The reSource Minute – February 2026
Video Transcript:
Hello, this is Doug Copple, and it's time for another reSource Minute. This time, we're going to look back at the valuations we prepared in the calendar year 2025.
Every year, we prepare an annual review of the valuation metrics we've completed during the previous year, and many practice owners have told us they find this data useful to benchmark their individual practice. It’s also beneficial for young doctors to understand the market when they’re considering buying a practice.
Here’s a summary of the key metrics of the valuations we performed last year. First, please note that these are private doctor-to-doctor transactions. DSO and OSO transactions are completely different based upon EBITDA, and typically, they’re valued higher, but the terms are very different. If you look at this chart, the average orthodontic practice we reviewed last year had average collections of $2.65 million. The adjusted overhead rate is just under 57% - that’s the adjusted overhead rate, meaning that we have removed discretionary or non-operating expenses from the overhead, such as family payrolls and similar items. The average value as a percentage of collections is just under 85%.
I want to point out that the majority of these practices - about 60% - were actually sold at these values, or a contract has been entered into for someone to purchase all or a portion of the practice at the valued amount. So we think these percentages are fairly representative of the orthodontic space. These values are affected by many different things. Again, we’re looking at averages, but factors include the individual characteristics of the practices, primarily the profitability of the practice (which is why we talk about overhead here), growth trends, the condition of the office and equipment, location, and total contracts and accounts receivable. These are just some of the items we evaluate.
As always, we pull 25 practices as a representative sample of all the valuations we completed to give you an idea of the ranges. This list includes 25 of the practices we reviewed. You’ll see in the second column from the left the net collections for these practices. There’s a huge range - the smallest is $750,000, and the largest is number 15, with nearly $6.5 million. Actually, the largest practice we worked with last year was over $8 million.
You’ll see the overhead rates in the middle column. There’s a wide range there as well. The highest overhead practice is at 80%. On the other end of the spectrum, the most profitable practice we worked with had overhead under 39%, meaning that for every dollar collected, over 60 cents was going to the owner doctors. Again, this reflects a 41.5 percentage point difference between the highest and lowest overhead rates - wide ranges.
Also this year, those two practices - the ones with the highest and lowest overhead rates - were valued at the lowest and highest amounts, respectively. One practice was valued at 45% of collections, and the other at 120% of collections. This demonstrates just how wide the range can be. That’s why we say don’t rely on a rule of thumb like “it should be 80 or 85% of collections.” You hear that a lot.
The reality is that many factors can greatly affect the value of a practice. Just because someone is asking 70% of collections doesn’t mean it’s a great deal. And if a practice is valued at over 100%, it doesn’t mean it’s a bad deal - often, it’s justified. In fact, the practice valued at nearly 120% of collections is being sold at that amount, or a pathway to partnership is being established.
As we have in previous years, we also track the number of office locations for each practice valued. About half of the practices we valued last year were single-location practices. As shown in this chart, practices with multiple locations produce more on average and are more profitable, with lower overhead. Again, these are averages.
We've had multiple one location practices producing over three and even four million dollars last year. But the main point is just don't assume that adding another location will increase your overhead. As in prior years, it typically increases both the top line and the profitability percentage of those practices.
The final chart here is a list of the last 15 years, the practice values that we've published...
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Chapters:
0:00 Introduction
0:17 2025 Orthodontic Practice Valuation Overview
0:41 2025 Orthodontic Market Averages
1:39 Key Drivers of Practice Value
2:03 Understanding Valuation Ranges
3:50 Single vs. Multi Location Performance
4:26 15 Year Orthodontic Valuation Trends
5:11 Closing Outro
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Connect with Bentson Copple Patterson & Associates: https://www.instagram.com/bentsoncopplepatterson https://www.facebook.com/BentsonCopplePattersonAssociates https://www.linkedin.com/company/bentsoncopplepattersonassociates/
Website: www.bcp-advisors.com
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