Water Street Healthcare Partners is exiting dental health company OraPharma Inc. at what appears to be a solid return, selling the Horsham, Pa., company to Canadian specialty pharmaceutical giant Valeant Pharmaceuticals International Inc. for $312 million, plus up to a further $114 million in potential milestones payments.

Water Street acquired OraPharma in December 2010 for an undisclosed price. That month, an OraPharma holding company said in a regulatory filing that Water Street contributed $88.5 million in equity, listing Alan Heller, an operating partner at the firm, as a director.

The company also took out a $41.5 million term loan and a $5 million revolver in December 2010 related to a deal, according to data provider Thomson Reuters Corp.

If Chicago-based Water Street paid around $130 million for OraPharma, it could gain as much as a 2.4 times return from the sale to Valeant, or as much as 3.3 times its investment if OraPharma meets its milestones. Water Street declined to comment on returns.

Water Street bought OraPharma from healthcare giant Johnson & Johnson. J&J had owned OraPharma for approximately eight years, after buying out the then-public company for $85 million.

In OraPharma, Valeant is getting a proven treatment, Arestin, for periodontitis, a disease that inflames and infects the ligaments and bones of the teeth. Valeant said it wants to use OraPharma's large specialized pharmaceutical sales force to cross-sell some of its existing products in dermatology, podiatry and ophthalmology, such as cold sore medication Xerese. OraPharma also has multiple partnership agreements with companies, including Listerine with J&J.

"We believe the OraPharma business is a new growth platform from which to build additional opportunities in the future," Valeant chairman and chief executive J. Michael Pearson said in a statement.

The milestone payments are at least partly contingent on OraPharma reaching undisclosed revenue targets. Valeant said OraPharma's trailing 12-month net revenue was approximately $95 million. It said the company has a high single-digit business growth rate. OraPharma had around $14 million in revenue on nine months of sales in 2002.

Water Street exited outpatient rehabilitation service Physiotherapy Associates in March, which it owned with Chicago-based Wind Point Partners, selling the company to Court Square Capital Partners for $510 million, according to Standard & Poor's.

Valeant has been one of the most acquisitive healthcare companies in the past two years. The Montreal-based company has made around 18 acquisitions since June 2010, with Biovail Corp. in the top slot at $3.2 billion.

Marie Gibson, Steve Arcano, Matthew Zisk, Erica Schohn and Robert Copen from Skadden, Arps, Slate, Meagher & Flom LLP represented Valeant in the deal. OraPharma used Kirkland & Ellis LLP partners Martin DiLoreto and Robert Kiburz. There were no financial advisers.