Wednesday, August 12, 2020

Another One Bites the Dust: Benevis - Kool Smiles Files For Chapter 11 Bankruptcy

August 3, 2020

Two years after agreeing to pay $23.9 million, plus interest to settle Medicaid fraud allegation Benevis (formerly NCDR, LLC) has filed for Chapter 11 Bankruptcy in the Southern District of Texas. (See Amended Petition here) (See LT Smiles Petition here)

In January 2018 Benevis and it's Kool Smiles branded dental clinics agreed to the settlement after the Department of Justice found the company  "knowingly submitted" false claims for payment to state Medicaid programs for medically unnecessary pediatric dental services.

Benevis and it's Kool Smiles clinics were featured on the first episode of CBS Whistleblower TV program that aired July 13, 2018. (see trailer here)


MARIETTA, Ga.--(BUSINESS WIRE)--Aug 3, 2020--

LT Smile Corporation, along with its subsidiaries Benevis Holding Corporation, Benevis Corporation, Benevis, LLC, Benevis Affiliates, LLC and Benevis Informatics LLC (“Benevis” and “Company”), announced that it has filed voluntary petitions for relief in the Southern District of Texas under Chapter 11 of the United States Bankruptcy Code to effectuate a recapitalization and sale of the business, and to improve its balance sheet and operating position. Benevis and its employees will continue their normal operations and their support of high-quality dental care at supported dental practices throughout the process. None of the Company’s supported dental practices are part of the Chapter 11 filing.

 This is the same scenario as it was with the Small Smiles chain: Chapter 11 first then Chapter 7 soon followed. 

Benevis Corp., which provides back-office services to 150 dental offices, has filed for bankruptcy, saying its revenue fell more than 60% recently due to the coronavirus pandemic.

Benevis claim to provide "back-office" services and that is true, but they also own and operate the clinics using company executives, such as dentists Dale Mayfield, David Veith, and Tu Tran as so called "owner-dentists". Dr. Tran may tried to claim he has nothing to do with the company but he is still being shown as "owner" and "incorporator" of Winchester Dental, PSC d/b/a Ruby Dental and Braces whose address just happens to be the same as Benevis'. Other current and/or past owner-dentists have included dentists Thien Pham and David Strange, Jr.

 Since these places operate on volume and overtreatment (this my own opinion of course, but the DOJ agreed with me) the Corvid-19 pandemic has severely hit their bottom line.

According to Scott Mell's Declaration in the court filings, the companies new Chief Restructuring Officer, the company approximately 70% of the company's income was generated from state Medicaid and CHIP programs.

In the bankruptcy filings:

 The company listed assets and liabilities of as much as $500 million each in its bankruptcy petition. Benevis provides support services to almost 200 dental practices across the U.S., according to its website.

Benevis has lined up as much as $30 million in financing from current lenders including New Mountain Finance Corp., according court papers. New Mountain has also agreed to serve as the stalking horse bidder for the company.

Benevis has secured committed financing from its current lenders; including New Mountain Finance Corporation and several of its credit investing affiliates, to bolster liquidity and enhance ongoing operations during the reorganization process.

Scott Hornbuckle, Chief Financial Officer for Benevis stated, “The additional financing and the reorganization process will help us strengthen our balance sheet and solidify our path to future success. We look forward to continued investments in the future and the continuation of our long history of supporting outstanding dental care.”

Benevis’s legal advisor for the reorganization is Jackson Walker. Conway Mackenzie and Lincoln International LLC are serving as financial advisors to the Company.

Admittedly I nearly choked and puked on the "outstanding dental care" statement. 

Below is the corporate structure according to Scott Mell and was included in his Declaration on page 4.

Maybe it's just me, but I think there might be a few things left out of this little stick drawing. 

In the Amended Petition it lists the 30 largest unsecured creditors.  Henry Schein, Inc., holds the number one spot with Benevis owing them $3,671,336.72!  WHOA!  

LT Smiles Bankruptcy Petition shows the Equity Security Holders as this. To save you some time, that address is New Mountain Capital.

New Mountain Capital SEC Filings

Another familiar name I noticed on the creditors list is Tailwind Capital. They are the PE firm that bought Lone Peak Management Group located in Utah and their Smiles 4 Kids clinics, mostly located in the Northwest. In 2018 a whistleblower came forward with serious allegation against the company and it's leadership.



Friday, March 20, 2020

Will the COVID-19 Pandemic Be The Demise Private Equity Owned and Operated Dental Chains?

Updated: March 21. 2020

With the COVID-19 Virus hitting every industry hard, and Wall Street crumbling, what will happen to places such as Heartland Dental, Aspen Dental, Kool Smiles, and the host of other dental chains across America that are backed by Private Equity firms and various other types of investors?

Rumor has it that Immiadent, operated by Samson Dental Partners, LLC,  has closed the doors to many, if not all, of their offices. As of today, their website shows only 12 offices still open, that's down from 33. However, I'm told that they closed several and were going to rebrand using the name Bright Tiger Dental until about the time the COVID-19 hit, then suddenly, they fired all employees and closed the doors to all their clinics. This has not been verified.

In 2018 Samson and Immiadent agreed to pay $5.1 million to settle claims that it improperly billed Indiana’s Medicaid program as well as breaking Indiana law that forbids nondental managers from compromising clinical judgments by rewarding or punishing dental staff based on productivity measures. Samson Dental Partners and their Immediadent offices were located in Indiana, Kentucky and Ohio. 

On March 18, 2020 the American Dental Association issued guidelines in response to the Covid-19 Virus, recommending emergency treatment only.  Click here for what the ADA considers Emergency Treatment.

New out of Nebraska reports some dental offices closing under the guidelines.
I suspect we will be seeing more headlines as the one below in the coming months. However, during the first stage I suspect there will be more pressure on working dentists to overtreat as the chains try to stay afloat.  I'll be watching.

Dental office’s abrupt closure leaves patients frowning

The Signature Smiles dental office in Garden Oaks.
Nothing seemed amiss on Jan. 17, when Amanda Leal took her two daughters to the Signature Smiles dental office in Garden Oaks. The Candlelight Estates resident said she joked with some of the employees there after her girls had their checkups, and then Leal made appointments for the following month.

Three days later, however, she got an email saying the office was non-operational.
“I’m just flabbergasted,” Leal said.

Several other Northwest Houston residents have had similar reactions since the local Signature Smiles office, located at 3800 N. Shepherd Dr., Suite 3A, abruptly closed Jan. 20. The business provided no warning, according to multiple patients, and some said they aren’t sure whether they can continue to receive treatment from the doctors who worked there or recoup payments they made for services that have yet to be provided.

Read the entire story here.