Patterson Firms is shifting nearer to changing into a non-public firm after its shareholders permitted its acquisition by funding agency Affected person Sq. Capital at a particular assembly on Tuesday.
“The Patterson workforce is happy about this partnership with Affected person Sq. Capital and starting our subsequent chapter as a non-public firm,” stated Don Zurbay, Patterson’s president and chief govt officer.
The approval follows a merger settlement dated Dec. 10, underneath which Affected person Sq. Capital will purchase Patterson in an all-cash transaction valued at roughly $4.1 billion. The deal provides Patterson shareholders $31.35 per share of frequent inventory. Affected person Sq. Capital had about $12 billion in belongings underneath administration as of Dec. 31.
Patterson expects the transaction to shut later this month. Upon completion, the corporate will turn out to be privately held, and its frequent inventory will now not be traded on the Nasdaq International Choose Market.
Non-public fairness pattern
Non-public fairness companies proceed to consolidate the U.S. healthcare companies market, together with dental laboratories, clinics and tools suppliers similar to Patterson. Final 12 months, Steris, an American-Irish medical tools firm specializing in sterilization and surgical merchandise, bought its dental phase, HuFriedyGroup, to personal fairness agency Peak Rock Capital in a $787.5-million deal. KKR & Co. final 12 months additionally turned the largest non-index fund shareholder in Henry Schein, taking a 12 per cent stake with the choice to extend it to almost 15 per cent.
Non-public buyers are drawn to healthcare acquisitions for his or her potential operational efficiencies, market enlargement alternatives and synergies throughout acquired companies.
“We imagine this collaboration will allow us to proceed investing in serving our clients and our enterprise, speed up our development, and be well-positioned to realize our strategic priorities,” Zurbay stated.
“The broader shift towards consolidation can deliver efficiencies—but additionally the danger of diminished competitors and selection.” Gurtej Varn.
What does this imply for dentists?
Gurtej Varn, a wealth advisor at White Coat Monetary Inc., stated Patterson’s shift to personal possession is a “significant development” for the dental group, although it may have each optimistic and damaging implications for dentists.
“The broader shift towards consolidation can deliver efficiencies—but additionally the danger of diminished competitors and selection,” Varn stated.
In the case of pricing fashions, going non-public is a “two-sided coin.”
“On one hand, it removes the strain of quarterly earnings and the fixed scrutiny of public markets,“ he stated. “This could permit Patterson to make longer-term investments in areas like digital infrastructure, logistics and value-added companies—investments which will have been more durable to justify whereas making an attempt to satisfy short-term shareholder expectations.“
For dental professionals, this might imply extra “built-in and progressive choices” from Patterson.
“For dentists, it will likely be necessary to watch whether or not service high quality and responsiveness enhance—or in the event that they’re being quietly adjusted behind the scenes.” Gurtej Varn.
Nonetheless, non-public fairness possession introduces a “totally different set of efficiency metrics, most notably an intensified concentrate on profitability and EBITDA development.”
“This shift may manifest in modifications to pricing fashions, provide chain constructions or product bundling methods,” Varn stated.
Whereas Patterson has indicated a continued concentrate on serving clients, the wealth advisor famous there’s potential for margin optimization initiatives which will have an effect on how dental practices buy and pay for services.
The identical applies to customer support. Patterson may “make investments extra deeply in customer support, technical assist and tailor-made options for clinics. However there’s additionally the danger of streamlining or consolidation if sure divisions are seen as underperforming.”
“For dentists, it will likely be necessary to watch whether or not service high quality and responsiveness enhance—or in the event that they’re being quietly adjusted behind the scenes,” Varn stated.
