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8-K - FORM 8-K - AMERICAN DENTAL PARTNERS INCd8k.htm
EX-99.2 - SLIDE PRESENTATION - AMERICAN DENTAL PARTNERS INCdex992.htm

Exhibit 99.1

American Dental Partners, Inc.

401 Edgewater Place, Suite 430

Wakefield, MA 01880

Phone: 781/224-0880                            Fax: 781/224-4216

 

 

For Immediate Release

 

Contacts:    Gregory A. Serrao    Breht T. Feigh
   Chairman, President and    Executive Vice President,
   Chief Executive Officer    Chief Financial Officer and Treasurer
   781-224-0880    781-224-0880

AMERICAN DENTAL PARTNERS REPORTS

SECOND QUARTER FINANCIAL RESULTS

WAKEFIELD, MASSACHUSETTS – July 25, 2011 – American Dental Partners, Inc. (NASDAQ: ADPI) announced financial results today for the quarter ended June 30, 2011.

Comparing results for the second quarter of 2011 with results for the second quarter of 2010:

 

   

Net revenue was $73,953,000 for the second quarter of 2011 as compared to $72,366,000 for the second quarter of 2010.

 

   

Earnings from operations were $5,987,000 for the second quarter of 2011 as compared to $7,959,000 for the second quarter of 2010.

 

   

Net earnings were $2,629,000 for the second quarter of 2011 as compared to $3,112,000 for the second quarter of 2010.

 

   

Diluted net earnings per share were $0.17 for the second quarter of 2011 as compared to $0.19 for the second quarter of 2010.

 

   

Non-GAAP diluted adjusted net earnings per share were $0.28 for the second quarter of 2011 as compared to $0.32 for the second quarter of 2010. Please see the attached Reconciliation of GAAP Net Earnings, as Reported, to Non-GAAP Diluted Adjusted Net Earnings.

Comparing results for the six months ending June 30, 2011 with results for the six months ending June, 30, 2010:

 

   

Net revenue was $148,775,000 for the six months ending June 30, 2011 as compared to $144,220,000 for the six months ending June 30, 2010.

 

   

Earnings from operations were $13,994,000 for the six months ending June 30, 2011 as compared to $14,573,000 for the six months ending June 30, 2010.

 

   

Net earnings were $6,427,000 for the six months ending June 30, 2011 as compared to $5,457,000 for the six months ending June 30, 2010.

 

   

Diluted net earnings per share were $0.41 for the six months ending June 30, 2011 as compared to $0.34 for the six months ending June 30, 2010.

 

   

Non-GAAP diluted adjusted net earnings per share were $0.61 for the six months ending June 30, 2011 as compared to $0.56 for the six months ending June 30, 2010. Please see the attached Reconciliation of GAAP Net Earnings, as Reported, to Non-GAAP Diluted Adjusted Net Earnings.

For the quarter, patient revenue of the Company’s affiliated dental group practices and Arizona’s Tooth Doctor for Kids was $115,953,000 and same market patient revenue increased 1.0% year-over-year. For the six months ending June 30, 2011, patient revenue of the Company’s affiliated dental group practices and Arizona’s Tooth Doctor for Kids was $233,541,000 and same market patient revenue increased 1.4% year-over-year.


Cash flow from operations was $11,904,000 for the quarter and $25,441,000 for the six months ending June 30, 2011. Amounts paid for acquisitions amounted to $2,563,000 during the quarter and $2,713,000 for the six months ending June 30, 2011. The Company completed seven in-market acquisitions during the quarter and nine in-market acquisitions during the six months ending June 30, 2011. Acquisitions completed during the quarter generated approximately $692,000 of patient revenue in the quarter and are expected to generate patient revenue of approximately $3,300,000 on an annualized basis. Capital expenditures were $4,469,000 for the quarter and $6,845,000 for the six months ending June 30, 2011. The Company completed one de novo facility during the six months ending June 30, 2011.

The Company recognized $545,000, $323,000 net of tax or $0.02 per diluted share, of stock-based compensation expense during the quarter, as compared to $432,000, $260,000 net of tax or $0.02 per diluted share, for the same quarter last year.

As previously announced, the Company refinanced its credit facility in May 2011 by entering into an amended $180,000,000 senior secured credit facility, which includes a $100,000,000 revolving credit facility and an $80,000,000 term loan facility. As a result, included in interest expense, net, for the quarter was $370,000 of expenses associated with the amendment of the Company’s credit facility, $219,000 net of tax or $0.01 per diluted share.

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.

Use of Non-GAAP Financial Measures

Adjusted net earnings and adjusted net earnings excluding service agreement amortization are 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 those GAAP measures 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. Amortization expense of intangible assets related to service agreements with the affiliated practices is presented separately and excluded from the Company’s adjusted net earnings excluding service agreement amortization, a non-GAAP financial measure, due to its magnitude and non-cash impact on the Company’s ongoing operations and because, unlike depreciation of the Company’s dental facilities, it requires no recurring capital investment. 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 press release.


Conference Call

For further discussion of these events and a comprehensive review of the quarter ending June 30, 2011, the Company will host its previously announced conference call on Tuesday, July 26, 2011 at 9:00 a.m., EDT, which will be broadcast live over the Internet at www.amdpi.com. The call will be hosted by Gregory A. Serrao, Chairman, President and Chief Executive Officer. To access the webcast, participants should visit the Investors section of the website at least 15 minutes prior to the start of the conference call to download and install any necessary audio software. A replay of the webcast will be available at www.amdpi.com approximately two hours after the call through 6:00 p.m., EDT, Tuesday, August 2, 2011.

About American Dental Partners, Inc.

American Dental Partners is one of the nation’s leading business partners to dental group practices. The Company is affiliated with 26 dental group practices, which have 278 dental facilities with approximately 2,387 operatories located in 21 states.

Use of Forward-Looking Statements

“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.


AMERICAN DENTAL PARTNERS, INC.

FINANCIAL HIGHLIGHTS

(in thousands, except per share amounts)

(unaudited)

 

     Three Months Ended      Six Months Ended  
     June 30,      June 30,  
     2011      2010      2011      2010  

Net revenue

   $ 73,953       $ 72,366       $ 148,775       $ 144,220   

Operating expenses:

           

Salaries and benefits

     29,196         28,735         58,444         58,337   

Lab fees and dental supplies

     11,790         10,668         23,369         21,736   

Office occupancy expenses

     9,509         9,131         18,983         18,256   

Other operating expenses

     7,682         6,878         15,002         13,425   

General corporate expenses

     4,160         3,669         7,949         7,316   

Depreciation expense

     3,070         2,862         5,935         5,707   

Amortization of intangible assets

     2,559         2,464         5,099         4,870   
                                   

Total operating expenses

     67,966         64,407         134,781         129,647   
                                   

Earnings from operations

     5,987         7,959         13,994         14,573   

Interest expense, net

     1,525         2,726         3,108         5,378   
                                   

Earnings before income taxes

     4,462         5,233         10,886         9,195   

Income taxes

     1,818         2,082         4,405         3,632   
                                   

Consolidated net earnings

     2,644         3,151         6,481         5,563   

Noncontrolling interest

     15         39         54         106   
                                   

Net earnings

   $ 2,629       $ 3,112       $ 6,427       $ 5,457   
                                   

Net earnings per common share:

           

Basic

   $ 0.17       $ 0.20       $ 0.42       $ 0.35   
                                   

Diluted

   $ 0.17       $ 0.19       $ 0.41       $ 0.34   
                                   

Weighted average common shares outstanding:

           

Basic

     15,430         15,728         15,422         15,721   
                                   

Diluted

     15,753         16,056         15,738         16,055   
                                   


AMERICAN DENTAL PARTNERS, INC.

FINANCIAL HIGHLIGHTS

(in thousands)

(unaudited)

 

     June 30,      December 31,  
     2011      2010  

ASSETS

     

Current assets:

     

Cash and cash equivalents

   $ 4,657       $ 4,798   

Short-term investments

     1,850         —     

Accounts receivable, net

     19,379         19,403   

Other current assets

     12,098         13,085   
                 

Total current assets

     37,984         37,286   
                 

Property and equipment, net

     55,690         53,095   
                 

Other non-current assets:

     

Goodwill

     90,750         90,750   

Intangible assets, net

     182,581         185,669   

Other assets

     5,254         5,556   
                 

Total non-current assets

     278,585         281,975   
                 

Total assets

   $ 372,259       $ 372,356   
                 

LIABILITIES AND STOCKHOLDERS’ EQUITY

     

Current liabilities:

     

Accounts payable and accrued expenses

   $ 26,142       $ 22,664   

Other current liabilities

     9,933         9,943   

Current maturities of debt

     8,078         8,156   
                 

Total current liabilities

     44,153         40,763   
                 

Non-current liabilities:

     

Long-term debt

     78,500         92,250   

Other liabilities

     45,984         43,909   
                 

Total non-current liabilities

     124,484         136,159   
                 

Total liabilities

     168,637         176,922   
                 

Noncontrolling interest

     521         462   

Commitments and contingencies

     

Stockholders’ equity

     203,101         194,972   
                 

Total liabilities and stockholders’ equity

   $ 372,259       $ 372,356   
                 


AMERICAN DENTAL PARTNERS, INC.

SUPPLEMENTAL OPERATING DATA

(unaudited)

Selected Statistical Data

 

     Three Months Ended  
     June 30,  
     2011      2010  

Number of dental facilities

     278         275   

Number of operatories (a)

     2,387         2,379   

Number of affiliated dentists (b)

     579         581   

 

(a) An operatory is an area where dental care is performed and generally contains a dental chair, a hand piece delivery system and other essential equipment.
(b) Includes full-time equivalent general or specialty dentists employed by or contracted with the affiliated practices and Arizona’s Tooth Doctor for Kids.

Patient Revenue and Same Market Patient Revenue Growth (c)

(in thousands)

 

     Three Months Ended            Six Months Ended         
     June 30,      %     June 30,      %  
     2011      2010      Change     2011      2010      Change  

Total patient revenue (c):

                

Platform dental group practices affiliated with the Company in both periods of comparison

   $ 111,320       $ 110,169         1.0   $ 224,031       $ 220,955         1.4

Platform dental group practices that affiliated with the Company during periods of comparison

     4,633         1,737         166.7     9,510         1,737         447.5
                                        

Total patient revenue

     115,953         111,906         3.6     233,541         222,692         4.9

Patient revenue of Arizona’s Tooth Doctor for Kids

     4,592         5,639         -18.6     9,644         11,405         -15.4
                                        

Patient revenue of practices affiliated with the Company by means of service agreements

     111,361         106,267         4.8     223,897         211,287         6.0

Net revenue due to the Company under service agreements

     68,935         66,134         4.2     138,371         131,636         5.1
                                        

Amounts retained by practices affiliated with the Company by means of service agreements

   $ 42,426       $ 40,133         5.7   $ 85,526       $ 79,651         7.4
                                        

 

(c) Includes patient revenue of Arizona’s Tooth Doctor for Kids, which is consolidated with the Company’s financial results, and patient revenue of affiliated practices that are not consolidated with the Company’s financial results.


AMERICAN DENTAL PARTNERS, INC.

SUPPLEMENTAL OPERATING DATA

(in thousands)

(unaudited)

Components of Same Market Patient Revenue Growth (in thousands)

 

     Three Months Ended            Six Months Ended         
     June 30,      %     June 30,      %  
     2011      2010      Change     2011      2010      Change  

Existing facilities (d)

   $ 109,019       $ 109,806         -0.7   $ 219,964       $ 219,997         0.0

De novo facilities (e)

     820         33         —          1,814         274         562.0

Expanded/relocated facilities (e)

     333         330         0.9     646         684         -5.6
                                        

Same market growth excluding acquisitions

     110,172         110,169         0.0     222,424         220,955         0.7

Acquired facilities (e)

     1,148         —           —          1,607         —           —     
                                        

Same market patient revenue growth

   $ 111,320       $ 110,169         1.0   $ 224,031       $ 220,955         1.4
                                        

 

(d) Includes facilities in both periods of comparison.
(e) Includes facilities completed or acquired in either period of comparison.

Reconciliation of GAAP Net Earnings, as Reported, to Non-GAAP Diluted Adjusted Net Earnings

(in thousands, except per share amounts)

 

     Three Months Ended,
June 30,
     Six Months Ended,
June 30,
 
     2011      2010      2011      2010  

GAAP net earnings (as reported)

   $ 2,629       $ 3,112       $ 6,427       $ 5,457   

Add: Write-off of expenses associated with debt refinancing, net of tax (f)

     219         370         219         372   

Add: Expenses associated with Cincinnati Dental Services affiliation, net of tax (f)

     —           123         —           174   
                                   

Adjusted net earnings

     2,848         3,605         6,646         6,003   

Add: Amortization of service agreements, net of tax (f)

     1,506         1,475         3,017         2,928   
                                   

Adjusted net earnings excluding service agreement amortization

   $ 4,354       $ 5,080       $ 9,663       $ 8,931   
                                   

Weighted average diluted shares outstanding

     15,753         16,056         15,738         16,055   

Diluted adjusted net earnings per share

   $ 0.18       $ 0.22       $ 0.42       $ 0.37   
                                   

Diluted adjusted net earnings excluding service agreement amortization per share

   $ 0.28       $ 0.32       $ 0.61       $ 0.56   
                                   

 

(f) Tax effected at effective tax rate in the period reported.