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Computer-based manufacturing has been part of the optical industry almost as long as computers have been around.

“For the last 30 years, it’s been computer controlled,” said Larry Clarke, President/CEO of Satisloh North America Inc., a Milwaukee-based manufacturer of various equipment used for producing prescription eyewear.

Seeing the future

With “mass customization” equipment that automatically loads the lens blanks into processing equipment, large modern optical labs can produce as many as 5,000 lens pairs per day. From the prescription, a mathematical formula creates a point file of approximately 3,000 points across the surface of the lens. The data is then sent to the generator, which automatically grinds the lens material to the precise profile based on the calculations.

Photos: Satisloh North America

“In the beginning, technicians were optical experts who had to calculate which type of curve to generate and grind lenses by hand. The first computers performed very simple operations such as grinding a simple curve in a lens. Today, it’s all automated, and the machines fabricate very complex curves digitally.”

Clarke estimates that there are between 400 and 500 prescription optical labs in the United States, down from around 1,000 not too long ago. “Our industry is consolidating very fast as large lens blank casting companies continue a trend started approximately nine years ago to vertically integrate by buying up prescription labs varying in size from 5000 prescriptions per day to mom-and-pop labs producing less than 300 per day ,” he said. The cost of the specialty equipment, including generators, polishers, coaters, and edgers often proves out of reach for many, running into millions of dollars for some production equipment. “It’s difficult to compete now without a lot of capital.”

According to both Cortez and Clarke, outsourcing of component production is rare in their respective industries because most processes involved are done at the same location. Though, Clarke adds that in some instances a group of independent lab owners may join together and form a centralized facility for the very high-ticket equipment. “It’s a way that small labs can compete with big guys with a lot of capital,” said Clarke.

Carpe idustrious

Slowly over the past few years, there has been a growing interest toward the dental laboratory industry by outside investment firms drawn to its desirable growth potential and its disjointed, fragmented nature. In the past three years, Novadent, a capitalist investment firm, aggressively bought up several large operations on the West Coast while others such as HealthpointCapital purchased laboratory groups like DTI Dental Technologies Inc., a network of full-service dental laboratories located in the United States and Canada. Recently, Bolder Capital bought out Dental Services Group, with nearly two dozen locations. Often the influx of capital goes straight into expanding the laboratory businesses for growth and investment, while others see drastic changes in daily and long-term operations.

“Anytime people use the words ‘industry consolidation’ or ‘acquisition’ or anything like that, it provokes a lot of dark fears and suspicions,” said Andrew Hofmeister, President and CEO of GeoDigm Corp., a Minnesota-based company that recently arranged a $100 million commitment with Welsh, Carson, Anderson & Stowe, a New York private equity firm, to fund its purchase and consolidation of dental laboratories. Simultaneous to the agreement, GeoDigm purchased Lord’s Dental Studio, with Wisconsin facilities in Green Bay and New Berlin. “The fact that many players from outside the dental laboratory industry are interested in investing is an indication that others see opportunity here,” Hofmeister added.

Even before Welsh Carson’s impressive investment in GeoDigm’s consolidation strategy and the resulting purchase of Lord’s Dental Studio, Hofmeister said that GeoDigm had been aggressively growing its portfolio through acquisitions of four other laboratories in the Wisconsin/Minnesota area. “Currently, we have more than 150 technicians working in five different locations that generate about $25 million in revenue,” he said.

“Welsh Carson’s investment in us was just to further something that we were already down the road on doing from a technology standpoint. We saw this as an industry that was large, growing, and unconsolidated. It looked like an opportunity to do a better job leveraging the skills of the laboratories with technology.”

Like Hofmeister at GeoDigm, Brunvoll’s background is not directly in the dental field but mainly in business management, as is that of other principles in Biodenta management. “We have spent a lot of time trying to understand this industry,” he said. “I look at it as an advantage when you are coming from the outside. All the ‘do nots’ and all the ‘should dos’… you just disregard because you can look at it with your own eyes. From a management point of view, we can think freely and differently.”

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