American Dental Partners, Inc. (NASDAQ: ADPI) announced financial
results today for the quarter ended March 31, 2009.
Comparing actual results for the first quarter of 2009 and pro
forma results for the first quarter of 2008 (see "Litigation
Settlement Accounting" and "Supplemental Operating Data" tables for
an explanation of the pro forma results):
-- Net revenue was $69,385,000 as compared to pro forma net revenue of
$70,055,000.
-- Earnings from operations were $5,949,000 as compared to pro forma
earnings from operations of $5,454,000.
-- Net earnings were $1,421,000 as compared to pro forma net earnings of
$1,694,000.
-- Diluted net earnings per share were $0.11 as compared to pro forma
diluted net earnings per share of $0.13.
-- Diluted cash net earnings per share were $0.21 as compared to pro
forma diluted cash net earnings per share of $0.23.
Operating Results
Patient revenue of the Company's affiliated dental group
practices was $106,757,000 for the quarter, which includes
$100,633,000 from dental group practices which are affiliated with
the Company by means of service agreements and $6,124,000 from
Arizona's Tooth Doctor for Kids. Same market patient revenue growth
was (1.0)% for the quarter and (1.8)% excluding in-market
affiliations.
Cash flow from operations was $6,842,000 for the quarter.
Capital expenditures were $1,794,000. Amounts paid for affiliations
and acquisitions, including contingent amounts and affiliation
costs, amounted to $224,000 for the quarter. The Company completed
two de novo facilities and one in-market affiliation during the
quarter which generated approximately $33,000 of patient revenue
from date of affiliation for the quarter and is expected to
generate patient revenue of approximately $390,000 on an annualized
basis.
The Company recognized $379,000 in stock-based compensation
expense, $245,000 net of tax or $0.02 per diluted share, during the
quarter as compared to $526,000, $321,000 net of tax or $0.02 per
diluted share, for the prior year's same quarter.
The Company's revolving credit facility and term loan, both of
which are senior secured facilities, mature on January 20, 2010 and
accordingly have been classified as a current liability as of March
31, 2009. The Company continues to explore financing alternatives
with its existing lenders and potential lenders, which include
extensions to existing facilities and alternative sources of
capital, with the long term interests of the Company's shareholders
in mind.
Litigation Settlement Accounting
The Company's 2008 financial results reflect income and
expenses, including non-cash items, required by generally accepted
accounting principles associated with the February 29, 2008
settlement of litigation among PDG, P.A. ("PDG"), PDHC, Ltd., one
of the Company's subsidiaries, and the Company. In addition to its
2008 actual results, the Company has provided a pro forma financial
presentation to exclude the income and expense items related to the
litigation settlement.
Cash net earnings and cash earnings from operations are non-GAAP
financial measures. In accordance with the requirement of SEC
Regulation G, please see the attached financial tables for a
presentation of the most comparable GAAP measures and the
reconciliation to the nearest GAAP measure and all additional
reconciliations required by Regulation G.
For further discussion of these events and a comprehensive
review of the first quarter ended March 31, 2009, the Company will
host its previously announced conference call on Thursday, April
30, 2009 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 Investor Relations
section of the website at least fifteen 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, Thursday, May 7, 2009.
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 243 dental facilities with
approximately 2,120 operatories located in 18 states.
"Safe Harbor" Statement under the Private Securities Litigation
Reform Act of 1995: With the exception of the historical
information contained in this news release, the matters described
herein contain "forward-looking" statements that involve risk and
uncertainties that may individually or collectively impact the
matters herein described, including but not limited to the
Company's risks associated with its ability to refinance its credit
facilities on satisfactory terms, overall or regional economic
conditions, dependence upon affiliated dental practices, contracts
its affiliated practices have with third-party payors, dependence
upon service agreements and government regulation of the dental
industry, the impact of any terminations or potential terminations
of such contracts and the Company's acquisition and affiliation
strategy, which are detailed from time to time in the "Risk
Factors" section of the Company's SEC reports, including the annual
report on Form 10-K for the year ended December 31, 2008.
AMERICAN DENTAL PARTNERS, INC.
FINANCIAL HIGHLIGHTS
(in thousands, except per share amounts)
(unaudited)
Three Months Ended
March 31,
--------------------
2009 2008
--------- --------
Net revenue $ 69,385 $ 79,811
Operating expenses:
Salaries and benefits 29,566 35,501
Lab fees and dental supplies 10,293 11,981
Office occupancy expenses 8,499 9,013
Other operating expenses 6,578 6,772
General corporate expenses 3,360 3,630
Depreciation expense 2,715 2,774
Amortization of intangible assets 2,425 2,387
Litigation settlement (gain) expense - (30,127)
--------- --------
Total operating expenses 63,436 41,931
--------- --------
Earnings from operations 5,949 37,880
Interest expense, net 3,370 2,455
--------- --------
Earnings before income taxes 2,579 35,425
Income taxes 1,021 13,760
--------- --------
Consolidated net earnings 1,558 21,665
Noncontrolling interest 137 140
--------- --------
Net earnings $ 1,421 $ 21,525
========= ========
Net earnings per common share:
Basic $ 0.11 $ 1.68
========= ========
Diluted $ 0.11 $ 1.65
========= ========
Weighted average common shares outstanding:
Basic 12,935 12,839
========= ========
Diluted 12,994 13,084
========= ========
AMERICAN DENTAL PARTNERS, INC.
FINANCIAL HIGHLIGHTS
(in thousands)
(unaudited)
March 31, December 31,
2009 2008
----------- -----------
ASSETS
Current assets:
Cash and cash equivalents $ 6,568 $ 6,626
Accounts receivable, net 27,888 25,875
Other current assets 10,539 12,183
----------- -----------
Total current assets 44,995 44,684
----------- -----------
Property and equipment, net 53,485 54,542
----------- -----------
Other non-current assets:
Goodwill 76,122 76,122
Intangible assets, net 173,295 175,527
Other assets 2,345 2,378
----------- -----------
Total non-current assets 251,762 254,027
----------- -----------
Total assets $ 350,242 $ 353,253
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $ 30,447 $ 30,819
Other current liabilities 215 81
Current maturities of debt 126,149 196
----------- -----------
Total current liabilities 156,811 31,096
----------- -----------
Non-current liabilities:
Long-term debt 293 131,441
Other liabilities 43,823 43,634
----------- -----------
Total non-current liabilities 44,116 175,075
----------- -----------
Total liabilities 200,927 206,171
----------- -----------
Noncontrolling Interest 1,173 584
Commitments and contingencies
Stockholders' equity 148,142 146,498
----------- -----------
Total liabilities and stockholders' equity $ 350,242 $ 353,253
=========== ===========
AMERICAN DENTAL PARTNERS, INC.
SUPPLEMENTAL OPERATING DATA
(in thousands, except per share amounts and selected statistical data)
(unaudited)
Pro forma consolidated statement of income
for the three months ended March 31, 2008
Three Months Ended March 31, 2008
Pro Forma Adjustments
----------------------------
Settlement Management Pro Forma
Actual Assets (a) Services (b) 2008
----------- ------------ ------------ ------------
Net revenue $ 79,811 $ 6,423 $ 3,333 $ 70,055
Operating expenses
Salaries and
benefits 35,501 3,755 852 30,894
Lab fees and
dental supplies 11,981 1,301 - 10,680
Office occupancy
expenses 9,013 863 60 8,090
Other operating
expenses 6,772 252 108 6,412
General corporate
expenses 3,630 - - 3,630
Litigation
expenses (30,127) (30,127)(c) - -
----------- ------------ ------------ ------------
EBITDA 43,041 30,379 2,313 10,349
Depreciation 2,774 252 14 2,508
Amortization 2,387 - - 2,387
----------- ------------ ------------ ------------
Earnings from
operations 37,880 30,127 2,299 5,454
Interest expense,
net 2,455 - - 2,455
----------- ------------ ------------ ------------
Earnings before
income taxes 35,425 30,127 2,299 2,999
Income taxes 13,760 1,165
----------- ------------
Consolidated
earnings 21,665 1,834
Noncontrolling
interest 140 140
----------- ------------
Net earnings 21,525 1,694
Amortization of
service agreements,
net of tax 1,351 1,351
----------- ------------
Cash net
earnings (d) $ 22,876 $ 3,045
=========== ============
Diluted net earnings
per common share $ 1.65 $ 0.13
=========== ============
Diluted cash net
earnings per common
share (d) $ 1.75 $ 0.23
=========== ============
(a) Includes expense reimbursement associated with (i) 25 dental facilities
transferred to PDG as part of litigation settlement and (ii) PDG
doctors who practiced temporarily in the six dental facilities retained
by the Company.
(b) The Company provided management services to PDG through September 30,
2008. Includes interim management fee revenue, expenses associated with
providing such services, and salaries and benefits expense, including
severance, of management staff who were terminated as a result of
realigning the Company's Minnesota-based management team.
(c) Includes gain on disposal of assets of $30,763,000 and professional
fees associated with PDG litigation of $636,000.
(d) Cash net earnings and diluted cash net earnings per share are not
measures of financial performance under GAAP. Cash net earnings
excludes amortization expense related to intangible assets, net of tax.
The Company incurs significant amortization expense related to its
service agreements while many companies, both in the same industry and
other industries, no longer amortize a significant portion of their
intangible assets pursuant to Statement of Financial Accounting
Standards No. 142 - Goodwill and Other Intangible Assets. The Company
believes that cash net earnings and diluted cash net earnings per share
are important financial measures for understanding its relative
financial performance.
AMERICAN DENTAL PARTNERS, INC.
SUPPLEMENTAL OPERATING DATA
(in thousands, except per share amounts and selected statistical data)
(unaudited)
Change in consolidated statement of income
for the three months ended March 31, 2009 and 2008
Actual Pro Forma Change
2009 2008
--------- --------- --------
Net revenue $ 69,385 $ 70,055 -1%
Operating expenses
Salaries and benefits 29,566 30,894 -4%
Lab fees and dental supplies 10,293 10,680 -4%
Office occupancy expenses 8,499 8,090 5%
Other operating expenses 6,578 6,412 3%
General corporate expenses 3,360 3,630 -7%
--------- --------- --------
EBITDA 11,089 10,349 7%
Depreciation 2,715 2,508 8%
Amortization 2,425 2,387 2%
--------- --------- --------
Earnings from operations 5,949 5,454 9%
Interest expense, net 3,370 2,455 37%
--------- --------- --------
Earnings before income taxes 2,579 2,999 -14%
Income taxes 1,021 1,165 -12%
--------- --------- --------
Consolidated net earnings 1,558 1,834 -15%
Noncontrolling interest 137 140 -2%
--------- --------- --------
Net earnings 1,421 1,694 -16%
Amortization of service agreements,
net of tax 1,361 1,351 1%
--------- --------- --------
Cash net earnings (e) $ 2,782 $ 3,045 -9%
========= ========= ========
Diluted net earnings per common share $ 0.11 $ 0.13 -15%
========= ========= ========
Diluted cash net earnings per common share $ 0.21 $ 0.23 -9%
========= ========= ========
(e) Cash net earnings and diluted cash net earnings per share are not
measures of financial performance under GAAP. Cash net earnings
excludes amortization expense related to intangible assets, net of tax.
The Company incurs significant amortization expense related to its
service agreements while many companies, both in the same industry and
other industries, no longer amortize a significant portion of their
intangible assets pursuant to Statement of Financial Accounting
Standards No. 142 - Goodwill and Other Intangible Assets. The Company
believes that cash net earnings and diluted cash net earnings per share
are important financial measures for understanding its relative
financial performance.
AMERICAN DENTAL PARTNERS, INC.
SUPPLEMENTAL OPERATING DATA
(in thousands, except per share amounts and selected statistical data)
(unaudited)
Selected statistical data
March 31, March 31,
2009 2008
--------- ---------
Number of dental facilities 243 244
Number of operatories (f) 2,120 2,099
Number of affiliated dentists (g) 542 550
(f) 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.
(g) Includes full-time equivalent general or specialty dentists employed by
or contracted with the affiliated practices, including Arizona's Tooth
Doctor for Kids.
Patient revenue and same market patient revenue growth (h)
Three Months Ended
March 31,
------------------- %
2009 2008 Change
--------- --------- --------
Patient revenue of affiliated practices:
Platform dental group practices
affiliated with us in both periods of
comparison $ 106,271 $ 107,301 -1.0%
Platform dental group practices that
affiliated with us during periods of
comparison 486 73 565.8%
--------- --------- --------
Total patient revenue 106,757 107,374 -0.6%
Patient revenue of Arizona's Tooth Doctor
for Kids 6,124 6,122 0.0%
--------- --------- --------
Patient revenue of platform dental group
practices affiliated with us by means of
service agreements 100,633 101,252 -0.6%
Amounts due to us under service agreements 62,560 62,795 -0.4%
--------- --------- --------
Amounts retained by platform dental group
practices affiliated with us by means of
service agreements $ 38,073 $ 38,457 -1.0%
========= ========= ========
(h) Includes patient revenue of affiliated dental group practices which are
not consolidated with the Company's financial results and patient
revenue of Arizona's Tooth Doctor for Kids which is consolidated with
the Company?s financial results.
Contacts: Gregory A. Serrao Chairman, President and Chief
Executive Officer 781-224-0880 Breht T. Feigh Executive Vice
President, Chief Financial Officer and Treasurer 781-224-0880
American Dental Partners, Inc. 401 Edgewater Place, Suite 430
Wakefield, MA 01880 Phone: 781/224-0880 Fax: 781/224-4216
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