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Advantage Dental &DentaQuestApril 20, 2016
Introductions DentaQuest– Todd R. Cruse, President, DentaQuest Care Group– James P. Hawkins, Vice President & Deputy GeneralCounsel Advantage Dental– R. Mike Shirtcliff, DMD, President & Founder– Thomas S. Tucker, DMD, CEO2
Advantage Mission Statement “To provide service, leadership, and access to dentalcare in our communities in a sustainable,entrepreneurial, and professional manner.”
COMPANY HISTORY AND TIMELINEADVANTAGE COMPANY TIMELINEAdvantage sells itsRoseburg Dentalcommercial insurance(now Advantagebook of business toDental) was formedPacificSource, withas a for-profit dentalThe Company startsInsurance Divisionmanagementcontracting with CCOs toapproval, and acquirescompany.offer Medicaid dentalThe Company obtained15 clinics.Advantage starts working services and developslicenses to sellwith healthcare entitiesADIN, its proprietarycommercial insuranceto form CCOs.IT platform.in Washington and IdahoThe Company addsand Advantage Dentalfour clinic locations.Plan, Inc., beganoffering its IndividualInsurance Plan.19941995RDS Dental obtained acertificate from the OregonInsurance Division toengage in the commercialdental insurance business.2003200920102011201320142016Advantage nowowns 42 clinicsserving patients inall 36 counties.The Company startsinvesting in EHR and ITsystem infrastructure.Advantage adds twoclinic locations.Advantage adds eightnew clinic locations.
COMPANY OVERVIEWADVANTAGE OVERVIEWThe Advantage brand is synonymous with quality care andcustomer service to dental patients.Dental Insurance BusinessExclusive1,150Exclusive Dental Provider Network forPacificSource Health Plan in Oregon,Idaho and Washington.Dental Services Business Advantage owns and operates 42 dental clinicsthroughout Oregon.Facility OverviewContracted dental providers acrossOregon, Idaho and Washington. 42 Company-ownedclinics Headquarters inRedmond, OregonCommercial Dental Insurance: Licensed insurer in Oregon, Idaho andWashington. Serves as dental network for PacificSource HealthPlans since 2009.HeadquartersEmployee Overview 67 Dentists 297 Clinic staff 106 Administrative
OUTREACH PROGRAMSADVANTAGE OUTREACH PROGRAMSOral Care EducationOutreach Program Available to childrenand parents in theclassroom setting andcommunityorganizationsthroughout the state More than 7,700children received adental hygiene examin one year“Everybody Brush"Project Community-widetoothpaste distributioncampaign Toothbrush andfluoridated toothpastedistribution toapproximately 23,000families in threecountiesAdvantage Smilesfor Kids (ASK) Non-profit created in2003 to improve thequality of life for lowincome, at-risk childrenby providing orthodonticservices to children inOregon, Idaho andWashington 60 Oregonorthodontists partnerwith ASK
Who is DentaQuest? 2nd Largest Oral Health Company in United Statesand 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 theOral Health of All ”7
Our Unique Structure8
DentaQuest Benefits Administration Serve 24 MILLIONmembers in 28 states Partner with nearly 100health plans and 9 stateagencies Dental and vision benefitsmanagement services Operation of 6 licensedinsurers, domiciled in 4states9
DentaQuest Care Group The DQCG Objective: To develop, manage and improvesystems for the delivery of quality health care tounderserved communities. Manages and operates 23 facilities in Alabama, Kentuckyand Texas providing quality dental and vision servicesprimarily to Medicaid members. Believes the integration of care and financing is the futureof oral health, particularly in government sponsoredhealth programs10
DentaQuest Institute (DQI)DQI Objective: Promote optimal oral health through efficient and effective careand preventionKnowledgeRoutine PracticeBasicResearchAppliedResearchDeveloping newknowledge on theetiology andepidemiology ofdiseaseTesting newprevention andtreatment methodsin clinical practiceThink TankCompiling,processing anddisseminatinginformation toinform practiceand ingclinical andprocess barriers tomake care moreefficient andeffectiveSupportingpractitioners inmaking practicechanges toimprove careDentaQuest Institute Approach11
DentaQuest Foundation (DQF) Largest oral health foundation in the country Invested nearly 17M this year National network reaching all 50 states Grantees in 30 ch) Strategic goals oriented around Oral Health 2020national 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 totaladjusted capital and an RBC ratio of 648%– DSM’s consolidated 2015 GAAP financials will showrevenue of 1.825B and net income of 42.5M– DentaQuest is putting an expanded 400M credit facility inplace and projects the outstanding balance to be 140Mpost-closing DentaQuest has the financial wherewithal to support anybusiness expansion opportunities or other capitalrequirements of the Advantage companies13
Other Financial Considerations Advantage Dental Plan, Inc. has more than adequatecapital and reserves for the small amount of businesson its books There are no current plans to expand the use ofAdvantage Dental Plan’s insurance license in Oregonor either of the other states in which it is licensed14
Major Transaction Components DentaQuest will acquire an 80% interest in AdvantageCommunity Holding, LLC (“Holding”) The remaining 20% will continue to be held byAdvantage Consolidated, LLC (“Consolidated”),which is owned by 300 Oregon dentists. Purchase Price eliminates all debt of the Advantagecompanies and returns equity to investors15
Other Transaction Details The purchase price and other financial terms of thetransaction are confidential.– The nominal purchase price will be paid in cash atclosing– Additional “earn out” payments may be made basedon certain earnings measures during the first 3 years16
ORGANIZATIONAL STRUCTUREADVANTAGE CURRENT ORGANIZATION STRUCTUREClass A (Oregon Dentists)andClass B (Oregon others)AdvantageConsolidated, LLCAdvantage Community HoldingCompany, LLCAdvantageLeveragedLenders, opertyManagement,LLCAdvantageClinicProperties, LLCLicensedhealth carecontractorAdvantageDentalPlan, Inc.AdvantageDentalServices, LLCAdvantageMember BenefitsCompany, LLCDentist ManagersAdvantageSupportServices, LLCAmericanFinancialServices, Inc.AdvantageEquipmentLeasing, LLCAdvantageConsultingServices, LLCAdvantageQALICBEntitiesAdvantageDentalClinics, LLCAdvantageDental SupportGroup, LLCAdvantageDentalGroup, PCWesternOregonAdvancedHealth, LLC(owns 6,000units)
DentaQuest Organization Structure18
Post-Closing Organization StructureClass A (Oregon Dentists)andClass B (Oregon others)1.2.Retains 20 percentinterestAppoints 2 managersof Holding Company1.DentaQuest Care GroupManagement, LLCAdvantageConsolidated, LLC2.Acquires 80 percentinterestAppoints 4 managersof Holding CompanyAdvantage CommunityHolding Company, LLCAdvantageLeveragedLenders, opertyManagement,LLCAdvantageClinicProperties, LLCLicensedhealth carecontractorAdvantageDentalPlan, Inc.AdvantageDentalServices, LLCAdvantageMember BenefitsCompany, LLCDentist ManagersAdvantageSupportServices, LLCAmericanFinancialServices, Inc.AdvantageEquipmentLeasing, LLCAdvantageConsultingServices, LLCAdvantageQALICBEntitiesAdvantageDentalClinics, LLCAdvantageDental SupportGroup, LLCAdvantageDentalGroup, PCWesternOregonAdvancedHealth, LLC(owns 6,000units)19
GOVERNANCE The Board of Directors of Holding will consist of 4DentaQuest representatives, holding 80% of the votingpower, and 2 Consolidated representatives, with 20% ofthe 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 remainconsistent and will continue to run the business,including the operations of the insurance company.20
Impact of Advantage Transaction In Oregon:– No change anticipated in outreach programs– No change anticipated in Oregon patient services– No change in Advantage Dental Plan, Inc., as Oregonlicensed Health Care Services Contractor Outside Oregon:– Expand overall model into other state marketsleveraging the strengths of Advantage andDentaQuest21
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
