Dental: The Swelling Is Going Down: Dykema DSO Takeaways

研报英文原文证据摘录

Dental: The Swelling Is Going Down: Dykema DSO Takeaways

July 20, 2026

State of the DSO Market

The industry is four years into a downturn that broke the old roll-up model.

• After a smooth 2015 to 2021 run, conditions have been challenging for four straight years: elevated interest

rates, labor shortages, high labor and supply costs, and stubborn inflation

• Reimbursement stays flat while everything else rises, described as the "unnatural state of dentistry"

• Aggregating EBITDA through M&A no longer works on its own; the new mandate is building a premium

organization

• The 2026 formula: implement technology, right-size overhead, integrate specialty, maximize clinical

productivity, and build a strong culture

The market is paused, not broken, and capital has stopped recycling.

• Deal flow is stalled, and a system that depends on recycling capital is effectively "constipated"

• The pause is better read as a window to fix fundamentals than as structural decline

• The gap between the best and worst operators is widening

How the Industry Got Here

The sector moved through three generations, from failed public roll-ups to today's compliant, support-

driven model.

• The first generation (late '80s to early '90s) was a stock play, acquiring practice revenue without real support

and treating compliance as an afterthought; it ended in litigation, delistings, bankruptcy, and criminal

charges

• The second generation (mid-to-late '90s) was built for dentists with comprehensive non-clinical support, and

prosperity followed

• Around 2010, dental boards, Congress, and state attorneys general turned hostile with investigations and

threatened legislation; the industry fought back and, alongside the ADSO, won acceptance in all 50 states,

producing today's compliant model