Advantage Dental & DentaQuest April 20, 2016
Introductions • DentaQuest – Todd R. Cruse, President, DentaQuest Care Group – James P. Hawkins, Vice President & Deputy General Counsel • Advantage Dental – R. Mike Shirtcliff, DMD, President & Founder – Thomas S. Tucker, DMD, CEO 2
Advantage Mission Statement • “To provide de s service ce, l leade dershi hip, p, a and d access t to dent ental care i e in ou our communities i in n a s sustaina nabl ble, entrep epren eneu eurial, , and d profe fessional m manner.”
COMPANY HISTORY AND TIMELINE ADVANTAGE COMPANY TIMELINE Advantage sells its Roseburg Dental commercial insurance (now Advantage book of business to Dental) was formed PacificSource, with as a for-profit dental The Company starts Insurance Division management contracting with CCOs to approval, and acquires company. offer Medicaid dental The Company obtained 15 clinics. Advantage starts working services and develops licenses to sell with healthcare entities ADIN, its proprietary commercial insurance to form CCOs. IT platform. in Washington and Idaho The Company adds and Advantage Dental four clinic locations . Plan, Inc., began offering its Individual Insurance Plan. 1994 1995 2003 2009 2010 2011 2013 2014 2016 Advantage now owns 42 clinics RDS Dental obtained a serving patients in certificate from the Oregon all 36 counties. Insurance Division to engage in the commercial The Company starts Advantage adds eight dental insurance business. investing in EHR and IT new clinic locations. system infrastructure. Advantage adds two clinic locations.
COMPANY OVERVIEW ADVANTAGE OVERVIEW The Advantage brand is synonymous with quality care and customer service to dental patients . Dental Insurance Business Dental Services Business Exclusive Exclusive Dental Provider Network for Advantage owns and operates 42 dental clinics throughout Oregon. PacificSource Health Plan in Oregon, Idaho and Washington. Facility Overview Contracted dental providers across 1,150 Oregon, Idaho and Washington. 42 Company-owned clinics Headquarters in Redmond, Oregon Commercial Dental Insurance: Licensed insurer in Oregon, Idaho and Employee Overview Headquarters Washington. Serves as dental network for PacificSource Health 67 Dentists Plans since 2009. 297 Clinic staff 106 Administrative
OUTREACH PROGRAMS ADVANTAGE OUTREACH PROGRAMS Oral Care Education “Everybody Brush" Advantage Smiles Outreach Program Project for Kids (ASK) Available to children Community-wide Non-profit created in and parents in the toothpaste distribution 2003 to improve the classroom setting and campaign quality of life for low- community income, at-risk children Toothbrush and organizations by providing orthodontic fluoridated toothpaste throughout the state services to children in distribution to Oregon, Idaho and More than 7,700 approximately 23,000 Washington children received a families in three 60 Oregon dental hygiene exam counties in one year orthodontists partner with ASK
Who is DentaQuest? • 2 nd Largest Oral Health Company in United States and the largest in the Medicaid space • Massachusetts non profit at the top of organization – Dental Service of Massachusetts, Inc. (DSM), chartered in 1966 • Our business is driven by our Mission – “ Improve the Oral Health of All ” 7
Our Unique Structure 8
DentaQuest Benefits Administration • Serve 24+ MILLION members in 28 states • Partner with nearly 100 health plans and 9 state agencies • Dental and vision benefits management services • Operation of 6 licensed insurers, domiciled in 4 states 9
DentaQuest Care Group • The DQCG Objective: To develop, manage and improve systems for the delivery of quality health care to underserved communities. • Manages and operates 23 facilities in Alabama, Kentucky and Texas providing quality dental and vision services primarily to Medicaid members. • Believes the integration of care and financing is the future of oral health, particularly in government sponsored health programs 10
DentaQuest Institute (DQI) DQI Objective: Promote optimal oral health through efficient and effective care and prevention Knowledge Routine Practice Basic Applied Think Tank Quality Technical Research Compiling, Research Improvement Assistance Testing new processing and Developing new Overcoming Supporting prevention and disseminating knowledge on the clinical and practitioners in treatment methods information to etiology and process barriers to making practice in clinical practice inform practice epidemiology of make care more changes to and policy disease efficient and improve care effective DentaQuest Institute Approach 11
DentaQuest Foundation (DQF) • Largest oral health foundation in the country • Invested nearly $17M this year • National network reaching all 50 states • Grantees in 30+ states ( http://dentaquestfoundation.org/impact/search ) • Strategic goals oriented around Oral Health 2020 national initiative
DentaQuest Financial Strength • DentaQuest is very strong financially – As of 12/31/15, DSM’s annual statement showed assets of $533M, with $408M in admitted assets, $352M of total adjusted capital and an RBC ratio of 648% – DSM’s consolidated 2015 GAAP financials will show revenue of $1.825B and net income of $42.5M – DentaQuest is putting an expanded $400M credit facility in place and projects the outstanding balance to be ~$140M post-closing • DentaQuest has the financial wherewithal to support any business expansion opportunities or other capital requirements of the Advantage companies 13
Other Financial Considerations • Advantage Dental Plan, Inc. has more than adequate capital and reserves for the small amount of business on its books • There are no current plans to expand the use of Advantage Dental Plan’s insurance license in Oregon or either of the other states in which it is licensed 14
Major Transaction Components • DentaQuest will acquire an 80% interest in Advantage Community Holding, LLC (“Holding”) • The remaining 20% will continue to be held by Advantage Consolidated, LLC (“Consolidated”), which is owned by ~300 Oregon dentists. • Purchase Price eliminates all debt of the Advantage companies and returns equity to investors 15
Other Transaction Details • The purchase price and other financial terms of the transaction are confidential. – The nominal purchase price will be paid in cash at closing – Additional “earn out” payments may be made based on certain earnings measures during the first 3 years 16
ORGANIZATIONAL STRUCTURE ADVANTAGE CURRENT ORGANIZATION STRUCTURE Class A (Oregon Dentists) and Class B (Oregon others) Advantage Consolidated, LLC Advantage Community Holding Dentist Managers Company, LLC Advantage Advantage Advantage Advantage Advantage Advantage Advantage Advantage Advantage Professional Property Leveraged Dental Dental Dental Support Equipment Dental Management, Management, Plan, Inc. Services, LLC Lenders, Inc. Group, PC Services, LLC Leasing, LLC Clinics, LLC LLC LLC Western Advantage American Advantage Advantage Advantage Oregon Member Benefits Financial Consulting Dental Support Clinic Advanced Company, LLC Services, Inc. Services, LLC Group, LLC Properties, LLC Health, LLC (owns 6,000 units) Advantage Licensed QALICB health care Entities contractor
DentaQuest Organization Structure 18
Post-Closing Organization Structure Class A (Oregon Dentists) and Class B (Oregon others) 1. 1. Retai ains 2 s 20 percent 1. 1. Acquires 8 80 p percent inter eres est inter eres est DentaQuest Care Group Advantage 2. 2. Appoints 2 2 managers s 2. 2. Appoints 4 4 m manag agers Management, LLC Consolidated, LLC of H Holding C Compan any of H Holding Compan any Advantage Community Dentist Managers Holding Company, LLC Advantage Advantage Advantage Advantage Advantage Advantage Advantage Advantage Advantage Professional Property Leveraged Dental Dental Dental Support Equipment Dental Management, Management, Plan, Inc. Services, LLC Lenders, Inc. Group, PC Services, LLC Leasing, LLC Clinics, LLC LLC LLC Western Advantage American Advantage Advantage Advantage Oregon Member Benefits Financial Consulting Dental Support Clinic Advanced Company, LLC Services, Inc. Services, LLC Group, LLC Properties, LLC Health, LLC (owns 6,000 units) Advantage Licensed QALICB health care Entities contractor 19
GOVERNANCE • The Board of Directors of Holding will consist of 4 DentaQuest representatives, holding 80% of the voting power, and 2 Consolidated representatives, with 20% of the voting power. • The directors and officers of Advantage Dental Plan, Inc. will consist of 3 DentaQuest representatives: Todd R. Cruse – Director and President James Hawkins – Director and Secretary James Collins – Director and Treasurer • The management team at Advantage will remain consistent and will continue to run the business, including the operations of the insurance company. 20
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