Inside the corporate dash to buy up dentists’ offices, veterinary clinics and pharmacies

Stephen Hughes/The Globe and Mail

Jordyn Hewer had a plan: Go to veterinary school, get a decade of experience under his belt and then buy his own practice.

The first two steps went off without a hitch. He graduated from the University of Montreal’s veterinary school in 2011. He spent the next 10 years working as a small-animal veterinarian in private practices and shelters in Quebec and Ontario.

But it’s when he got to the third step – buying his own practice – that he ran into a serious problem. In the intervening years, the whole industry had changed.

Major corporate players had entered Canada’s veterinary industry, including VetStrategy – backed by U.S. private-equity firm Berkshire Partners, and recently merged with European pet-care chain IVC Evidensia – and VCA Canada, owned by international confectionery giant Mars Inc. The corporate chains were buying up independent veterinary practices, sparking bidding wars that saw the price of vet practices balloon from three or four times annual gross earnings to 10, 20, even 30 times that at the beginning of this year.

The buyouts meant multimillion-dollar paydays for veterinarians who already owned a practice. But for ambitious young professionals like Dr. Hewer, there was no way to compete. Even if he could somehow secure the funding to buy a practice at the prices they were now going for, he would be saddled with a mountain of debt he would struggle to pay off.

“It’s ridiculous,” said Dr. Hewer, who chose to leave the industry to work for a pet-food manufacturer. “When you translate that to how much debt that represents and how much you would need to pay that back in, let’s say, a five- to 10-year period, the numbers never add up.”

Fuelled by international private equity funds, consolidating firms have been on a tear in other health-professional fields as well, buying up practices in fields such as veterinary medicine, dental care, optometry and pharmacies and assembling them into chains. Practitioners who sell to corporate owners typically get back-office support through the firm’s technology and staff, help with marketing, and reduced management responsibilities. The buyers, meanwhile, get businesses with steady streams of revenue, and profits that can be boosted by centralizing equipment and administrative functions, and ordering supplies in bulk. In the vast majority of cases, the old branding remains intact after a purchase happens, so patients and customers have no idea their once-independent practice has been taken over by corporate ownership.

Consolidation within these fields is still relatively low in Canada, but it is building fast – in less than a decade, nearly a quarter of vet practices have been bought by corporate owners.

“I’ve never seen anything like it,” said Douglas Jack, a leading veterinary lawyer at Borden Ladner Gervais LLP. “I’ve been practicing law for 37 years. It just became a frenzy among the consolidators.”

The recent acquisitions are part of a wave of increased activity from private-equity firms across the globe, as they search for new fields to generate

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Sale of five San Antonio-space dental clinics’ belongings potential customers to fraud lawsuit in opposition to Dallas buyer

The house owners of five dental clinics in San Antonio and Schertz offered the business belongings to a Dallas business in 2016 for $3.5 million.

But getting customer KP-SA Management and principal Thang “Kido” V. Pham to spend has been like pulling tooth, say the sellers — corporations owned by dentists Scott and Diana Malone of San Antonio.

The Malone companies this week sued KP-SA Management and Pham for fraud, conversion — the unauthorized taking of assets — and breach of agreement in point out District Courtroom in San Antonio.

The clinics run beneath the name Smiley Dental & Orthodontics.

Beneath terms of the deal, KP-SA paid out $300,000 up entrance and financed the remaining $3.2 million with the Malones. The invest in value was comprised of virtually $3.2 million in goodwill, $160,000 in accounts receivable, $100,000 in inventory and $80,000 in fixtures and machines.

KP-SA should have compensated virtually $3 million by now but has only paid out $781,140, the lawsuit alleges. The plaintiffs are trying to get more than $3.8 million in damages and curiosity.

The parties’ settlement grants the Malone corporations an instant suitable to foreclose and consider possession of the collateral upon a default with no going to court, the go well with suggests.

In response to desire letters and foreclosure notices, however, Pham “threatened to abscond and mystery away all collateral” so the plaintiffs would hardly ever locate it, the fit provides.

“Mr. Pham has constantly created these threats and lately has reiterated that he has no challenge with emptying all accounts and hiding all the collateral and devices of the dental procedures,” Scott Malone suggests in a declaration hooked up to the lawsuit.

To prevent that from taking place, the Malone businesses obtained a non permanent restraining get that stops the defendants from distributing any revenue or removing furnishings and devices from the techniques.

It could not be identified if Pham or his associates opposed the request for the order. He could not be achieved for remark Thursday. Austin lawyer John P. Ferguson, who represents the Malone organizations, reported he could not remark with out his clients’ permission.

A hearing to extend the purchase right until a trial is established for Jan. 24

The clinics, 4 in San Antonio and a person in Schertz, had operated possibly as M&M Orthodontics or U Too Dental & Orthodontics prior to the asset sale to KP-SA.

A Malone partnership continued to own the clinics’ serious estate, so it has been KP-SA’s landlord.

The clinics had been rebranded as Smiley Dental & Orthodontics soon after the asset sale closed. One more Dallas firm, Smiley Dental Administration Co., has managed the methods and gets 15 percent of the gains, whilst KP-SA receives 85 % of the profits, the suit says. Smiley Dental has 31 places in Texas, its web page claims.

Smiley Dental Administration is owned by Pham’s ex-wife, dentist Lynh Thy Pham, the

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