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American Dental Partners Inc (ADPI) SEC Filing 8-K Material Event for the period ending Friday, November 4, 2011

SEC Filings

American Dental Partners Inc

CIK: 1028087 Ticker: ADPI

Exhibit 99.1

American Dental Partners, Inc.

401 Edgewater Place, Suite 430

Wakefield, MA 01880

Phone: 781/224-0880                             Fax: 781/224-4216

 

 

For Immediate Release

 

Contacts:    Gregory A. Serrao          Breht T. Feigh      
   Chairman, President and          Executive Vice President,      
   Chief Executive Officer          Chief Financial Officer and Treasurer      
   781-224-0880          781-224-0880      

AMERICAN DENTAL PARTNERS REPORTS

THIRD QUARTER 2011 FINANCIAL RESULTS

WAKEFIELD, MASSACHUSETTS – November 7, 2011 – American Dental Partners, Inc. (NASDAQ: ADPI) announced financial results today for the quarter ended September 30, 2011. The Company also issued a separate press release today announcing that it has entered into a definitive agreement to be acquired by funds affiliated with JLL Partners.

Comparing results for the third quarter of 2011 with results for the third quarter of 2010:

 

   

Net revenue was $70,241,000 for the third quarter of 2011 as compared to $71,116,000 for the third quarter of 2010.

 

   

Earnings from operations were $5,339,000 for the third quarter of 2011 as compared to $6,073,000 for the third quarter of 2010.

 

   

Net earnings were $2,679,000 for the third quarter of 2011 as compared to $2,715,000 for the third quarter of 2010.

 

   

Diluted net earnings per share were $0.17 for the third quarter of 2011 as compared to $0.17 for the third quarter of 2010.

 

   

Non-GAAP diluted adjusted net earnings per share were $0.27 for the third quarter of 2011 as compared to $0.27 for the third quarter of 2010. Please see the attached Reconciliation of GAAP Net Earnings, as Reported, to Non-GAAP Diluted Adjusted Net Earnings.

Comparing results for the nine months ending September 30, 2011 with results for the nine months ending September 30, 2010:

 

   

Net revenue was $219,016,000 for the nine months ending September 30, 2011 as compared to $215,336,000 for the nine months ending September 30, 2010.

 

   

Earnings from operations were $19,333,000 for the nine months ending September 30, 2011 as compared to $20,646,000 for the nine months ending September 30, 2010.

 

   

Net earnings were $9,106,000 for the nine months ending September 30, 2011 as compared to $8,172,000 for the nine months ending September 30, 2010.

 

   

Diluted net earnings per share were $0.58 for the nine months ending September 30, 2011 as compared to $0.51 for the nine months ending September 30, 2010.

 

   

Non-GAAP diluted adjusted net earnings per share were $0.89 for the nine months ending September 30, 2011 as compared to $0.83 for the nine months ending September 30, 2010. Please see the attached Reconciliation of GAAP Net Earnings, as Reported, to Non-GAAP Diluted Adjusted Net Earnings.

For the quarter ending September 30, 2011, patient revenue of the Company’s affiliated dental group practices and Arizona’s Tooth Doctor for Kids was $110,321,000 and same market patient revenue decreased 0.9% year-over-year. For the nine months ending September 30, 2011, patient revenue of the Company’s affiliated dental group practices and Arizona’s Tooth Doctor for Kids was $343,862,000 and same market patient revenue increased 0.7% year-over-year.

 

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Cash flow from operations was $12,080,000 for the quarter and $37,521,000 for the nine months ending September 30, 2011. The Company did not complete any acquisitions during the quarter and completed nine in-market acquisitions during the nine months ending September 30, 2011. Amounts paid for acquisitions amounted to $2,713,000 for the nine months ending September 30, 2011. Capital expenditures were $7,671,000 for the quarter and $14,516,000 for the nine months ending September 30, 2011. The Company completed three de novo facilities during the quarter and completed four de novo facilities during the nine months ending September 30, 2011.

The Company recognized $535,000, $336,000 net of tax or $0.02 per diluted share, of stock-based compensation expense during the quarter, as compared to $450,000, $284,000 net of tax or $0.02 per diluted share, for the same quarter last year.

Patient Revenue of the Affiliated Practices

The Company does not consolidate the financial statements of the practices affiliated with the Company by means of service agreements with its financial statements. Patient revenue of the affiliated practices is, however, a financial measure used by the Company’s management to monitor operating performance and to help identify and analyze trends of the affiliated practices that may affect the Company’s business. Most of the operating expenses incurred by the Company, pursuant to the service agreements, are on behalf of the affiliated practices in the operation of dental facilities. These expenses are significantly affected by the patient revenue of the affiliated practices.

Use of Non-GAAP Financial Measures

Adjusted net earnings and adjusted net earnings excluding service agreement amortization are non-GAAP financial measures. In accordance with the requirements of Regulation G of the Securities and Exchange Commission, please see the attached financial tables for a presentation of the most comparable GAAP measures, the reconciliation to those GAAP measures and all additional reconciliations required by Regulation G.

The Company believes non-GAAP financial measures, such as adjusted net earnings and adjusted net earnings excluding service agreement amortization, are important financial measures for understanding its financial performance. Amortization expense of intangible assets related to service agreements with the affiliated practices is presented separately and excluded from the Company’s adjusted net earnings excluding service agreement amortization, a non-GAAP financial measure, due to its magnitude and non-cash impact on the Company’s ongoing operations and because, unlike depreciation of the Company’s dental facilities, it requires no recurring capital investment. The primary limitations associated with the Company’s use of non-GAAP measures are that these measures may not be directly comparable to the amounts reported by other companies. Management compensates for these limitations by providing a detailed reconciliation of the non-GAAP financial measures to the most directly comparable GAAP measures in this press release.

 

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About American Dental Partners, Inc.

American Dental Partners is one of the nation’s leading business partners to dental group practices. The Company is affiliated with 27 dental group practices, which have 282 dental facilities with approximately 2,404 operatories located in 21 states.

Use of Forward-Looking Statements

“Safe Harbor” Statement under the Private Securities Litigation Reform Act of 1995: With the exception of the historical information contained in this press release, the matters described herein contain “forward-looking” statements that involve risk and uncertainties that may individually or collectively affect the matters herein described, including but not limited to the Company’s risks associated with overall or regional economic conditions, dependence upon affiliated dental practices, contracts the affiliated practices have with third-party payors, government regulation of the dental industry, impact of health care reform, dependence upon service agreements and the impact of any terminations or potential terminations of such contracts, business interruptions, the outcome of pending litigation and the Company’s acquisition and affiliation strategy, which are detailed from time to time in the “Risk Factors” section of the Company’s filings with the Securities and Exchange Commission, including its annual report on Form 10-K and quarterly reports on Form 10-Q.

 

3


AMERICAN DENTAL PARTNERS, INC.

FINANCIAL HIGHLIGHTS

(in thousands, except per share amounts)

(unaudited)

 

     Three Months Ended
September 30,
     Nine Months Ended
September 30,
 
     2011      2010      2011      2010  

Net revenue

   $ 70,241       $ 71,116       $ 219,016       $ 215,336   

Operating expenses:

           

Salaries and benefits

     28,294         29,242         86,738         87,579   

Lab fees and dental supplies

     10,776         10,759         34,145         32,495   

Office occupancy expenses

     9,655         9,611         28,638         27,867   

Other operating expenses

     7,453         6,932         22,455         20,357   

General corporate expenses

     3,023         3,054         10,972         10,370   

Depreciation expense

     3,125         2,903         9,060         8,610   

Amortization of intangible assets

     2,576         2,542         7,675         7,412   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total operating expenses

     64,902         65,043         199,683         194,690   
  

 

 

    

 

 

    

 

 

    

 

 

 

Earnings from operations

     5,339         6,073         19,333         20,646   

Interest expense, net

     1,028         1,710         4,136         7,088   
  

 

 

    

 

 

    

 

 

    

 

 

 

Earnings before income taxes

     4,311         4,363         15,197         13,558   

Income taxes

     1,602         1,605         6,007         5,237   
  

 

 

    

 

 

    

 

 

    

 

 

 

Consolidated net earnings

     2,709         2,758         9,190         8,321   

Noncontrolling interest

     30         43         84         149   
  

 

 

    

 

 

    

 

 

    

 

 

 

Net earnings

   $ 2,679       $ 2,715       $ 9,106       $ 8,172   
  

 

 

    

 

 

    

 

 

    

 

 

 

Net earnings per common share:

           

Basic

   $ 0.17       $ 0.17       $ 0.59       $ 0.52   
  

 

 

    

 

 

    

 

 

    

 

 

 

Diluted

   $ 0.17       $ 0.17       $ 0.58       $ 0.51   
  

 

 

    

 

 

    

 

 

    

 

 

 

Weighted average common shares outstanding:

           

Basic

     15,451         15,695         15,432         15,712   
  

 

 

    

 

 

    

 

 

    

 

 

 

Diluted

     15,700         15,991         15,726         16,032   
  

 

 

    

 

 

    

 

 

    

 

 

 

 

4


AMERICAN DENTAL PARTNERS, INC.

FINANCIAL HIGHLIGHTS

(in thousands)

(unaudited)

 

     September 30,
2011
     December 31,
2010
 

ASSETS

     

Current assets:

     

Cash and cash equivalents

   $ 3,507       $ 4,798   

Short-term investments

     2,215         —     

Accounts receivable, net

     19,061         19,403   

Other current assets

     13,301         13,085   
  

 

 

    

 

 

 

Total current assets

     38,084         37,286   
  

 

 

    

 

 

 

Property and equipment, net

     59,308         53,095   
  

 

 

    

 

 

 

Other non-current assets:

     

Goodwill

     90,750         90,750   

Intangible assets, net

     180,005         185,669   

Other assets

     5,118         5,556   
  

 

 

    

 

 

 

Total non-current assets

     275,873         281,975   
  

 

 

    

 

 

 

Total assets

   $ 373,265       $ 372,356   
  

 

 

    

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

     

Current liabilities:

     

Accounts payable and accrued expenses

   $ 27,969       $ 22,664   

Other current liabilities

     9,153         9,943   

Current maturities of debt

     8,038         8,156   
  

 

 

    

 

 

 

Total current liabilities

     45,160         40,763   
  

 

 

    

 

 

 

Non-current liabilities:

     

Long-term debt

     73,350         92,250   

Other liabilities

     47,575         43,909   
  

 

 

    

 

 

 

Total non-current liabilities

     120,925         136,159   
  

 

 

    

 

 

 

Total liabilities

     166,085         176,922   
  

 

 

    

 

 

 

Noncontrolling interest

     562         462   

Commitments and contingencies

     

Stockholders’ equity

     206,618         194,972   
  

 

 

    

 

 

 

Total liabilities and stockholders’ equity

   $ 373,265       $ 372,356   
  

 

 

    

 

 

 

 

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AMERICAN DENTAL PARTNERS, INC.

SUPPLEMENTAL OPERATING DATA

(unaudited)

Selected Statistical Data

 

     September 30,  
     2011      2010  

Number of dental facilities

     282         275   

Number of operatories (a)

     2,404         2,378   

Number of affiliated dentists (b)

     566         574   

 

(a) 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.
(b) Includes full-time equivalent general or specialty dentists employed by or contracted with the affiliated practices and Arizona’s Tooth Doctor for Kids.

Patient Revenue and Same Market Patient Revenue Growth (c)

(in thousands)

 

     Three Months Ended
September 30,
     %     Nine Months Ended
September 30,
     %  
     2011      2010      Change     2011      2010      Change  

Total patient revenue (c):

                

Platform dental group practices affiliated with the Company in both periods of comparison

   $ 110,313       $ 111,318         -0.9   $ 329,907       $ 327,494         0.7

Platform dental group practices that affiliated with the Company during periods of comparison

     8         —           —          13,955         6,516         114.2
  

 

 

    

 

 

      

 

 

    

 

 

    

Total patient revenue

     110,321         111,318         -0.9     343,862         334,010         2.9

Patient revenue of Arizona’s Tooth Doctor for Kids

     4,848         5,645         -14.1     14,492         17,050         -15.0
  

 

 

    

 

 

      

 

 

    

 

 

    

Patient revenue of practices affiliated with the Company by means of service agreements

     105,473         105,673         -0.2     329,370         316,960         3.9

Net revenue due to the Company under service agreements

     64,978         64,958         0.0     203,349         196,594         3.4
  

 

 

    

 

 

      

 

 

    

 

 

    

Amounts retained by practices affiliated with the Company by means of service agreements

   $ 40,495       $ 40,715         -0.5   $ 126,021       $ 120,366         4.7
  

 

 

    

 

 

      

 

 

    

 

 

    

 

(c) Includes patient revenue of Arizona’s Tooth Doctor for Kids, which is consolidated with the Company’s financial results, and patient revenue of affiliated practices that are not consolidated with the Company’s financial results.

 

6


AMERICAN DENTAL PARTNERS, INC.

SUPPLEMENTAL OPERATING DATA

(in thousands)

(unaudited)

Components of Same Market Patient Revenue Growth (in thousands)

 

     Three Months Ended
September 30,
     %     Nine Months Ended
September 30,
     %  
     2011      2010      Change     2011      2010      Change  

Existing facilities (d)

   $ 107,414       $ 110,375         -2.7   $ 321,039       $ 324,006         -0.9

De novo facilities (e)

     1,213         494         145.5     4,928         2,357         109.1

Expanded/relocated facilities (e)

     352         334         5.4     998         1,016         -1.8
  

 

 

    

 

 

      

 

 

    

 

 

    

Same market growth excluding acquisitions

     108,979         111,203         -2.0     326,965         327,379         -0.1

Acquired facilities (e)

     1,334         115         1060.0     2,942         115         2458.3
  

 

 

    

 

 

      

 

 

    

 

 

    

Same market patient revenue growth

   $ 110,313       $ 111,318         -0.9   $ 329,907       $ 327,494         0.7
  

 

 

    

 

 

      

 

 

    

 

 

    

 

(d) Includes facilities in both periods of comparison.
(e) Includes facilities completed or acquired in either period of comparison.

Reconciliation of GAAP Net Earnings, as Reported, to Non-GAAP Diluted Adjusted Net Earnings

(in thousands, except per share amounts)

 

     Three Months Ended, September 30,      Nine Months Ended, September 30,  
         2011              2010              2011              2010      

GAAP net earnings (as reported)

   $ 2,679       $ 2,715       $ 9,106       $ 8,172   

Add: Write-off of expenses associated with debt refinancing, net of tax (f)

     —           —           219         377   

Add: Expenses associated with Cincinnati Dental Services affiliation, net of tax (f)

     —           32         —           207   
  

 

 

    

 

 

    

 

 

    

 

 

 

Adjusted net earnings

     2,679         2,747         9,325         8,756   

Add: Amortization of service agreements, net of tax (f)

     1,597         1,597         4,601         4,520   
  

 

 

    

 

 

    

 

 

    

 

 

 

Adjusted net earnings excluding service agreement amortization

   $ 4,276       $ 4,344       $ 13,926       $ 13,276   
  

 

 

    

 

 

    

 

 

    

 

 

 

Weighted average diluted shares outstanding

     15,700         15,991         15,726         16,032   

Diluted adjusted net earnings per share

   $ 0.17       $ 0.17       $ 0.59       $ 0.55   
  

 

 

    

 

 

    

 

 

    

 

 

 

Diluted adjusted net earnings excluding service agreement amortization per share

   $ 0.27       $ 0.27       $ 0.89       $ 0.83   
  

 

 

    

 

 

    

 

 

    

 

 

 

 

(f) Tax effected at effective tax rate in the period reported.

 

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Ticker: ADPI
CIK: 1028087
Form Type: 8-K Corporate News
Accession Number: 0001193125-11-299764
Submitted to the SEC: Mon Nov 07 2011 4:09:58 PM EST
Accepted by the SEC: Mon Nov 07 2011
Period: Friday, November 4, 2011
Industry: Health And Allied
Events:
  1. Earnings Release
  2. Financial Exhibit
  3. New Agreement
  4. Other Events

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