A large, national dental insurer has agreed to acquire a midsize dental insurer and vision benefits provider in the Midwest.
DentaQuest LLC and DCP Holding Company announced today that DentaQuest is preparing to pay $41.5 million in cash for DCP. DCP is the parent of The Dental Care Plus Group.
DCP will make the deal more appealing to its shareholders by paying them about $8 million in special cash dividends, the companies said.
The companies hope to complete the deal by Sept. 30.
DentaQuest is a Boston-based dental and vision benefits carrier that was founded in 1966. It provides or administers coverage for 27 million people, and it has been especially strong in the Medicaid dental coverage market.
DentaQuest has said that it wants to get bigger by buying other companies and making other types of investments.
The Dental Care Plus Group is a Sharonville, Ohio-based company that provides or administers dental coverage, vision coverage or both for about 409,100 people, according to a report it filed for the third quarter of 2018 with the U.S. Securities and Exchange Commission.
DCP was founded in 1986. It reported $870,000 in net income for the third quarter on $29 million in revenue, compared with $1 million in net income on $27 million in revenue for the third quarter of 2017.
The business acquisition cost total, which includes spending on commissions, increased to $1.7 million, from $1.4 million.
DCP told employees, according to a set of answers to employee questions filed with the SEC, that it has been “studying the market and exploring best practices for sustainability for ancillary insurance” for several years.
“This exploration has included seeking a qualified partner with which to join forces,” DCP told its employees.
An employee noted in a question that DCP has been offering employees a $200-per-month incentive not to enroll in the medical plan.
DCP is asking brokers to direct questions about the deal to Rebecca Hetzer.
DentaQuest says it intends to operate DCP as a separate, wholly owned subsidiary, and to keep DCP’s headquarters in Sharonville.
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