American Dental Partners Reports Second Quarter and First Half 2006 Financial Results1 August 2006
Diluted cash net earnings per share were $0.59 as compared to $0.55, an increase of 7%. Excluding stock-based compensation expense from 2006 (discussed below), diluted cash net earnings per share increased 13%. 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 $84,047,000 for the quarter as compared to $75,821,000 for the prior year's same quarter, an increase of 11%. Same market revenue growth for the Company's affiliated dental group practices as measured by patient revenue was 10% for the quarter.
For the quarter, cash flow from operations was $6,678,000, capital expenditures were $1,368,000 and amounts paid for affiliations, including contingent payments and affiliation costs, amounted to $3,690,000. The Company expanded two dental facilities and completed four practice affiliations which were combined with its existing affiliated dental group practices in Arizona, New York, Texas and Wisconsin. The Company also completed one platform affiliation with Deerwood Orthodontics and entered into a Service Agreement with a professional association in Minnesota with the intention of developing two de novo practices. The Company intends to operate this affiliation separate from its existing Minnesota affiliates.
The Company's debt to total capitalization stood at 19% at June 30, 2006, compared to 24% at December 31, 2005. The Company achieved an annualized cash return on committed capital of 21% for the quarter and cash return on equity of 15% 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 $374,000 in stock-based compensation expense, $227,000 net of tax or $.02 per diluted share, during the second quarter and $677,000 in stock-based compensation expense, $411,000 net of tax or $.03 per diluted share, during the six months ended June 30, 2006.
During the second quarter, the Company incurred approximately $370,000 in legal fees 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 has been made aware that PDG, P.A. is no longer accredited by the Accreditation Association for Ambulatory Health Care.
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 second quarter ended June 30, 2006, the Company will host its previously announced conference call on Tuesday, August 1, 2006 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, August 8, 2006.
American Dental Partners is one of the nation's leading business partners to dental group practices. The Company is affiliated with 20 dental group practices which have 200 dental facilities with approximately 1,873 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 Six Months Ended June 30, June 30, ------------------- ------------------- 2006 2005 2006 2005 --------- --------- --------- ---------
Net revenue $ 55,078 $ 49,427 $ 109,144 $ 97,572 Operating expenses: Salaries and benefits 22,396 20,595 44,936 40,977 Lab fees and dental supplies 8,971 7,976 17,682 15,610 Office occupancy expenses 6,482 5,498 12,817 11,028 Other operating expenses 4,850 4,565 9,668 9,127 General corporate expenses 3,378 2,602 6,730 5,200 Depreciation expense 1,939 1,669 3,851 3,314 Amortization of intangible assets 1,339 1,242 2,649 2,451 --------- --------- --------- --------- Total operating expenses 49,355 44,147 98,333 87,707 --------- --------- --------- --------- Earnings from operations 5,723 5,280 10,811 9,865 Interest expense, net 470 392 954 822 --------- --------- --------- --------- Earnings before income taxes 5,253 4,888 9,857 9,043 Income taxes 2,070 1,934 3,883 3,580 --------- --------- --------- --------- Net earnings $ 3,183 $ 2,954 $ 5,974 $ 5,463 ========= ========= ========= =========
Net earnings per common share: Basic $ 0.26 $ 0.25 $ 0.49 $ 0.46 ========= ========= ========= ========= Diluted $ 0.25 $ 0.23 $ 0.46 $ 0.43 ========= ========= ========= ========= Weighted average common shares outstanding: Basic 12,280 11,960 12,275 11,915 ========= ========= ========= ========= Diluted 12,848 12,635 12,850 12,585 ========= ========= ========= =========
AMERICAN DENTAL PARTNERS, INC. FINANCIAL HIGHLIGHTS (in thousands) (unaudited)
June 30, December 31, 2006 2005 ------------ ------------ ASSETS Current assets: Cash and cash equivalents $ 2,081 $ 592 Receivables due from affiliated dental group practices 14,415 14,751 Other current assets 7,362 6,966 ------------ ------------ Total current assets 23,858 22,309 ------------ ------------
Property and equipment, net 44,682 45,184 ------------ ------------ Other non-current assets: Goodwill 5,095 5,095 Intangible assets, net 98,789 97,260 Other assets 612 798 ------------ ------------ Total non-current assets 104,496 103,153 ------------ ------------ Total assets $ 173,036 $ 170,646 ============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable and accrued expenses $ 21,632 $ 20,131 Current maturities of debt 123 123 ------------ ------------ Total current liabilities 21,755 20,254 ------------ ------------ Non-current liabilities: Long-term debt 26,108 32,039 Other liabilities 16,269 16,458 ------------ ------------ Total non-current liabilities 42,377 48,497 ------------ ------------
Total liabilities 64,132 68,751 ------------ ------------
Commitments and contingencies Stockholders' equity 108,904 101,895 ------------ ------------ Total liabilities and stockholders' equity $ 173,036 $ 170,646 ============ ============
AMERICAN DENTAL PARTNERS, INC. Supplemental Operating Data (in thousands) (unaudited)
Reconciliation of GAAP earnings, as reported, to cash net earnings
Three Months Six Months Ended Ended June 30, June 30, --------------- --------------- 2006 2005 2006 2005 ------- ------- ------- -------
Net earnings (as reported) $ 3,183 $ 2,954 $ 5,974 $ 5,463 Add: Amortization of intangible assets, net of tax 811 750 1,605 1,480 ------- ------- ------- ------- Cash net earnings (1) $ 3,994 $ 3,704 $ 7,579 $ 6,943 ======= ======= ======= =======
Weighted average common shares outstanding 12,848 12,635 12,850 12,585 ======= ======= ======= ======= Diluted net earnings per share $ 0.25 $ 0.23 $ 0.46 $ 0.43 ======= ======= ======= ======= Diluted cash net earnings per share (1) $ 0.31 $ 0.29 $ 0.59 $ 0.55 ======= ======= ======= =======
Calculation of cash return on committed capital and cash return on equity for the three and six months ended June 30, 2006 and 2005
Three Months Ended Six Months Ended June 30, June 30, -------------------- -------------------- 2006 2005 2006 2005 --------- --------- --------- ---------
Earnings from operations $ 5,723 $ 5,280 $ 10,811 $ 9,865 Add back: Amortization of intangible assets 1,339 1,242 2,649 2,451 --------- --------- --------- --------- Cash earnings from operations (2) $ 7,062 $ 6,522 $ 13,460 $ 12,316 ========= ========= ========= ========= Annualized cash earnings from operations $ 28,248 $ 26,088 $ 26,920 $ 24,632 ========= ========= ========= =========
Average committed capital (3) $ 133,902 $ 122,693 $ 134,596 $ 120,041
Cash return on committed capital (2) 21% 21% 20% 21%
Net earnings $ 3,183 $ 2,954 $ 5,974 $ 5,463 Add back: Amortization of intangible assets, net of taxes 811 750 1,605 1,480 --------- --------- --------- --------- Cash net earnings (1) $ 3,994 $ 3,704 $ 7,579 $ 6,943 ========= ========= ========= ========= Annualized cash net earnings $ 15,976 $ 14,816 $ 15,158 $ 13,886 ========= ========= ========= =========
Average stockholders' equity (3) $ 107,078 $ 92,280 $ 105,400 $ 90,535
Cash return on equity (2) 15% 16% 14% 15%
AMERICAN DENTAL PARTNERS, INC. Supplemental Operating Data (in thousands) (unaudited)
Patient revenue of the affiliated dental group practices (4)
Three Months Ended Six Months Ended June 30, % June 30, % ------------------- --------- --------- 2006 2005 Change 2006 2005 Change --------- --------- -------- --------- --------- -------- Patient revenue - affiliated practices: Platform dental groups affiliated with the Company in both periods of comparison (5) $ 83,519 $ 75,821 10% $ 161,899 $ 145,555 11% Platform dental groups that affiliated with the Company during periods of comparison 528 - N/A 6,434 3,808 69% --------- --------- -------- --------- --------- -------- Total patient revenue 84,047 75,821 11% 168,333 149,363 13% Amounts due to the Company under service agreements 53,832 48,148 12% 106,808 95,063 12% --------- --------- -------- --------- --------- -------- Amounts retained by affiliated practices $ 30,215 $ 27,673 9% $ 61,525 $ 54,300 13% ========= ========= ======== ========= ========= ========
(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
SOURCE: American Dental Partners, Inc.
Source: marketwire
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