DSOs, consolidation and private equity are quickly becoming part of the dental industry's new normal.
Andrew Smith, executive director at the Association of Dental Support Organizations, and Bart Walker, partner at McGuireWoods, spoke with "Becker's Dental + DSO Review Podcast" to weigh in on the growth explosion of DSOs.
Note: This is an edited excerpt. Listen to the full podcast episode here.
Question: What is going on with consolidation in the dental services area?
Andrew Smith: I think what's really intriguing is that DSOs are in growth mode. Dentistry remains one of the fastest-growing industries in healthcare. We see this time and time again that the pie in the oral healthcare marketplace continues to get bigger. DSOs probably will triple in size over the next 10 to 15 years, and we are seeing a ton of consolidation coming out of COVID-19. A lot of our member companies are growing either through affiliation or acquisition, but also are growing through a de novo process. I think it's continuing to get bigger and better, and it really showcases where oral healthcare is growing.
Q: Has there been any slowdown in consolidation, or are you just seeing the constant development of both DSO transactions and the growth of new DSOs?
Bart Walker: It's really accelerating; it's continued to accelerate. It's been going like gangbusters for a number of years now, and the deals just keep getting bigger and bigger. Now, what we're seeing is [private equity] to [private equity] deals. So more of secondary sales. Smile Doctors that is owned by Lindon, just took an investment from Thomas H. Lee. Blue Sea sold DECA to Blackstone. Sheridan sold Canadian Orthodontic Partners to Pamlico. So you're seeing a lot of peer-to-peer transactions that we hadn't seen in the past now that we've got some DSOs with real scale out there.