Understanding EBITDA for Dental Practices in Pennsylvania: Why It Matters

October 19, 2026

Two dental practices can collect the same amount each year and still sell for very different prices. The difference often comes down to one number that buyers, lenders, and dental support organizations care about most: EBITDA, or earnings before interest, taxes, depreciation, and amortization. For Pennsylvania dentists, this figure is one of the clearest ways to see what a practice is worth and how well it runs day to day.

Founded in 2004, LLI Advisory Group works with hundreds of dental practices across Pennsylvania, New Jersey, New York, and Connecticut. We review EBITDA as a core part of our dental practice valuations and transitions, as well as our year-round advisory work. This way, you can make decisions based on a clear financial picture rather than guesswork.

What EBITDA Tells You About Your Practice

EBITDA removes items that change based on how a practice is financed or taxed, not how it performs. Interest depends on your loans, taxes depend on your entity type and location, and depreciation and amortization reflect past purchases of equipment or goodwill. Setting these aside leaves a cleaner view of the earnings your practice generates from patient care.

This view is especially useful in Pennsylvania, where some cities, such as Philadelphia, levy their own business taxes. Because EBITDA leaves taxes out, it lets you compare a practice in Philadelphia with one in Pittsburgh or across the river in New Jersey on equal footing. Profit on a tax return may look very different, even when two offices perform almost the same.

Why EBITDA Matters When You Buy or Sell

Buyers rarely price a dental practice on collections alone. Most offers, especially from DSOs, are built as a multiple of EBITDA, so each added dollar of earnings can raise the sale price by several dollars. Demand from these groups keeps growing, and research from the American Dental Association’s Health Policy Institute shows that more than one in four dentists within 10 years of graduation were affiliated with a DSO in 2024. When reviewing a practice, buyers typically look closely at:

• Revenue mix: how much production comes from the doctor compared to the hygiene department.
• Overhead ratios: staff, supply, and lab costs measured as a percentage of collections.
• Owner compensation: whether the owner’s pay matches what an associate would earn.
• Growth potential: services that could be added to lift earnings after the sale.

A strong EBITDA can improve your negotiating position, but every offer still deserves a careful review. We have helped oral surgeons and orthodontists weigh DSO offers and doctor-to-doctor sales, looking at both the numbers and the personal goals that shape the right decision for each dentist.

How Adjustments Change the Number

Raw EBITDA is only a starting point, so buyers and advisors usually calculate an adjusted figure that reflects how the practice would perform under new ownership.

Owner Compensation

Many owner-dentists pay themselves more or less than the market rate for the clinical work they perform. Adjusting that pay to a fair associate salary gives buyers a realistic view of future earnings and helps keep the practice from being undervalued or overvalued.

Personal and One-Time Expenses

Personal vehicle costs, family members on payroll, or a one-time renovation can lower reported profit. Identifying these add-backs may raise adjusted EBITDA, but each one needs clear records behind it, or a buyer may reject it during due diligence.

Using EBITDA to Run a Stronger Practice

EBITDA is a valuable tool long before a sale is on the table. After the pandemic, many offices saw hygienist wages climb while insurance reimbursements stayed flat, which squeezed earnings from both sides. Our practice advisory services include quarterly meetings with dental-specific financial statements that compare your overhead to industry benchmarks, so these shifts never catch you off guard.

When the benchmarks reveal a gap, we help you act on it. That may mean reviewing supply vendors, adding services such as clear aligner therapy or periodontal care, updating fees based on your zip code, or refining your tax strategy through our dental tax and accounting services. For dentists opening a new office, building EBITDA tracking into your dental practice startup from day one creates cleaner books and a stronger value down the road.

Plan Your Practice’s Future With LLI Advisory Group

EBITDA shapes how lenders, buyers, and DSOs see your practice, and it gives you a clear way to improve performance well before any sale. Our team, led by Gerard Iacovano, CPA, Domenick Lobifaro, CPA, MST, and Dena Testa, CPA, brings decades of dental accounting experience to valuations, due diligence, and year-round planning.

Each client works with a dedicated partner and relationship manager, and we respond to every call and email within 24 hours. Whether you plan to sell in a few years or simply want a healthier bottom line, schedule a consultation with our dental CPAs to see where your practice stands today.