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BFD Expert Voices - Health Tech Deals

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A sale process is underway for founder-led dental support organization Dentive, multiple sources tell Sarah. 

Why it matters: Dentive plays in markets — including its Provo, Utah, headquarters, or the so-called Silicon Slopes — that have seen massive post-COVID growth as people swap pricy cities for a more affordable life.  

That translates to greater opportunity for many sectors in those underpenetrated markets, including dental care. 

What's happening: Dentive's auction process is private equity-focused, sources say. 

Houlihan Lokey is providing financial advice to Dentive, with the company marketing roughly $40 million of EBITDA, sources say. 

Led by founder Tom Clark, Dentive provides tech-enabled, non-clinical support to affiliated specialty and general dentist partners. 

How it works: Dentive is said to have a heavy doctor ownership model — and that may align with the evolution of PE-backed DSOs trying to balance physician autonomy and growth.

As the industry (and PE participation) has evolved, there's also a movement to shared services on a bespoke basis, versus the take-it-all model, one source notes.

Not every DSO is created equal from an organic growth perspective.

Factors that impact expansion include a concentration in rural versus suburban markets if players have specialty dentistry offerings, how they manage staff, etc.

Zoom in: The four-year-old Dentive is situated in some flourishing markets. 

Provo replaced San Francisco in 2021 as the No. 1 big metropolitan area with the best regional economy, per Milken Institute's annual ranking, Axios wrote. 

And, another one of its major markets — Bend, Oregon — ranked 13th in population growth among all U.S. metro areas from mid-2020 to mid-2021. Dentive also has a presence in Washington.

State of play: BlackRock Long Term Private Capital last week agreed to buy a majority stake in Paradigm Oral Health from InTandem Capital Partners, valuing the oral surgery company north of $900 million, Axios wrote. 

And, ICYMI: Axios wrote Wednesday that BC Partners formally kicked off its sale process for Zest Dental Solutions, the dominant player in overdenture attachments used to implant a full set of teeth.

The big picture: While dentistry is a well-trod sector for private equity, the industry, and the needs of dentists are constantly evolving. 

Dentive did not immediately return a request for comment, while Houlihan declined to comment.

1 big thing: Founder-led Dentive seeks PE partner

Illustration of a toothbrush polishing a quarter.

Dementia-focused mental health company Rippl catapulted out of stealth with $32 million in seed funding, Erin writes.

Why it's the BFD: Rippl couldn't have timed it better if it tried: It debuts the day after an investigational Alzheimer's treatment offered what experts are calling the most encouraging findings to date. 

Driving the news: The investigational treatment from Biogen and Eisai, called lecanemab, significantly slowed participants' rate of cognitive decline in a clinical trial.

Deal details: ARCH Venture Partners and General Catalyst led the round for Seattle-based Rippl.

GV, F-Prime Capital and Mass General Brigham Ventures joined.

How it works: Rippl, which offers therapy, medication management and remote monitoring, says its services will be offered by health plans and include 24/7 virtual care and support.

The company is using the seed funding to hire clinicians, develop its tech and open a Washington state-based clinical support center to launch pilot programs in two areas, starting in Seattle. 

By the numbers: Alzheimer’s is projected to cost the U.S. $321 billion this year including $206 billion in Medicare and Medicaid payments, per the Alzheimer's Association.

An estimated 6 million people in the U.S. are living with Alzheimer's, and an estimated 11 million more are providing unpaid care, according to the association.

What they're saying: Robert Nelsen, Rippl co-founder and ARCH managing director, said in a statement the company plans to tackle the issue of elder mental decline by centering clinicians.

"We have a shared drive to redefine what a health care company looks like, and that's by putting clinicians at the center of every decision we make," Nelsen said.

2. The BFD: Alzheimer's-focused Rippl gets $32M after hopeful study

Illustration of a heart and brain overlapping to create a venn diagram

State of play: There's been interest among venture capitalists in elder-focused care companies for about a decade, but most tackle the space through the lens of primary care, social support or nursing tech rather than age-related psychological decline. For example...

Lifespark, a tech-powered startup looking to reinvent senior care, is seeking $50 million in growth equity funding, sources told Axios last week.

Fair Square Medicare, a senior insurance navigation platform, in August garnered $15 million in Series A funding.

Sage, a startup hoping to replace nurse call systems at senior living facilities, in July notched $9 million in seed funding.

Honor, a provider of elder home care services, pulled in $70 million in Series E funding and $300 million in debt financing last October.

Papa, a Miami-based startup that pairs older adults and families with trained companions, raised $150 million in Series D funding last November.

3. State of play: Elder-focused care

Consumer Direct Holdings, a self-directed in-home personal care network, is merging with SPAC DTRT Health Acquisition Corp at a $681 million valuation, Sarah writes. 

Why it matters: SPAC deals, while no longer the founder's favorite financing tool, are still alive. TBD how this one will go, but CDH has characteristics that make folks more comfortable tapping into this vehicle despite the public market's choppy waters. 

Zoom in: Missoula, Montana-based CDH generates real earnings with visibility into future numbers, plays in a large and growing market, and importantly, its SPAC sponsor includes a bench of experienced health care execs and investors. 

DTRT Health Acquisition's CEO is Mark Heaney, who during his 31 years at Addus HomeCare held both the COO and CEO posts, eventually leading its successful IPO in 2009. 

COO Arion Robbins comes from health care PE firm Revelstoke Capital Partners, and CFO Don Klink is the former CFO of United Dental Partners, VNA Health Care and Addus.

💭 Our thought bubble: CDH and DTRT are a good match given that CDH's closest public comp is Addus.

How it works: Whereas Addus recruits, hires and places third-party caregivers in an individual's home, CDH allows older adults and people with disabilities to choose their own non-medical caregiver — often a family member or close friend. 

Acting as a tech-enabled program administrator, CDH facilitates and manages the various back-end functions to compensate caregivers of those patients that are eligible for public Medicaid assistance. 

Long-term contracts with states offer visibility into numbers. 

State of play: CDH is one of two scaled players in self-directed in-home care — the other being another under-the-radar player that recently garnered PE backing: Public Partnerships (PPL).

A deal was never announced, but Axios learned in August that DW Healthcare Partners and Linden Capital Partners quietly injected capital into PPL, which was said to generate some $20 million to $30 million of EBITDA.

Between the lines: Self-directed programs like CDH and PPL are growing as they solve for labor issues and as older adults demand greater autonomy as they age. 

Family caregivers oftentimes face financial or emotional stress — particularly if forced to step away from paid jobs. These programs are a solution. 

Likewise, it's a job creation opportunity for states, and potentially a more stable one. Whereas the agency model tends to see a lot of labor churn, caregivers that are family or friends are arguably more incentivized, one source explains. 

By the numbers: The transaction expects to result in up to $300 million of total available liquidity on a consolidated basis — which CDH says is adequate to support ongoing operations, development and expansion. 

The $681 million enterprise value implies 10.1x pro forma 2023 adjusted EBITDA — implying about $64 million of EBITDA. 

Current equity holders will own approximately 61% of the company post-closing. 

Who advised: Bank of Montana advised CDH, Deutsche Bank worked with DTRT and Lincoln International advised the board of directors.

4. SPAC alert: Ex-Addus CEO-sponsored SPAC inks home care deal

Illustration of a house wearing a stethoscope

Grow Therapy, a New York-based platform for therapists to launch their own practice, raised $75m in series B funding comprised of $45m in equity and $30m in venture debt, co-led by TCV and Transformation Capital with support from existing backers SignalFire and SVB.

InHome Therapy, a King of Prussia, Pa.-based provider of home physical, occupational and speech therapy services, raised $22m in financing led by TT Capital Partners and joined by insider NewSpring. https://www.inhometherapy.com/

Doccla, a London-based remote monitoring startup, raised $16.6m (£15m) in Series A funding. General Catalyst led and was joined by KHP Ventures, Giant Ventures and Speedinvest. https://axios.link/3RoJdUS

Xund, a Vienna-based virtual care platform, raised $6m in seed funding. MMC Ventures and MassMutual Ventures co-led, and were joined by Roche and Lana Ventures. www.xund.ai

Swiss Re exchanged its investment in Granular Insurance Company for an equity stake in Google life science company Verily. Granular is now wholly owned by Verily. https://www.swissre.com 

Town Hall Ventures, a firm focused on health care for underserved communities, closed its third fund with $350m in capital commitments. https://axios.link/3fwj3Cn 

5. Deals o' the day

Town Hall Ventures named former McKinsey & Co senior partner Meera Mani partner.

Babylon named former EY partner Andrew Hine VP of its go-to-market team. 

6. It's Personnel

💰 Situational awareness: The White House promises $8 billion in commitments to the "food is medicine" movement — aligning with investor attention to social determinants of health.

🍷 Erin is looking forward to visiting a local winery and the only one in her neighborhood this weekend with a friend from the Bay Area.

❤️ Thanks for reading, and extra thanks to newsletter editor Claire Rychlewski and copy editor Mickey Meece. Please ask your friends and colleagues to sign up.

September 29, 2022

1 big thing: Founder-led Dentive seeks PE partner