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WAKEFIELD, MS -- (MARKET WIRE) -- 05/01/06 -- American Dental Partners, Inc. (NASDAQ: ADPI)
announced financial results today for the first quarter ended March 31,
2006.
Comparing the first quarter of 2006 with the first quarter of 2005:
-- Net revenue was $54,066,000 as compared to $48,145,000, an increase of
12%.
-- Earnings from operations were $5,088,000 as compared to $4,585,000, an
increase of 11%.
-- Net earnings were $2,791,000 as compared to $2,509,000, an increase of
11%.
-- Diluted net earnings per share were $0.22 as compared to $0.20, an
increase of 10%.
-- Diluted cash net earnings per share were $0.28 as compared to $0.26,
an increase of 8%.
Patient revenue of the Company's affiliated dental group practices, which
is not consolidated with the Company's financial results, was $84,286,000
for the quarter as compared to $73,542,000 for the prior year's same
quarter, an increase of 15%. Same market revenue growth for the Company's
affiliated dental group practices as measured by patient revenue was 13%
for the quarter.
For the quarter, cash flow from operations was $7,976,000, capital
expenditures were $1,489,000 and amounts paid for affiliations, including
contingent payments and affiliation costs, were $1,045,000. The Company
expanded five dental facilities, opened one de novo facility and completed
three practice affiliations which were combined with its existing
affiliated dental group practices in Michigan, New York and Oklahoma. As
previously announced, subsequent to the end of the first quarter, the
Company completed a platform affiliation with Deerwood Orthodontics.
The Company's debt to total capitalization stood at 21% at March 31, 2006,
compared to 24% at December 31, 2005. The Company achieved an annualized
cash return on committed capital of 19% for the quarter and cash return on
equity of 14% for the quarter.
The Company adopted Statement of Financial Accounting Standards No. 123 (R)
"Share-Based Payment," effective January 1, 2006. As a result, the Company
recognized $304,000 in stock-based compensation expense, $185,000 net of
tax, during the first quarter. The Company estimates stock-based
compensation expense for the full year 2006 will be approximately $786,000,
net of tax.
The Company's Minnesota subsidiary, PDHC, Ltd. ("PDHC"), responded on
February 23, 2006 to the previously announced complaint served against PDHC
by PDG, P.A. ("PDG"), the dental group practice which is affiliated with
Park Dental. PDHC denied all claims made by PDG and has made various
counterclaims. The Company intends to defend itself and pursue its claims
vigorously. During the first quarter, the Company incurred approximately
$300,000 in legal fees related to this litigation.
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, 2006, the Company will host its previously
announced conference call on Tuesday, May 2, 2006 at 10:00 a.m. EDT, which
will be broadcast live over the Internet at www.amdpi.com. 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
9, 2006.
American Dental Partners is one of the nation's leading business partners
to dental group practices. The Company is affiliated with 20 dental groups
which have 192 dental facilities with approximately 1,789 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, 2005.
AMERICAN DENTAL PARTNERS, INC.
FINANCIAL HIGHLIGHTS
(in thousands, except per share amounts)
(unaudited)
Three Months Ended
March 31,
---------------------
2006 2005
---------- ----------
Net revenue $ 54,066 $ 48,145
Operating expenses:
Salaries and benefits 22,540 20,382
Lab fees and dental supplies 8,711 7,634
Office occupancy expenses 6,335 5,530
Other operating expenses 4,818 4,562
General corporate expenses 3,352 2,598
Depreciation expense 1,912 1,645
Amortization of intangible assets 1,310 1,209
---------- ----------
Total operating expenses 48,978 43,560
---------- ----------
Earnings from operations 5,088 4,585
Interest expense, net 484 430
---------- ----------
Earnings before income taxes 4,604 4,155
Income taxes 1,813 1,646
---------- ----------
Net earnings $ 2,791 $ 2,509
========== ==========
Net earnings per common share:
Basic $ 0.23 $ 0.21
========== ==========
Diluted $ 0.22 $ 0.20
========== ==========
Weighted average common shares outstanding:
Basic 12,269 11,870
========== ==========
Diluted 12,851 12,534
========== ==========
AMERICAN DENTAL PARTNERS, INC.
FINANCIAL HIGHLIGHTS
(in thousands)
(unaudited)
March 31, December 31,
2006 2005
------------ ------------
ASSETS
Current assets:
Cash and cash equivalents $ 1,551 $ 592
Receivables due from affiliated dental group
practices 15,436 14,751
Other current assets 6,787 6,966
------------ ------------
Total current assets 23,774 22,309
------------ ------------
Property and equipment, net 44,941 45,184
------------ ------------
Other non-current assets:
Goodwill 5,095 5,095
Intangible assets, net 96,953 97,260
Other assets 654 798
------------ ------------
Total non-current assets 102,702 103,153
------------ ------------
Total assets $ 171,417 $ 170,646
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $ 22,383 $ 20,131
Current maturities of debt 123 123
------------ ------------
Total current liabilities 22,506 20,254
------------ ------------
Non-current liabilities:
Long-term debt 27,294 32,039
Other liabilities 16,366 16,458
------------ ------------
Total non-current liabilities 43,660 48,497
------------ ------------
Total liabilities 66,166 68,751
------------ ------------
Commitments and contingencies
Stockholders' equity 105,251 101,895
------------ ------------
Total liabilities and stockholders' equity $ 171,417 $ 170,646
============ ============
AMERICAN DENTAL PARTNERS, INC.
Supplemental Operating Data
(in thousands)
(unaudited)
Reconciliation of GAAP earnings, as reported, to cash net earnings
Three Months Ended
March 31,
---------------------
2006 2005
---------- ----------
Net earnings (as reported) $ 2,791 $ 2,509
Add: Amortization of intangible assets, net of tax 794 730
---------- ----------
Cash net earnings (1) $ 3,585 $ 3,239
========== ==========
Weighted average common shares outstanding 12,851 12,534
========== ==========
Diluted net earnings per share $ 0.22 $ 0.20
========== ==========
Diluted cash net earnings per share (1) $ 0.28 $ 0.26
========== ==========
Calculation of cash return on committed capital and cash return on equity
for the three months ended March 31, 2006 and 2005
Three Months Ended
March 31,
--------------------
2006 2005
--------- ---------
Earnings from operations $ 5,088 $ 4,585
Add back: Amortization of intangible assets 1,310 1,209
--------- ---------
Cash earnings from operations (2) $ 6,398 $ 5,794
========= =========
Annualized cash earnings from operations $ 25,592 $ 23,176
========= =========
Average committed capital (3) $ 133,363 $ 118,400
Cash return on committed capital (2) 19% 20%
Net earnings $ 2,791 $ 2,509
Add back: Amortization of intangible assets, net of
taxes 794 730
--------- ---------
Cash net earnings (1) $ 3,585 $ 3,239
========= =========
Annualized cash net earnings $ 14,339 $ 12,957
========= =========
Average stockholders' equity (3) $ 103,573 $ 88,953
Cash return on equity (2) 14% 15%
AMERICAN DENTAL PARTNERS, INC.
Supplemental Operating Data
(in thousands)
(unaudited)
Patient revenue of the affiliated dental group practices (4)
Three Months Ended
March 31,
-------- -------- %
2006 2005 Change
-------- -------- ------
Patient revenue - affiliated practices:
Platform dental groups affiliated with the
Company in both periods of comparison (5) $ 81,234 $ 72,059 13%
Platform dental groups that affiliated with
the Company during periods of comparison 3,052 1,483 106%
-------- -------- ------
Total patient revenue 84,286 73,542 15%
Amounts due to the Company under service
agreements 52,976 46,915 13%
-------- -------- ------
Amounts retained by affiliated practices $ 31,310 $ 26,627 18%
======== ======== ======
(1) 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.
(2) 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.
(3) 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.
(4) Patient revenue of the affiliated dental group practices is not
consolidated with the Company's financial statements.
(5) Same market patient revenue excludes new platform affiliations that
occurred during the periods of comparison in which a new service
agreement was entered into.
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