American Dental Partners, Inc. Reports First Quarter Results.Business/Technology Editors & Health/Medical Writers WAKEFIELD Wakefield, estate, United States Wakefield, family estate of George Washington, on the Potomac River, E Va.; part of the George Washington Birthplace National Monument (see National Parks and Monuments, table). , Mass.--(BW HealthWire)--May 7, 2001 American Dental Partners, Inc. (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on :ADPI ADPI Alpha Delta Pi Sorority ADPI American Dairy Products Institute ADPI Analog Devices (Philippines) Inc ADPI Australian Dance Performance Institute (Brisbane, QLD, Australia) ) today reported first quarter earnings for the period ended March 31, 2001. "We are pleased with our operating results during the first quarter. As we previously announced, we expect the termination of four managed care contracts in Arizona Arizona (âr'əzō`nə), state in the southwestern United States. It is bordered by Utah (N), New Mexico (E), Mexico (S), and, across the Colorado R., Nevada and California (W). , Minnesota and North Carolina North Carolina, state in the SE United States. It is bordered by the Atlantic Ocean (E), South Carolina and Georgia (S), Tennessee (W), and Virginia (N). Facts and Figures Area, 52,586 sq mi (136,198 sq km). Pop. to impact our financial results during 2001. Our operating performance during this quarter was in line with guidance previously given," said Gregory A. Serrao, Chief Executive Officer. "We have now narrowed the challenges related to the contract terminations Defense procurement: the cessation or cancellation, in whole or in part, of work under a prime contract or a subcontract thereunder for the convenience of, or at the option of, the government, or due to failure of the contractor to perform in accordance with the terms of the contract (default). to Arizona, and our Arizona affiliate is making numerous changes to address the contract losses," added Mr. Serrao. As a result, the Company has made several operational and managerial changes during the quarter and recorded $843,000 of non-recurring after-tax expenses related to these changes. Comparing the first quarter of 2001, excluding the non-recurring expenses, with the same period in 2000: --Net revenue grew to $38,096,000 from $34,130,000, an increase of 12%. --Earnings from operations increased to $3,438,000 from $3,430,000. --Net earnings decreased to $1,210,000 from $1,468,000. --Diluted net earnings per share decreased to $0.16 from $0.20. --Cash earnings per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share, calculated by adding back the after-tax impact of amortization of intangible assets Intangible Asset An asset that is not physical in nature. Notes: Examples are things like copyrights, patents, intellectual property, and goodwill. These are the opposite of tangible assets. , decreased to $0.25 from $0.27. Patient revenue during the quarter was $53,691,000. Same market revenue growth was 10% for the quarter excluding the affiliates whose operations were disrupted dis·rupt tr.v. dis·rupt·ed, dis·rupt·ing, dis·rupts 1. To throw into confusion or disorder: Protesters disrupted the candidate's speech. 2. by the contract terminations. Including the affiliates being impacted by the contract terminations, same market revenue growth was 8%. With the non-recurring expenses included in the first quarter results, earnings from operations was $1,964,000, net income was $367,000 and diluted earnings per share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of was $0.05. During the quarter, the Company and its affiliated dental groups in Arizona, Minnesota and North Carolina carefully assessed the potential impact of the contract terminations on their operations. Based on these assessments the Company and its Arizona affiliate decided to reduce physical capacity by closing selected practices and implemented an extensive marketing program designed specifically for its changing revenue mix. In addition, changes were made at the Company's various regional resource groups across the country simultaneous with closing its Phoenix regional resource group office. As a result, the Company expects to incur To become subject to and liable for; to have liabilities imposed by act or operation of law. Expenses are incurred, for example, when the legal obligation to pay them arises. An individual incurs a liability when a money judgment is rendered against him or her by a court. expenses in the amount of $1,474,000 ($843,000 net of tax benefit) related to these changes. While all of these expenses are non-recurring charges, pursuant to SEC Staff Accounting Bulletin 100, $1,004,000 of these expenses ($574,000 net of tax benefit) may be disclosed separately in the Company's consolidated statement of operations See Income statement. while $470,000 of these expenses ($269,000 net of tax benefit) must be included in the normal line item disclosure of the Company's consolidated statement of operations. A pro forma As a matter of form or for the sake of form. Used to describe accounting, financial, and other statements or conclusions based upon assumed or anticipated facts. The phrase pro forma disclosure excluding all of the non-recurring expenses has been provided in order to provide a better understanding of the underlying financial performance of the Company. "During the quarter, we helped Park Dental, Associated Dental Care Providers and University Dental Associates review proposed terms for new contracts with Cigna Dental and Protective Life. Ultimately, these affiliates chose not to continue as participants in the dental plans offered by Cigna Dental and Protective Life," said Mr. Serrao. "These contract terminations are expected to have minimal long term impact on Park Dental and University Dental Associates, and in fact, we believe the revenue impact on all three affiliates will be far less than the revenue numbers previously disclosed would suggest. Nevertheless, given that several of Associated Dental's Phoenix facilities were acquired from Cigna Dental and previously operated by Cigna as staff model dental practices Noun 1. dental practice - the practice of dentistry practice - the exercise of a profession; "the practice of the law"; "I took over his practice when he retired" , the group's financial performance was heavily dependent upon its contract with Cigna. As a result, Associated Dental has taken decisive action to bring its costs in line with expected financial performance, and American Dental Partners has made various changes to its management structure as well. We remain committed to Associated Dental Care, and the long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. potential of our Arizona affiliate remains strong given the very attractive economic and demographic growth trends of the Tucson and Phoenix markets. We believe that the decisions made during the quarter will improve the financial soundness of this affiliate and American Dental Partners," concluded Mr. Serrao. For further discussion of these events and a comprehensive review of the first quarter for the period ending March 31, 2001, the Company will host a conference call on Tuesday, May 8, 2001 at 10:00 a.m. EST EST electroshock therapy. EST abbr. electroshock therapy , which will be broadcast live over the Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the at www.amdpi.com. The call will be hosted by Gregory A. Serrao, Chairman, President and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. . To access the webcast, participants should visit the Investor Relations Investor relations The process by which the corporation communicates with its investors. section of the website at least fifteen minutes prior to the start of the conference call to download To receive a file transmitted over a network. In any communications session, "download" means receive, and "upload" means send. The download/upload often implies a big/little scenario, in which data is being downloaded from the "big" server into the "little" user's computer. 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. EST P.M. also p.m. or p.m. abbr. post meridiem Usage Note: By definition, 12 a.m. Friday, May 11, 2001. American Dental Partners, Inc. is one of the nation's leading business partners to group dental practices. The Company is affiliated with 19 dental groups and operates 154 dental facilities with approximately 1,400 operatories located in 14 states. Note: Some of the information in this press release contains "forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. " within the meaning of the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and 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 its affiliated dental groups' contracts with third party payors and the impact of any terminations or potential terminations of such contracts, the cost of and access to capital, the tight labor markets labor market A place where labor is exchanged for wages; an LM is defined by geography, education and technical expertise, occupation, licensure or certification requirements, and job experience , the Company's acquisition and affiliation strategy, management of rapid growth, dependence upon affiliated dental groups, dependence upon service agreements and government regulation of the dental industry. Additional risks, uncertainties and other factors are set forth in the "Risk Factors" section of the Company's Registration Statement on Form S-4 (File No. 333-56941).
AMERICAN DENTAL PARTNERS, INC.
FINANCIAL HIGHLIGHTS
(in thousands, except per share amounts)
(unaudited)
Three Months Ended
March 31,
Pro Forma Actual
2001 2001 2000
Net revenue $38,096 $38,096 $34,130
Operating expenses:
Salaries and benefits 18,027 18,027 16,460
Lab fees and dental supplies 5,844 5,844 4,900
Office occupancy 4,044 4,044 3,374
Other operating expenses 2,997 3,175 2,697
General corporate expenses 1,541 1,833 1,414
Special charges -- 1,004 --
Depreciation 1,310 1,310 1,082
Amortization of intangibles assets 895 895 773
Total operating expenses 34,658 36,132 30,700
Earnings from operations 3,438 1,964 3,430
Interest expense, net 1,287 1,287 846
Earnings before income taxes 2,151 677 2,584
Income taxes 941 310 1,116
Net earnings $ 1,210 $ 367 $ 1,468
Net earnings per common share:
Basic $ 0.17 $ 0.05 $ 0.21
Diluted $ 0.16 $ 0.05 $ 0.20
Weighted average common
shares outstanding:
Basic 7,179 7,179 7,125
Diluted 7,405 7,405 7,325
AMERICAN DENTAL PARTNERS, INC.
FINANCIAL HIGHLIGHTS
(in thousands)
March 31, December 31,
2001 2000
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 359 $ 472
Receivables due from affiliated
dental groups 19,221 17,331
Other current assets 5,262 4,675
Total current assets 24,842 22,478
Property and equipment, net 28,852 27,840
Non-current assets:
Intangible assets, net 80,214 81,083
Other assets 1,138 1,182
Total non-current assets 81,352 82,265
Total assets $135,046 $132,583
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $ 17,135 $ 16,822
Current maturities of debt 1,593 1,593
Total current liabilities 18,728 18,415
Non-current liabilities:
Long-term debt 56,640 55,330
Other liabilities 354 352
Total non-current liabilities 56,994 55,682
Total liabilities 75,722 74,097
Stockholders' equity 59,324 58,486
Commitments and contingencies
Total liabilities and stockholders'
equity $135,046 $132,583
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