SOURCE: American Dental Partners, Inc.

April 30, 2007 16:05 ET

American Dental Partners Reports First Quarter 2007 Financial Results

WAKEFIELD, MA -- (MARKET WIRE) -- April 30, 2007 -- American Dental Partners, Inc. (NASDAQ: ADPI) announced financial results today for the first quarter ended March 31, 2007.

Comparing the first quarter of 2007 with the first quarter of 2006:

--  Net revenue was $65,458,000 as compared to $54,066,000, an increase of
    21%.
--  Earnings from operations were $7,223,000 as compared to $5,088,000, an
    increase of 42%.
--  Net earnings were $3,879,000 as compared to $2,791,000, an increase of
    39%.
--  Diluted net earnings per share were $0.30, as compared to $0.22, an
    increase of 36%.
--  Diluted cash net earnings per share were $0.36 as compared to $0.28,
    an increase of 29%.
    
Patient revenue of the Company's affiliated dental group practices increased 16.9% to $98,539,000 for the quarter, which includes $92,736,000 from dental group practices which are affiliated with the Company by means of service agreements and $5,803,000 from Arizona's Tooth Doctor for Kids. Same market patient revenue growth was 8.9% for the quarter.

Cash flow from operations was $3,483,000 for the quarter. Capital expenditures were $2,168,000 for the quarter. The Company relocated two dental facilities during the quarter. Amounts paid for affiliations and acquisitions, including contingent payments and affiliation costs, amounted to $2,110,000 for the quarter. During the quarter, the Company completed three in-market affiliations which were combined with existing platform affiliated practices in Maryland and Texas.

The Company incurred professional fees of approximately $525,000 during the quarter as compared to $300,000 for the prior year's same quarter related to the previously announced litigation between the Company's Minnesota subsidiary, PDHC, Ltd., and PDG, P.A., the affiliated practice at Park Dental. The Company recognized $441,000 in stock-based compensation expense, $282,000 net of tax or $0.02 per diluted share, during the quarter as compared to $304,000, $197,000 net of tax or $0.02 per diluted share, for the prior year's same quarter.

The Company's debt to total capitalization stood at 23% at March 31, 2007, compared to 21% at March 31, 2006. The Company achieved an annualized cash return on committed capital and cash return on equity for the quarter of 22% and 16%, respectively, compared to the prior year's annualized cash return on committed capital and cash return on equity for the quarter of 19% and 14%, respectively.

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, 2007, the Company will host its previously announced conference call on Tuesday, May 1, 2007 at 10:00 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 and www.streetevents.com approximately two hours after the call through 6:00 p.m. EDT Tuesday, May 8, 2007.

American Dental Partners is one of the nation's leading business partners to dental group practices. The Company is affiliated with 22 dental group practices which have 213 dental facilities with approximately 1,958 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 possibility that we may not realize the benefits expected from our acquisition and affiliation strategy, economic, regulatory and/or other factors outside the control of the Company, 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, 2006.

                      AMERICAN DENTAL PARTNERS, INC.
                          FINANCIAL HIGHLIGHTS
                (in thousands, except per share amounts)
                              (unaudited)


                                                     Three Months Ended
                                                          March 31,
                                                  -------------------------
                                                      2007         2006
                                                  ------------ ------------

Net revenue                                       $     65,458 $     54,066
Operating expenses:
   Salaries and benefits                                27,971       22,540
   Lab fees and dental supplies                         10,174        8,711
   Office occupancy expenses                             7,136        6,335
   Other operating expenses                              5,501        4,818
   General corporate expenses                            3,907        3,352
   Depreciation expense                                  2,104        1,912
   Amortization of intangible assets                     1,442        1,310
                                                  ------------ ------------
      Total operating expenses                          58,235       48,978
                                                  ------------ ------------
Earnings from operations                                 7,223        5,088
   Interest expense, net                                   625          484
   Minority interest                                       157            -
                                                  ------------ ------------
Earnings before income taxes                             6,441        4,604
   Income taxes                                          2,562        1,813
                                                  ------------ ------------
Net earnings                                      $      3,879 $      2,791
                                                  ============ ============

Net earnings per common share:
   Basic                                          $       0.31 $       0.23
                                                  ============ ============
   Diluted                                        $       0.30 $       0.22
                                                  ============ ============
Weighted average common shares outstanding:
   Basic                                                12,456       12,269
                                                  ============ ============
   Diluted                                              13,145       12,851
                                                  ============ ============




                      AMERICAN DENTAL PARTNERS, INC.
                           FINANCIAL HIGHLIGHTS
                             (in thousands)
                              (unaudited)



                                                    March 31,  December 31,
                                                      2007         2006
                                                  ------------ ------------
ASSETS
Current assets:
   Cash and cash equivalents                      $      5,082 $      1,386
   Accounts receivable, net                             20,590       16,373
   Other current assets                                  6,999        6,860
                                                  ------------ ------------
      Total current assets                              32,671       24,619
                                                  ------------ ------------

Property and equipment, net                             47,192       46,460
                                                  ------------ ------------
Other non-current assets:
   Goodwill                                             22,668       23,091
   Intangible assets, net                              101,867      101,113
   Other assets                                            758          537
                                                  ------------ ------------
      Total non-current assets                         125,293      124,741
                                                  ------------ ------------
      Total assets                                $    205,156 $    195,820
                                                  ============ ============

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
   Accounts payable and accrued expenses          $     29,156 $     29,351
   Current maturities of debt                               81           81
                                                  ------------ ------------
      Total current liabilities                         29,237       29,432
                                                  ------------ ------------
Non-current liabilities:
   Long-term debt                                       36,907       33,807
   Other liabilities                                    16,778       16,216
                                                  ------------ ------------
      Total non-current liabilities                     53,685       50,023
                                                  ------------ ------------
      Total liabilities                                 82,922       79,455
                                                  ------------ ------------

Minority Interest                                          211           54

Commitments and contingencies
Stockholders' equity                                   122,023      116,311
                                                  ------------ ------------
      Total liabilities and stockholders' equity  $    205,156 $    195,820
                                                  ============ ============



                      AMERICAN DENTAL PARTNERS, INC.
                       Supplemental Operating Data
      (in thousands, except per share amounts and statistical data)
                              (unaudited)

                        Selected statistical data

                                          March 31,   December 31,    %
                                             2007         2006     Change
                                         ------------ ------------ -------

Number of dental facilities                       213          209     1.9%
Number of operatories (1)                       1,958        1,944     0.7%
Number of affiliated dentists (2)                 515          470     9.6%




    Reconciliation of GAAP earnings, as reported, to cash net earnings


                                                     Three Months Ended
                                                          March 31,
                                                  -------------------------
                                                      2007         2006
                                                  ------------ ------------


Net earnings (as reported)                        $      3,879 $      2,791
Add: Amortization of intangible assets, net of tax         868          794
                                                  ------------ ------------
Cash net earnings (3)                             $      4,747 $      3,585
                                                  ============ ============


Weighted average common shares outstanding              13,145       12,851
                                                  ============ ============
Diluted net earnings per share                    $       0.30 $       0.22
                                                  ============ ============
Diluted cash net earnings per share (3)           $       0.36 $       0.28
                                                  ============ ============




                       AMERICAN DENTAL PARTNERS, INC.
                        Supplemental Operating Data
                              (in thousands)
                               (unaudited)

     Calculation of cash return on committed capital and cash return
      on equity for the three months ended March 31, 2007 and 2006

                                                     Three Months Ended
                                                          March 31,
                                                  ------------------------
                                                      2007         2006
                                                  -----------  -----------

Earnings from operations                          $     7,223  $     5,088
Add back:  Amortization of intangible assets            1,442        1,310
                                                  -----------  -----------
Cash earnings from operations (4)                 $     8,665  $     6,398
                                                  ===========  ===========
Annualized cash earnings from operations          $    34,660  $    25,592
                                                  ===========  ===========

Average committed capital (5)                     $   154,605  $   133,363

Cash return on committed capital (4)                       22%          19%

Net earnings                                      $     3,879  $     2,791
Add back:  Amortization of intangible assets, net
 of taxes                                                 868          794
                                                  -----------  -----------
Cash net earnings (3)                             $     4,747  $     3,585
                                                  ===========  ===========
Annualized cash net earnings                      $    18,988  $    14,340
                                                  ===========  ===========

Average stockholders' equity (5)                  $   119,167  $   103,573

Cash return on equity (4)                                  16%          14%


         Patient revenue and same market patient revenue growth (6)

                                            Three Months Ended
                                                 March 31,            %
                                         -------------------------
                                             2007         2006     Change
                                         ------------ ------------ -------
Patient revenue of affiliated practices:
   Platform dental group practices
    affiliated with us in both periods
    of comparison                        $     91,826 $     84,286     8.9%
   Platform dental group practices that
    affiliated with us during periods of
    comparison                                  6,713            -       -
                                         ------------ ------------ -------
Total patient revenue                          98,539       84,286    16.9%
Patient revenue of Arizona's Tooth
 Doctor for Kids                                5,803            -       -
                                         ------------ ------------ -------
Patient revenue of platform dental group
 practices affiliated with us by means
 of service agreements                         92,736       84,286    10.0%
Amounts due to us under service
 agreements                                    58,480       52,976    10.4%
                                         ------------ ------------ -------
Amounts retained by platform dental
 group practices affiliated with us by
 means of service agreements             $     34,256 $     31,310     9.4%
                                         ============ ============ =======



                       AMERICAN DENTAL PARTNERS, INC.
                        Supplemental Operating Data
                                (unaudited)


(1) 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.

(2) Includes full-time equivalent general or specialty dentists employed by
    or contracted with the affiliated practices, including Arizona's Tooth
    Doctor for Kids.

(3) 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.

(4) Cash earnings from operations is not a measure of financial performance
    under GAAP. The Company believes that cash return on committed capital
    and cash return on equity are useful financial measures for
    understanding its financial performance.

(5) Average committed capital calculated as average of beginning of quarter
    and end of quarter debt, including current portion, plus stockholders'
    equity.  Average stockholders' equity calculated as average of
    beginning of quarter and end of quarter stockholders' equity.

(6) 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 as of December 1, 2006.

Contact Information

  • 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.
    201 Edgewater Drive, Suite 285
    Wakefield, MA 01880
    Phone: 781/224-0880
    Fax: 781/224-4216