American Dental Partners, Inc. (NASDAQ: ADPI) announced financial
results today for the quarter and six months ended June 30, 2009.
Comparing actual results for the second quarter of 2009 and pro
forma results for the second quarter of 2008 (see "Litigation
Settlement Accounting" and "Supplemental Operating Data" tables for
an explanation of the pro forma results):
-- Net revenue was $70,378,000 as compared to pro forma net revenue of
$70,032,000.
-- Earnings from operations were $7,454,000 as compared to pro forma
earnings from operations of $5,599,000.
-- Net earnings were $3,012,000 as compared to pro forma net earnings of
$1,818,000.
-- Diluted net earnings per share were $0.23 as compared to pro forma
diluted net earnings per share of $0.14.
-- Diluted cash net earnings per share were $0.33 as compared to pro
forma diluted cash net earnings per share of $0.24.
Comparing actual results for the first six months of 2009 and
pro forma results for the first six months of 2008 (see "Litigation
Settlement Accounting" and "Supplemental Operating Data" tables for
an explanation of the pro forma results):
-- Net revenue was $139,763,000 as compared to pro forma net revenue of
$140,086,000.
-- Earnings from operations were $13,403,000 as compared to pro forma
earnings from operations of $11,051,000.
-- Net earnings were $4,433,000 as compared to pro forma net earnings of
$3,590,000.
-- Diluted net earnings per share were $0.34 as compared to pro forma
diluted net earnings per share of $0.27.
-- Diluted cash net earnings per share were $0.55 as compared to pro
forma diluted cash net earnings per share of $0.48.
Operating Results
Patient revenue of the Company's affiliated dental group
practices was $107,046,000 for the quarter, which includes
$100,772,000 from dental group practices which are affiliated with
the Company by means of service agreements and $6,274,000 from
Arizona's Tooth Doctor for Kids. Same market patient revenue growth
was 0.8% for the quarter and (0.1)% excluding in-market
affiliations.
Cash flow from operations was $14,307,000 for the quarter.
Capital expenditures were $1,409,000. The Company completed one
facility relocation and consolidated two facilities during the
quarter. Amounts paid for affiliations and acquisitions, including
contingent amounts and affiliation costs, amounted to $136,000 for
the quarter. The Company completed one in-market affiliation which
generated approximately $50,000 of patient revenue from date of
affiliation for the quarter and is expected to generate patient
revenue of approximately $200,000 on an annualized basis.
The Company recognized $385,000 in stock-based compensation
expense, $232,000 net of tax or $0.02 per diluted share, during the
quarter as compared to $479,000, $292,000 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 June
30, 2009. The Company continues to explore alternatives to
re-finance the senior secured facilities with its existing lenders
and others, with the objective of refinancing its indebtedness on a
longer term basis rather than incurring the costs associated with
short-term extension of the maturity.
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, cash earnings from operations and the pro
forma 2008 financial results 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 second quarter ended June 30, 2009, the Company will
host its previously announced conference call on Tuesday, July 28,
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, Tuesday, August 4, 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 242 dental facilities with
approximately 2,131 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 Six Months Ended
June 30, June 30,
-------------------- --------------------
2009 2008 2009 2008
---------- --------- ---------- ---------
Net revenue $ 70,378 $ 74,639 $ 139,763 $ 154,450
Operating expenses:
Salaries and benefits 29,183 31,355 58,749 66,856
Lab fees and dental
supplies 10,321 11,143 20,614 23,124
Office occupancy expenses 8,542 8,480 17,041 17,493
Other operating expenses 6,422 6,708 13,000 13,480
General corporate expenses 3,332 3,465 6,692 7,095
Depreciation expense 2,700 2,684 5,415 5,458
Amortization of intangible
assets 2,424 2,409 4,849 4,796
Litigation settlement
(gain) expense - (687) - (30,814)
---------- --------- ---------- ---------
Total operating
expenses 62,924 65,557 126,360 107,488
---------- --------- ---------- ---------
Earnings from operations 7,454 9,082 13,403 46,962
Interest expense, net 2,187 2,419 5,557 4,874
---------- --------- ---------- ---------
Earnings before income taxes 5,267 6,663 7,846 42,088
Income taxes 2,091 2,539 3,112 16,299
---------- --------- ---------- ---------
Consolidated net earnings 3,176 4,124 4,734 25,789
Noncontrolling interest 164 151 301 291
---------- --------- ---------- ---------
Net earnings $ 3,012 $ 3,973 $ 4,433 $ 25,498
========== ========= ========== =========
Net earnings per common share:
Basic $ 0.23 $ 0.31 $ 0.34 $ 1.98
========== ========= ========== =========
Diluted $ 0.23 $ 0.30 $ 0.34 $ 1.95
========== ========= ========== =========
Weighted average common shares
outstanding:
Basic 12,949 12,862 12,942 12,850
========== ========= ========== =========
Diluted 13,099 13,117 13,059 13,106
========== ========= ========== =========
AMERICAN DENTAL PARTNERS, INC.
FINANCIAL HIGHLIGHTS
(in thousands)
(unaudited)
June 30, December 31,
2009 2008
------------ ------------
ASSETS
Current assets:
Cash and cash equivalents $ 7,164 $ 6,626
Accounts receivable, net 24,806 25,875
Other current assets 10,673 12,183
------------ ------------
Total current assets 42,643 44,684
------------ ------------
Property and equipment, net 52,458 54,542
------------ ------------
Other non-current assets:
Goodwill 76,122 76,122
Intangible assets, net 170,936 175,527
Other assets 2,339 2,378
------------ ------------
Total non-current assets 249,397 254,027
------------ ------------
Total assets $ 344,498 $ 353,253
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $ 21,865 $ 21,383
Other current liabilities 10,938 9,517
Current maturities of debt 114,051 196
------------ ------------
Total current liabilities 146,854 31,096
------------ ------------
Non-current liabilities:
Long-term debt 227 131,441
Other liabilities 44,232 43,634
------------ ------------
Total non-current liabilities 44,459 175,075
------------ ------------
Total liabilities 191,313 206,171
------------ ------------
Noncontrolling Interest 1,299 584
Commitments and contingencies
Stockholders' equity 151,886 146,498
------------ ------------
Total liabilities and stockholders'
equity $ 344,498 $ 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 June 30, 2008
Pro Forma Adjustments
---------------------------
Settlement Management Pro Forma
Actual Assets (a) Services (b) 2008
-------- ---------- ----------- ---------
Net revenue $ 74,639 $ 1,274 $ 3,333 $ 70,032
Operating expenses
Salaries and benefits 31,355 962 355 30,038
Lab fees and dental
supplies 11,143 135 - 11,008
Office occupancy
expenses 8,480 229 60 8,191
Other operating expenses 6,708 (117) 108 6,717
General corporate
expenses 3,465 - - 3,465
Litigation expenses (687) (687)(c) - -
-------- ---------- ----------- ---------
EBITDA 14,175 752 2,810 10,613
Depreciation 2,684 65 14 2,605
Amortization 2,409 - - 2,409
-------- ---------- ----------- ---------
Earnings from operations 9,082 687 2,796 5,599
Interest expense, net 2,419 - - 2,419
-------- ---------- ----------- ---------
Earnings before income taxes 6,663 687 2,796 3,180
Income taxes 2,539 1,211
-------- ---------
Consolidated earnings 4,124 1,969
Noncontrolling interest 151 151
-------- ---------
Net earnings 3,973 1,818
Amortization of service
agreements, net of tax 1,364 1,364
-------- ---------
Cash net earnings (d) $ 5,337 $ 3,182
======== =========
Diluted net earnings per
common share $ 0.30 $ 0.14
======== =========
Diluted cash net earnings
per common share (d) $ 0.41 $ 0.24
======== =========
(a) Includes expense reimbursement associated with the PDG doctors who
practiced temporarily in the six dental facilities retained by the
Company.
(b) The Company agreed to provide interim management services to PDG
through September 30, 2008. Includes interim management fee revenue
and expenses associated with providing such services.
(c) Includes insurance proceeds of $1,002,000 received for professional
fees that were partially reimbursable pursuant to insurance coverage
offset by professional fees and other expenses associated with the
litigation of $315,000.
(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 service agreement 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)
Pro forma consolidated statement of income
for the six months ended June 30, 2008
Pro Forma Adjustments
---------------------------
Settlement Management Pro Forma
Actual Assets (e) Services (f) 2008
--------- ---------- ----------- ----------
Net revenue $ 154,450 $ 7,697 $ 6,667 $ 140,086
Operating expenses
Salaries and benefits 66,856 4,717 1,207 60,932
Lab fees and dental
supplies 23,124 1,436 - 21,688
Office occupancy
expenses 17,493 1,092 120 16,281
Other operating
expenses 13,480 135 215 13,130
General corporate
expenses 7,095 - - 7,095
Litigation expenses (30,814) (30,814)(g) - -
--------- ---------- ----------- ----------
EBITDA 57,216 31,131 5,125 20,960
Depreciation 5,458 317 28 5,113
Amortization 4,796 - - 4,796
--------- ---------- ----------- ----------
Earnings from operations 46,962 30,814 5,097 11,051
Interest expense, net 4,874 - - 4,874
--------- ---------- ----------- ----------
Earnings before income
taxes 42,088 30,814 5,097 6,177
Income taxes 16,299 2,296
--------- ----------
Consolidated earnings 25,789 3,881
Noncontrolling
interest 291 291
--------- ----------
Net earnings 25,498 3,590
Amortization of service
agreements, net of tax 2,714 2,714
--------- ----------
Cash net earnings (h) $ 28,212 $ 6,304
========= ==========
Diluted net earnings per
common share $ 1.95 $ 0.27
========= ==========
Diluted cash net earnings
per common share (h) $ 2.15 $ 0.48
========= ==========
(e) Includes expense reimbursement associated with (i) 25 dental facilities
transferred on February 29, 2008 to PDG as part of litigation
settlement and (ii) the PDG doctors who practiced temporarily in the
six dental facilities retained by the Company.
(f) The Company agreed to provide interim management services to PDG
through September 30, 2008. Includes interim management fee revenue,
expenses associated with providing such services, and salaries and
benefits expense of management staff, including severance, who were
terminated as a result of realigning the Company's Minnesota-based
management team.
(g) Includes gain on disposal of assets of $30,763,000 and insurance
proceeds of $1,002,000 for professional fees associated with the PDG
litigation which were partially reimbursable pursuant to insurance
coverage offset by professional fees and other expenses associated
with the litigation of $951,000.
(h) 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 service agreement 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 and six months ended June 30, 2009 and 2008
Three Months Ended June 30, Six Months Ended June 30,
------------------------- -------------------------
Actual Pro Forma Actual Pro Forma
2009 2008 Change 2009 2008 Change
--------- --------- ----- --------- --------- -----
Net revenue $ 70,378 $ 70,032 0% $ 139,763 $ 140,086 0%
Operating expenses
Salaries and
benefits 29,183 30,038 -3% 58,749 60,932 -4%
Lab fees and
dental supplies 10,321 11,008 -6% 20,614 21,688 -5%
Office occupancy
expenses 8,542 8,191 4% 17,041 16,281 5%
Other operating
expenses 6,422 6,717 -4% 13,000 13,130 -1%
General corporate
expenses 3,332 3,465 -4% 6,692 7,095 -6%
--------- --------- ----- --------- --------- -----
EBITDA 12,578 10,613 19% 23,667 20,960 13%
Depreciation 2,700 2,605 4% 5,415 5,113 6%
Amortization 2,424 2,409 1% 4,849 4,796 1%
--------- --------- ----- --------- --------- -----
Earnings from
operations 7,454 5,599 33% 13,403 11,051 21%
Interest expense,
net 2,187 2,419 -10% 5,557 4,874 14%
--------- --------- ----- --------- --------- -----
Earnings before
income taxes 5,267 3,180 66% 7,846 6,177 27%
Income taxes 2,091 1,211 73% 3,112 2,296 36%
--------- --------- ----- --------- --------- -----
Consolidated net
earnings 3,176 1,969 61% 4,734 3,881 22%
Noncontrolling
interest 164 151 9% 301 291 3%
--------- --------- ----- --------- --------- -----
Net earnings 3,012 1,818 66% 4,433 3,590 23%
Amortization of
service agreements,
net of tax 1,374 1,364 1% 2,748 2,714 1%
--------- --------- ----- --------- --------- -----
Cash net earnings (e) $ 4,386 $ 3,182 38% $ 7,181 $ 6,304 14%
========= ========= ===== ========= ========= =====
Diluted net earnings
per common share $ 0.23 $ 0.14 64% $ 0.34 $ 0.27 26%
========= ========= ===== ========= ========= =====
Diluted cash net
earnings per common
share $ 0.33 $ 0.24 38% $ 0.55 $ 0.48 15%
========= ========= ===== ========= ========= =====
AMERICAN DENTAL PARTNERS, INC.
SUPPLEMENTAL OPERATING DATA
(in thousands, except per share amounts and selected statistical data)
(unaudited)
Selected statistical data
June 30, June 30,
2009 2008
--------- ---------
Number of dental facilities 242 242
Number of operatories (i) 2,131 2,097
Number of affiliated dentists (j) 538 544
(i) 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.
(j) 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 (k)
Three Months Ended Six Months Ended
June 30, June 30,
------------------- % ------------------- %
2009 2008 Change 2009 2008 Change
--------- --------- ----- --------- --------- -----
Patient revenue of
affiliated practices:
Platform dental
group practices
affiliated with
us in both periods
of comparison $ 106,814 $ 105,952 0.8% $ 212,686 $ 212,812 -0.1%
Platform dental
group practices
that affiliated
with us during
periods of
comparison 232 - 100.0% 1,119 514 117.7%
--------- --------- ----- --------- --------- -----
Total patient revenue 107,046 105,952 1.0% 213,805 213,326 0.2%
Patient revenue of
Arizona's Tooth
Doctor for Kids 6,274 6,043 3.8% 12,398 12,164 1.9%
--------- --------- ----- --------- --------- -----
Patient revenue of
platform dental group
practices affiliated
with us by means of
service agreements 100,772 99,909 0.9% 201,407 201,162 0.1%
Amounts due to us
under service
agreements 63,415 63,032 0.6% 125,969 125,971 0.0%
--------- --------- ----- --------- --------- -----
Amounts retained by
platform dental group
practices affiliated
with us by means of
service agreements $ 37,357 $ 36,877 1.3% $ 75,438 $ 75,191 0.3%
========= ========= ===== ========= ========= =====
(k) 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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