Patterson Buys into New Market

Who says there are no new lands left to conquer? Certainly not St. Paul, MN-based Patterson Dental Co. In August the cataloger of dental and veterinary supplies bought Chicago-based AbilityOne Products Corp., a mailer of rehabilitative supplies, for approximately $575 million. At press time, the acquisition was expected to close by the end of the month.

By entering the physical- and occupational-therapy markets, the $1.6 billion Patterson is assured of another revenue stream. According to Tom Shinick, president of Merrick, NY-based Shinick Business Development Group, Patterson had to expand its product offering because its core dental market — which includes major competitors Henry Schein and Darby Group — has become saturated.

“The rehabilitative supplies market is a small fragmented industry, similar to what the medical supplies industry once was,” Shinick says. “Their competition isn’t the catalogers such as Henry Schein. it’s the multitude of local suppliers out there, the mom-and-pop shops.” Another benefit of entering the market, Shinick says, is that as the U.S. population grows older, demand for AbilityOne’s products should increase.

According to Patterson, the price it paid for AbilityOne, in relation to operating profit, is comparable to the multiple Patterson paid to enter the veterinary market with its acquisition of Webster Veterinary Supply in July 2001. Patterson CEO Peter Frechette was a board member of AbilityOne until last year.

AbilityOne expects sales to top $220 million this year. The Chicago-based company sells more than 15,000 rehabilitation and assistive products from more than 1,500 suppliers to acute-care hospitals, nursing homes, rehabilitation clinics, dealers, and schools. Howard Schwartz will stay on as president/CEO of AbilityOne after it becomes a subsidiary of Patterson.

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