Laguna Hills-based dental technology company Sonendo Inc., Orange County’s fastest-growing midsized private company for two years running, isn’t done growing.
The medtech firm, whose GentleWave System uses a combination of a liquid solution and acoustic energies to clean a tooth’s root canal system, this month announced an $85 million funding round, led by New York-based EW Healthcare Partners, one of the largest and oldest private healthcare investment firms, with some $4 billion raised since its 1985 founding.
EW invests in companies with revenue between $20 million to $200 million and are EBITDA-positive, or about to be.
Sonendo clearly fits the bill in terms of revenue, thanks to a hyper-charged period of growth of late as its GentleWave product has been introduced into the market.
It reported two-year revenue growth of 814% to $38.4 million for the year ended June 30, 2019.
That figure comfortably placed them first in the Business Journal’s 2019 ranking of fast-growing midsized private companies—those with revenue between $10 million and $100 million.
A year prior, Sonendo was also No. 1 on the same list, reporting two-year revenue growth of 2,083%, jumping from $4.2 million to $13.1 million between 2016 and 2018.
“It’s an exciting time to be part of Sonendo as we continue to collaborate in partnership with the endodontist and advocate for saving more teeth for more patients,” said Chief Executive and President Bjarne Bergheim, at the time of last year’s Business Journal rankings.
The company is estimated to employ more than 170 people in Orange County, up from about 100 two years ago.
It’s currently hiring locally for about a dozen positions, according to the company’s website. Open positions include a “senior talent operations specialist,” suggesting a bigger hiring push could be on the way soon.
Fraction of Market
Sonendo and its new investors said that its GentleWave System has now been used by more than 300,000 patients.
That figure represents just a fraction of the potential market for the product, which the company says “presents an alternative to traditional root canal treatment and a departure from the standard file-based techniques of cleaning root canals.”
More than 40,000 root canals are performed every day, according to data from the American Association of Endodontists.
The company’s minimally invasive product leaves teeth intact by delivering a “vortex of fluids” to the root canal system, it says.
Sonendo “represents an extremely compelling medtech opportunity in the dental segment with its transformative technology that benefits an underserved market and has the potential to change the way endodontics is practiced today,” said Brooks Andrews, a partner with EW.
Andrews has joined Sonendo’s board of directors.
In addition to the root canal technology, Sonendo is also the developer of TDO Software, which the company calls “the most widely used endodontic practice management software in the world.”
TDO software integrates practice management, imaging, social media, referral reporting, CBCT imaging, and also offers “built-in communication with the GentleWave System,” according to the company.
$200M+
The $85 million funding round is a notable one for the medtech industry; in 2019 only six larger venture capital deals for private medical device companies were completed in the U.S., according to data from healthcare trade publication Vantage.
Sonendo also raised a $17 million funding round in mid-2019. The latest round puts its reported cumulative funding over $200 million since its 2006 founding.
The company was initially called Dentatek Corp. and was founded by Laguna Hills-based Fjord Ventures, a life sciences accelerator that invests in a variety of medical device, diagnostic and biopharmaceutical companies.
Fjord and Sonendo were founded by local investor Olav Bergheim, who’s on Sonendo’s board. Fjord was also an investor in San Clemente’s eye-stent maker Glaukos Corp. (NYSE: GKOS), which went public in 2015 and counts a $2.5 billion market capitalization.
Olav Bergheim is the father of CEO Bjarne.
New, Existing Investor
Fjord wasn’t listed as an investor in the latest round, which along with EW included new investors Redmile Group of San Francisco, Denver-based ArrowMark Partners, and New York-based Broadfin Capital.
Other existing investors participating in the round include General Atlantic, Orbimed Advisors LLC, Meritech Capital Partners, CVF LLC, NeoMed Management, Perceptive Advisors, JMR Capital, SEB Private Equity, and Security Pacific Finance.
