Illustration: Shoshana Gordon/Axios
Alpine Investors-backed DSO Lightwave Dental is on the block, sources tell Axios.
Why it matters: With several PE-backed peers reaching 5-year-plus hold times, Lightwave could be one of a handful of sponsor-backed dental platforms coming to market after a sluggish 2022.
What's happening: Houlihan Lokey is advising Woodbridge, Virginia-based Lightwave, the sources say.
- Lightwave is being marketed on around $40 million in EBITDA, they note.
- The process launched in the fourth quarter of 2022, one source adds.
Driving the news: Yesterday, HGGC announced its acquisition of Utah-based DSO Dentive.
- That deal was a leveraged buyout, HGGC partner Pat Dugoni told Axios, declining to disclose the lender or other financials.
- Not only was Dentive around the same size, at $40 million of EBITDA per Axios reporting (Dugoni declined to comment), but that auction was also led by Houlihan Lokey.
Catch up fast: Alpine acquired Lightwave in 2016 for an undisclosed price.
- The company has executed several acquisitions since, most recently buying Blue Ridge Orthodontics and Smoky Mountain Dentistry in March 2022.
- Lightwave has 76 practices across Virginia, North Carolina, South Carolina and Alabama, over 1,800 employees, and is a non-Medicaid provider, per its website.
Context: Dental platforms generating from $20 million to $40 million in EBITDA are continuing to trade at 12x to 15x EBITDA, one source says.
- "If it's fully integrated, no Medicaid, has a good management team and a good integration team, they're going to fetch in that 13x to 14x range," he says.
- Additionally, although buyers are taking a more critical eye on EBITDA adjustments, the source noted that many platforms are still getting deal pipeline credit for their financials.
Of note: Dental bolt-ons aren't exactly cheap at the moment.
- Practices in the $1 million to $2 million EBITDA range are fetching upper-single-digit to lower-double-digit multiples, a source says.
- Paying up for add-on acquisitions could come back to bite DSOs that are still recovering from the pandemic impact and the ongoing labor crisis.
State of play: Though PE hold times are stretching longer, several long-in-the-tooth assets seem due for a trade soon.
- NPK Capital formed Guardian Dentistry in 2018, and the platform has since completed a handful of debt transactions.
- Linden Capital acquired Sage Dental in 2012 and has since completed debt refinancings via Twin Brook Capital Partners, per PitchBook.
- Silver Oak Services Partners has held Smile Partners since 2017 and hired Piper Sandler last year to explore a transaction.
Houlihan declined to comment. Alpine did not respond to a request for comment.