Bright Now Dental Inc.’ has mixed two large deals with its own expansion to come up with a formula that’s brought a smile to cofounder and Chief Executive Steven Bilt.
The dental management company expects nearly $500 million in sales this year, up from about $70 million in 2003, he said.
Santa Ana-based Bright Now provides management services for dentists, including technology, accounting and billing, human resources, managed care contracting, marketing, call centers and other services.
Bright Now’s growth spurt was fueled a couple of years ago by a pair of acquisitions.
It spent $53 million in 2004 for Castle Dental Centers Inc., a Houston-based company with 73 offices in Florida, Texas, Tennessee and California. A year earlier, it spent $11 million for Monarch Dental Corp., a once high-flying Dallas-based dental practice management operator that fell on hard times.
“The rest of the industry had basically failed,” Bilt said.
Bright Now picked up Monarch Dental at a bargain, according to Bilt.
“They were three times our size,it was kind of a classic minnow swallowing a whale story,” he said.
At the time of that deal, Monarch had 150 dental offices, nearly triple that of Bright Now’s.
“Once we did those two, it was time to stop, take a pause and attend to the infrastructure,” Bilt said.
The Future
The company is focusing on a “de novo” growth model, where it builds dental offices in its markets instead of acquiring them through acquisitions. Bright Now opened 22 offices last year.
Still, Bilt said he could see another major deal come next year or in 2009.
Bright Now has nearly 300 affiliated dental offices in 19 states under its umbrella, operating under the Bright Now, Castle Dental, Newport Dental and Monarch Dental names.
The company counts 4,500 workers, including 150 at its Santa Ana headquarters. Independent dentists contract with the company and provide general, specialty and cosmetic dentistry to more than 2 million patients a year.
Freeman Spogli & Co., a private equity firm with offices in Los Angeles and New York, is Bright Now’s majority owner. Freeman Spogli acquired a majority share of Bright Now from San Francisco-based Gryphon Investors in 2005.
The company has a lot of possibilities, according to Bilt.
“We can either take it public, or we could do another private equity deal,” he said.
Bright Now still has room for growth.
The U.S. dentistry market is estimated at $90 billion annually, which Bilt said is “just a monster.” There’s room for expansion because large dental practice management companies only have about 5% of it, if even that, he said.
“We’re talking cottage, unconsolidated, Wild West, whichever metaphor you want to use,” Bilt said, chuckling.
Other players with business models different than Bright Now’s include a pair of OC companies: Western Dental Services Inc., which is based in Orange and has 200 dental offices in California and Arizona; and Irvine-based Pacific Dental Services, which has about 125 affiliated practices in California, Arizona and Nevada.
Other big players include InterDent Inc., an El Segundo-based company that went private in 2003 after emerging from bankruptcy, Aspen Dental Management Inc. of Syracuse, N.Y., and American Dental Partners Inc., a publicly traded company based in Wakefield, Mass.
Luring Dentists
The other variable of the business: getting dentists to work in its offices.
“We tell dentists that they’ll be able to spend more time on patient care, among other things,” Bilt said. “They’re going to produce 40% to 50% more dentistry (than the average private practice dentist).”
Dentistry is all they do. None of the billing and other issues in running a practice.
Bilt, who became chief executive in 2000, succeeded Richard Matros, who now is chief executive of Sun Healthcare Group Inc., an Irvine-based nursing home operator. Bilt spent the first 15 months at Bright Now as its chief financial officer.
“First of all, we bought three companies with 45 offices and pretty much struggled right out of the gate,” Bilt said.
Cleaning Up
Certain things, such as too many different information systems in all the different clinics, consumed his time.
“We had a lot to do to try to organize the company. When I moved into the CEO role, I had just really finished taking the clinical information systems from 23 down to one. And then I moved into the operating role and just aligned mental models,” Bilt said.
Bright Now’s roots date back to 1998, when Consumer Dental Services Organization was started after Matros affiliated with Gryphon, a private equity firm that invests in midsize companies.
Gryphon and Matros first invested in Consumer Dental Services Organization, a 19-office Northern California operation that specialized in union and employer group services. The partnership then acquired the 16 Southern California offices of Newport Dental. Bright Now later took over managing the Megdal Dental Care clinics, another dental chain, later in 1998.
In an earlier Business Journal article, Matros said that consolidating dentists under a single practice management company was part of a trend that started roughly a decade ago. What Bright Now was doing had different roots than physician group consolidation, which was driven by managed care demands, Matros said.
“This is a consolidation that is really focused on making life easier for the individual dentist and taking advantage of economies of scale,” he said.
