Dallas-based MB2 Dental is one of the largest DSOs in the U.S. and is coming off another year of high growth and expansion, with the company supporting more than 600 practices and more than 1,300 dentists.
The DSO's founder and CEO, Chris Villanueva, DMD, recently connected with Becker's to share how MB2 Dental plans to ride its 2023 success into the new year.
Question: What are your DSO's top priorities in 2024?
Dr. Chris Villanueva: MB2 Dental's top priorities for 2024 include leveraging technology to continue to scale our business and foster greater connectivity amongst our doctor partners. Our recently launched internal communications platform, Cerebro, will play a large role in this initiative. Additionally, we will continue to focus on expanding our support departments and resources to help our growing network of doctor partners and practices.
Q: What are two to three key strategies in place to expand your footprint?
CV: To expand and grow our footprint, MB2 Dental is focused on building market density in key geographies where we can leverage the referral synergies between our general and specialty practices. We also are continuing to grow through the opportunistic opening of de novo locations and facility expansions and helping transition associate doctors into ownership opportunities.
Q: What are the biggest challenges facing DSOs today?
CV: The labor market continues to be one of the most significant challenges DSOs face today. Hiring is more difficult than ever, and having the resources and support team dedicated to hiring is critical.
In addition, the growing cost of capital and access to debt is a challenge for dental groups. We see competitors that once bid against us on deals beginning to slow down or halt their acquisition pace as capital runs out. Groups are beginning to run up against their debt covenants because they were too aggressive in paying higher multiples to accelerate growth. Unfortunately, many of these groups are now unable to generate the same-store growth needed to meet their leverage requirements.
Q: How do you think economic challenges will impact growth in the overall DSO industry?
CV: I can confidently say that MB2 Dental is not slowing down. We are wrapping up yet another record year and entering 2024 with a promising pipeline of prospective doctor partners that already surpasses the same period in 2023. While we continue to outpace the prior year, we've already seen fewer dental groups competing for deals, mostly due to a lack of capital or leverage challenges. Additionally, the increased cost of debt has been identified as a key factor limiting groups' ability to pay higher multiples, as seen in the past few years.
Q: What is your proudest accomplishment of 2023?
CV: This year has been another record-breaking year for MB2 Dental. We reached our 600th practice in August and will finish this year with over 160 new practices, including 13 de novo locations. We also successfully launched our internal communications platform, Cerebro, this year. This significant milestone reflects MB2 Dental’s commitment to advancing and enhancing our operations. We continue to grow our support services for our more than 1,300 dentists and 9,000 team members within the MB2 Dental network.