DX / Differentials / DSO & GENERAL DENTISTRY

D-05 — PREPARING FOR SALE · DENTAL GROUPS & DSOs

Growth has to read as a system — dental groups

Preparing for exit — making growth read as a system rather than as a good year

DIFFERENTIAL — LIKELY CAUSES, MOST LIKELY FIRST

1. 01

   Same-store growth is not separated from acquired and de novo growth

   Total production growth blends organic, acquired and newly opened locations into one number, so a buyer cannot tell what the operating model produced — and in a dental group assembled by acquisition that is almost always how the number was built.

   Planet DDS defines same-store growth explicitly as production-based and publishes three averaging methods across 3,294 practice locations — simple average 6.6%, trimmed mean 4.9%, weighted average 4.0% — with 63% of practices achieving same-store production growth in 2025 against 2024. A story that cannot state which cohort and which averaging method it used is stating a number a buyer will re-derive and discount.

   Planet DDS, 2026 Dental Industry Outlook Deep Dive

   NOT THIS IF — Same-store is already reported per location, against a defined cohort of locations owned for the full comparison period, with the averaging method written down.

2. 02

   Attribution cannot be reproduced — growth reads as market luck

   New patients are counted but not traced to source or to spend, so there is no evidence the growth was engineered rather than received.

   The unit a buyer will ask for is new patients per location per month, for 36 months — the same unit both major practice-management datasets report on (Henry Schein One's industry average of 39 with tiers running to an 82 top decile; Planet DDS's 46 per practice per month in 2025, up from 43 in 2024). Growth also correlates with it: practices at 75+ new patients a month average 9.0% growth against 4.5% for practices at 10–20.

   Henry Schein One, 2026 Catalyst Index; Planet DDS, 2026 Deep Dive growth-rate curve

   NOT THIS IF — The practice-management series is already extractable by location and by month for 36 months and reconciles to marketing spend on the same denominator.

3. 03

   Owner dependence — production sits in one pair of hands

   A practice whose production concentrates on the selling dentist is priced as a job with a transition risk, not as a system with a management team.

   ADA HPI Table 5: solo general-practitioner owners average $1,062,180 in gross billings per dentist against $836,540 for non-solo owners — the solo practice is more dependent on one chair by construction. Planet DDS: average daily production per provider-practice is $8,764, of which the hygienist contributes $1,058, so the doctor column carries most of it unless the group has deliberately built otherwise.

   ADA Health Policy Institute, 2026 Survey of Dental Practice, Table 5; Planet DDS, 2026 Deep Dive and 2025 Outlook

   NOT THIS IF — Associate and hygiene production has been a stable majority of total production for at least 24 months and survives the owner taking six weeks off.

4. 04

   Collections, not production, is what gets priced — and collection rate is the weak spot at scale

   The growth narrative is built on production while the buyer underwrites collections, and the gap between them widens with group size.

   Henry Schein One: 8+ location practices collect 72% on average against 97% for the top 10% — a 25-point spread, with the average for large groups running 8 points below smaller practices. ADA HPI Table 17: practice expenses including shareholder salaries run at an average of 95.2% and a median of 97.9% of gross billings collected for incorporated owner general practitioners, with the third quartile above 100% — the published margin structure leaves very little room for a collection-rate problem.

   Henry Schein One, 2026 Catalyst Index; ADA Health Policy Institute, 2026 Survey of Dental Practice, Table 17

   NOT THIS IF — Collection rate is stable in the 90s across every location for 24 months. Note that ADA HPI's Table 17 figure includes shareholder salaries and is therefore not the 55–65% overhead number the trade press quotes — do not present it as overhead.

5. 05

   Payer mix concentration is carrying the growth

   Production grew because of a plan, a fee schedule or a Medicaid contract that a buyer will treat as a risk rather than as an asset.

   For owner general practitioners, sources of gross billings are 50.0% private insurance carriers (DHMO/DPPO), 40.2% direct patient payment, 7.3% government programs, 2.5% other. Dental Economics / Levin Group reports only 10% of practices fully fee-for-service, average insurance coverage per practice at 57%, and 50.5% of respondents having one or more plans lower reimbursements in 2025 — with declining insurance reimbursement ranked the single top concern at 56%.

   ADA Health Policy Institute, 2026 Survey of Dental Practice, Table 11; Dental Economics / Levin Group 19th Annual Practice Survey

   NOT THIS IF — Payer mix is documented per site, no single carrier is a large concentration, and any reimbursement change in the comparison period has been isolated out of the growth story rather than left inside it.

HOW TO TELL THEM APART

How to tell these apart in your own numbers

Each of these is a measurement you can run yourself, without us.

WHAT RESOLVES EACH

What resolves this, and how you will know it resolved

Same-store growth is not separated from acquired and de novo growth	Rx 05 · preparing for sale →	Banker-ready growth narrative built on a defined same-store cohort with a stated averaging method, supported by the monthly readout and board pack under Rx 04 · reporting. A number a buyer can re-derive is worth more than a larger number they cannot.
Attribution cannot be reproduced — growth reads as market luck	Rx 04 · marketing attribution →	New patients per location per month reconciled to spend by location by month, running continuously rather than reconstructed at diligence. Reconstruction six weeks before a data room is the most expensive version of this work and the least convincing.
Owner dependence — production sits in one pair of hands	Rx 05 · preparing for sale →	Owner-independent systems are what buyers price, and the operating instrumentation for that sits in Rx 03 · intake-and-ops. Stated plainly: no marketing work reduces owner dependence. Recruiting, delegation and clinical capacity do, and that is a two-year job, not a campaign.
Collections, not production, is what gets priced — and collection rate is the weak spot at scale	Rx 04 · marketing attribution →	Production, adjustments and collections separated and reconciled to the income statement. This is a revenue-cycle problem, not a marketing one. What does not work: adding acquisition to a group collecting 72% — it enlarges the leak on the way into diligence.
Payer mix concentration is carrying the growth	Rx 04 · marketing attribution →	Reporting isolates and sizes the exposure so it can be disclosed rather than discovered. The remedy is contracting and fee-schedule work, which is not ours. One further discipline for the deck: do not put a dental valuation multiple in it. The multiples circulating in the trade press could not be traced to a primary source; the only figure with a named attribution is Colao / Dykema's — platforms sell at roughly 9–10× while practices are bought at 5–6×, down from 13–16× at the peak.

HOW THIS DIFFERS BY SCALE

How this differs by scale

Single site	The buyer is another dentist or a small group and the transaction is priced off collections, so the story is chair time, recall and collection rate. Get the unit right: ADA HPI's median gross billings per owner general practitioner is $893,510 (first quartile $583,410, third quartile $1,198,710, n = 423) and that is per dentist — a two-dentist single location at the median is roughly a $1.8M practice. Confusing per-dentist with per-practice is the most common way dental figures get misquoted, and a buyer will catch it.
Group	At 2–25 locations the cohort definition is the whole argument, because acquisitions are frequent enough to blur it. The published growth bands give a reference the group will be measured against: 2–5 offices average 9.0% growth, 6–10 offices 6.9%, 11–25 offices 8.8% (Planet DDS).
Platform	At 26+ locations the arbitrage is thinner than the narrative assumes — Colao / Dykema puts practice purchases at 5–6× and platform sales at 9–10×, down from 13–16× at the peak — which shifts the burden onto same-store growth and collections. Both are where platform data is weakest: Planet DDS's 26–50 office band grows 2.8% with 55.3% of offices growing, and Henry Schein One shows 8+ location groups collecting 72% against 97% for the top decile.

OTHER PRESENTATIONS — DSO & GENERAL DENTISTRY

• Plateaued growth — production flat while the marketing invoice holds or climbs
• Rising cost per new patient — and no industry number to compare it to
• Thin pipeline — the phone rings and the chair stays empty
• Multi-site variance — one brand, one playbook, and a fourfold spread between locations