Henry Schein acquires majority interest in Canadian dental software company

Henry Schein, Inc., has acquired a majority interest in The Exan Group (Exan), a privately held dental software company with headquarters in Port Coquitlam, British Columbia, Canada. The remaining ownership interest will continue to be held primarily by Exan executive management. Through this transaction, Henry Schein further expands its business with dental schools in the U.S. and Canada, as well as general practice dental offices primarily in Canada.

Sales by Exan for the last 12 months were approximately $11.7 million. This transaction is expected to be neutral to Henry Schein's financial results for the remainder of 2012 and 2013, and expected to be accretive thereafter. Financial terms were not disclosed.

Exan's main product is axiUm, a dental institution management software solution that is sold to approximately 65 dental schools in the U.S. and Canada and represents approximately 75% of total revenue. Exan also develops and sells Power Practice, a practice management software solution for general dental practices that is used by approximately 750 practices, primarily in Canada, and represents approximately 23% of total revenue.

"Exan is known for its excellent dental software technology, and as such has enjoyed considerable success in dental schools with a premium product, and recently has successfully expanded into the enterprise market and to international dental schools," said Stanley M. Bergman, Chairman and Chief Executive Officer of Henry Schein. "We are optimistic about the growth opportunities for Exan's products and services, in particular as they complement our enterprise business and will provide access to dental schools for our special markets merchandise."

"Exan's growing presence among dental schools is particularly important to us because dental students are Henry Schein's future customers. We are delighted to add this high-growth business with customizable software solutions to Henry Schein," added Bergman.

Exan has 82 team members, including 76 at headquarters outside Vancouver. Exan CEO Ted Devries will serve as president of the company and CFO Bill Gold will serve as Vice President of Finance.

"By joining forces with Henry Schein, Exan has new opportunities on a global basis and the support of the dental industry's preeminent value-added distributor," said Devries. "We now have access to the tremendous resources and expertise of Henry Schein, and are able to take Exan's business to the next level."

Wall Street’s take
From Jeff Johnson of RW Baird: “With this deal giving HSIC increased access to nearly 90% of U.S. and Canadian dental schools (Exan has relationships with 65 out of the 74 dental schools across both countries) and younger dentists typically representing the most rapid adopters of dental technology, we like this deal and believe it fits nicely with the company's ongoing efforts to drive high-tech dental equipment sales. From the press release, it sounds as if management believes this deal and HSIC's increased exposure to dental schools might also facilitate incremental cross-selling opportunities for medical products through the company's Special Markets division, although we don't plan to make any changes to our medical segment projections due to this deal.”