The Group Dentistry Now Show: The Voice of the DSO Industry – Episode 241

Ranked the #1 DSO Podcast!

Welcome to The Group Dentistry Now Show: The Voice of the DSO Industry!

The Best Strategies for Maximizing Value in Dental Real Estate Investments

Subscribe to our channel for more episodes and stay updated on the latest DSO news, insights, and events!

If you like our podcast, please give us a ⭐⭐⭐⭐⭐ review on iTunes https://apple.co/2Nejsfa and a Thumbs Up on YouTube.

Choose your favorite listening app below and subscribe today so you don’t miss an episode! Full transcript is also provided below. See all of our podcasts HERE.

DSO Podcast Transcript – The Best Strategies for Maximizing Value in Dental Real Estate Investments with A.J. Peak.

Welcome to the Group Dentistry Now Show: The voice of the DSO industry. Join us as we talk with industry leaders about their challenges, successes and the future of group dentistry. With over 200 episodes and listeners in over 100 countries, we’re proud to be ranked the number one DSO podcast for the latest DSO news, analysis and events, and to subscribe to our DSO weekly e-newsletter, visit Group Dentistry Now. We hope you enjoy today’s show.

Bill Neumann 00:00:38 Welcome everyone to the group Dentistry Now Show. Happy 2026. I’m Bill Newman and we really appreciate you all checking in with us. Always have great guests and I’m surprised we haven’t had a peek on the podcast before. Shame on us, but we’ve got them on now, so it’s, it’s great to have you with a CJ and, Yeah. Happy 2026.

A.J. Peak 00:01:04 Thank you for having me. Looking forward to it.

Bill Neumann 00:01:08 So, probably a lot of, you know, AJ. but there might be some that don’t. So, AJ was the founder of Peak Dental Services, and, he probably doesn’t remember this, but I met AJ at the Henry Shine DSO event in Las Vegas.

Bill Neumann 00:01:29 gosh, probably in 2017 or 2018. And actually, had a chance to meet his mom and dad. They were there as well. In fact, I think his mom and dad were like the first people, like, they’re scouting out the event. And AJ came in a little bit later, but kind of got to meet the the whole family so that it was a nice memory. And AJ scaled up, Peak Dental Services and took it from a single practice. Was was that your dad’s single practice. Did you start with that?

A.J. Peak 00:02:00 It was just him and four employees.

Bill Neumann 00:02:03 Yeah. To, over 50 locations. A hundred million in revenue. So, just just a neat story and fun. Fond memories of meeting your dad and mom and, congratulations on what you built there. But now you’ve moved on to to something else. You’re the founder and CEO at Health Wealth Capital. So maybe take us through, you know, your single practice to, you know, getting to that 50 plus locations at peak and then you’re transitioning off to, health wealth capital.

A.J. Peak 00:02:37 Well, thanks, Bill. was a nostalgic memory at 1718 presenting at that conference. as I was acquiring and building dental offices occasionally, that the dentist would own the real estate that started several years ago and in order for them to sell the practice, they need to sell the real estate. Often the debt was cross collateralized. And so several years ago, set up kind of friends and family fund and a separate entity to buy the real estate and then lease it back to Pete Dunne Services. So that was sort of my experience in dental real estate starting several years ago, and it was a lucrative side investment for quite some time until, about two years ago started the, beginnings of building a real fond of health, wealth capital where raising syndicated capital to essentially buy triple net lease, dental real estate, sometimes veterinarian and some other health care, real estate where basically scaling up what I was doing in a small capacity, across the country to buy kind of medical, real estate, predominantly dental.

Bill Neumann 00:03:54 Maybe we start with some terms that some people might not be familiar with.

Bill Neumann 00:03:59 So, sale leaseback. maybe define what that means.

A.J. Peak 00:04:08 So many, healthcare entrepreneurs, particularly your audience, DSO executives, or starting, dental entrepreneurs, if they own their building and they own the practice and they’re looking to grow, this has been a successful strategy for many. In fact, I know of some that have grown ten, 20 locations last year through the term sales leaseback. So they buy the real estate and the buy the practice. they’ll go to an institutional investor like our fund and agree to a ten, 15 year lease, typically a triple net lease. And in exchange, we’ll often pay a premium for that real estate. Often times, Hundreds of thousands of dollars more than they bought it, even if they bought it recently, within a month. So by converting that building that they now purchase from maybe a solo dentist, and they purchase the practice and they turn around and offer an institutional investor a 10 or 15 year triple net lease. That’s called a sales leaseback. They’re going to now sell the building in exchange for the lease.

A.J. Peak 00:05:15 And they may have bought that building for, let’s say, 600,000. And we’ll turn around and hypothetically buy for 1.2 million. And in exchange, they made 600,000 in a short period of time. And they’re able to go invest.

Bill Neumann 00:05:28 That.

A.J. Peak 00:05:28 Capital and oftentimes to buy additional practices and additional sales leaseback kind of real estate. and sort of some dental groups have done this ten, 20 times in a year.

Bill Neumann 00:05:41 And, is it pretty commonplace now that you see the sales lease back? I mean, is it or is it becoming more commonplace?

A.J. Peak 00:05:52 It’s becoming more commonplace to some. had I known about this strategy when I was building my DSO, I would have borrowed maybe half as less money as I did. So it’s not a technique that I knew about. ten years ago, when I was growing and scaling, I was borrowing tons of money from a bank. And I think with the the banks kind of retracting with interest rates rising the last few years, there’s been some really entrepreneurial, dental groups. You see this heavily in urgent care and, and some of that same tactics has now come to dental and veterinarian where they’ve been able to find, you know, dental practices for sale.

A.J. Peak 00:06:33 They’re growing, they’re multi-site, the dentist owns the building and they sort of own the practice in the building. And they sell the building for, you know, comparable, you know, dollars per square foot basis, maybe 700,000. And they know if they put in place a triple net lease with an institutional investor like us will pay a premium oftentimes sometimes double what they paid. And that can be their sole source of financing. I know of a couple dental groups that have no bank financing and through sales lease backs are funding all their growth. So I’d say it’s not common knowledge but growing substantially. And I’d I’d argue some of the fastest growing dsos last year were growing via this source of capital.

Bill Neumann 00:07:17 Excellent. so you use the term triple net lease. So can you explain what that means?

A.J. Peak 00:07:25 I think I signed ten of these things as a tenant before I really understood what they meant. So it’s not well understood, but it it, is all taxes, all insurance and all maintenance expenses. That’s the three items that the tenant is responsible for and in the audience.

A.J. Peak 00:07:46 If you look at kind of any retail center. Majority of the dental practices. If you were to drive on a busy street corner, you see a dental office. They are probably 90% in what’s called a triple net lease, meaning they’re paying the rent. Any of the property taxes, all the insurance and all the maintenance on that building. And it’s sort of the for investors gold standard to have a triple net lease. You’re really not exposed to inflation. It’s all in the tenant. And so my real estate investor that’s you know worth a lot. Meaning the tenants really almost self-managing the property for the most part outside of maybe the roof of the walls. The tenant is really responsible for everything.

Bill Neumann 00:08:29 So as we kind of look at the two different issues, you’ve really got two different things going on. You’ve got the in a lot of cases, you’ve got the value of the practice itself and then you’ve got real estate valuation. A lot of times I think in an entrepreneur’s mind they combine the two, right.

Bill Neumann 00:08:45 So there’s maybe talk talk through that a little bit. Because I think bigger investors, bigger platforms are looking at the value of the practice and not so much the value of the real estate, but maybe talk through that a little bit of a disconnect.

A.J. Peak 00:09:03 And it’s not well understood until most recently I don’t think I really got it. as to how important the real estate can be from a total valuation perspective. And, if in the audience, if there’s an entrepreneur and they own, let’s say, five, ten buildings and they’ve got, you know, ten, 15 locations, on that front, the deciding factor, is really how to handle these leases and how to sell that real estate before you go to sell the practice. And I’d say 95% of the time in this industry, that does not happen. we all, and including myself, we sort of fixate on the practice. And real estate is sort of handled in the 11th hour and oftentimes at the detriment of the total valuation. And if you learn certain tactics by, on a per practice basis, the combined value of the practice and the real estate can actually go up by upwards of half a million in almost every scenario, $100,000 if you sort of structure it properly.

A.J. Peak 00:10:10 not in the 11th hour. And the proper way to do it is to actually, engage in a sales leaseback or put the property in a traditional triple net lease. Well, before you go to sell the practices. And if you do so, you can mathematically engineer, the valuation of the real estate. So the real estate being valued on a triple net lease basis is going to add value. number one and number two, you know, if you pay higher rent of less EBITDA and most of your listeners will understand, you know, dental practices, DSO are valued off of EBITDA. And so if you pay more rent, you’re thinking, oh, you know, I don’t want to pay more rent because my EBITDA is going to go down. Well, to be honest with you, the average multiple on your dental real estate under a legitimate triple net lease is going to be around 12 x. And then last year, one of the top three dsos in the country right now, you’re probably not getting a 12 x valuation on your dental group.

A.J. Peak 00:11:11 You know, maybe you’re getting a seven or X multiple on your dental group. oftentimes if you’re smaller or even less. so on the real estate, there’s a premium valuation to at least bring the rents up to market levels and on the tippy top of market levels. And that’s where you get an arbitrage, where you get a slightly higher valuation on the rental rate for the real estate, then the loss or forgone EBITDA on the rent, being a little higher for your practice. And so you can actually do the math, it’s algebra. And almost every time. It’s about a hundred thousand per practice. Upwards of half a million. And I, I know of at least five people last year that they got to me too late and, lost over half a million in valuation on the combined practice sale and practice sale because they waited till the 11th hour and, you know, they were being, bought by a DSO and the DSO, kind of negotiated maybe a little harder on the lease than they would have had they handled that beforehand, and they really agreed to something that was not a triple net lease and therefore destroyed a ton of value.

A.J. Peak 00:12:19 The other part to your question, bill, is if you’re a DSO, this can actually, you know, be really strategic for you. You can find a dental building, where the dentist is selling a practice in the building. And you may not have a mandate to own real estate. I know Peak Dental services. Our mandate was not on real estate on the balance sheet. but you can still put that under contract and you know that, hey, if I agree to a long term triple net lease in that space, there’s buyers out there, health, wealth, capital being one of them that may pay a multiple of what you’re paying for that building. So you might have that building under contract for 600,000. We’ll turn around and, you know, put an offer together and buy for 1.2. And you will never have to put it up to cash. Meaning you’ll assign that over to us. We close and you get the spread or the arbitrage. some dental groups that arbitrage might be 200,000 to upwards of a million.

A.J. Peak 00:13:18 with some of the buyers and sellers I interacted with last year. That could be transformational for your DSO. almost fully fund, the practice purchase, if you know what you’re doing and find the right opportunity.

Bill Neumann 00:13:32 I think one of the really exciting things about the sales lease backs is the ability to fund acquisitions in de novos. And we talked about, you know, when we first met. Money was cheap, right. So it wasn’t as big an issue as it is now. It’s a different story if you can get a bank to even lend to you. So this is this is a really great solution. Do you want to. And you’re advising Dsos and emerging groups on this right now. So maybe kind of take us through you know how that all works.

A.J. Peak 00:14:10 if and so the question being how to finance, the acquisition.

Bill Neumann 00:14:17 Of the.

A.J. Peak 00:14:17 Practice through.

Bill Neumann 00:14:18 Yeah, exactly. Exactly right.

A.J. Peak 00:14:21 and, you know, basically there’s two ways to evaluate commercial real estate. The sort of lowest common denominator way is you look at comparables of dollars per square feet, and it’s not unusual that a dental practice is considered to be like office space and without a lease.

A.J. Peak 00:14:43 It’s going to go on a dollar per square foot basis. So it’s very common that you might run into a building and, you know, Tucson, Arizona, or somewhere in Knoxville, Tennessee with a building is only worth, 500,000. And the dental practice is, you know, you might be buying it for, let’s say, 750,000. Maybe it’s a smaller million dollar practice. And USPS are going to buy the practice for 750 and you get the the building. You know, the dentist, is not, you know, looking to own the building post-purchase you get the building agreed to for 500,000 if you were to, you know, pay for that. And I can sort of, do quick math on my head, roughly agree to 80,000 in rent a year, which is not that much for $1 million practice. maybe the practice is doing 1,000,005 something in that zone, and you agree to a 10 or 12 year lease in most markets. We’re going to now turn around and offer a million or a 1.1 million for that building.

A.J. Peak 00:15:51 Now, if you get it even better, you’ll never have to buy the real estate. Some people will. I don’t, you know, encourage that because why put up the cash? You can just get it under contract or under letter of intent. Come to an institutional buyer like us or some other groups out there. We’ll quickly be able to do the math, usually within a day or two. Offer you 1.1 million. We then step in to your shoes as the buyer. And at closing, we’re going to fund the difference between what you had at under contract for, let’s say, $500,000. And in this scenario 1.1 so minus some transaction fees and taxes, you still clear net of half a million. And the practice, let’s say was under purchase for 750. Nearly every DSO out there you’re agreeing to sort of cash in some equity rollover. likely, the cash, that you promised the seller was less than the 500,000 you got. So you might actually put money in your pocket, working capital through a typical cash and equity rollover.

A.J. Peak 00:16:55 it just creates a positive flywheel for growth, to fund your acquisitions, of, practices. And there’s some dsos that have really figured this out. That’s the only type of acquisitions that are doing right now where they’re actually looking for dentists that own the building on the practice, and they kind of understand the valuations of triple net leases, and they’ll find buyers like us to step into, to buy that real estate and pay them that kind of arbitrage.

Bill Neumann 00:17:24 So in, in today’s environment, you know, how should a DSO think about. So you’ve got you may have access to traditional, you know, bank debt right. You’ve got, you’ve got, you’ve got some, funding versus, real estate capital and then I guess. Are there constraints on that, that debt from just like the speed of acquisition, because we have seen things really slow down with some groups. I mean, it’s completely stopped when it’s come to, to acquisitions or to close. And then you talked about other groups that have it seems like they’ve been funding a lot or all of their acquisitions or novos with sales lease backs.

A.J. Peak 00:18:10 Yeah. Some bank financing, you know, before interest rates, you know, skyrocketed and money was cheap. You know, banks were going for you know, traditional banks would go up for four and a half times, debt to EBITDA. You know, non-traditional banks to go six, seven, eight times. And, when money was cheap, you could almost always buy a practice. Let’s say at A6X multiple and you have 30% equity rollover. If a bank was going to borrow forex to you kind of 100% of the time, you could do it with no cash, meaning you’re sort of just using 100% borrowed proceeds. And I would say you could do it unlimited, but you could do it at a pretty aggressive pace with bank financing. In today’s world, that’s really, I don’t want to say dried up exclusively, but it is not as easy as to source that as it once was. You’re probably going to be limited to something like three times EBITDA. And, you know, that puts more pressure for you to come with more cash to the table to do acquisitions in sales lease backs.

A.J. Peak 00:19:18 Essentially, it’s off balance sheet. You know, there there is under GAAP reporting, some of this is sort of contingent liabilities and won’t get into it. But from a bank financing standpoint, it’s not really traditional debt. and oftentimes these don’t have personal guarantees. So I know until I was private equity backed, I had millions of dollars in personal guarantees, with sales lease backs, if you’ve got a really substantive dental group, a lot of these sort of long term leases won’t have personal guarantees. They’ll have corporate guarantees, but not personal guarantees. So you’re winning there with not having personal guarantees to the balance sheet treatments a little differently. it’s not treated as traditional debt from a lot of others perspectives. And so when you go to get a transaction, if you grew your DSL through sales lease backs, that’s not treated as debt, these leases aren’t treated as debt. You know, when I had 50 practices and, you know, did a, a private equity transaction, they weren’t valuing all these leases and then taking it off the enterprise value.

A.J. Peak 00:20:21 Now, they did take off enterprise value debt. Right. So just for your audience, let’s say enterprise value is $100 million. If you’ve got 50 million in debt, then your net equity is only 50. But let’s say you grew your DSL 100% through sales lease backs. and your $100 million of, you know, enterprise value. You’re not going to have that. Subscribe. subtraction math. You mean there’s no debt? It’s pretty incredible. Not only does it help fund your your growth, but it doesn’t hit you in terms of debt on your valuation. Now, there are some caveats. The sales leaseback, the lease terms have to be in market rate terms. You can’t agree to a lease at, let’s say $40 a square foot. If the local market rents $18 square foot. So it’s got to be, you know, economically within the market, can bear not some arbitrary high lease, but if it’s within the market and you do this, you know, appropriately, that is not going to hurt your valuation when you go to exit.

A.J. Peak 00:21:25 So the sales leaseback is not only been a solution for more favorable capital, but when you go to exit, it’s not going to ding you. you know, reduce off your enterprise value in terms of your valuation. It’s, you know, had I known this, I would have done this almost exclusively, ten years ago, in growing Peak Dental Services.

Bill Neumann 00:21:45 I think with that, there’s some I’m sure there’s some groups in our audience, if they’re looking, maybe they’ve got like a 3 to 5 year horizon, maybe some, advice for them, you know, what should they be, you know, doing with their real estate? and how is that going to influence, you know, the exit valuation, you know, the, the deal structure and just the leverage that they, that they have. So now some of these 3 to 5 years out now, now is the time to start looking at things.

A.J. Peak 00:22:19 So if you’re.

Bill Neumann 00:22:20 A.

A.J. Peak 00:22:21 Dental group and you’ve got five, ten, 20 locations and some of them you own and some of them you lease the ones you own.

A.J. Peak 00:22:29 You know, 3 to 5 years out. If you’re going to continue to grow, I would heavily consider, you know, at least half to grow with a majority of it doing through sales lease backs. This sort of strategy I mentioned. You’ve got to be more selective as the opportunities you go after, but I highly recommend it. It can be, you know, transformational in terms of what you stand to make at exit. So that’s number one in terms of future growth. Second is really get in place now even with yourself. Let’s say you own the real estate and some other, you know, random legal entity you set up and you own the practice at a minimum, get a traditional market standard triple net lease in place, and don’t hire your local favorite attorney, hire an attorney that’s doing a dozen of these a week. This is a highly specialized category. Triple net leases. And although many attorneys might do 4 or 5, ten of these a year, that is not what I consider to be a specialist, somebody that almost exclusively is doing, you know, five or more of these a week is who you want to talk to because the land of triple net leases, you can have somebody say there’s a triple net lease and it’s two pages long and another one is 50 pages.

A.J. Peak 00:23:40 And, you know, truthfully, you want the bigger triple net lease because institutional investors like us are going to value that at a premium. And so if you have that in place, even when you own both assets, when you go to exit, the future buyers are going to just take it for, you know, as a given that you’ve got a triple net lease in place and it’s not really up for negotiation, and you’re going to want to have that triple net lease in place for at least ten years or more at the time of, of selling. So what I would do is actually put it in place right now for 15, because, you know, you’re going to exit in three and then you just, you know, tell your future buyers like, this is what it is. This is the market standard, triple net least. There’s another 12 years left on it. And that’s going to maximize the value of your real estate as well as your practices when you have that in place, when you go to transact.

Bill Neumann 00:24:31 Why do you, as an institutional investor and others see triple net leases? Is is so, you know, attractive.

A.J. Peak 00:24:40 You know, when I raise capital for our investors and you compare that to other real estate categories, let’s say apartment buildings have been, you know, proliferated everywhere in high growth areas in this country. You know, with apartment buildings, you have what’s called a gross lease with tenants, meaning they pay you just a fixed rate. But if your property taxes go up, which they have, or insurance they have, particularly in coastal areas, you don’t have a way to immediately pass those expenses on to your tenants. You got to hope and pray you can raise rents. Now, if a competitor put up an apartment complex across the street, you can’t raise rents because it’s competition. And so that eats into your investor returns and triple net Lee says. It’s like having a bond. Like you’re getting almost a guaranteed payment because there’s guaranteed negotiated rent increases. Plus, the triple net lease covers all those expenses.

A.J. Peak 00:25:35 So if inflation happens, whatever happens with property taxes, insurance, as long as the tenant in our case is dental practices or veterinarians are high performing, they’re going to have to absorb all of those inflationary costs. And so is it real estate investors for us and my investors, it’s really security in the investment, meaning we can invest with high degree of predictability. We kind of know what our investor returns are, what our distributions are going to be. And so that’s just a premium asset in terms of predictability in the finance world.

Bill Neumann 00:26:08 So this is this is the mistake question. Since you’ve got a lot of you’ve got a lot of experience. You’re at peak. You’re working with a lot of dsos now. And especially when it comes to scaling. Are there some mistakes that you see or some things maybe that people in the audience can avoid when you’re scaling from maybe that. You know, we see those inflection points, right? We see, you know, that like the 5 to 10 location inflection point.

Bill Neumann 00:26:33 Then there’s like that 25 to 50. There’s all these different areas where, you know, we see a lot of, you know, almost, groups go backward, right? You know, they were doing better when they had fewer locations. So maybe any any tips on that? And somehow I know this is going to tie into real estate, but, from that 25 to to 50 in particular, I think we’ve got a lot in the audience that are there at that inflection point.

A.J. Peak 00:27:01 You know, for me, it felt like in multiples of 10 or 15 locations, things just fell apart. And the way that I did them before just would no longer work. up to about 50. And I’d say at 50 it really changed. But going from 10 to 20, you know, 20 to 30, on up. it really, got challenging and and you start to kind of drink your own Kool-Aid that you had such great success with ten. You’re just going to keep running this, you know, forever.

A.J. Peak 00:27:32 And I think one of the things that for me was sort of basic and being quite analytical and or oriented was just having the right dashboard of KPIs. And I thought I, I did understand the numbers. And the problem is I had too many numbers. And so I was always looking at everything. And with ten locations I could almost memorize every KPI. If you had asked me, I kind of knew off the top of my head, you know, it got to 20, 30, locations. Really starting to simplify and understanding those key drivers. I didn’t do it soon enough. I did it far too late and started narrowing in on what are the top ten KPIs to be able to manage the business. So you can kind of see around corners a lot quicker. you know, your ten locations, you kind of intuition. You’re an entrepreneur, you kind of see everything When you get to 20 locations, that visibility, your ability to understand all those KPIs kind of goes out the window. And so really nailing down the top ten, I think, was just a common mistake many people make.

A.J. Peak 00:28:31 And often you don’t realize it until you know you’re financially already. in the struggle, boss, if you will, and you’re trying to figure things out. I’d say the the second for me was kind of hiring, ahead of schedule, often was sort of, hey, I could do this, or I could pick this up or, you know, I’ll work a little bit more and do do those things. And, you know, it’s a people driven business. And I think the thing that I always took for granted that even if you run a high performing ten locations when it’s 20 locations and if they’re all high performing, random things happen. And so it’s a lot of large numbers, you know, just death, disability, you know, and in Colorado, a doctor would break their arm. The incidence of these random things just goes up because you’re bigger. And when you’re bigger and those random things happen at you, you need a infrastructure of people to handle that. And I think I’ve learned that far too late.

A.J. Peak 00:29:33 where I’d sort of had the right team in place or even some of the right, things to handle. Otherwise, you know what I found out? I was just putting out fires all week and couldn’t do the things I was doing when we were smaller to grow the business, because I was just handling all these random kind of fire drills. Not that anything was materially wrong. It’s just it’s a people driven business, you know, weird things happen. And so they would take time and attention. And if you don’t have a senior team, that was a really challenging thing. in my early inflection point and with the dsos, I grow helped grow now, often see, you know, they’re at 20 locations and they’re just drowning in all these sort of random, idiosyncratic, events that are natural. They don’t really have a team to handle them. And so they don’t have the time and energy now to grow the business.

Bill Neumann 00:30:18 Yeah, I think those are some really valid points. And I’ve heard that especially your your second point there with hiring early.

Bill Neumann 00:30:25 I hear that time and time again, you know, and that’s I think that is probably something that’s pretty consistent with entrepreneurs. Right. You think he can do everything and then you, you, you find out too late that you. Gosh, I needed to put somebody in place six months ago to handle this. So put you kind of behind the eight ball, right? It slows your growth. so I think that hiring early and on the KPI side of things, definitely. noted. can you kick out a couple of, like, the top KPIs that you were measuring at peak that you think people should be measuring at their. dsos. You know, I think for us,

A.J. Peak 00:31:08 we’re provider based business, and this sounds so simple. And you think I understood this sooner than I did, but provider days if you don’t have a provider working, you. Actually, that’s how we make money. so provider days, kind of visits per day and dollars per day. Those are three kind of, would be three right out of the gates kind of understanding.

A.J. Peak 00:31:31 And I intuitively knew it, but I didn’t track it, measure it quite at the level I should of at kind of 10 to 20 locations. And what would happen to me is, you know, when you get or if even there’s a snow day, well, that would knock out your doctor days. And so you could then understand, you know, what’s happening or, you know, more doctors take off time. And all of a sudden you had your doctors take 10% of the time off than they did the previous year. It’s really hard to grow same store sales if your doctor get a shrink by 10%, visits per day. That’s something sort of, you know, you really can get to an industry standard of 12 visits per day if you’re, I think, a good dentist, some can get as high as 18 or 20. But if you’re struggling at 6 or 8, it’s quite a big deal. If you can get from 8 to 12, you’re going to almost grow your production 50%.

A.J. Peak 00:32:22 And that can actually just help you figure out the levers for growth very quickly on the visits per day. doctor days and the dollars per, per day are kind of the three big core ones that I encourage everybody to measure and really get your arms around when you’re smaller. it’s going to help you manage the business when you get larger.

Bill Neumann 00:32:41 Thanks for that. Okay. So we’re beginning at 2026. So what does, you know, your crystal ball say as far as the what is the DSO industry look like for, you know, the rest of this year and then, you know, talk a little bit about what you’re doing, in the New Year at Health Wealth Capital.

Speaker 4 00:33:03 I’d say it’s the DSO industry speaking conferences.

A.J. Peak 00:33:06 I’m on, certainly the Board of Health Services and advise with a half a dozen dsos. I think the industry is growing impatient. You know, we’ve been sort of in the coal mine of high interest rates, high inflation. you have a lot of, dental groups that are looking to transact.

A.J. Peak 00:33:26 And I think finally, you’re starting to see some relief on interest rates. And I think more kind of positive enthusiasm for some transactions to happen. I, you know, I don’t think it’s going to be the boom times, but I think you’ll start to see some more groups transact, maybe not at the, you know, favorable multiples that were in 2020, but at least getting some reasonable transactions happening, this year. And I also, I think it’s going to happen, if not this year or next, you’ll start to see some mergers of equals. there’s just an awful lot of, groups of similar size and looking for that next level of growth. And so I think one way to get a growth is if you have two kind of management teams and infrastructure and equal size. You know, that’s one way to get, kind of an earnings arbitrage, if you will, and sort of, arbitrage benefits from economies of scale. So I, you know, would be, interested to see some groups kind of mergers of vehicles this year to kind of, get a better outcome, if you will, from an EBITDA, exit standpoint from health, up capital.

A.J. Peak 00:34:40 we are about 100 million of assets under management. we’ve been at it at about 30, buildings this last year. And if you look at the fourth quarter, we’re looking really just to, run rate into the new year, what we did in the fourth quarter, which would enable us, believe it or not, almost do, add another 100 million of assets, next year. So we’re sort of adding almost 25 million a quarter. that’s roughly, you know, ten. It’s about 15 locations every 90 days. So we’re doing 1 to 2, closing the week. presently, in 25 states, we’re pretty open to be in any of the 50 states throughout the country. So just kind of doing this at a farther, to the pace we did in 2025. adding predominantly dental buildings, sometimes veterinarian buildings throughout the country. roughly 50, 60 buildings would be the goal next year.

Bill Neumann 00:35:37 So if there’s anybody in the audience that would like to learn more or reach out to you, AJ because there’s a couple of options, right? I mean, there’s, there’s, there’s the opportunity to potentially invest, right.

Bill Neumann 00:35:50 And with, with your organization, but then also as a DSO or a dental group to just learn more about from you, like, hey, you know, this is what we this is what our real estate portfolio looks like. And you help us with strategy. And, so talk a little bit about best ways to connect with you and work with you and your organization.

A.J. Peak 00:36:15 best way is just shoot me an email. pretty personal at AJ, at health wealth. One word capital. You can also check us out on online at the health, wealth capital or website. But welcome to send me an email letter A to letter J at Health Wealth Capital. Certainly. Welcome to connect with me on LinkedIn as well. And happy to, you know, set up time and see if I can be helpful.

Bill Neumann 00:36:39 Excellent. Well, thanks so much, AJ, and thanks, everybody for listening in or watching the podcast. again, happy 2026. And until next time, this is the group Dentistry Now show.

Thank you for joining us today. Don’t forget to subscribe to the podcast to stay up to date on the latest DSO news, insights and events. Also subscribe to our DSO weekly newsletter at GroupDentistryNow.com.