News

WAKEFIELD, MASSACHUSETTS - Feb 25, 2009 - American Dental Partners, Inc. (NASDAQ:ADPI) today announced financial results for the quarter and year ended December 31, 2008.

The Company’s financial results reflect income and expenses, including non-cash items, required by generally accepted accounting principles as a result of the previously announced settlement of litigation among PDG, P.A. (“PDG”), PDHC, Ltd., one of the Company’s subsidiaries, and the Company effective February 29, 2008. In addition to its actual results, the Company has provided a pro forma financial presentation that excludes the operating results of 25 dental facilities transferred to PDG on February 29, 2008 and the accounting impact associated with the litigation settlement from both periods of comparison (see “PDG Litigation Settlement Accounting” and “Supplemental Operating Data” tables).

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.

Comparing actual results and pro forma results for the twelve months of 2008 with the same period in 2007:

• Net revenue was $291,108,000 as compared to $278,755,000. Pro forma net revenue was $273,411,000 as compared to $230,011,000.
• Earnings from operations were $60,190,000 as compared to $(6,354,000). Pro forma earnings from operations were $21,526,000 as compared to $20,433,000.
• Net earnings were $30,118,000 as compared to $(7,716,000). Pro forma net earnings were $6,528,000 as compared to $8,992,000.
• Diluted net earnings per share were $2.29 as compared to $(0.61). Pro forma diluted net earnings per share were $0.50 as compared to $0.68.
• Diluted cash net earnings per share were $2.71 as compared to $(0.27). Pro forma diluted cash net earnings per share were $0.91 as compared to $1.00.

Operating Results

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 approximately $2,300,000 of patient revenue from date of affiliation and are expected to generate patient revenue of approximately $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 previously reported, 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.

For further discussion of these events and a comprehensive review of the fourth quarter and year ended December 31, 2008, the Company will host its previously announced conference call on Thursday, February 26, 2009 at 10:00 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 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 approximately two hours after the call through 6:00 p.m. EST, Thursday, March 5, 2009.

American Dental Partners is one of the nation's leading business partners to dental group practices. The Company is affiliated with 25 dental group practices which have 241 dental facilities with approximately 2,107 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, settlements or judgments of pending litigation, 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, 2007.