Consolidations all around
It is clear that we are fast moving from a world of one man band sole practitioners to one of multi-site practices or chains offering a variety of services to suit everyone’s needs. Dentistry in the UK and Europe is changing rapidly.
Principals in the UK are using web and social media to select their specialist accountants and brokers when it comes to sell, and patients are also becoming more selective when it comes to choosing a dentist or healthcare practitioner. Consolidations have been happening for years, both in the UK and abroad, however we feel the process has barely begun, including in the UK.
It is no hidden news that investors are after profit, clearly, but in my view consolidations can be good as it is easier for regulators to control single handed practitioners, in addition to this, multi-site practices can offer a variety of services.
Consolidations of groups of dental practices are also happening in the rest of Europe, the main difference between UK dentistry and the rest of Europe seems to be that the British model grows profits by reducing costs and still heavily relying on the NHS contracts, whilst the European models heavily rely on the growth of the number of new customers.
In the UK
BUPA recently made an offer to acquire Oasis for £835m with 380 practices and 1,800 dentists. The company was previously acquired by Bridgepoint in 2013 for £187m and grew after purchasing Smiles, Apex Dental and DenDental as well as individual practices and labs. Along with a few other large Dental Body Corporates, there are around 80-90 smaller chains ranging from 5-30 practices each..
What about the rest of Europe?
A fast-developing market. Market leader is Zahnarztzentrum which offers 32 clinics in city centres. Adent is the second largest player Adent now have 18 dental clinics following acquisition of 5 new clinics in German – speaking Switzerland. Swiss Smiles has raised €44m in 2015 and has 13 clinics in Switzerland plus clinics in London, Russia and India.
The three largest chains are Samenwerkende Tandartsen with 32 practices followed by Dental Clinics and Ivory & Ivory, both with 23 practices.
The market leader in Swedish dentistry is Praktikertjanst, a €1bn cooperative of dentists and family doctors , followed by Colosseum (a merger of the two largest practices in Norway and Sweden in March 2014). City Dental, a single big clinic in Stockholm , a Danish chain of 10 outlets, Godt Smild. OralCare in Sweden specializes in providing mobile dentistry services to the elderly at home and in nursing homes and is planning to expand internationally.
Oral is by far the largest player. Other chains are held by the large care to hospital groups who dominate the Finnish landscape. Uusitalo puts Mediverkko as number 2, followed by Attendo in third place. Med Group, a smaller conglomerate is also building a chain.
In the UK, dentists can sell NHS revenue for around 5 times EBITDA, or, roughly, 130-140% of gross revenue. In Italy, the dentist often pays to join a franchise. It is a completely different system. Big Spanish group Vitaldent is the largest player in Italy with some 80 outlets. It is gradually converting from a franchise model to one which is wholly owned. The second largest player is Dental Pro with 21 outlets.
Other large players include Dentalcoop and Giovanni Bona and there are a myriad of other small, regional chains. There are 400 outlets in chains today out of a total of more than 38,000. The Italian government pays for as little as 4% of dental costs in Italy and this is concentrated in particular areas where the state runs dental hospitals.
Spain / Portugal
Vitaldent, the big family-owned dentistry chain operating across Spain and Italy, has 460 clinics and claims to be three times larger than its nearest rival in Spain, where it claims 7% market share, and five times larger in Italy. It is now entering Poland.
Realza Capital is consolidating high-end dentistry in Spain merging Clínicas Aparicio in Barcelona with Clinico Perio in Madrid. Both carry out dental implants and dental surgery. In Portugal private equity house Inter-Risco is trying to consolidate the market. In 2011, Inter-Risco invested in 32 Senses, a buy-and- build dental project which planned to buy around 150 dental clinics and fund the roll-out of another 30 to 40 greenfield facilities by 2014. It has now bought chains Alba and Smile Up.