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Patterson Dental grows as dental offices go high-tech

March 18, 1997

MENDOTA HEIGHTS, Minn. (AP) _ Patients who needed dental care 200 years ago lay down or sat on the floor with their head gripped between the knees of the person pulling their tooth.

The first hydraulic chair didn’t hit the market until 1877, the same year two brothers bought a drugstore and began Patterson Dental Co., what has become the largest distributor of dental products in North America.

That first hydraulic chair was considered pretty high-tech for its time. Today, a dentist is likely to buy equipment unheard of in those days, or even just a few years ago: cameras that take pictures inside a patient’s mouth and mirrors with fiber-optic lights.

Patterson carries these and 70,000 other items of dental equipment. For a dentist opening a new office _ about 70 percent of dentists practice alone _ with two patient rooms and a waiting room, basic equipment costs between $80,000 and $100,000, said Peter Frechette, Patterson’s president and chief executive.

Patterson can provide about 90 percent of a dentist’s needs, including new equipment, parts, supplies and forms for the front office. But high-tech equipment that comes on top of the basics has been a big factor in helping Patterson build its sales to $581.9 million, with earnings of $28.7 million, for the fiscal year ended last April 27.

In the first nine months of fiscal 1997, sales increased rose to $480.1 million from $476.7 million, and earnings rose to $23.1 million from $20.3 million.

Analyst Timothy Reiland of Cleary Gull Reiland & McDevitt, a Milwaukee investment banking firm, is optimistic about Patterson’s future.

``Their business on the consumable side has held and grown quite nicely all year long,″ Reiland said.

Advances in technology have helped drive demand for new dental products, Frechette said.

Gone are the days when toothaches were treated with raven dung and nettle juice and hippopotamus teeth _ at four pounds each _ were carved up to make artificial human teeth that were wired to adjacent ones.

In a high-tech dental office today, a computerized machine with a 3-D camera records the height, width and depth of a cavity and creates a ceramic restoration within minutes. The same technology will be available this year for doing crowns, Frechette said. The Cerec 2 machine costs about $70,000.

Intraoral camera systems also are becoming more common. The tiny camera and handpiece, about the size of a dental drill, can film a patient’s teeth, enlarge the pictures on a television monitor and print color copies for the patient to look at while deciding on dental care.

A recent survey by the American Dental Association showed about 30 percent of dental practices have an intraoral camera.

``High-tech is the fastest growing part of this business,″ Frechette said.

The intraoral camera, the Cerec 2 and an air abrasive cavity preparation system are three big-ticket items driving the growth of Patterson’s high-tech business, Frechette said.

The air abrasive unit, with a built-in compressor, uses forced air to blast the tooth with tiny sand-like particles as it is prepared for a filling. The unit costs about $21,000.

On the lower-cost end of the high-tech equipment is the new dental mirror with its own fiber optic light that puts the illumination where the dentist is focusing the mirror.

``It’s probably something they’ve wanted forever,″ said Ezerski. They’re $300 apiece.

The company also carries a lightweight headset a patient can put on to watch movies or television or to play video games to distract themselves while in the dental chair.

With its extensive product line, Patterson Dental is a very different company than that started by brothers Myron and John Patterson out of their Milwaukee drugstore.

Myron Patterson bought the dental part of the business and moved it to Minnesota in 1891. Other ownership changes followed before Patterson was purchased by its management and other investors in 1985.

That’s when the big growth began. The company saw the opportunity to become the largest distributor in a fragmented industry and began buying up competitors.

Patterson has acquired more than two dozen companies in the last 10 years and now controls about 22 percent of the dental supply market, Frechette said. Its main competitors are Henry Schein Inc. of Melville, N.Y. (14 percent) and Sullivan Dental Supplies Inc. of West Allis, Wis. (9 percent). There also are about 300 regional and local companies.

Patterson, which went public in 1992, plans to continue buying up smaller companies.

``The industry is consolidating,″ said analyst Reiland. ``I think that’s going to continue for the next few years. I wouldn’t doubt if it accelerates this year.″

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