Gentle Dental to Merge With Florida Firm
Gentle Dental Services Corp. of El Segundo said Thursday that it plans to merge with a Florida company in an $80-million stock deal that would create one of the largest publicly traded firms in the fast-growing dental practice management industry.
Gentle Dental’s combination with Sarasota-based Dental Care Alliance Inc. would create a company with annual revenue of about $175 million.
The combined companies, which haven’t decided on a new name, would be based in El Segundo, company officials said Thursday.
Both companies went public last year, joining a small wave of dental concerns seeking to capitalize on the consolidation among dental practices. These management companies offer to free dentists from the headaches of running a business so they can focus on patient care.
They provide office space, equipment, billing services, marketing and staff in exchange for a portion of a dentist’s revenue.
Under terms of the deal, Gentle Dental investors would receive one share in the new company for each Gentle Dental share they own, and would wind up with a 53.5% stake once certain preferred stock and debt is converted to common stock. Dental Care investors would receive 1.67 shares in the new company for each Dental Care share they own.
The deal was announced after the markets closed Thursday. Gentle Dental shares rose 25 cents to close at $5.75, and Dental Care advanced 38 cents to $9.75. Both companies trade on Nasdaq.
In the six months ended June 30, Gentle Dental trimmed its losses to $108,000, or 1 cent a share, from a $1.2-million deficit, or 32 cents a share, a year earlier. Revenue rose 126% to $39.4 million. Dental Care posted a $1.5-million profit, or 22 cents a share, contrasted with a $10,889 loss a year earlier. Six-month revenue surged to $12.1 million, from $2.6 million a year earlier.
Gentle Dental Chief Executive Michael Fiore, 44, would become chief executive of the new company, and Dental Care’s chairman and chief executive, Steven Matzkin, 40, would become president and chief dental officer.
Fiore said the merger would give both companies the chance to boost business in their respective markets. Gentle Dental operates 82 offices, with about 45 in California and the rest in other Western states. Dental Care operates 55 offices, mostly in Florida.
Matzkin said the deal “gives us an opportunity to be a market leader. We can make Gentle more profitable and they can help us develop more profitably as well.”
The deal requires both shareholder and regulatory approvals.
