Despite steady growth and strong cash flow over the past year, dental management services company InterDent Inc. in El Segundo just can’t seem to get a smile out of Wall Street.

After a failed attempt by management to take the company private last April, the stock of the nation’s largest supplier of dental management services went into a downward spiral that only recently has started to turn around.

Meanwhile, analysts say the company is well positioned for rapid earnings growth and for making acquisitions in an industry marked by consolidation.

“You’re looking at a business with growing, stable cash flows, lots of good vision, and a good client base,” said Mike Crawford, an analyst with B. Riley & Co.

Founded in 1997, InterDent owns the hard assets and staffs the administrative side of 226 dental practices in 12 states, where fees collected from 750 dentists are projected to generate about $300 million in revenue this year.

The firm is now focused on helping those dentists expand their practices by providing capital and business advice about how to best develop specialty-care practices such as orthodontics and cosmetic work.

InterDent’s stock went into free-fall last year, as investor interest in dental management groups fizzled and InterDent stopped taking on new practices due to a lack of capital available for further expansion.

Faced with tepidness on Wall Street, InterDent’s management team announced last November their intention to take the company private, with financial backing from Los Angeles investment firm Leonard Green & Partners LP.

But the financing fell through and the company’s stock hit a 52-week low of $2.88 a share on May 31, down from a 52-week high $9.13 in September 1999. As of Aug. 16, it had rebounded slightly to $3.94 a share.

For the second quarter ended June 30, the company reported net income of $2.11 million (9 cents per diluted share), essentially flat from net income of $2.13 million (9 cents) for the year-earlier quarter. Revenue was $71.4 million vs. $55 million.

The net income remained flat despite the sharp increase in revenues because of expenses incurred to upgrade internal information systems and add regional staff, and costs related to the failed buyout.

For the fiscal year ended Dec. 31, InterDent reported net income of $5.2 million (23 cents per diluted share), a significant increase over the $1.3 million (6 cents) reported for the prior year. Revenue was $231.6 million, up sharply from $134.7 million.

Three analysts covering the firm rate it a “buy” or “strong buy.”

Crawford said part of the reason for the depressed stock price is that the markets have unfairly lumped InterDent in with other health-care management groups that work with physicians. But while doctors’ practices are being tightly constrained by HMOs and Medicare reimbursement rates, dentists are not as constrained because Medicare doesn’t pay for dental coverage and a significant number of people still seek private dental care rather than join dental HMOs.

“(Dental care) is a much better market for this kind of (practice management) group,” Crawford said.

He is projecting earnings per share to reach 30 cents this year and 50 cents next year.

The company’s plan for continued growth also received a boost thanks to a $36.5 million financing from Levine Leichtman Capital Partners in June.

The money didn’t come cheaply, though. It involved Levine Leichtman buying 2.75 million shares at $4 each, and issuing $25.5 million in senior subordinated debt financing, at an annual interest rate of 12.5 percent, due in 2005. Levine Leichtman also received warrants to buy another 2.125 million shares at $6.84 a share at any time prior to June 15, 2010.

Michael Fiore, InterDent’s chief executive, said a major challenge for the company remains getting access to capital without giving away the farm.

“The biggest problem is the lack of investor interest,” Fiore said. “If capital was more affordable, we would be able to grow faster.”

InterDent is hardly debt-free, with total liabilities of $174.8 million, but that load is manageable due to the company’s strong cash flow, Crawford said.

“The debt at current levels is less than three times operating cash flow, so there’s not a problem of repayment or solvency or ability to handle interest,” he said.