Planet DDS, a Newport Beach provider of cloud-based dental software, on Aug. 11 said it acquired QSIDental from NextGen Healthcare Inc. (Nasdaq: NXGN).
QSIDental has offered cloud-based dental practice management software for 40 years, including an older version of Planet DDS’ software.
“We’ve had a long relationship with NextGen,” Planet DDS Chief Executive Eric Giesecke told the Business Journal. NextGen “is more focused on community health centers and ambulatory services. We were the natural fit to send the (dental) customers to.”
It’s a departure from the dental business that originally helped build NextGen, which was founded as Quality Systems in 1974 by Orange County exec Sheldon Razin. It went public in 1982 as a dental software platform before expanding to the ambulatory healthcare market in 1996.
NextGen, which last year moved its headquarters from Irvine to Atlanta, was involved in a proxy battle with Razin, who was still on the board of directors until he lost his seat last year. Its current chairman is Jeff Margolis, who is active in Orange County medical circles, including as a director at Orange-based Alignment Healthcare Inc. (Nasdaq: ALHC) and at Hoag Memorial Hospital Presbyterian in Newport Beach.
NextGen has been reorganizing its businesses in recent years to shed units with little growth or profits.
On a conference call late last month, NextGen told analysts that it sold the “dental assets” for $12 million and said the unit was generating about $10 million in annual sales.
“They produced no growth over the last few years and would have required significant incremental investments” if NextGen kept it, Chief Financial Officer Jamie Arnold, who works out of the company’s OC offices, said on the call.
Giesecke said NextGen’s dental customers were using an older version of Planet DDS.
“We can easily upgrade them,” he said. “We don’t have to make those investments” that NextGen said were needed.
Planet DDS provides customers with cloud-based dental software that includes practice management, dental imaging, and patient engagement and retention capabilities that enable them to streamline operations.
The company’s current partners and customers include American Dental Partners, the U.S. Army and Navy, and Dental Care Alliance.
It has over 10,000 practices in North America with over 60,000 users.
The acquisition will probably add another 1,000 practices, Giesecke said.
The acquisition follows a June recapitalization of Planet DDS by Aquiline Capital Partners LLC, a New York-based private investment firm with $8.7 billion in assets under management.
“Eric and his team have built a comprehensive and highly scalable platform that is well-positioned to meet the growing demand for cloud-based dental practice management software,” Jeff Greenberg, chairman and CEO of Aquiline Capital, said in a June statement.
Another New York-based PE firm, Level Equity Management LLC, which invested in the Newport Beach company in 2019, rolled a portion of its existing equity in Planet DDS and invested additional capital.
“It is simply amazing what Eric and the Planet DDS team have accomplished since our acquisition less than three years ago,” said Ben Levin, co-founder and CEO of Level Equity.
Planet DDS has “the most comprehensive offering in the dental market and the only purpose-built, fully cloud-based solution for solo practitioners and DSOs alike,” Levin said.
Still on Hunt
Planet DDS, which has made four recent acquisitions, will continue to look for more, Giesecke said.
“We plan to be selective in acquisitions,” he said. “We like acquisitions with great products and great teams servicing a unique need in dentals. We’re not just going buying software companies and putting them together.”
Planet DDS was founded in 2003 by Richard Lee, who now leads Irvine-based teledentistry firm Virtual Dental Care, which has 14 employees, placing it No. 14 on the Business Journal’s most recent list of dental companies.
At that time, Planet DDS had 140 employees companywide and $19 million in sales in 2021, ranking it No. 12 on the Business Journal’s list.
With the recent acquisitions, the company now has close to 300 employees and a $45 million run rate, Giesecke said.
“The great folks that we are hiring—are almost all local—we’re happy about them joining,” he said. “We’re really excited about the acquisition. There are a great bunch of customers that we’ll have.”