American Dental Partners, Inc. (American Dental Partners), a US-based provider of dental solutions, has reported net revenue of $291.1 million for the year 2008, compared with the net revenue of $278.7 million in the previous year-end. It has also reported net earnings of $30.1 million, or $2.29 per diluted share, for the year 2008, compared with the net loss of $7.7 million, or $0.61 loss per diluted share, in the previous year-end.
Comparing actual results and pro forma results for the fourth quarter of 2008 with the fourth quarter of 2007:
Net revenue was $65,110,000 as compared to $79,583,000. Pro forma net revenue was $65,110,000 as compared to $67,421,000.
Earnings from operations were $5,270,000 as compared to $(27,016,000). Pro forma earnings from operations were $5,429,000 as compared to $5,046,000.
Net earnings were $1,310,000 as compared to $(18,824,000). Pro forma net earnings were $1,407,000 as compared to $1,052,000.
Diluted net earnings per share were $0.10 as compared to $(1.47). Pro forma diluted net earnings per share were $0.11 as compared to $0.08.
Diluted cash net earnings per share were $0.21 as compared to $(1.36). Pro forma diluted cash net earnings per share were $0.21 as compared to $0.20.
Patient revenue of the company’s affiliated dental group practices was $99,073,000 for the quarter, which includes $93,227,000 from dental group practices which are affiliated with the company by means of service agreements and $5,846,000 from Arizona’s Tooth Doctor for Kids. Same market patient revenue growth was 0.6% for the quarter and (0.3)% excluding in-market affiliations. Patient revenue of the company’s affiliated dental group practices was $415,958,000 for the year, which includes $391,520,000 for dental group practices which are affiliated with the company by means of service agreements and $24,438,000 from Arizona’s Tooth Doctor for Kids. Same market patient growth was 5.6% for the year and 1.1% excluding in-market affiliations.
Cash flow from operations was $9,904,000 for the quarter and $38,561,000 for the year. Capital expenditures were $2,652,000 for the quarter and $11,984,000 for the year. The company relocated one dental facility during the quarter. During the year, the company completed four denovo facilities and expanded and/or relocated seven dental facilities. Amounts paid for affiliations and acquisitions, including contingent amounts and affiliation costs, amounted to $2,101,000 during the quarter and $15,557,000 for the year. The company completed five in-market affiliations during the quarter. During the year, the company completed one platform affiliation and seven in-market affiliations which were combined with existing platform affiliations in Wisconsin, New York, Tennessee and North Carolina. Affiliations generated around $2,300,000 of patient revenue from date of affiliation and are expected to generate patient revenue of around $5,300,000 on an annualized basis.
The company recognized $450,000 in stock-based compensation expense, $275,000 net of tax or $.02 per diluted share, during the quarter as compared to $464,000, $289,000 net of tax or $.02 per diluted share, for the prior year’s same quarter. The company recognized $1,961,000 in stock-based compensation expense, $1,196,000 net of tax or $.09 per diluted share, during the year as compared to $1,898,000, $1,158,000 net of tax or $.09 per diluted share, for the prior year.
PDG Litigation Settlement Accounting
As reported earlier, the company completed the settlement of the litigation with PDG effective February 29, 2008 which included transferring the operating assets of 25 dental facilities to PDG and entering into a transition services agreement with PDG in which the company was obligated to provide interim management services to PDG through September 30, 2008. The company has concluded the transition services agreement and received the related $19 million fee, and the parties are completing the final steps in the separation of the companies.
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.