Henry Schein and Internet Brands Launch Joint Venture Henry Schein One to Transform Dental Practice Management with $400M in Annual Revenue

VCBeat (WeChat ID: vcbeat) has learned that in April, Henry Schein, the world’s largest dental distributor, announced the formation of a joint venture with Internet Brands, a leading provider of online media and marketing software. Named Henry Schein One, the joint venture aims to help the dental industry improve practice management, marketing, and patient communication through integrated dental technologies.

The transaction is expected to close in the second quarter of 2018, with the financial terms of the agreement not currently disclosed. Harding, Senior Vice President of Henry Schein’s Global Practice Solutions Group, will serve as CEO of the combined company; he joined Henry Schein in 2000.

As a globally renowned supplier of healthcare products and services, Henry Schein operates branches or offices in 34 countries worldwide. With a workforce of 22,000 employees, the company serves over one million customers globally, offering more than 100,000 branded and Henry Schein private-label products, along with over 150,000 additional special-order items.

Henry Schien maintains in-depth collaborations with many industry giants, including Dentsply Sirona, Danaher, and 3M, preserving a delicate balance of win-win cooperation and competition among them.

Data shows that the newly established Henry Schein One joint venture will integrate the products and services of Henry Schein Practice Solutions, a dental practice management software provider, including Dentrix, Dentrix Ascend, Easy Dental, and TechCentral, as well as Henry Schein’s international dental practice management systems, such as Software of Excellence, Logicie Julie, InfoMed, Exan, and LabNet.

Henry Schein One has also integrated Internet Brands’ dental business, including web-based solutions such as Demandforce, Sesame Communications, Officite, and DentalPlans.com. Internet Brands is a leader in the online software market for dental practices to attract and retain patients and manage their online brand reputation, backed by investments from KKR and Temasek.

The joint venture will initially employ approximately 1,500 employees, with its headquarters in Utah. Henry Schein holds the majority ownership of the joint venture, and senior executives from both companies serve on the board of directors of Henry Schein One.

The merged company will serve the global market, with estimated sales of approximately $400 million in 2017, and is projected to achieve $20–30 million in financial synergies by the end of the third year.

“We are very pleased to establish this joint venture with Internet Brands, as our shared goal is to be the best partner in helping our dental customers deliver better experiences for their patients,” said Stanley M. Bergman, Chairman and CEO of Henry Schein. “Through this agreement, by combining the strengths of both companies, our customers will have access to a powerful suite of services that, through leading management systems, enable dental professionals to enhance their ability to provide high-quality care to their patients.”

The current reality facing the dental sector is the challenge of lacking technological integration; different clinics use disparate technical systems that are typically not interconnected, thereby wasting the time of both teams and patients.

Henry Schein One will provide advanced technologies to address the challenges posed by the lack of technological integration in current dental practices, striving to become a new platform that elevates innovation and delivers enhanced dental software and services. This platform enables seamless data sharing through collaborative interoperability and streamlines digital workflows for every member of the dental team.

With end-to-end management and marketing systems, Henry Schein One will empower dental teams to become better business managers, enable clinicians to work more efficiently, and enhance patient loyalty to clinic services.

By enabling every member of the dental team to work more intelligently and efficiently, thereby effectively enhancing both practice operations and patient experiences, Henry Schein One empowers dentists to focus more on delivering high-quality patient care.

Integrating Henry Schein’s practice management software with Internet Brands’ web and mobile digital marketing and communication tools provides dental teams with new capabilities linked to their practice management systems, enabling better engagement with current and prospective patients, minimizing appointment cancellations, improving treatment plan acceptance rates, and facilitating the development of new revenue streams.

“By combining Henry Schein’s strengths in dental practice management software with our leading digital marketing applications, and pooling the extensive resources of both companies, we are delivering a better experience for customers and patients,” said Bob Briscoe, CEO of Internet Brands. “We are simply capitalizing on this momentum to enhance how dental practices engage with patients in the era of digital communication, and leveraging the power of leading brands in the market to provide patients with an improved healthcare experience.”

Data shows that Henry Schein, founded in 1932 and headquartered in Melville, New York, USA, is the world’s largest provider of dental healthcare products and services primarily focused on clinics.

The entire group operates through two divisions: Healthcare, Technology and Additional Services. Its dental business primarily serves dentists, dental laboratories, dental schools, and other institutions.

In the 1950s, Henry Schein shifted its focus from direct-to-end-customers to primarily serving physicians. In 1995, the company went public on the NASDAQ in the United States. By 1997, through a series of acquisitions, it became the largest medical distributor serving clinics.

Major M&A:

In 1997, it acquired Sullivan Dental Products, Dentrix Dental Systems, Caligor, and Medi-Quick Arzt GmbH (Germany), becoming the world’s largest distributor of dental equipment and supplies;

In 2008, acquired Minerva Dental Ltd. (UK dental consumables and equipment);

In 2009, it acquired OrthoOrganizers (a manufacturer and producer of a full line of orthodontic products, headquartered in Carlsbad, California), Noviko (the leading veterinary distributor in the Czech Republic), DNA Anthos Impianti (the Italian distributor for Cefla Dental, a leading manufacturer of dental equipment), and Medka (a full-line supplier of medical consumables, equipment, and technical services for physicians, headquartered in Berlin, Germany);

In 2010, Henry Schein announced the acquisition of Provet Holding Ltd.;

In 2014, the acquisition of five Arseus companies strengthened its dental and technology business in Europe. The acquisition of Lincoln Dental Supplies expanded its dental laboratory distribution business;

In 2016, Zane Dental (Henry Schein’s laboratory supply business) acquired Custom Automated Prosthetics, expanding Henry Schein’s restorative business.

In the first half of 2017, Henry Schein’s dental business generated $2.893 billion in revenue. Zane Dental (Henry Schein’s laboratory supply division) acquired Custom Automated Prosthetics, expanding Henry Schein’s restorative offerings and contributing to a 5.8% growth in its dental segment.

In 2017, the Group reported annual revenue of $12.5 billion and net profit of $406.3 million, with dental operations contributing $6.048 billion in revenue. Germany, Europe’s largest dental market, is Henry Schein’s second-largest global market, trailing only North America.

Henry Schein's acquisition strategy has three directions:

First, it can expand its market position. For example, in Germany, it acquired Medka to broaden its dental product portfolio and attract more customers;

Second, pursue geographic expansion by acquiring Provet to bring Henry Schein into Turkey’s rapidly growing dental market;

Third, expanding its product portfolio, Hanruixiang acquired a novel technology in the field of dental implants through its investment in BioHorizons.

Currently, the dominant business model in the dental market is the “clinic model”; however, many professional dentists lack expertise in management, marketing, and daily operations.

Henry Schein has become the largest seller to dental clinics through its extensive distribution network and customer service, offering private-label products in more commoditized segments, while expanding its portfolio into specialized market areas such as implants, which are primarily sold through direct channels.

Beyond its products, Hanruixiang’s dental clinic clients rely heavily on its services, including practice management software, training, and equipment installation, maintenance, and repair. These services address the challenges encountered when establishing dental clinics, fill a significant gap in the market, and enhance customer loyalty.

Facing competition from major manufacturers and distributors in the market, Hanruixiang’s products are available through multiple channels, and customers often maintain relationships with several distributors. Competitors can secure exclusive distribution rights for key products in the market, thereby preventing Hanruixiang from entering the market.

Meanwhile, manufacturers can also establish direct sales systems, thereby reducing the business allocated to distributors. Whether Hanruixiang fails to secure agency rights or manufacturers interrupt supply, it will have an adverse impact on Hanruixiang.

Technological innovations and the promotion of third-party online management systems for dental clinic operations have compelled Hanruixiang to adapt to evolving technologies, promptly respond to changing customer demands, and enhance customer stickiness.

In 2017, Henry Schein’s dental software sales and e-services revenue declined, which was one of the factors contributing to its partnership with Internet Brands.

References:

https://www.prnewswire.com/news-releases/henry-schein-and-internet-brands-form-joint-venture-to-deliver-integrated-technology-to-enhance-dental-practice-management-300623350.html

https://www.prnewswire.com/news-releases/henry-schein-reports-record-fourth-quarter-and-full-year-2017-financial-results-300601026.html

MedTrend: Dental Giant Henry Schein—The Global Dominator of the Dental Network