Dental Laboratories

Industry Profile Report

Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters

Industry Overview Current Conditions, Industry Structure, How Firms Operate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.

Call Preparation Call Prep Questions, Industry Terms, and Weblinks.

Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.

Industry Profile Excerpts

Industry Overview

The 5,400 dental labs in the US design and fabricate custom dental prosthetic appliances, such as dentures, crowns, and bridges, for dentist offices and practices. Primary products include fixed and removable prosthetic devices, cosmetic devices, and orthodontic devices. Other products include sports guards and anti-snoring devices.

Foreign Competition

Domestic dental labs compete with foreign labs in China, Mexico, and India, which have specialized in offering low-priced partial frames and traditional crowns, especially zirconia-based restorations.

Competition from In-Office Technology

Advances in technology allow dentists to produce certain dental appliances in-office, replacing services from dental labs with their internal operations.

Industry size & Structure

The average dental lab operates out of single location, employs 7 workers, and generates $954,000 annually.

    • The dental lab industry consists of about 5,400 firms that employ 38,800 workers and generate $5 billion annually.
    • The industry is somewhat concentrated, as the top 50 companies account for over 43% of industry revenue.
    • Large firms include Glidewell Laboratories, Modern Dental Labs, Dental Services Group, and National Dentex.
                            Industry Forecast
                            Dental Laboratories Industry Growth
                            Source: Vertical IQ and Inforum

                            Recent Developments

                            Mar 2, 2023 - Private Equity Firms Eye Sector
                            • Private equity (PE) funding continues to flow into healthcare, according to market data firm Pitchbook. The highly fragmented dental laboratory space has not yet undergone major consolidation and private equity investors continue to seek the next healthcare services market to consolidate, according to Forbes. PE firms announced or closed an estimated 863 deals in 2022, making last year the second-highest on record for activity in the sector, after 2021. Pitchbook has been tracking the data since 2017. Deal activity is expected to slow in the first half of 2023 amid staffing-related margin pressures, liquidity constraints, and a difficult PE fundraising market. There could be a rebound in the second half of the year, however if macroeconomic conditions stabilize, Pitchbook researchers said.
                            • The Centers for Medicare and Medicaid services (CMS) began generating in 2023 an annual review process for coverage of medically necessary dental treatment. Expansion of dental reimbursement may improve health outcomes by reducing patient cost burden to receive life-saving care, according to Health Affairs. Medicare had provided essentially no coverage for dental care since its inception in 1965. CMS' Calendar Year 2023 Physician Fee Schedule final rule includes a new guarantee to cover dental services “when that service is integral to treating a beneficiary’s medical condition.”
                            • Frontier Dental Lab unveiled a new website as a major part of its direct-to-consumer campaign. Potential patients learn about veneers and the process of getting a smile makeover, and are provided with a before/after smile simulation before being connected with Trusted Frontier Dentists. Site visitors are taken behind the scenes at the lab to see how veneers are made. Popular questions and misconceptions about veneers are answered and addressed in the company's video series. Visitors can receive a before/after smile simulation using Frontier’s proprietary software. The prospective patient sends a selfie, and Frontier returns a simulation that shows them what their new smile could look like.
                            • Patients are back, the dentistry industry seems to be exceeding pre-pandemic levels, and industry consolidation has accelerated, according to financial and global information services firm GLG. All dentistry sectors, from dental practices through laboratories and back to procurement, are experiencing rapid consolidation, but the velocity of private dental practices consolidating into large group practices like DSOs has increased most over the last three years. Dental labs may have fewer, larger customers, as general dentistry is being done in increasingly fewer organizations. Dental practice consolidation is being driven by new technologies that enable large group practices to scale efficiently, the private equity community’s interest in dentistry, and the growth of a subset of dental entrepreneurs looking to start with small practices and grow them into smaller DSOs. A lack of skilled labor in the dental industry is also affecting dental laboratories. There was a 20% decrease in the number of dental technicians in the US between 2007 and 2017, according to the US Bureau of Labor Statistics. The trend has since accelerated, especially during the coronavirus pandemic. Increasing costs and the need for highly efficient manufacturing processes capable of producing accurate and quality parts are other issues that dental labs are confronting.
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