Attached files
| file | filename |
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| 8-K - FORM 8-K - AMERICAN DENTAL PARTNERS INC | d8k.htm |
| EX-99.1 - PRESS RELEASE - AMERICAN DENTAL PARTNERS INC | dex991.htm |
 First Quarter 2011
Earnings Conference Call
April 28, 2011
Exhibit 99.2 |
 2
Introductory Comments
“Safe Harbor" Statement under the Private Securities Litigation Reform Act
of 1995: With the exception of the historical information contained in this
press release, the matters described herein contain
"forward-looking" statements that involve risk and uncertainties
that may individually or collectively affect the matters herein described,
including but not limited to the Company's risks associated with overall or
regional economic conditions, dependence upon affiliated dental practices,
contracts the affiliated practices have with third-party
payors,
government
regulation
of
the
dental
industry,
impact
of
health
care
reform,
dependence
upon
service
agreements
and
the
impact
of
any
terminations
or
potential terminations of such contracts, business interruptions, the outcome of
pending litigation and the Company's acquisition and affiliation strategy,
which are detailed from time to time in the "Risk Factors" section
of the Company's filings with the Securities and Exchange Commission,
including its annual report on Form 10-K and quarterly reports on Form
10-Q. Certain financial measures that are not in accordance with
Generally Accepted Accounting Principles are included in these slides.
Please see our press release, which is available on our website, www.amdpi.com, for a presentation of the most comparable
GAAP measures and a reconciliation of these non-GAAP measures.
|
 3
Highlights
•
Financial results for 1Q11 vs. 1Q10:
Net revenue +4%
Earnings from operations +21%
Net earnings +62%
•
Completed two in-market acquisitions
•
Completed
one
pediatric
Medicaid
de
novo |
 4
$117.6 million vs. $110.8 million +6.1%
•
+1.7% same market growth
•
+1.3% same market excluding
acquisitions growth
•
+0.7% same facility growth
Components of same market growth
•
+0.7% hours
•
+4.0% productivity per hour
•
-3.0% effectivity (b)
Revenue mix
•
12% fee for service
•
78% PPO
•
5% managed care
•
5% Medicaid/CHIPS
Patient Revenue of Affiliated Practices (a)
(a)
See appendix for discussion of patient revenue of affiliated practices.
(b)
Effectivity is the difference between full fee increases and the
net fee increases actually realized from patients and
insurance companies.
Same Market Growth
-4%
-2%
0%
2%
4%
1Q10
2Q10
3Q10
4Q10
1Q11
Same Facility
Development
Acquisitions
Components of Same Market
-6%
-4%
-2%
0%
2%
4%
6%
1Q10
2Q10
3Q10
4Q10
1Q11
Hours
PPH
Effectivity
Revenue Mix
0%
25%
50%
75%
100%
1Q10
2Q10
3Q10
4Q10
1Q11
FFS
PPO
MC
Medicaid |
 5
Income Statement (thousands, except per share amts)
2011
2010
Change
Comments
Net revenue
74,822
$
71,854
$
4%
Cincinnati Dental (6/10) platform acquisition
Operating expenses:
Salaries and benefits
29,248
29,602
(211)
b.p.
Arizona Tooth Doctor (105bp)
Lab fees and dental supplies
11,579
11,068
7
b.p.
Office occupancy expenses
9,474
9,125
(4)
b.p.
Other operating expenses
7,320
6,547
67
b.p.
Texas Tooth Doctor (22bp) / Cincinnati Dental (15bp)
General corporate expenses
3,789
3,647
(1)
b.p.
EBITDA
13,412
11,865
13%
EBITDA margin
17.9%
16.5%
141
b.p.
Depreciation expense
2,865
2,845
(13)
b.p.
Amortization of intangible assets
2,540
2,406
5
b.p.
Earnings from operations
8,007
6,614
21%
EFO margin
10.7%
9.2%
150
b.p.
Interest expense, net
1,583
2,652
Earnings before income taxes
6,424
3,962
62%
Income taxes
2,587
1,550
Effective tax rate
40.3%
39.1%
Consolidated net earnings
3,837
2,412
59%
Noncontrolling interest
39
67
Net earnings
3,798
$
2,345
$
62%
Diluted EPS
0.24
$
0.15
$
65%
Diluted weighted shares outstanding
15,756
16,054
-2%
Q1 |
 6
Cash Flow (thousands)
Operating activities
Patient receivable DSO @ 3/31/31 of
25 vs DSO @ 12/31/10 of 26
Maintenance
capital
expenditures
Includes 11 Improvis EDR
implementations
Growth
capital
expenditures
Includes one pediatric Medicaid de
novo in Texas
Acquisitions
Completed two in-market acquisitions
1Q11
1Q10
Cash flow from operating activities
Net income and non-cash items
11,614
$
8,529
$
Working capital items
1,918
(830)
Cash flow from operating activities
13,532
7,699
Maintenance capital expenditures
(1,930)
(783)
Free cash flow before growth investments
11,602
6,916
Growth capital expenditures
(441)
(218)
Acquisitions
(150)
-
Available for sale securities
(1,774)
-
Cash flow before financing activities
9,237
$
6,698
$ |
 7
Capitalization ($ millions)
$0
$100
$200
$300
Mar '10
Jun '10
Sep '10
Dec '10
Mar '11
Equity
Debt
Debt to Total Capitalization
36%
34%
35%
34%
Leverage
•
$93 million debt
•
1.8x debt/EBITDA (bank
compliance calculation)
•
$61 million available for borrowing
under credit facility (bank
compliance calculation)
31% |
 8
$0.00
$0.25
$0.50
$0.75
$1.00
$1.25
$1.50
2010
3 mos '10
3 mos '11
Reported EPS
After-tax Amortization Expense
Diluted Earnings per Share (a)
}+56%
}+42%
}+64%
TTM
PE(b)
Diluted Reported EPS
$0.77
18x
Diluted non-GAAP EPS (a)
$1.16
12x
+51%
-33%
(a) See Appendix for reconciliation of non-GAAP items.
(b) Calculated at $13.50 share price and trailing twelve months ended March 31,
2011 financial results.
|
 9
Return on Market Value (millions, except per share amount)
2010
Mar '10
Mar '11
TTM
Cash flow from operations
36.3
$
7.7
$
13.5
$
42.1
$
Maintenance capital expenditures
4.7
0.8
1.9
5.8
$
Free cash flow
31.6
$
6.9
$
11.6
$
36.3
$
Diluted shares outstanding
15.8
Share price
13.50
$
Market value of equity
213.3
$
Cash flow from operations/market value equity
19.7%
Free cash flow/market value equity
17.0%
3 Months |
 10
Operating Comments
•
Growth trends are encouraging:
Second consecutive quarter of increased provider hours
Second quarter of increased real productivity per hour
Same facility growth was positive after 2010 quarters all
negative
•
Pediatric Medicaid dental groups:
Arizona: 1Q11 earnings increase after 2010 drag on earnings
Texas: facility EBITDA loss of $126,000 in 1Q11 and full year
loss of $818,000 in 2010
Additional state expansion in 2012
•
Dental Associates, P.C. litigation |
 11
Appendix |
 12
Appendix
Non-GAAP Financial Measures
•
This presentation includes non-GAAP financial measures. In accordance with the requirements
of Regulation G of the Securities and Exchange Commission, please see the attached financial
tables for a presentation of the most comparable GAAP measures, the reconciliation to the
nearest GAAP measure and all additional reconciliations required by Regulation G. •
The Company believes non-GAAP financial measures, such as adjusted net earnings and
adjusted net earnings excluding service agreement amortization, are important financial
measures for understanding its financial performance. The Company
incurs significant amortization expense related to its service agreements in contrast to many
companies, in the same and other industries, that do not amortize intangibles based on
authoritative literature for goodwill and other intangible assets. Expenses related to
the Company’s debt refinancing and professional fees related to the Company’s acquisitions have also
been excluded from the
Company’s non-GAAP financial measures. The Company believes these items should be presented
separately due to their magnitude and non-recurring impact to the Company’s ongoing operations. The primary limitations
associated with the
Company’s use of non-GAAP measures are that these measures may not be directly comparable to the
amounts reported by other companies.
Management compensates for these limitations by providing a detailed reconciliation of
the non-GAAP financial measures to the most directly comparable GAAP measures in this
presentation. Patient Revenue of the Affiliated Practices
•
The Company does not consolidate the financial statements of the practices affiliated with the
Company by means of service agreements with its financial statements. Patient revenue of
the affiliated practices is, however, a financial measure used by the Company’s management to monitor operating performance and to help identify and analyze trends of the affiliated
practices that may affect the
Company’s business. Most of the operating expenses incurred by the Company, pursuant to the
service agreements, are on behalf of the affiliated practices in the operation of dental facilities.
These expenses are significantly affected by the patient revenue of the affiliated
practices. |
 13
Non-GAAP
EPS
Reconciliation
(thousands,
except
per
share
amt)
2010
2010
2009
Net earnings (as reported)
10,339
$
3,798
$
2,345
$
Add: Write-off of expenses associated with debt refinancing, net of tax
(a) 370
-
-
Add: Expenses associated with Cincinnati Dental Services acquisition, net of
tax (a) 203
-
-
Adjusted net earnings
10,912
3,798
2,345
Add: Amortization related to service agreements, net of tax (a)
5,960
1,509
1,462
Adjusted net earnings excluding service agreement amortization
16,872
$
5,307
$
3,807
$
Weighted average diluted shares outstanding
15,965
15,756
16,054
Diluted adjusted net earnings per share
0.68
$
0.24
$
0.15
$
Diluted adjusted net earnings excluding service agreement amortization per
share 1.06
$
0.34
$
0.24
$
(a) Tax effected at effective tax rate in the period reported.
Q1 |
 14 |