DSO Thought Leaders | Brian Colao's Market Forecast

 As of mid‑2025, there isn't a single definitive source pinning down the exact current number of U.S. dental offices affiliated with DSOs. However, leading voices—including legal experts at Dykema and industry analysts—paint a clear picture:

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📌 What Dykema Law & Thought Leaders Say

🏥 Total Consolidation Outlook

• Brian Colao, leader of Dykema’s DSO industry group, predicts 75–80% of dental practices will be consolidated into DSOs within the next 10–15 years. 

📈 Industry Growth & Innovation

• In its March 2025 insight, Dykema described 2025 as a year of recovery and innovation for DSOs, underlining strong upward momentum.

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🌐 Market Data & Projections from Other Sources

• Wikipedia (citing market research) reports that as of 2023, the DSO market was valued at $139.3 billion, with a projected 17.6% annual growth through 2030.

• While this doesn’t directly state practice counts, it does imply rapid expansion in both scale and reach.

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🔍 Putting the Puzzle Together

1. Current snapshot:

   • Most industry estimates suggest DSO affiliation ranges between 25% and 35% of U.S. practices today. (This aligns with past data from analysts like LEK and others.)

2. Near-term projections:

   • DSO penetration is expected to reach ~40% by 2026, per several consulting and advisory firms.

3. Longer-term outlook:

   • Dykema’s 75–80% prediction over 10–15 years suggests by 2035–2040, the vast majority of dental offices could be DSO-affiliated.

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🧮 Summary Table

Timeframe	Projected DSO Affiliation (%)	Approx. No. of Practices*
2025 (now)	~25–35%	~50,000–70,000 (est.)
~2026 (near-term)	~40%	~80,000
10–15 yrs (2035–40)	75–80%	~150,000+

* Based on an estimated 200,000 dental offices in the U.S.

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✅ Takeaway

• Today (June 2025): Roughly 25–35% of U.S. dental offices are DSO-affiliated (est. 50k–70k practices) — though no single source gives an exact headcount.

• Projections:

• Near-term (~2026): ~40% adoption.

• Long-term (~2035‑2040): Massive consolidation to ~75–80% of practices  

However even with the predicted DSO Growth, the industry is still going through challenges of their own. Here’s what current data and insiders reveal about the financial health of DSOs as of mid‑2025:

⚠️ DSOs in Receivership (Bankruptcy or Court-Controlled)

• 23 DSOs entered receivership over the past 12 months, according to insights from the Dykema DSO Conference. These are undergoing restructuring under court-appointed receivership to protect creditors and potentially reorganize .

• While some are stable and working toward recovery, their placement in receivership signals serious financial distress.

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📉 DSOs Struggling Financially (Zombie or Over‑leveraged DSOs)

Multiple expert sources highlight a growing group of DSOs under duress due to market pressures:

• Exposure to inflation, high interest rates, and falling reimbursement rates has severely squeezed margins—raising cost of borrowing and shrinking valuations.

• “Zombie DSOs”: These organizations continue acquiring practices despite being financially fragile, overly leveraged, and delaying recapitalization (recap) plans .

• As NextLevel founder Gary Kadi and MB2’s Chris Villanueva warned, many smaller or fast-growing DSOs are failing to recapitalize, hitting debt covenants, unable to scale profitably, and facing operational inefficiencies .

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📊 Estimated Scale of Financial Distress

• 23 in receivership is the only quantified figure found.

• “Many” struggling DSOs: While no exact count, multiple industry voices confirm that a considerable number—especially those that grew rapidly via PE funding—are on shaky ground (unable to recap or sustain operations).

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🔍 Summary

Category	Approx. Number	Description
DSOs in receivership	23	Court-supervised restructuring (last 12 months)
Over-leveraged / struggling DSOs	High, unspecified	“Zombie,” recap-delayed, covenant-breaching; scale suggested by experts rather than data

✅ Bottom Line

• 23 DSOs are officially in receivership.

• A significant but unquantified number (~dozens to possibly hundreds) are financially distressed—over-leveraged, failing to recap, or struggling to stay solvent—and often still engaging in acquisitions as a survival tactic.

If you're considering partnering with or investing in a DSO, it's crucial to conduct deep due diligence—scrutinizing their debt load, acquire strategy, recap timeline, and operational strength. Let me know if you’d like help reviewing individual DSOs or preparing a risk assessment framework!