updated 3/2/2011 5:16:28 PM ET 2011-03-02T22:16:28

WAKEFIELD, Mass., March 2, 2011 (GLOBE NEWSWIRE) -- American Dental Partners, Inc. (Nasdaq:ADPI) announced financial results today for the quarter and twelve months ended December 31, 2010.

Comparing results for the fourth quarter of 2010 with results for the fourth quarter of 2009:

  • Net revenue was $70,306,000 for the fourth quarter of 2010 as compared to $66,593,000 for the fourth quarter of 2009.
  • Earnings from operations were $5,560,000 for the fourth quarter of 2010 as compared to $5,773,000 for the fourth quarter of 2009. 
  • Net earnings were $2,167,000 for the fourth quarter of 2010 as compared to $1,865,000 for the fourth quarter of 2009.
  • Diluted net earnings per share were $0.14 for the fourth quarter of 2010 as compared to $0.12 for the fourth quarter of 2009.
  • Non-GAAP diluted adjusted net earnings, excluding service agreement amortization, per share were $0.23 for the fourth quarter of 2010 as compared to $0.22 for the fourth quarter of 2009.

Comparing results for the twelve months ended December 31, 2010 with results for the twelve months ended December 31, 2009:

  • Net revenue was $285,642,000 for the twelve months ended December 31, 2010 as compared to $274,342,000 for the twelve months ended December 31, 2009.
  • Earnings from operations were $26,206,000 for the twelve months ended December 31, 2010 as compared to $24,848,000 for the twelve months ended December 31, 2009. 
  • Net earnings were $10,339,000 for the twelve months ended December 31, 2010 as compared to $7,729,000 for the twelve months ended December 31, 2009.
  • Diluted net earnings per share were $0.65 for the twelve months ended December 31, 2010 as compared to $0.55 for the twelve months ended December 31, 2009.
  • Non-GAAP diluted adjusted net earnings, excluding service agreement amortization, per share were $1.06 for the twelve months ended December 31, 2010 as compared to $1.00 for the twelve months ended December 31, 2009.

For the quarter, patient revenue of the Company's affiliated dental group practices and Arizona's Tooth Doctor for Kids was $109,878,000 and same market patient revenue increased 1.0%. For the twelve months ended December 31, 2010, patient revenue of the Company's affiliated dental group practices and Arizona's Tooth Doctor for Kids was $443,888,000 and same market patient revenue declined 1.7%. 

Cash flow from operations was $8,952,000 for the quarter and $36,270,000 for the twelve months ended December 31, 2010. Amounts paid for acquisitions amounted to $535,000 during the quarter and $21,108,000 for the twelve months ended December 31, 2010. The Company completed one in-market acquisition during the quarter and one platform acquisition and three in-market acquisitions during the twelve months ended December 31, 2010. The acquisition completed during the quarter generated approximately $164,000 of patient revenue in the quarter and is expected to generate patient revenue of approximately $640,000 on an annualized basis. Acquisitions completed during the year generated approximately $11,807,000 of patient revenue in the quarter and are expected to generate patient revenue of approximately $21,000,000 on an annualized basis. Capital expenditures were $3,614,000 for the quarter and $8,964,000 for the twelve months ended December 31, 2010. The Company completed two de novo facilities during the quarter, and it completed six de novo facilities and relocated one dental facility during the twelve months ended December 31, 2010. 

The Company recognized $338,000 of professional fees, $203,000 net of tax or $0.01 per diluted share, for the twelve months ended December 31, 2010, associated with its acquisition of Cincinnati Dental Services. The Company recognized $561,000 of professional fees, $338,000 net of tax or $0.02 per diluted share, for the quarter ended December 31, 2009 and twelve months ended December 31, 2009, associated with its acquisition of Christie Dental Partners. These fees have been included in general corporate expenses.

The Company recognized $615,000 of expenses, $370,000 net of tax or $0.02 per diluted share, associated with the refinancing of its indebtedness for the twelve months ended December 31, 2010. The Company recognized $989,000 of expenses, $596,000 net of tax or $0.04 per diluted share, associated with the refinancing of its indebtedness for the twelve months ended December 31, 2009. These expenses have been included in interest expense.

The Company recognized $450,000, $253,000 net of tax or $0.02 per diluted share, of stock-based compensation expense during the quarter, as compared to $436,000, $263,000 net of tax or $0.02 per diluted share, for the same quarter last year. These expenses have been included in general corporate expenses.

Under the Company's share repurchase program, the Company repurchased 185,000 shares of its common stock for $2,230,000 at an average price of $12.09 per share during the quarter and 407,000 shares of its common stock for $4,698,000 at an average price of $11.56 per share for the twelve months ended December 31, 2010. The Company has $5,302,000 remaining under its $10,000,000 repurchase authorization.

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.  The Company incurs significant amortization expense related to its service agreements in contrast to many companies, in the same and other industries, that do not amortize intangible assets based on authoritative literature for goodwill and other intangible assets. Expenses related to the Company's debt refinancing and professional fees related to the Company's acquisitions have also been excluded from the Company's non-GAAP financial measures. The Company believes these items should be presented separately due to their magnitude and non-recurring impact to the Company's ongoing operations.  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.

Conference Call

For further discussion of these events and a comprehensive review of the quarter ended December 31, 2010, the Company will host its previously announced conference call on Thursday, March 3, 2011 at 9:00 a.m., EST, 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 Investors section of the website at least 15 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., EST, Thursday, March 10, 2011.

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 26 dental group practices, which have 278 dental facilities with approximately 2,389 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.

AMERICAN DENTAL PARTNERS, INC.
 
FINANCIAL HIGHLIGHTS 
(in thousands, except per share amounts)
(unaudited)
         
  Three Months Ended Twelve Months Ended
  December 31, December 31,
  2010 2009 2010 2009
         
Net revenue  $ 70,306  $ 66,593  $ 285,642  $274,342
Operating expenses:        
Salaries and benefits  28,709  28,068  116,288  117,429
Lab fees and dental supplies  10,352  9,550  42,847  39,691
Office occupancy expenses  9,510  8,638  37,377  34,326
Other operating expenses  6,938  5,734  27,295  23,739
General corporate expenses   3,867  3,471  14,237  13,709
Depreciation expense  2,821  3,034  11,431  11,137
Amortization of intangible assets  2,549  2,325  9,961  9,463
Total operating expenses  64,746  60,820  259,436  249,494
Earnings from operations  5,560  5,773  26,206  24,848
Interest expense, net  1,666  2,571  8,754  11,055
Earnings before income taxes  3,894  3,202  17,452  13,793
Income taxes  1,709  1,272  6,946  5,475
Consolidated net earnings  2,185  1,930  10,506  8,318
Noncontrolling interest  18  65  167  589
Net earnings   $ 2,167  $ 1,865  $ 10,339  $ 7,729
         
Net earnings per common share:        
Basic  $ 0.14  $ 0.12  $ 0.66  $ 0.55
Diluted  $ 0.14  $ 0.12  $ 0.65  $ 0.55
Weighted average common shares outstanding:        
Basic  15,422 15,682  15,639 13,946
Diluted  15,754 16,009  15,965 14,155
 
AMERICAN DENTAL PARTNERS, INC. 
 
FINANCIAL HIGHLIGHTS 
(in thousands) 
(unaudited)
     
  December 31, December 31,
  2010 2009
ASSETS
Current assets:    
Cash and cash equivalents  $ 4,798  $ 6,807
Accounts receivable, net  19,403  20,811
Other current assets  19,085  15,285
Total current assets  43,286  42,903
     
Property and equipment, net  53,095  53,766
Other non-current assets:    
Goodwill  90,750  86,852
Intangible assets, net  185,669  180,573
Other assets  5,556  5,912
Total non-current assets  281,975  273,337
Total assets  $ 378,356  $ 370,006
     
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:    
Accounts payable and accrued expenses  $ 28,664  $ 27,211
Other current liabilities  9,943  11,810
Current maturities of debt  8,156  8,685
Total current liabilities  46,763  47,706
Non-current liabilities:    
Long-term debt  92,250  93,506
Other liabilities  43,909  41,478
Total non-current liabilities  136,159  134,984
Total liabilities  182,922  182,690
     
Noncontrolling interest  462  1,857
     
Commitments and contingencies    
Stockholders' equity  194,972  185,459
Total liabilities and stockholders' equity  $ 378,356  $ 370,006
 
AMERICAN DENTAL PARTNERS, INC.
 
SUPPLEMENTAL OPERATING DATA
 (unaudited)
 
Selected statistical data
     
  December 31,
  2010 2009
     
Number of dental facilities  278  268
Number of operatories (a)  2,389  2,259
Number of affiliated dentists (b)  576  533
     
(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   Twelve Months Ended  
  December 31, % December 31, %
  2010 2009 Change 2010 2009 Change
Total patient revenue (c):            
Platform dental group practices affiliated with the Company in both periods of comparison  $ 100,546  $ 99,515 1.0%  $ 408,298  $ 415,565 -1.7%
Platform dental group practices that affiliated with the Company during periods of comparison   9,332  1,861  --   35,590  2,840  -- 
Total patient revenue  109,878  101,376 8.4%  443,888  418,405 6.1%
Patient revenue of Arizona's Tooth Doctor for Kids  4,700  5,545 -15.2%  21,750  24,708 -12.0%
Patient revenue of practices affiliated with the Company by means of service agreements  105,178  95,831 9.8%  422,138  393,697 7.2%
Net revenue due to the Company under service agreements  65,098  60,482 7.6%  261,692  247,103 5.9%
Amounts retained by practices affiliated with the Company by means of service agreements  $ 40,080  $ 35,349 13.4%  $ 160,446  $ 146,594 9.4%
             
(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. 
 
AMERICAN DENTAL PARTNERS, INC.
 
SUPPLEMENTAL OPERATING DATA
(in thousands)
(unaudited)
             
Components of same market patient revenue growth
             
  Three Months Ended   Twelve Months Ended  
  December 31, % December 31, %
  2010 2009 Change 2010 2009 Change
Existing facilities (d)  $ 98,379  $ 98,808 -0.4%  $ 394,769  $ 406,158 -2.8%
De novo facilities (e)  941  168 460.1%  6,581  4,390 49.9%
Expanded/relocated facilities (e)  501  539 -7.1%  4,095  4,377 -6.4%
Same market growth excluding acquisitions  99,821  99,515 0.3%  405,445  414,925 -2.3%
Acquired facilities (e)  725  --   --   2,853  640 345.8%
Same market patient revenue growth  $ 100,546  $ 99,515 1.0%  $ 408,298  $ 415,565 -1.7%
             
(d) Includes facilities in both periods of comparison.
(e) Includes facilities completed or acquired in either period of comparison.
 
Reconciliation of GAAP earnings, as reported, to non-GAAP earnings and adjusted net earnings
(in thousands, except per share amounts)
                 
  Three Months Ended December 31, Twelve Months Ended December 31,
  2010 2010 2009 2009 2010 2010 2009 2009
  GAAP Non-GAAP GAAP Non-GAAP GAAP Non-GAAP GAAP Non-GAAP
                 
Net earnings (as reported)  $ 2,167  $ 2,167  $ 1,865  $ 1,865  $ 10,339  $ 10,339  $ 7,729  $ 7,729
Add: Write-off of expenses associated with debt refinancing, net of tax (f)  --   --   --   --   --   370  --   596
Add: Expenses associated with Christie Dental acquisition, net of tax (f)  --   --   --   338  --   --   --   338
Add: Expenses associated with Cincinnati Dental Services acquisition, net of tax (f)  --   --   --   --   --   203  --   -- 
Adjusted net earnings  2,167  2,167  1,865  2,203  10,339  10,912  7,729  8,663
Add: Amortization related to service agreements, net of tax (f)  1,422  1,422  1,394  1,394  5,960  5,960  5,509  5,509
Adjusted net earnings excluding service agreement amortization  $ 3,589  $ 3,589  $ 3,259  $ 3,597  $ 16,299  $ 16,872  $ 13,238  $ 14,172
                 
Weighted average diluted shares outstanding  15,754  15,754  16,009  16,009  15,965  15,965  14,155  14,155
Diluted adjusted net earnings per share  $ 0.14  $ 0.14  $ 0.12  $ 0.14  $ 0.65  $ 0.68  $ 0.55  $ 0.61
Diluted adjusted net earnings excluding service agreement amortization per share  $ 0.23  $ 0.23  $ 0.20  $ 0.22  $ 1.02  $ 1.06  $ 0.94  $ 1.00
                 
(f) Tax effected at effective tax rate in the period reported.
CONTACT: 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

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