SOURCE: American Dental Partners, Inc.

July 27, 2005 17:26 ET

American Dental Partners Reports Second Quarter and First Half 2005 Financial Results

WAKEFIELD, MA -- (MARKET WIRE) -- July 27, 2005 -- American Dental Partners, Inc. (NASDAQ: ADPI) announced financial results today for the quarter and six month period ended June 30, 2005.

Comparing the second quarter of 2005 with the second quarter of 2004:

--  Net revenue was $49,427,000 as compared to $45,044,000, an increase of
    10%.
--  Earnings from operations were $5,280,000 as compared to $4,230,000, an
    increase of 25%.
--  Net earnings were $2,954,000 as compared to $2,319,000, an increase of
    27%.
--  Diluted net earnings per share were $0.35, as compared to $0.29, an
    increase of 21%.
--  Diluted cash net earnings per share were $0.44 as compared to $0.37,
    an increase of 19%.
    
Comparing the first six months of 2005 with the first six months of 2004:
--  Net revenue was $97,572,000 as compared to $89,108,000, an increase of
    9%.
--  Earnings from operations were $9,865,000 as compared to $8,093,000, an
    increase of 22%.
--  Net earnings were $5,463,000 as compared to $4,383,000, an increase of
    25%.
--  Diluted net earnings per share were $0.65 as compared to $0.55, an
    increase of 18%.
--  Diluted cash net earnings per share were $0.83 as compared to $0.72,
    an increase of 15%.
    
Patient revenue of the Company's affiliated dental group practices, which is not consolidated with the Company's financial results and is a non-GAAP financial measure, was $75,821,000 for the quarter as compared to $68,882,000 for the prior year's same quarter, an increase of 10%. Same market revenue growth for the Company's affiliated dental group practices as measured by patient revenue was 7% for the quarter.

For the quarter, cash flow from operations was $7,878,000, capital expenditures were $2,491,000 and amounts paid for acquisitions and affiliations, including contingent payments and acquisition costs, amounted to $5,425,000. The Company relocated three facilities and expanded five facilities during the quarter; additionally, the Company completed two practice affiliations which were combined with its existing affiliated dental group practices in Oklahoma and New York.

The Company noted that its discussions continued with representatives of PDG, P.A., the affiliated dental group practice of Park Dental, its Minnesota affiliate, regarding previously disclosed matters relating to Park Dental's 2005 operating plan and organizational issues. The Company indicated that the parties had made progress in recent discussions and that it hoped to have these matters finalized in the near future.

Cash net earnings per share, patient revenue, total revenue and same market revenue growth 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 measures 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, 2005, the Company will host its previously announced conference call on Thursday, July 28, 2005 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 Thursday, August 4, 2005.

American Dental Partners is one of the nation's leading business partners to dental group practices. The Company is affiliated with 19 dental group practices which have 183 dental facilities with approximately 1,689 operatories located in 18 states.

Note: Some of the information in this press release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. The words "believe," "expect," "anticipate," "project,'' and similar expressions, among others, identify forward-looking statements. Forward-looking statements speak only as of the date the statement was made. Such forward-looking statements are subject to uncertainties and other factors that could cause actual results to differ materially from those projected, anticipated or implied. Certain factors that might cause such a difference include, among others, the Company's risks associated with overall or regional economic conditions, contracts its affiliated dental group practices have with third party payors and the impact of any terminations or potential terminations of such contracts, the cost of and access to capital, fluctuations in labor markets, the Company's acquisition and affiliation strategy, management of rapid growth, dependence upon affiliated dental group practices, dependence upon service agreements and government regulation of the dental industry. Additional risks, uncertainties and other factors are set forth in Management's Discussion and Analysis of Financial Condition and Results of Operations - "Risk Factors" section of the Company's Annual Report on Form 10-K for the year ended December 31, 2004.

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


                                   Three Months Ended    Six Months Ended
                                        June 30,             June 30,
                                    ----------------     ----------------
                                      2005     2004        2005     2004
                                    -------  -------     -------  -------

Net revenue                         $49,427  $45,044     $97,572  $89,108
Operating expenses:
  Salaries and benefits              20,595   19,189      40,977   38,462
  Lab fees and dental supplies        7,976    7,205      15,610   14,360
  Office occupancy expenses           5,498    5,181      11,028   10,345
  Other operating expenses            4,565    4,165       9,127    8,324
  General corporate expenses          2,602    2,492       5,200    4,424
  Depreciation expense                1,669    1,479       3,314    2,915
  Amortization of intangible assets   1,242    1,103       2,451    2,185
                                    -------  -------     -------  -------
    Total operating expenses         44,147   40,814      87,707   81,015
                                    -------  -------     -------  -------
Earnings from operations              5,280    4,230       9,865    8,093
  Interest expense, net                 392      392         822      857
                                    -------  -------     -------  -------
Earnings before income taxes          4,888    3,838       9,043    7,236
  Income taxes                        1,934    1,519       3,580    2,853
                                    -------  -------     -------  -------
Net earnings                        $ 2,954  $ 2,319     $ 5,463  $ 4,383
                                    =======  =======     =======  =======

Net earnings per common share:
  Basic                             $  0.37  $  0.31     $  0.69  $  0.59
                                    =======  =======     =======  =======
  Diluted                           $  0.35  $  0.29     $  0.65  $  0.55
                                    =======  =======     =======  =======
Weighted average common
 shares outstanding:
  Basic                               7,973    7,537       7,943    7,464
                                    =======  =======     =======  =======
  Diluted                             8,423    8,057       8,390    7,961
                                    =======  =======     =======  =======


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



                                                    June 30,   December 31,
                                                      2005         2004
                                                   --------     --------
ASSETS
Current assets:
  Cash and cash equivalents                        $  2,677     $  1,378
  Receivables due from affiliated dental
   group practices                                   15,322       13,539
  Other current assets                                6,231        6,657
                                                   --------     --------
    Total current assets                             24,230       21,574
                                                   --------     --------


Property and equipment, net                          40,855       39,252
                                                   --------     --------

Other non-current assets:
  Goodwill                                            5,095        5,095
  Intangible assets, net                             90,325       87,425
  Other assets                                          890          801
                                                   --------     --------
    Total non-current assets                         96,310       93,321
                                                   --------     --------
    Total assets                                   $161,395     $154,147
                                                   ========     ========

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Accounts payable and accrued expenses            $ 20,876     $ 23,353
  Current maturities of debt                            141          527
                                                   --------     --------
    Total current liabilities                        21,017       23,880
                                                   --------     --------
Non-current liabilities:
  Long-term debt                                     30,331       28,220
  Other liabilities                                  16,185       14,840
                                                   --------     --------
    Total non-current liabilities                    46,516       43,060
                                                   --------     --------
    Total liabilities                                67,533       66,940
                                                   --------     --------

Commitments and contingencies
Stockholders' equity                                 93,862       87,207
                                                   --------     --------
    Total liabilities and stockholders' equity     $161,395     $154,147
                                                   ========     ========

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

              Comparable GAAP Presentation and
                Reconciliation of Non-GAAP
                  Financial Measures




                                                  Three Months Ended
                                                       June 30,
                                                  ----------------
                                                    2005     2004  % Growth
                                                  -------  ------- --------
Reconciliation of total revenue to
 net revenue and patient
 revenue same market growth (1)
Patient revenue:
  Dental group practices affiliated
   with the Company in both periods
   of comparison (2)                              $73,496  $68,882      7%

  Dental group practices that completed
   affiliations with the Company during
   periods of comparison                            2,325        -      -
                                                  -------  -------
  Total                                            75,821   68,882     10%
Other revenue                                       1,279    1,307     -2%
                                                  -------  -------
Total revenue                                      77,100   70,189     10%
Amounts retained by affiliated dental
 group practices                                   27,673   25,145     10%
                                                  -------  -------
Net revenue                                       $49,427  $45,044     10%
                                                  =======  =======



                                Three Months Ended      Three Months Ended
                                   June 30, 2005          June 30, 2004
                                ------------------      ------------------
                                      % of    % of           % of    % of
                                       Net    Total           Net    Total
                                     Revenue Revenue        Revenue Revenue
                             Amount    (1)     (1)   Amount   (1)    (1)
                             -------  -----   ----   -------  -----  -----

Patient revenue              $75,821          98.3%  $68,882          98.1%
Other revenue                  1,279           1.7     1,307           1.9
                             -------          ----   -------         -----
Total revenue                 77,100         100.0    70,189         100.0
  Amounts retained by
   affiliated dental
   group practices            27,673          35.9    25,145          35.8
                             -------          ----   -------         -----
Net revenue                   49,427  100.0%  64.1    45,044  100.0%  64.2
  Salaries and benefits       20,595   41.7   26.7    19,189   42.6   27.3
  Lab fees and dental
   supplies                    7,976   16.1   10.3     7,205   16.0   10.3
  Office occupancy expenses    5,498   11.1    7.1     5,181   11.5    7.4
  Other operating expenses     4,565    9.2    5.9     4,165    9.2    5.9
  General corporate expenses   2,602    5.3    3.4     2,492    5.5    3.6
  Depreciation expense         1,669    3.4    2.2     1,479    3.3    2.1
  Amortization of
   intangible assets           1,242    2.5    1.6     1,103    2.4    1.6
                             -------  -----   ----   -------  -----  -----
    Total operating expenses  44,147   89.3   57.3    40,814   90.6   58.1
                             -------  -----   ----   -------  -----  -----
Earnings from operations       5,280   10.7    6.8     4,230    9.4    6.0
  Interest expense, net          392    0.8    0.5       392    0.9    0.6
                             -------  -----   ----   -------  -----  -----
Earnings before income taxes   4,888    9.9    6.3     3,838    8.5    5.5
  Income taxes                 1,934    3.9    2.5     1,519    3.4    2.2
                             -------  -----   ----   -------  -----  -----
Net earnings                 $ 2,954    6.0%   3.8%  $ 2,319    5.1%   3.3%
                             =======  =====   ====   =======  =====  =====


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

              Comparable GAAP Presentation and
                Reconciliation of Non-GAAP
              Financial Measures (Continued)


                                      Three Months Ended   Six Months Ended
                                           June 30,            June 30,
                                      ------------------   ----------------
                                        2005     2004       2005     2004
                                       ------   ------     ------   ------
Reconciliation of net earnings,
 as reported, to cash net
 earnings: (3)
Net earnings (as reported)             $2,954   $2,319     $5,463   $4,383
Add: Amortization of intangible
 assets, net of tax                       750      666      1,480    1,320
                                       ------   ------     ------   ------
Cash net earnings                      $3,704   $2,985     $6,943   $5,703
                                       ======   ======     ======   ======

Weighted average common shares
 outstanding                            8,423    8,057      8,390    7,961
                                       ======   ======     ======   ======
Diluted net earnings per share         $ 0.35   $ 0.29     $ 0.65   $ 0.55
                                       ======   ======     ======   ======
Diluted cash net earnings
 per share (3)                         $ 0.44   $ 0.37     $ 0.83   $ 0.72
                                       ======   ======     ======   ======
(1) Patient and total revenue are not measures of financial performance under GAAP. Total revenue includes patient revenue of the Company's affiliated dental group practices, for which their results of operations are not consolidated with the Company's financial statements. The Company uses these and other non-GAAP financial measures to analyze operating trends and to help manage its business. The Company believes that total revenue and patient revenue and the expense ratios derived from total revenue are useful measures to analyze operating trends.

(2) Same market revenue excludes affiliations in new markets that occurred during the periods of comparison. Same market patient revenue is comprised of revenue of the Company's affiliated dental group practices which are not consolidated into the Company's financial statements. The Company believes that same market patient revenue growth is important for understanding its financial performance.

(3) Diluted cash net earnings and diluted cash net earnings per share are not measures of financial performance under GAAP. Diluted 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 diluted cash net earnings and diluted cash net earnings per share are important financial measures for understanding its relative financial performance.

Contact Information

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

    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