Orthodontic Practice Profitability: 7 Numbers Every Owner Should Know

By Spiro Leunes, CPA | CEO, MRL Advisory Group – New Jersey and New York

Dental CPAs

An orthodontic practice can generate $2 million in annual collections and still have significant opportunities to improve profitability.

The problem is that collections don't tell the entire story. Treatment can extend for months beyond the original estimate, laboratory costs vary considerably, and today's collections often reflect cases started a year or two earlier.

When I evaluate an orthodontic practice, I look beyond the financial statements. Here are seven numbers I believe every orthodontist should understand.

1. New Patient Starts

New starts are one of the best indicators of where an orthodontic practice is heading.

Consider a practice generating $2 million annually with an average comprehensive treatment fee of $6,000. Approximately 28 starts per month would generate $2 million in annual contracted fees, assuming a consistent case mix and steady-state operations. For reference, the 2025 Orthodontic Practice Survey reported an average of 295 starts per orthodontist per year, or roughly 25 per month.

But what happens when starts decline from 30 per month to 23?

Collections may remain strong because existing patients continue making payments. The financial impact of declining starts may not appear until much later.

Track starts monthly, compare them with prior years, and separate comprehensive treatment, clear aligners, Phase I, and limited treatment.

Also monitor referral sources. Depending too heavily on a handful of referring dentists creates risk.

2. Profitability by Treatment Type

Not every orthodontic case produces the same profit.

Consider two comprehensive cases, each with a $6,000 fee.

A traditional braces case might generate $4,850 after direct appliance, supply, and clinical support costs, while a clear aligner case generates $3,950 because of higher laboratory fees.

However, if braces require 18 appointments and aligners require 10, the picture changes. At 30 minutes per visit, the braces case produces about $539 per chair hour and the aligner case about $790. The aligner case earns less per patient but more per hour of chair time.

These are illustrative figures, but the distinction matters. If your chairs are full, chair time is the constraint. If you have open capacity, starts are.

Phase I treatment, including palatal expanders, should also be evaluated separately. Intraoral scanning and digital appliance fabrication have changed treatment workflows, but technology still carries equipment, software, and laboratory expenses.

The question isn't just how much you collect per case. It's how much it costs to complete treatment.

3. Visits Per Case

This is where orthodontic practices can lose substantial profitability without realizing it. Suppose comprehensive treatment is expected to require 18 visits but actually averages 24. That's six additional appointments without necessarily generating additional revenue.

For a practice completing 300 such cases annually, that's 1,800 extra appointments, or 900 additional chair hours assuming 30 minutes per visit.

At $25 in clinical support labor per visit, that's another $45,000 in direct labor alone.

Not every delay is preventable. But tracking actual visits and treatment duration against the original estimate can identify scheduling, compliance, and efficiency problems.

4. Exam-to-Start Conversion

Bringing new patients into the office is expensive. Failing to convert patients who are ready for treatment makes it even more expensive.

Monitor how many treatment-ready patients begin treatment following their initial examination.

If conversion is declining, investigate the consultation process, fee presentation, payment arrangements, and follow-up procedures before increasing marketing spending.

Orthodontists should also track their observation pool. These younger patients represent potential future starts, but they also require appointments and staff time before treatment begins.

I've addressed related issues in Dental Case Acceptance: How to Turn Diagnosis Into Patient Fees.

5. Overhead and Contract Receivables

Orthodontic practices have a different overhead structure from general dental practices. The 2025 Orthodontic Practice Survey reported average overhead of approximately 56.5%, and more than half of respondents said overhead rose from the prior year. But overhead is only part of the picture.

Most orthodontic practices maintain their tax records on the cash basis. A patient paying $6,000 upfront creates current collections even though treatment may continue for another two years.

Meanwhile, other patients pay through monthly installment contracts.

I would review three additional figures alongside the financial statements:

• Outstanding contract receivables and delinquent balances.

• Amounts already collected for treatment not yet completed.

• The number of active patients being treated past their estimated completion date.

  
  

A healthy bank balance doesn't necessarily mean a healthy practice.

6. Owner Compensation vs. Practice Profit

Orthodontists earn money in two capacities: as clinicians and as business owners.

Consider a $2 million practice generating $710,000 before compensating the owner for clinical services. Assume the owner personally produces $1.4 million.

At an illustrative 25% replacement compensation rate, the owner's clinical services are worth $350,000. That leaves $360,000 in practice earnings, before any additional normalization adjustments.

The distinction is important because a buyer needs to understand how much income comes from the owner's clinical work and how much comes from ownership of the business. It's also why financial statements alone don't establish what a practice is worth.

7. What Your Orthodontic Practice Is Actually Worth

Orthodontic practices are often discussed in terms of a percentage of collections. I prefer to begin with sustainable earnings.

Two practices collecting $2 million can have very different values.

A buyer should evaluate earnings, new starts, referral concentration, owner dependence, and the number of cases requiring treatment beyond their estimated completion dates. Work in progress is particularly important.

In a typical orthodontic asset purchase, the seller retains cash collected before closing, while the buyer receives the remaining contract receivables and assumes responsibility for completing unfinished treatment.

The buyer must determine whether the remaining collectible receivables adequately cover the cost of completing those cases. If they don't, that financial burden needs to be addressed in the transaction.

I've discussed the broader valuation considerations in Dental Practice Valuation: How Much Is Your Practice Really Worth?.

Where to Start: Run the Same Exercise on Your Own Practice

These seven numbers came from one $2 million practice. They aren't separate problems. Starts drive collections two years out. Visits per case decide whether a $6,000 fee is worth $4,850 or a good deal less. The owner's clinical pay decides what the business is actually earning. Fix one and the others move.

So, take the practice you actually own and pull the same numbers. Count last year's starts by month and by referring office. Cost out your most common braces case and your most common aligner case, including the visits. Pull every active patient past the estimated completion date. Then take what the practice earned before your compensation and subtract what it would cost to replace you in the chair.

Most orthodontists who do this find at least one number they didn't expect. Usually it's visits per case. Sometimes it's the observation pool. Either one is worth more than any tax strategy I could show you.

At MRL Advisory Group, we work with orthodontists and other dental specialists throughout New Jersey, New York, and nationwide. Our Dental Practice Advisory Services turn the practice management reports and the financial statements into one set of numbers you can act on. Our Transition Advisory Services make sure that when you sell, you get paid for the business and not just the chair time.

If you've never seen your practice analyzed this way, set up a free consultation. It's far better to know these numbers now than to learn them from a buyer.

From your New Jersey and New York Dental CPAs, also working with clients nationally.