Good morning. Hello and welcome to the first edition of The Morning Grind, brought to you by Planet DDS, where we brew the freshest news, insights, and updates for leaders in DSOs and group practices. From private equity plays to the latest in dental tech, we’re here to keep you sharp, focused, and a step ahead in an industry that never takes a coffee break.

Inside this issue:
- Is private equity’s dental honeymoon over?
- LA wildfires disrupt dentistry

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🏆 Enjoy your coffee break with Word of Mouth, a dental-themed word game inspired by Wordle … guaranteed to leave you grinning, not grinding!

MARKETS

📈 Patterson Companies ($PDCO) – 30.95 | 0.00 (0.00%)
📈 Henry Schein ($HSIC) – 80.00 | +5.18 (6.92%)
📈 Weave Communications ($WEAV) – 16.32 | +0.46 (2.90%)
📈 Dentsply Sirona ($XRAY) – 19.76 | +0.15 (0.74%)
📉 Align Technology ($ALGN) – 219.11 | -13.46 (5.79%)
📉 Envista Holdings ($NVST) – 20.52 | -0.93 (4.34%)
📉 Colgate-Palmolive ($CL) – 86.70 | -3.27 (3.63%)
📉 3D Systems Corp ($DDD) – 3.60 | -0.16 (4.26%)

Data is provided by Google Finance. Stock data reflects market close at 5:00 p.m. ET, showing changes over the past five days.

THE DRILL DOWN

🤖 The American Dental Association bets on AI innovation, investing in Pearl as it continues to integrate machine learning into diagnostics. Much like the ADA's previous investment in dental AI company Overjet, the Pearl partnership aims to enhance patient care and boost efficiency in dental practices nationwide. Smart machines, sharper smiles?

💻 Patient records request exposes hidden ransomware attack, forcing a dental practice into a $350K HIPAA settlement after failing to disclose the breach, with regulators cracking down on the issue.

📢 Alabama dentists push back, accusing insurance companies of prioritizing profits over patients. The state's dental association is advocating for improved fairness and accessibility in dental coverage. 

💵 National dental spending trends unveiled, with this report revealing insights on shifting patient behaviors, out-of-pocket costs, and market dynamics. 

💧 Prevention starts at the tap, says the ADA, reaffirming community fluoridation’s safety amid new debates over a study linking fluoride to lower IQs. President Trump’s latest executive orders omit fluoride policy despite past signals from his health secretary nominee.

💳 Medical debt gets the boot from credit reports, as the Consumer Financial Protection Bureau finalizes a rule banning third-party collectors from reporting medical debt. The move protects consumers' credit scores, but the ADA has concerns about unintended consequences.

🏛️ Massachusetts puts private equity under the microscope, with a new law forcing tougher financial disclosures and transaction reviews. Healthcare deals involving PE investors now face stricter scrutiny and increased oversight. Looks like due diligence just got a lot more diligent.

PRIVATE EQUITY

The romance isn’t over, just more paperwork

Private equity has long been smitten with dentistry, charmed by its steady returns, high margins, and the universal truth that, even in a recession, teeth don’t fix themselves. But as 2025 rolls around, the one-time gold rush has matured—still very lucrative, but not always love at first sight.

What happened: While dentistry remains a solid bet, 2024 threw a few curveballs at private equity, causing players to ask more questions before saying, “I do.”

• Longer Holds: Some private equity firms are begrudgingly holding onto DSOs and other dental investments longer than planned, waiting for better market conditions and exit prospects.

• Regulatory Scrutiny: Heightened federal and state oversight of health-related investments has added compliance costs and hurdles to PE-backed dental plays. 

• Bad Press: Exposés and news reports have raised concerns about the intersection of patient care and dentistry, alleging a prioritization of profit over patients. 

Why it’s happening: The broader economic environment isn’t doing private equity any favors. Rising interest rates, inflationary pressures, and stricter regulatory priorities have increased the cost of doing business. On top of that, some consolidators have reported hitting a ceiling on optimization and cost-cutting, in light of staff shortages and fragmented offices.

But hold on: Despite it all, 2024 proved that the dental industry’s fundamentals, including its high market fragmentation, still make sense for investors:

• MB2 Dental: This Dallas-based giant secured a $2.344 billion debt facility in 2024, with KKR leading the charge. A $525 million investment from Warburg Pincus late last year valued MB2 at over $3.5 billion. 

• U.S. Oral Surgery Management: The Irving, Texas-based company obtained a $175 million credit expansion to support its growth initiatives through 2026.

• Oral Surgery Partners: The specialist group secured a $400 million credit expansion in January and an additional $75 million in June, totalling $475 million to fuel its growth. 

Why it matters: Private equity isn’t abandoning dentistry anytime soon; however, that’s not to say it won’t become choosier. As the market continues to consolidate from single shops to larger groups, attention will be turning to operational efficiency, tech integration, and compliance.

For group practices that can show scalability, innovation, and strong compliance records, investor interest is very much alive.

Looking ahead: 2025’s private equity playbook is likely all about quality over quantity. Investments will favor DSOs that can weather regulatory storms, adopt solutions to streamline operations, and adapt to changing patient expectations. As one PE player quipped, “We’re definitely not walking away from dentistry—it’s still one of the healthiest bets in healthcare. We’re just being more careful about who we swipe right on.”

BUSINESS BITES

 📊 DentalPost reveals 2025 dental salary trends, breaking down compensation, bonuses, and benefits across the dental industry. The report offers a deep dive into pay, conditions, and hiring trends … Brace yourself—HR inquiries are coming.

🦷 ADA launches Corporate Ventures, signaling a bold shift toward innovation in oral health care and revenue diversification for the association. The move positions the ADA to play a bigger role in the business of dentistry.

📈 Pearl celebrates a big year, with new investments, global expansion, and a new partnership with Carestream Dental to integrate AI-powered diagnostics into dental practices, while rolling out advanced imaging and detection tools

💸 Patterson Companies agrees to $4.1B ‘surprise’ sale, with purchaser Patient Square Capital aiming to take it private and improve financial results.

💰 Branford Castle buys into Eastern Dental, acquiring the 20-location New Jersey DSO from Staple Street Capital, with CEO Ray Iannaccone and his team staying on to lead operations as usual—new owners, same drill.

💡 Torch Dental secures $17M and sets up shop in Austin, expanding its dental supply marketplace while planting roots in Texas to fuel further growth—because everything’s bigger in Texas, including dental supply chains.

📈 MB2 Dental celebrates a booming 2024, reporting major expansion through new partnerships, de novo practices, and organic growth.

🤖 DIA bets big on robotic dentistry, backing Perceptive to drive the next wave of automation in dental care, aiming to integrate cutting-edge robotics into daily practice.

IN THE NEWS

LA wildfires disrupt dentistry

The devastation from the Los Angeles wildfires has been staggering—lives lost, homes destroyed, and entire communities upended. While the focus remains on immediate relief, the complicated impact on Californian dentistry is starting to become clear. From insurance turmoil to staffing disruptions and financial uncertainty, the impact will be felt for months, if not years. 

Practice disruptions: While some dental offices have suffered direct damage, the broader impact is being felt through patient cancellations, staff displacement, and supply chain disruptions. For DSOs, ensuring continuity across multiple locations has become a logistical challenge, particularly in fire-affected regions.

Insurance fallout: Like many businesses affected by the fires, California’s worsening insurance crisis is squeezing dental practice owners. Major insurers are scaling back coverage in high-risk areas, forcing some to rely on the FAIR Plan with its limited protections. Widespread fire-related claims are expected to send premiums soaring, adding financial strain to practice owners. 

Workforce challenges: Staff shortages are nothing new in Californian dentistry. But now, the fires will further squeeze practices, as their staff scramble to find safe places to stay. Housing shortages in Los Angeles were already a problem—now, the destruction of thousands of homes is pushing up rents in unaffected areas. These higher costs affect dental staff retention, as many employees struggle to afford to live near their workplaces. 

Financial uncertainty: Banks and lenders are offering loan forbearance to affected homeowners, including dental professionals. However, it remains unclear how commercial loans and mortgages will be affected long term. The fires’ estimated $275 billion economic impact could tighten lending conditions.

Industry response: The California Dental Association has launched a relief fund to support displaced dental professionals, offering immediate financial aid to those who have lost their offices or been otherwise affected. The CDA has also curated resources to assist dentists in navigating the crisis. Others in the industry, like Ultradent and Henry Schein, are providing financial aid and essential supplies to affected practices.

Dentists stepping up: Despite business challenges, many dental professionals are offering up living space and even free emergency dental care to displaced residents. Others are organizing donation drives and leveraging clinic resources to assist communities in need.

What’s next: The long-term impact on the dental industry will unfold over the coming months. DSOs and practice owners must prepare for higher insurance costs, labor shortages, and changing patient priorities. Strategic planning and industry-wide collaboration will be key to sustaining operations and supporting affected communities.

CLINICAL NOTES

• 🌿 Cannabis use linked to severe tooth loss, as a JADA study finds frequent recreational cannabis use associated with increased risk of caries and severe tooth loss, underscoring the oral health risks of “dry mouth” effects and high-sugar cravings. Buzz kill.

• 🧠 New fluoride study sparks IQ debate, with researchers publishing a meta-analysis in JAMA Pediatrics suggesting a potential link between fluoride exposure and cognitive development in children, though some critics argue the methodology misses key variables.

• 💤 Dentists can step into life-saving sleep apnea care, as a Rutgers-led study highlights the critical role dentists can play in detecting and managing sleep apnea. Paging Dr. Sandman!

• 🧬 Ancient DNA impacts modern tooth size, a Current Biology study reveals that genetic traits inherited from Neanderthals influence human tooth size today, supported by further insights on how ancient DNA continues to shape dental and craniofacial development.

• 🐌 Slugs inspire new approach to oral wound care, as Harvard researchers unveil a nature-inspired algae-derived polymer hydrogel that seals surgical wounds and treats chronic oral lesions. 

BEYOND THE CUSP

• Avoid these mistakes when giving your staff feedback, which according to Harvard Business Review, can cause more harm than good. Yikes.
  

• Teeth as Soviet time capsules, as this podcast delves into how one dentist-grandmother’s work with Soviet prisoners and spies uncover a secret past. 

• Phony dentist busted in Long Island kitchen, with a 70-year-old caught illegally practicing dentistry in her kitchen, performing extractions for $2,000 per victim. Always check credentials, folks.
  

• Honoring dentistry’s golf legacy, as Dr. George Grant, a pioneering dentist and inventor of the golf tee, gets his due recognition in Golf Digest, connecting oral health with sports history.
  

• Here’s how you can become a morning person, according to a renowned sleep expert. New year … new you?