Private Equity Reinforces its Investment with Canadian Dental Group

Amrit Bhogal and Dr. Mark McCullough practice suturing at MCA Dental Group

The Canadian market for dental services is expected to see a compounded annual growth rate (CAGR) of 6.6% from 2019 to 2024. This is primarily attributed to the growth of the aging population. Another interesting fact is the average Canadian dentist is over 50 years old. Many of these dentists are thinking about transition planning. Canadian dentists are also citing day-to-day business management struggles related to managing operational expenses, patient scheduling, dealing with insurance companies, finding, hiring and retaining employees.  Considering the aforementioned factors there is no better time for DSOs to grow in Canada than over the next 5 to 10 years.

Furthermore, over one third of Canadian dentists have been practicing at their current location for more than 25 years and with that is a lot of goodwill attributed to these more established practices with a stable patient base, especially if the principal dentist is willing to integrate a new associate dentist into the practice ahead of retirement.

It’s also worth noting that preventable dental issues led to more than 60,000 emergency room visits and 230,000 family doctor visits in just the Province of Ontario in 2014, at a cost of around $40 million. Some believe that because the Canadian market for dental services is highly fragmented, it’s difficult to improve access to oral care for Canadians without practices becoming more efficient. At scale, DSOs show promise in helping increase access to oral health in Canada. It is expected that the highly fragmented Canadian market for dental services will continue to consolidate. One DSO which is participating in the consolidation is MCA Dental Group Limited.

Founded in 2017 by Ken Craig and Dr. Mark McCullough, Chief Dental Officer, MCA, headquartered in Ottawa, has just announced their partnership with Persistence Capital Partners (PCP), a private equity fund focused exclusively on investing in high-growth opportunities in Canadian healthcare. While an initial partnership was established in early 2018, this announcement comes with a new round of investment.

“Partnering with PCP was an easy choice for us, knowing the firm has a long history of supporting and advancing Canadian healthcare companies made them an ideal partner,” says Ken Craig, Chief Executive Officer of MCA. “This investment will not only allow us to bring in the best talent to our team but will also accelerate our investments into more practices across the country.”

The initial investment received from PCP in 2018 was an important milestone for MCA because it recognized the future potential of MCA and allowed them to execute their strategy by building on existing operation’s infrastructure to support current and future dental partners, grow and improve the management team, as well as, fund expansion initiatives.

“We are thrilled to build on our partnership with MCA, an investment that exemplifies our strategy of creating and growing Canada’s leading healthcare businesses,” added John Trang, Partner at PCP. “We continue to do what has made PCP successful – partnering with a proven management team, in a growing and stable market with strong consolidation trends. We are proud that MCA is a hallmark investment in our third fund.”

MCA believes that the right business model greatly depends on geography, intensity of competition, as well as the skillsets and experience of the operations team. They are deploying dental business intelligence, patient feedback, inventory management and human resource software to better support practices of various sizes across Canada.

“The biggest challenge with any system implementation project is change management given that unlike most other industries, the primary factor of production in dentistry remains people, not technology. As such, we ensure that our dental partners are involved with shaping our system implementation roadmaps and understand the benefits that any new system or process will bring to them and their patients.” -Sina S. Amiri, VP, Operations, MCA Dental Group

MCA formed a dental hygiene committee as well as a dental office administration committee comprised of select individuals from various practices who work collaboratively to create educational resources by function for their supported practices. This ensures the curriculum they offer reflects the real day-to-day challenges front-line employees face and makes sure they have a voice in helping shape MCA’s training and development process. They are doing the same with dental assistants and associate dentists who work at practices supported by MCA.

As a privately held company, MCA does not disclose the number of dental office locations they support. MCA however is focused on total revenue, EBITDA, and the number of patients each of the practices serves as a result of the efficiencies following affiliation. Interestingly, MCA has doubled their total EBITDA following the first round of investment from PCP and plans to double it again within the next six months. One of their practices already sees over a hundred new patients per month which justified an expansion into a second location.

What differentiates MCA from some other DSOs in Canada is that they don’t believe all dentists want to focus on just being dentists. They appeal to entrepreneurial dentists looking to scale their operations in Canada without losing their brand identity, organizational culture or practice philosophy. One of their most successful dental partners is a female dentist in her mid-30s who is taking a clinic that’s already producing over $5 million in annual revenues and seeking to replicate that success in a second location with MCA’s capital and support services.

The DSO is focused primarily on acquisitions, but they have been working with regional partners to exploit other models that fit with their strategic objectives and MCA’s collective operational strengths. As an example, one of MCA’s dental partners has grown its market share by completing twelve successful tuck-in acquisitions and currently operates one of the largest dental clinics in Canada.

MCA’s short-term goals are to form more partnerships with entrepreneurial dentists across Canada seeking to grow their regional footprint through acquisitions, as well as to facilitate the transition of more solo practitioners into retirement.

According to Sina S. Amiri, VP, Operations, MCA Dental Group, “When your DSO finally establishes a high-performing team, your biggest challenge stems from the fact that you tend to hire very slowly. There is also a tendency to look for a job candidate with precisely the right education, set of experience and range of qualifications that perfectly fit a job’s requirements. Thankfully, we’ve had great success promoting from within our organization. As an example, our current Director of HR & Integration started her dental career at the age of 18. More than 16 years ago, she began working as a dental assistant with our Co-founder and Chief Dental Officer who quickly realized her leadership potential. She went from being a chairside dental assistant to working as an office administrator as well as a treatment coordinator and from managing a single practice location with 18 operatories to leading the day-to-day operations of 10 dental offices in two provinces.”

MCA is particularly proud of their DSO’s social impact. Dr. Mark McCullough, MCA’s Chief Dental Officer and Dr. Timothy Winlow, an MCA dental partner, volunteer with the Children’s Hospital of Eastern Ontario and the Pediatric Oncology Group of Ontario After-Care Team to provide dental care to approximately 10 patients per year, totaling over 70 survivors since inception of their volunteerism. They also participate in an annual free day of dentistry.

Additionally, they are involved with training the next generation of dentists by giving them exposure to the practices they support. In August 2019, a first-year dental student, Amrit Bhogal, and class president at Western University’s School of Dentistry (pictured above with Dr. Mark McCullough) completed a paid summer internship within MCA’s operations team, giving him unique exposure to both clinical training and dental practice management. Click here to read his takeaways.

MCA’s leadership team comprises of:

  • Ken Craig, Co-founder & CEO
  • Dr. Mark McCullough, Co-founder & Chief Dental Officer
  • Sina S. Amiri, VP of Operations
  • Roma Stepanchenko, VP of Mergers & Acquisitions
  • Mila Olumogba, VP of Marketing
  • Quinlan Boots, VP of Finance
  • Dr. Berne Reesor, Director of Partnership Development
  • Kendra March, Director of HR & Integration

 The MCA leadership team is further supported by:

  • Chelsea Fairhead, Training Lead, Dental Assistants
  • Regional Operations Managers

Sources: PRNewswire, PE Hub, Newswire 


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