SmileCare of Irvine Plans Big Expansion

SmileCare, a small provider of dental services, appears to be headed for a major expansion.

A New York investment firm, Liberty Partners, acquired a majority stake in the Irvine company, which has 17 offices in Southern California, and will provide up to $100 million for expansion, a SmileCare official said.

Mary-Ellen Hardin, SmileCare’s chief executive, said the company sees great opportunity for the managed dental care industry to grow throughout California, just as managed health care did more than a decade ago. Late last year, she said, the company started shopping for expansion capital as its possible ticket to the big leagues.

Clearly, Liberty has big aims too.

Paul Huston, managing director, noted the recent rush of Wall Street investments and initial stock offerings in dental management companies.

He said Liberty looks for “double-digit” returns on its investment and generally likes to either take its investments public or sell out to larger buyers. Liberty, which wouldn’t disclose the value of its equity investment, has more than $700 million in investments under management.

With 250,000 enrollees, SmileCare ranks among smaller to mid-sized dental plans. Hardin said the company would eventually like to develop into a “leader” nationally, but said immediate plans call for using some of Liberty’s funds to set up more SmileCare offices throughout California.

She declined to say how many or when.

SmileCare, which employs 350, started in Los Angeles 20 years ago as a mom-and-pop dental operation. Dr. Dennis R. Hardin and his wife, Mary-Ellen, a lawyer, bought a major practice, then later moved their headquarters to Tustin, then Irvine. In the 1980s, the company added other offices and two years ago it began lining up managed care contracts with 3,400 independent dentists across the state.

Currently, Hardin is a board member.

Huston, who said Liberty considered a number of dental management companies before choosing SmileCare, said, “We believe that Dr. Hardin and Mary-Ellen Hardin are two of the strongest managers in the industry.” He said Liberty intends to let the Hardins run the business as they see fit.