Unveiling the Investment Strategy: Parkview Dental Partners, a Profitable Contrarian Investment
In the dynamic Southwest Florida market, characterized by population growth at 3x the national average, an aging population with higher dental care needs, and robust GDP growth, Parkview Dental Partners has found a unique opportunity.
Founded in 2018 in Sarasota, Florida, Parkview Dental Partners manages 25 dental practices that provide general and specialty dentistry. The key to Cathay Capital's investment thesis was identifying a location with strong population fundamentals, high fragmentation, and a company that wanted to operate as an integrated business.
Cathay Capital, a global investment firm that invests in companies from North America, Europe, Asia, Latam, and Africa, partnered with Rene Sauerteig as their Operating Partner to find an acquisition. Through their sourcing efforts, they found Parkview Dental Partners, which operates in this dynamic market.
Parkview's operational focus, demonstrated by their desire to be a well-run integrated set of practices, aligned perfectly with Cathay Capital's approach of driving operational discipline. The dental industry, estimated to be worth $155 billion and growing at approximately 4% annually, is consolidating, giving rise to Dental Service Organizations (DSOs). DSOs create a larger business platform for faster growth and increased returns.
Parkview's strong relationship focus, evidenced by low staff turnover and a satisfied patient base, was also compelling. Cathay Capital's investment in Parkview Dental Partners is currently growing organically at approximately 10% year over year, roughly twice the industry average.
Recently, Parkview Dental Partners announced four acquisitions, accelerating its expansion in Florida's $9 billion dental services market. The attainable goal of Parkview is to become the best DSO in the United States. As the preferred partner to dentists in West Florida, Parkview is doing an acquisition per month.
Cathay Capital has shown interest in the dental industry due to its critical nature and impact on overall health. Despite consolidation, the dental industry remains highly fragmented, presenting opportunities for growth. When Cathay Capital invested in Parkview Dental a year ago, the dental sector was largely out of favor, with most private equity firms showing little interest and many hesitant to engage with the industry.
However, with Cathay Capital's investment and Parkview's strategic growth, the dental landscape in Southwest Florida is poised for change. Parkview is well on its way to being the market leader in West Florida while continuing to provide top-notch clinical care to patients.
