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Majority Stake Purchased in SmileCare

Health care: Liberty Partners will provide up to $100 million to help small Irvine-based dental firm expand.


SmileCare, a small provider of dental services, appears to be headed for a major expansion.

A New York investment firm, Liberty Partners, acquired a majority stake in the Irvine company, which has 17 offices in Southern California, and will provide up to $100 million for expansion, a SmileCare executive said.

Mary-Ellen Hardin, SmileCare's chief executive, said the company sees great opportunity for a managed-dental-care industry to grow throughout California, just as managed health care did more than a decade ago. Late last year, she said, the company started shopping for expansion capital as its possible ticket to the big leagues.

Clearly, Liberty has big aims as well.

Paul Huston, managing director, noted the recent rush of Wall Street investments and initial stock offerings in dental management companies.

He said Liberty looks for double-digit returns on its investments and generally likes to take them public or sell out to larger acquirers. Liberty, which wouldn't disclose the value of its equity investment, has more than $700 million in investments under management.

With 250,000 enrollees, SmileCare is among the smaller to mid-size dental plans. Hardin said the company would eventually like to become a leader nationally, but immediate plans call for using some of Liberty's funds to set up more SmileCare offices throughout California.

She declined to say how many or when.

SmileCare, which employs 350, started in Los Angeles 20 years ago as a mom-and-pop dental operation. Dr. Dennis R. Hardin and his wife, Mary-Ellen, a lawyer, bought a major practice, then later moved their headquarters to Tustin and then to Irvine. In 1981, the company began opening other offices, and two years ago it began lining up managed-care contracts with 3,400 independent dentists across the state. Dennis Hardin is a current board member.

Huston, who said Liberty considered a number of dental management companies before choosing SmileCare, said, "We believe that Dr. Hardin and Mary-Ellen Hardin are two of the strongest managers in the industry." He said Liberty intends to let the Hardins run the business as they see fit.

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