena Seshamani, M.D., Ph.D.,
deputy administrator and director, CMS Center for Medicare, and
Daniel Tsai, deputy administrator and director, CMS Center for
Medicaid and CHIP Services. The groups asked for a meeting to
address the limits to access to discuss their ongoing concerns
relating to dental rehabilitation surgery in hospital outpatient
and ambulatory surgical center access, which it noted were
exacerbated due to the pandemic and disproportionately affect high
risk Medicaid patients and those who require an operating room.

According to the American Dental Association,
fourteen states have worked to improve access to dental coverage
for those under Medicaid this year, including Connecticut, Florida,
Georgia, Illinois, Kansas, Louisiana, Maryland, Mississippi,
Missouri, Nebraska, South Dakota, Tennessee, Vermont and Virginia.
In addition, three other states have introduced legislation in
order to provide additional dental benefits, including Hawaii,
Michigan and New Hampshire.

The ADA said that it believes that ensuring
comprehensive dental services to all is an important issue for
dentists, patients and the dental profession as a whole. While this
represents progress, it’s significance cannot be over stated,
according to the KFF, which conducted a Health
care deb survey as part of its broader investigation into health
care debt, which includes dental bills people are unable to pay and
its effects on individuals and the industry as a whole. The survey
found that 24% of respondents currently had dental or medical bills
that they were past due or unable to pay, either for them or a
child, spouse or parent currently in their care.

Sources: Dentistry Today on Nov. 2020; Group Dentistry
Now.com on April 27, 2021

DENTAL SERVICE ORGANIZATION NEWS

Chicago-based DSO Aspen Dental gave out free
dental care to more than 3,000 military veterans and their families
during the eighth annual Aspen Dental Day of Service on June 11

On Saturday, June 11th, more than 400 Aspen Dental offices
participated in the 8th annual Aspen Dental Day of Service,
providing care to more than 3,000 United States military veterans
and their families, with nearly $1.8 million in donated dental
services. More than 2,000 Aspen Dental doctors and dental care team
members volunteered their time to break down barriers to care and
treat the most urgent dental needs – to help get veterans out
of pain, from fillings and extractions to hygiene and basic denture
repairs. The Aspen Dental Day of Service builds on the ongoing
impact of Aspen’s Healthy Mouth Movement, a community- giving
initiative launched in 2014 to deliver free dental care to veterans
in need in communities across the country. Since the launch of the
Health Mouth Movement, doctors and their dental care teams from
nearly 1,000 Aspen Dental-branded offices have donated more than
$26 million in dentistry services to nearly 35,000 veterans and
people in need.

Source: Aspen Dental on June 16, 2022

MERGERS & ACQUISITIONS

PE-backed itrac makes three DSO
acquisitions

itrac has been implementing an aggressive M&A strategy which
has resulted in three businesses joining the itrac family,
including – DentalPost, SmartBox Dental, and Local Search for
Dentists. itrac is a portfolio company of HealthEdge Investment
Partners and 424 Capital, and has expanded its product and service
offering through the completion of these three strategic add-on
investments. With offices in Oregon, Texas, Indiana, Georgia, and
Florida, itrac is a longest-standing dental marketing agencies in
the U.S., offering a suite of marketing technology, outsourced
marketing, training, and club software solutions to assist dentists
and their practices achieve their goals.

Source: itrac LLC on May 26, 2022

Sonrava Health completed its acquisition of
Plymouth Meeting, Pa.-based DSO Mid-Atlantic Dental
Partners

Sonrava Health completed its acquisition of Mid-Atlantic Dental
Partners, a PA-based DSO. The 215-office DSO was first acquired by
Orange, Calif.-based DSO Western Dental in May. Sonrava became the
new parent company of Western Dental earlier in June. The
acquisition expands the multispecialty health and wellness
company’s DSO portfolio to include Western Dental &
Orthodontics, Brident Dental & Orthodontics and Vital Smiles.
The organization now has 572 offices in 20 states.

Source: Sonrava Health on June 22, 2022

Sonrava Health acquired two DSOs, four other
mergers took place in June

Sonrava Health acquired two DSOs, and four other acquisitions
that took place in June 2022, which include:

  1. Dental electronic data interchange company DentalXChange
    acquired dental software company ExtraDent;

  2. Sonrava Health completed its acquisition of Plymouth Meeting,
    Pa.-based DSO Mid-Atlantic Dental Partners;

  3. Abra Health, an integrated dental and medical provider,
    purchased a multispecialty dental practice in Kearny, N.J.;

  4. New Hyde Park, N.Y.-based Premier Care Dental Management
    acquired Coventry, R.I.-based Eric George, DMD & Associates;
    and

  5. Sun Life Financial, a global financial services firm, completed
    its acquisition of DentaQuest, a dental benefits provider.

Source: Becker’s Dental and DSO Review on July 5,
2022

PRIVATE EQUITY

West Coast Dental lands private equity
investment

West Coast Dental, which has 40 multispecialty dental and
orthodontic practices in Calif. has received an investment from
private equity firm Court Square Capital Partners. The DSO’s
founders, Farid Pakravan, Soleyman Cohen-Sedgh, and Farhad Manavi
will remain investors in addition to Court Square. West Coast
Dental CEO and President Payam Sohrab will remain in his position.
In addition to West Coast Dental, the DSO functions under the brand
Magicland, its pediatric practice.

Source: West Coast Dental on July 11, 2022

Ideal Dental lands private equity
investment

Ideal Dental Management Partners, a Calif.-based DSO, received a
private equity investment from ONCAP Partners. Ideal Dental
partners with dentists who independently diagnose and treat
patients and provide orthodontic, pedodontics, oral surgery and
other therapeutic services. The terms of the deal have not been
disclosed, though the press release calls the investment
“significant”.

Source: Ideal Dental on July 5, 2022

LITIGATION & COMPLIANCE

Three dental practices subject to enforcement
actions for potential HIPAA violations

The U.S. Department of Health and Human Services Office for
Civil Rights resolved three investigations in March related to
dental offices’ compliance with the Health Insurance
Portability and Accountability Act Privacy Rule. “Between the
rising pace of breaches of unsecured protected health information
and continued cyber security threats impacting the health care
industry, it is critical that covered entities take their HIPAA
compliance responsibilities seriously,” said Office for Civil
Rights Director Lisa J. Pino who added that “we will pursue
civil money penalties for violations that are not
addressed.”

Source: ADA News on May 17, 2022

Over 600 dental practices hit in ransomware
attack

Professional Finance Co. detected a total of 657 ransomware
attacks on dental practices’ accounts receivable, which it said
it was able to detect and stop Feb 26. During the incident,
however, an unauthorized third party accessed and disabled some of
the company’s computers. The company launched an investigation,
which found that the unauthorized party accessed files containing
some individuals’ personal information. Information such as
first and last names, addresses, accounts receivable balances and
information regarding payments made to accounts, dates of birth,
Social Security numbers and health insurance and medical treatment
information may have been accessed, according to the notice. The
company has not found evidence of personal information being
misused.

Source: Becker’s Dental and DSO Review on July 8,
2022

INNOVATION & FUTURE OF DENTAL

Formlabs launches Dental Academy, a hub for
professional education, training in dental 3D printing

Formlabs, which manufactures desktop Stereolithography 3D
printers, launched Formlabs Dental Academy, an educational platform
dedicated to advancing dental 3D printing through online and
in-person courses, step-by-step guides, webinars, and more. The
platform offers free and paid courses for dental professionals that
include dental lab technicians, orthodontists, and clinicians learn
and successfully implement 3D printing technology in their
practices. Dental Academy courses are open and available both
online and in-person. Incorporating 3D printing into a dental
treatment plan benefits practitioners by allowing for more
efficient workflows and less downtime, while providing patients
with personalized yet affordable solutions such as custom dental
models, crowns, dentures, implants, and more.

Source: Manufactur3D on June 17, 2022

Global Dental 3D printing market expected to grow
$8.2B during 2022-2029

A report on the Global Dental 3D Printing Market by Maximize
Market Research provides analysis for the forecast period of 2022
to 2029. The report provides market insights for industry
stakeholders, including an explanation of market data as well as
expected market size and trends. The report includes market
leaders, followers, and new entrants in the Global Dental 3D
Printing market by goods and services, revenue, financial
situation, portfolio, growth plans, and geographical presence makes
the study an investor’s guide.

Source: Digital Journal on July 11, 2022

AI expected to have significant impact on the
field of dentistry

The patient experience in the dentist’s chair is changing,
however, and the patient trust deficit may soon shrink due to
artificial intelligence, according to Fortune. AI algorithms that
help dentist detect and track oral health issues with sensitivity
and precision that is equal to and often better than that of the
human eye promises to bring greater accuracy, consistency, and
transparency to a field of medicine that has long been beset by
patient mistrust. There are a number of reasons, however, that AI
will have an outsized impact on the field of dentistry. For
instance, dentistry sees way more X-rays than any other healthcare
fields. The volume of available imagery enables training of highly
accurate machine learning (ML) algorithms trained to recognize
humans through exposure to numerous images of faces that can detect
oral ailments more accurately than the human eye.

Source: Fast Company on July 1, 2022

DENTAL PRACTICE NEWS

Overjet partners with Affinity Dental Management
to utilize dental AI solution to improve patient care

The partnership will provide the practices with Overjet’s
AI-powered radiograph analysis solution to improve patient care,
clinical excellence, and practice efficiency. Overjet is the only
dental AI company that is FDA-cleared for both quantifying bone
level measurements to aid in the diagnosis of periodontal disease
and for detecting and outlining caries on X-rays. Affinity Dental
Management has 35 affiliated practices and more than 70 dentists
providing general dentistry and specialty services to families in
Massachusetts, Connecticut, Vermont, and New York.

Source: Dentistry Today on July 11, 2022

Patient cancellations continue to be a major
problem affecting dental practices across the U.S., preventing them
from filling their schedules, leads to revenue losses

According to the American Dental Association’s Health Policy
Institute, patient cancellations have been a main factor preventing
practices from filling their schedules over the past few months. In
June, 82% of dental practices said patient cancellations affected
their practice schedules, followed by a lack of appointments being
made and staff shortages. Robert Trager, a dentist at JFK and
LaGuardia airports, said that while his practice has always
experienced cancellations, now more than ever, airline
cancellations and delays have exacerbated the situation. Many other
dentists around the country are experiencing the same problem. Even
though COVID-19 restrictions have eased and many patients have been
vaccinated, cancelations persist in the industry.

Source: Becker’s Dental and DSO Review on July 5,
2022

British dentists warn common baby food pouches
contain ‘more sugary than Coca-Cola’ despite false
advertising claims of ‘no added sugar’

The British Dental Association (BDA) is warning that many baby
food pouches contain more sugar than Coca-Cola. The BDA are
concerned over an “epidemic” of tooth decay among young
children. A survey by the organization found that more than a
quarter of 109 baby food pouches aimed at children under 12 months
old were found to contain more sugar by volume than Coca-Cola. The
fruit-based pouches marketed for infants between four and 12 months
old were found to contain sugar levels equivalent to up to 150% of
the soda drinks. Some products that were examined even contained up
to two-thirds of an adult’s recommended daily allowance of
sugar, the report found. The BDA said that the results contrasted
with the products’ claims that they contained only
“naturally occurring sugars” or “no added
sugar”.

Source: The Independent on July 8, 2022

EVENTS

ICDO 2022

August 2022, Chicago

International Conference on Advanced Aesthetic Dentistry
and Oral Treatments

September 2022, San Francisco

American Association of Oral and Maxillofacial
Surgeons

September 2022, New Orleans

Straumann Symposium

October 2022, Boston

Pacific Northwest Dental
Conference

November 2022, Seattle

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