Author: Luke Moore
Obtaining reliable and up-to-the-minute market information is integral. Understanding the importance of trusted data, Dental Elite shares analysis of the practice sales and acquisitions market with the broader profession annually in the Autumn, reflecting on the previous years’ data. The latest Benchmarking Report has now been released and can be downloaded from the website for free.
A true representation
This report evaluates data from practice valuations completed between July 2024 and the End of June 2025, with year-on-year comparisons from an aggregate level and segmented by practice type. It offers unmatched insight into the dental market, including information from both new valuations and revaluations to maintain a dynamic data set. This provides an accurate understanding of the dental landscape, taking into account variations in operational structures as well as broader market trends.
Sales market landscape
The average EBITDA (Earnings Before Interest, Tax, Depreciation and Amortisation) margin across all practices is 20.77% – adjusted for outliers in the data. Approximately 42.5% of practices exceed the 20% EBITDA threshold and just 37.37% report turnover above the £882,000 average.
Those practices that are generating over £900,000 in revenue and EBDITA margins over 20% are the key target for consolidators and corporates in the acquisitions market. This is relevant to future vendors as they plan their exit, highlighting the scope of potential buyers among the first- and second-time owners. This is reflected in the latest Dental Elite Goodwill Report, which found that almost 70% of practice sales were made to individual or small group owners.
The practice picture
Comparing data from the past three years suggests that many expenses remain stable for most dental practices. Core costs such as lab and material fees have stayed largely the same, though notable increases are seen among mixed and private practices who require a greater range of clinical solutions as they diversify their services. Fee-per-item and dental plan payouts have also remained constant as percentages of revenue.
Turnover across all practices has also stayed within a similar range during this time at an average of £867,749. Mixed practices (made up of 20% or less NHS work) achieved the highest figures with an average of £1,052,984, followed by private and then NHS practice (consisting of 80% or more NHS dental provision). That said, gross profit margins are still highest in NHS-dominated practices – mostly due to proportionally lower lab and material costs. Lower associate payout ratios are also contributing to this, particularly for those with rates above £30, albeit associate pay rates have grown over the last few years. It is still not uncommon for a payout ratio for NHS work to be below 35%.
Further, the report also noted an interesting downwards shift in NHS payout ratios, despite UDA rates reaching record highs with the average across all practices now at £34.20. NHS England’s introduction of the £28 minimum UDA rate seems to have had a particularly positive impact for practices who were previously well below the market average, with funds directly increasing profitability rather than being absorbed by operational costs.
Staff wages have seen a slight increase, which will be partially due to the rise in National Living Wage, driving practices to offer salary uplifts in order to stay competitive. This is especially applicable to ancillary team members and is most noticeable in NHS practices. They typically require more staff to achieve the same revenue as a predominately private practice, albeit the larger increase in National Living Wage and changes to Employers National Insurance Contributions will be felt greater in next year’s report.
Implications for growth
Limitations and challenges within the NHS framework are causing more practices to transition towards mixed or private models, which is helping to unlock earning and growth potential. For these and other reasons, there has been a continuing contraction in the number of NHS-dominant practices throughout the UK.
The objective in every principal’s mind right now is business growth. The data suggests that this can be achieved by increasing revenue and optimising use of existing resources, rather than solely reducing costs. Principals should be focused on increasing chair occupancy, diversifying services and improving patient flow to drive profitability and EBITDA margins.
Introducing and optimising a hygiene function is another excellent way to increase revenue. It ensures efficient use of time and resources in the practice, freeing dentists to focus on higher-value treatment, while also being one of the most reliable and profitable private income streams available. A dental plan may offer similar advantages for many practices, tapping into the potential they offer for anchoring patients to the practice and encouraging their long-term loyalty.
Turning insight into action
Whether you are preparing for a future practice sale or not, it’s vital to understand the practice market landscape and to prepare your business accordingly. Allowing time to optimise business growth and boost profits will put you in good stead for the future either way. For expert support in interpreting the latest market data and applying it to your situation, contact the team at Dental Elite.
For more information on Dental Elite visit www.dentalelite.co.uk, email info@dentalelite.co.uk or call 01788 545 900
