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Scoop: Lightwave Dental exploring sale

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Jan 20, 2023
Illustration of a toothbrush with dollar bills as bristles.

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.

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