O.C.’s Steri-Oss Will Be Sold

Steri-Oss Inc., a fast-growing maker of dental implants, will be sold by its giant parent, Bausch & Lomb, to its top executives and a private investment fund, the companies said Tuesday.

The Finisterre Fund of New York, which invests in health-care businesses, would receive the majority stake in Steri-Oss, though the company’s local management team would continue to run the company, officials said.

Kenneth Darienzo, president of Steri-Oss, said that he would both retain his post under the new ownership and receive the largest share of the minority stake held by a few senior managers.

He predicted that the growth-driven company would provide financial incentives and “a lot of opportunities” for its entire 180-employee work force.

Terms of the deal were not disclosed. If adequate financing is arranged, the transaction is expected to close by year’s end, officials said.

Steri-Oss is one of a handful of privately held companies that make most of the dental implants sold worldwide. The company is profitable and has annual sales of about $28 million, more than double the level when Bausch & Lomb bought it three years ago, officials said.

Its sole factory, in Yorba Linda, makes titanium implants for missing teeth. They consist of a prosthesis that resembles a sawed-down tooth and a tiny screw that attaches it to the jawbone. (The company does not make the porcelain crown, which the dentist fits over the prosthesis.)

Founded in 1985, the company was sold to Bausch & Lomb three years ago when the Rochester, N.Y., giant was attempting to diversify into dental products. This year, Bausch & Lomb, in a strategic about-face, decided to refocus on its basic vision business and divest itself of Steri-Oss.

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Darienzo, who has been the top executive of the dental implant company since 1989, said that he is among the executives who sold their Steri-Oss shares to Bausch & Lomb in 1993 and now expect to buy back a chunk of the company.

Finisterre Fund, which invests in growth areas of the health-care business, plans to use Steri-Oss as a platform for other acquisitions, but officials weren’t specific. “We think this is a tremendous company with tremendous potential,” said Richard Gumer, a managing director of the fund.

He said that no employees will be laid off.

The fund, formed in 1994, seeks to make investments of $10 million to $100 million in privately held health-care companies.

The dental implant industry is dominated by closely held companies, but officials estimate that worldwide industry sales run about $350 million a year and are growing at an 8% to 12% clip. They say implants are superior to dentures because, unlike dentures, they don’t cause the jawbone to deteriorate, sometimes altering the shape of the face.

With dentures, Darienzo adds, “you can’t speak exactly normally, and you can’t eat certain foods.”

The American Dental Assn., which tests dental products, says that dental implants have advantages and disadvantages. A brochure for consumers says that among other complications, implants can cause “stress” to the jawbone, sometimes resulting in bone loss and loose implants that might have to be replaced with dentures.

Implants can be costly too. Consumer Reports magazine reports in this month’s issue that a single-tooth implant may cost $1,500 to $4,000, not much more than a small bridge. But a complete set for the upper or lower jaw can run $18,000 to $30,000, as much as 15 times more than full dentures, the magazine said.

The association, whose product acceptance is sought by manufacturers, has issued its “seal of acceptance” for some dental implants by Steri-Oss’ competitors. Two Steri-Oss products have received preliminary acceptance, but more studies must be completed before they are eligible for full acceptance, the organization said.

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Steri-Oss at a Glance

* Founded: 1985

* Headquarters: Yorba Linda

* President: Kenneth Darienzo

* Employees: 180

* Ownership: Bausch & Lomb, which purchased it in 1993, will sell it to top management and a private investment fund.

* Estimated annual sales: $20 million to $25 million

* Status: Private

* Products: Dental implants

Source: Steri-Oss; Researched by JANICE L. JONES / Los Angeles Times