AMERICAN DENTAL PARTNERS INC, S-1/A, 1998-01-30

AMERICAN DENTAL PARTNERS INC
S-1/A, 1998-01-30
MISC HEALTH & ALLIED SERVICES, NEC

Previous: STATE FARM LIFE INSURANCE CO VARIABLE LIFE SEPARATE ACCOUNT, S-6/A, 1998-01-30

Next: COMPOSITE AUTOMOBILE RESEARCH LTD, 10SB12G, 1998-01-30

<PAGE>

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 30, 1998

REGISTRATION STATEMENT NO. 333-39981

- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

--------------

AMENDMENT NO. 2
TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

--------------
AMERICAN DENTAL PARTNERS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

DELAWARE 8099 04-3297858
(STATE OR OTHER (PRIMARY STANDARD (I.R.S. EMPLOYER
JURISDICTION OF INDUSTRIAL IDENTIFICATION NO.)
INCORPORATION OR CLASSIFICATION CODE
ORGANIZATION) NUMBER)

--------------

301 EDGEWATER PLACE, SUITE 320
WAKEFIELD, MASSACHUSETTS 01880
(781) 224-0880
(781) 224-4216 (FAX)
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)

--------------

GREGORY A. SERRAO
CHAIRMAN, PRESIDENT AND CHIEF EXECUTIVE OFFICER
AMERICAN DENTAL PARTNERS, INC.
301 EDGEWATER PLACE, SUITE 320
WAKEFIELD, MASSACHUSETTS 01880
(781) 224-0880
(781) 224-4216 (FAX)
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)

--------------

COPIES TO:
GARY A. WADMAN, ESQ. KEITH F. HIGGINS, ESQ.
BAKER & HOSTETLER LLP ROPES & GRAY
65 EAST STATE STREET ONE INTERNATIONAL PLACE
COLUMBUS, OHIO 43215 BOSTON, MASSACHUSETTS 02110-2624
(614) 228-1541 (617) 951-7000
(614) 462-2616 (FAX) (617) 951-7050 (FAX)

--------------

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective.

If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act,
check the following box. [_]

If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]

If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act of 1933, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. [_]

If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]

If delivery of the prospectus is expected to be made pursuant to Rule 434,
check the following box. [_]

--------------

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO
SECTION 8(A), MAY DETERMINE.

- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>

++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF +
+ANY SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION

JANUARY 30, 1998

2,000,000 Shares

[AMERICAN DENTAL PARTNERS LOGO]

Common Stock

--------

All of the shares of Common Stock offered hereby are being sold by American
Dental Partners, Inc. ("ADP" or the "Company"). Prior to this offering, there
has been no public market for the Common Stock of the Company. It is currently
estimated that the initial public offering price will be between $15.00 and
$17.00 per share. See "Underwriting" for a discussion of the factors to be
considered in determining the initial public offering price. The Common Stock
has been approved for quotation on the Nasdaq National Market under the symbol
"ADPI."

--------

THE COMMON STOCK OFFERED HEREBY INVOLVES A HIGH DEGREE OF RISK.
SEE "RISK FACTORS" BEGINNING ON PAGE 6.

--------

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRICE UNDERWRITING PROCEEDS
TO DISCOUNTS AND TO
PUBLIC COMMISSIONS(1) COMPANY(2)
- ------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Share............. $ $ $
- ------------------------------------------------------------------------------
Total(3).............. $ $ $
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

(1) The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended. See "Underwriting."
(2) Before deducting expenses estimated at $1,000,000, payable by the Company.
(3) The Company has granted to the Underwriters a 30-day option to purchase up
to 300,000 additional shares of Common Stock solely to cover over-
allotments, if any. To the extent the option is exercised, the Underwriters
will offer the shares at the Price to Public shown above. If all such
shares are purchased, the total Price to Public, Underwriting Discounts and
Commissions and Proceeds to Company will be $ , $ , and $ ,
respectively. See "Underwriting."

--------

The shares of Common Stock are offered by the several Underwriters named
herein, subject to prior sale, when, as and if delivered and accepted by them,
and subject to their right to reject orders in whole or in part. It is expected
that delivery of certificates for such shares of Common Stock will be made at
the offices of BT Alex. Brown Incorporated in Baltimore, Maryland on or about
, 1998.

BT ALEX. BROWN
BANCAMERICA ROBERTSON STEPHENS
PIPER JAFFRAY INC.

THE DATE OF THIS PROSPECTUS IS , 1998.
<PAGE>

SINCE ITS INCEPTION THROUGH JANUARY 30, 1998, THE COMPANY HAS COMPLETED
AFFILIATIONS WITH TEN DENTAL GROUP PRACTICES AND CURRENTLY OPERATES 83 DENTAL
FACILITIES WITH 619 OPERATORIES IN SIX STATES. THE COMPANY ACQUIRES
SUBSTANTIALLY ALL THE ASSETS OF THE DENTAL PRACTICES WITH WHICH IT AFFILIATES,
EXCEPT THOSE REQUIRED BY LAW TO BE OWNED OR MAINTAINED BY DENTISTS, AND ENTERS
INTO LONG-TERM SERVICE AGREEMENTS WITH THE AFFILIATED DENTAL PRACTICES.

[A two-colored map of the United States displaying by separate color the states
in which the Company has dental facilities and in which the Company has its
corporate offices, and indicating within each state the metropolitan statistical
areas in which the Company operates, as well as the Company's corporate office,
along with a textual identification of each.]

The Company's corporate office is located at 301 Edgewater Place, Suite 320,
Wakefield, Massachusetts, 01880. Its telephone number is (781) 224-0880.

THE UNDERWRITERS AND CERTAIN OTHER PERSONS PARTICIPATING IN THIS OFFERING MAY
ENGAGE IN TRANSACTIONS THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE MARKET
PRICE OF THE COMMON STOCK, INCLUDING OVER-ALLOTMENT, STABILIZING AND SHORT-
COVERING TRANSACTIONS AND THE IMPOSITION OF PENALTY BIDS. FOR A DESCRIPTION OF
THESE ACTIVITIES, SEE "UNDERWRITING."
<PAGE>

PROSPECTUS SUMMARY

The following summary is qualified in its entirety by the more detailed
information and consolidated financial statements, including the notes thereto,
appearing elsewhere in this Prospectus.

THE COMPANY

American Dental Partners, Inc. is a leading provider of dental practice
management services to multi-disciplinary dental group practices in attractive
markets in the United States. The Company seeks to affiliate with leading
dental groups that provide a comprehensive range of dental care services, have
outstanding reputations for quality and have proven records of financial
performance. Since its inception through January 30, 1998, the Company has
successfully completed affiliations with ten dental group practices and
currently operates 83 dental facilities with 619 operatories in six states. The
Company's rapid growth has resulted primarily from these affiliations, which
consisted of three dental group practice affiliations completed in 1996, six
dental group practice affiliations completed in 1997 and one dental group
practice affiliation completed in 1998.

The United States Health Care Financing Administration estimates that
expenditures for dental care were approximately $45.8 billion in 1995 and will
reach approximately $79.1 billion by 2005, representing a compound annual
growth rate of approximately 5.6%. The Company believes that the growth in
expenditures for dental care will continue to be driven by both increases in
costs and increases in demand for services due to: (i) improved dental benefits
offered by employers; (ii) increased availability and use of dental insurance,
including preferred provider organization ("PPO") plans and capitated managed
care plans; (iii) increased demand for dental care from an aging population;
and (iv) increased demand for cosmetic and preventative procedures. The Company
believes that this growth will benefit not only dentists, but companies that
provide services to the dental care industry, such as dental practice
management companies. However, the failure of any of the foregoing factors to
materialize could offset increases in demand for dental care, and any such
increases may not correlate with growth in the Company's business.

The delivery of dental care in the United States is highly fragmented. Unlike
many other sectors of the health care services industry, the dental care
industry is in the early stages of consolidation. Although dental care is
typically offered by solo practioners, the trend toward group practice is
growing. According to the American Dental Association, in 1995, 11.8% of the
approximately 153,300 dentists in the United States were practicing in groups
of three or more, up from 4.1% in 1991. The Company believes that this
consolidation trend will continue and that dental group practices will seek to
affiliate with entities, such as the Company, that: (i) allow dentists to focus
on the clinical aspects of dentistry by providing management resources to
conduct the business and administrative aspects of dentistry; (ii) provide
information and operating systems that are required to effectively operate in
an increasingly complex reimbursement environment; (iii) assist with third-
party contracting; (iv) realize economies of scale in purchasing and provide
access to capital; and (v) provide dentists the opportunity to realize value
for their practices.

The Company's affiliation model is designed to create a partnership in
management between the Company and the affiliated dental group practice that
allows each party to maximize its strengths and retain its autonomy. When
affiliating with a dental group practice, the Company acquires substantially
all of its assets and enters into a long-term service agreement to manage the
non-clinical aspects of the dental operations. The Company supports its
affiliated dental group practices with a broad range of services designed to
enhance practice revenue, improve operating efficiencies and expand operating
margins. The Company shares the best practices of its network with each
affiliate and provides assistance with information systems, budgeting,
financial reporting, facilities management, third-party payor contracting,
supplies and equipment procurement, quality assurance initiatives, billing and
collecting accounts receivable, marketing and recruiting, hiring and training
support staff.

The Company's objective is to be the leading dental practice management
company in the United States. The Company's strategy for achieving this
objective is to: (i) expand into carefully selected and diverse geographic
markets which have favorable demographics and projected economic growth; (ii)
affiliate with leading dental group practices which have reputations for
quality care and proven records of financial performance; (iii) increase market
penetration in each of its markets through additional affiliations, recruitment
of dentists and new facility development; (iv) add value to each affiliated
dental group practice by assisting the practice in improving operating
performance; and (v) pursue various initiatives to help its affiliates provide
the highest quality of care and service.

3
<PAGE>

THE OFFERING

<TABLE>
<C> <S>
Common Stock offered by the Company................ 2,000,000 shares
Common Stock to be outstanding after the offering.. 6,829,012 shares(1)(2)
Use of proceeds.................................... To redeem the Company's Series B Redeemable
Preferred Stock, to repay certain indebtedness
and for general corporate purposes, including
acquisitions. See "Use of Proceeds."
Nasdaq National Market symbol...................... ADPI
</TABLE>
- --------

(1) Based on shares outstanding at January 30, 1998. Does not include 1,120,166
shares of Common Stock issuable upon the exercise of outstanding options
issued pursuant to the Company's stock option plans, at a weighted average
exercise price of $8.70 as of such date.

(2) After completion of this offering, executive officers and directors of the
Company as a group will own approximately 50.8% of the outstanding shares
of Common Stock and dentists affiliated with the Company's affiliated
dental group practices will beneficially own approximately 19.8% of the
outstanding shares of Common Stock. See "Risk Factors--Control by Existing
Stockholders" and "Principal Stockholders."

Unless otherwise indicated, the term "Company" includes American Dental
Partners, Inc. and (i) its management service organization ("MSO") subsidiaries
and (ii) its wholly-owned subsidiary Orthocare, Ltd. The term "PC" means the
dental professional corporation or other professional entity formed by the
dentists of the affiliating dental group practice. The Company does not own or
control the PCs and, accordingly, does not consolidate the financial statements
of the PCs with those of the Company.

Unless otherwise indicated, all references in this Prospectus: (i) assume no
exercise of the Underwriters' over-allotment option; (ii) assume conversion of
the Company's outstanding shares of Series A Convertible Preferred Stock, $0.01
par value (the "Series A Convertible Preferred Stock"), into 2,400,000 shares
of Common Stock upon completion of this offering; (iii) assume redemption of
the Company's outstanding Series B Redeemable Preferred Stock, $0.01 par value
(the "Series B Redeemable Preferred Stock"), upon completion of this offering;
and (iv) give effect to the 6-for-1 stock split effected in the form of a stock
dividend on November 7, 1997.

4
<PAGE>

SUMMARY HISTORICAL AND PRO FORMA CONSOLIDATED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE AND STATISTICAL DATA)

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, NINE MONTHS ENDED SEPTEMBER 30,
---------------------------------------------------------------------------------
PRO FORMA PRO FORMA
ACTUAL AS ADJUSTED ACTUAL AS ADJUSTED
----------- ----------------------------------- ---------------------
1996 1996(1)(2) 1996 1997 1996(1)(2) 1997(2)(3)
----------- --------------------- ------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
DATA:
Net revenue............ $ 3,933 $ 54,924 $ -- $36,620 $40,390 $46,862
Operating expenses..... 6,414 53,476 1,528 35,590 39,336 44,028
Earnings (loss) from
operations............ (2,481) 1,488 (1,528) 1,030 1,054 2,834
Interest expense
(income), net......... (38) 543 (14) 195 407 366
Earnings (loss) before
income taxes.......... (2,443) 905 (1,514) 835 647 2,468
Income taxes........... -- 367 -- 81 262 1,000
Net earnings (loss).... (2,443) 538 (1,514) 754 385 1,468
Net earnings (loss) per
common share.......... $ (0.55) (/4/) $ 0.08 $(0.33)(/4/) $ 0.07(/4/) $ 0.06 $ 0.22
Weighted average common
shares outstanding ... 4,625 6,567 4,606 5,025 6,553 6,606
</TABLE>

<TABLE>
<CAPTION>
SEPTEMBER 30, 1997
-----------------------------------
PRO FORMA
ACTUAL PRO FORMA(5) AS ADJUSTED(6)
------- ------------ --------------
<S> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents................. $ 2,459 $ 1,853 $9,467
Working capital........................... 743 (1,362) 6,181
Total assets.............................. 28,293 44,383 51,926
Long-term debt, excluding current
maturities............................... 5,490 18,790 5,090
Redeemable and convertible preferred
stock.................................... 16,000 16,000 --
Total stockholders' equity................ 213 1,201 38,444
</TABLE>

<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
---------------- -------------------------------
PRO FORMA PRO FORMA
ACTUAL AS ADJUSTED ACTUAL AS ADJUSTED
------ ----------- --------- ---------------------
1996 1996(1)(2) 1996 1997 1996(1)(2) 1997(2)(3)
------ ----------- ---- ---- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
STATISTICAL DATA (END OF
PERIOD):
Number of dental
facilities................ 42 71 -- 59 71 77
Number of
operatories(/7/).......... 331 523 -- 471 523 554
Number of affiliated
dentists(/8/)............. 128 n/a -- 148 n/a 165
</TABLE>
- --------
The following footnotes should be read in conjunction with the information
under "The Company," "Use of Proceeds," "Capitalization," "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
Unaudited Pro Forma Consolidated Financial Information.

(1) Gives effect to (i) the 1996 Transactions and (ii) the 1997 Transactions,
including those transactions completed subsequent to September 30, 1997, as
if they had been completed on January 1, 1996.
(2) Gives effect to the sale of 1,506,000 shares of Common Stock as if it had
been completed on January 1, 1996, at an assumed initial public offering
price of $16.00 per share and the application of the estimated net proceeds
therefrom to redeem the Series B Redeemable Preferred Stock, to reduce debt
and the associated interest expense and to adjust taxes.
(3) Gives effect to the 1997 Transactions, including those transactions
completed subsequent to September 30, 1997, as if they had been completed
on January 1, 1996
(4) Computed on the basis described in Note 2 to the Company's Consolidated
Financial Statements.
(5) Gives effect to the 1997 Transactions completed subsequent to September 30,
1997, as if they occurred on September 30, 1997.
(6) Gives effect to the conversion of the Series A Convertible Preferred Stock
into 2,400,000 shares of Common Stock and the completion of this offering
at an assumed initial public offering price of $16.00 per share and the
receipt and application of the estimated net proceeds therefrom, as if such
events occurred on September 30, 1997.
(7) An operatory is an area where dental care is performed and generally
contains a dental chair, a hand piece delivery system and other essential
dental equipment.
(8) Includes full-time general dentists employed by the PCs and full-time
specialists, some of whom are independent contractors to the PCs.

5
<PAGE>

RISK FACTORS

An investment in the Common Stock offered hereby involves a high degree of
risk. Prospective investors should carefully consider the following risk
factors, in addition to other information contained in this Prospectus, before
purchasing the securities offered hereby. This Prospectus contains forward-
looking statements. Prospective investors are cautioned that any such forward-
looking statements are not guarantees of future performance and involve risks
and uncertainties. Actual events or results may differ materially from those
discussed in the forward-looking statements, including the risk factors set
forth below and the matters set forth in this Prospectus generally.

LIMITED OPERATING HISTORY; 1996 OPERATING LOSS

The Company was formed in December 1995, commenced operations in January
1996 and began engaging in dental practice management operations in November
1996, concurrent with the completion of its first dental practice affiliation.
The Company experienced an operating loss in 1996. Although the Company was
profitable for the first three quarters of 1997, there can be no assurance
that the Company will be able to sustain profitable operations.

RISKS ASSOCIATED WITH ACQUISITION STRATEGY

The Company's strategy includes expansion through affiliations with dental
practices in new and existing markets and the expansion of such affiliated
practices. Affiliations involve numerous risks, including failure to retain
key personnel and contracts of the affiliated practices and the inability to
integrate businesses without material disruption. In addition, the Company
competes with other dental practice management companies which have a similar
strategy, some of which may have greater financial resources and a longer
operating history than the Company. Competition for affiliations may intensify
due to ongoing consolidation in the dental care services industry, which may
substantially increase the costs associated with completing affiliation
transactions. There can be no assurance that any future affiliations will be
successfully integrated into the Company's operations, that competition for
affiliations will not intensify or that the Company will be able to complete
such affiliations on acceptable terms and conditions. In addition, the costs
of unsuccessful affiliation efforts may adversely affect the Company's
business, financial condition or results of operations.

The Company devotes substantial time and resources to affiliation-related
activities. Identifying appropriate affiliation candidates and negotiating and
consummating affiliations with dental practices can be a lengthy, complex and
costly process. The success of the Company's expansion strategy will depend on
a number of factors, including the Company's ability to identify and affiliate
with quality dental practices in suitable markets and regulatory constraints.
There can be no assurance that the Company's affiliation strategy will be
successful or that modifications to its strategy will not be required.

MANAGEMENT OF RAPID GROWTH

The Company has experienced substantial growth in a relatively short period
of time, primarily because of affiliations with existing dental practices.
This growth has placed, and will continue to place, significant demands upon
the Company's management, operations and systems. The Company's ability to
manage its growth effectively will depend upon its ability to hire, train and
assimilate additional management and other employees and its ability to
expand, improve and effectively utilize its accounting and finance, management
and operating systems in order to accommodate its expanded operations. A
failure by the Company's management to anticipate, implement and manage
effectively the changes required to sustain the Company's growth could have a
material adverse effect on the Company's business, financial condition and
results of operations.

DEPENDENCE UPON AFFILIATED DENTAL GROUP PRACTICES

The Company's revenue will depend on revenue generated by dental group
practices with which the Company affiliates. The Company does not employ
dentists or control the clinical practices of the dental groups

6
<PAGE>

with which it affiliates. There can be no assurance that dental group
practices with which the Company affiliates will maintain successful dental
practices or that any of the key members of a particular dental group practice
will continue practicing with that group. A shortage of available dentists
could have a material adverse effect on the Company's expansion opportunities.
To the extent permitted by state law, each PC has entered into non-competition
agreements and other restrictive covenants with the dentists employed by the
PC. There can be no assurance that these restrictive covenants are or will be
sufficient to protect the interests of the Company or the PC or that a court
would enforce such agreements. Any material loss of revenue by the affiliated
dental group practices, whether through the loss of existing dentists, the
inability to attract new dentists or otherwise, would have a material adverse
effect on the Company's business, financial condition and results of
operations.

DEPENDENCE UPON SERVICE AGREEMENTS

The Company is dependent upon the service agreements it has entered into
with each of its affiliated PCs for substantially all of its operating
revenue. Under the service agreements, the Company is responsible for
providing all services necessary for the administration of the non-clinical
aspects of the PCs' dental operations. The Company pays all expenses incurred
for these services. The Company is reimbursed for these expenses and also
receives fees for providing management services. A portion of these fees
typically includes a fixed monthly amount. The Company typically receives an
additional fee if certain operating objectives are achieved. The fees payable
to the Company are determined prior to each affiliation and annually
thereafter based on a formal budgeting process.

The Company's service agreements with two of its affiliated dental group
practices, Park Dental and Smileage Dental Care, represented approximately 47%
and 14%, respectively, of the Company's pro forma consolidated net revenue for
the nine months ended September 30, 1997. The termination of either of these
service agreements could have a material adverse effect on the Company.

Any material loss in revenue by one or more PCs (such as the loss of
contracts which provide for significant revenue or significant increases in
patient nonpayment) would have a material adverse effect on their ability to
reimburse the Company for expenses and to pay service fees. The failure to
receive such amounts could have a material adverse effect on the Company's
business, financial condition and results of operations. Furthermore, in the
event of a breach of a service agreement by a PC, there can be no assurance
that the remedies available to the Company under the service agreements will
be enforceable or will be adequate to compensate the Company for its damages
resulting from such breach.

GOVERNMENT REGULATION

The dental industry and dental practices are regulated extensively at the
state and federal levels. The laws of many states, including states where the
Company operates and anticipates operating, prohibit entities not wholly owned
or controlled by dentists from practicing dentistry (which in certain states
includes owning, managing or controlling the assets, equipment or offices used
in a dental practice), employing dentists and, in certain circumstances,
dental assistants and dental hygienists, or exercising control over the
provision of dental services. These laws also often regulate the content of
advertisements of dental services. The Company and its affiliated dental
practices are also subject to state and/or federal licensure, fraud and abuse,
anti-kickback, false claims, fee splitting, self-referral, antitrust and
safety and health laws and regulations. At the state level, many of these laws
and regulations vary widely. In addition, these laws and regulations are
enforced by federal and state regulatory authorities with broad discretion.
The Company does not, and does not intend to, control the practice of
dentistry by the affiliated dental group practices or their compliance with
the regulatory requirements directly applicable to dentists or the practice of
dentistry. However, there can be no assurance that any review of the Company's
business relationships, including the relationships of the Company with
affiliated dental group practices, by courts or other regulatory authorities,
will not result in determinations that could have a material adverse effect on
the operations of the Company, or that the laws and regulatory environment
will not change to restrict or limit the enforceability of the Company's
service agreements. The laws and regulations of certain states in which the
Company may seek to expand may require the Company to change its contractual
relationships with dental practices in a manner that may restrict the
Company's operations in those states or may prevent the Company from
affiliating with dental practices or providing comprehensive services to
dental

7
<PAGE>

practices in those states. To the extent that the Company or any affiliated
dental group practice contracts with third party payors, including self-
insured plans, on a capitated or other basis which causes the Company or such
affiliated dental group practice to assume a portion of the financial risk of
providing dental care, the Company or such affiliated dental group practice
may become subject to state insurance laws, in which case the Company may be
required to change the method of payment from third party payors or seek
appropriate licensure. Any regulation of the Company or its affiliated dental
group practices under insurance laws could have a material adverse effect on
the Company's business, financial condition and results of operations. See
"Business--Government Regulation."

NEED FOR ADDITIONAL FINANCING

The Company's ability to execute its business strategy depends to a
significant degree on its ability to obtain substantial capital to finance
future affiliations. To date, the Company has obtained financing through
private sales of Preferred and Common Stock and through its $30 million
revolving credit facility. The Company has historically used a combination of
cash, Common Stock and subordinated promissory notes as consideration in
affiliations with dental practices and intends to continue this practice.
However, the Company's ability to use its Common Stock and subordinated
promissory notes as consideration for future affiliations may be adversely
affected if the Common Stock fails to maintain a sufficient market value or if
the affiliation candidates are unwilling to accept the Company's subordinated
promissory notes. Furthermore, while funds are currently available under the
Company's revolving credit facility, the Company's ability to draw such funds
is subject to certain terms and conditions, and there can be no assurance that
the Company will be able to satisfy such terms and conditions. There can be no
assurance that any other financing will be available to the Company, or if
available, that such financing would be on terms favorable to the Company.

RISKS RELATED TO CAPITATED FEES AND OTHER THIRD PARTY ARRANGEMENTS

A significant portion of the payments for dental care is paid or reimbursed
under insurance programs ("third party payors"). While payor mix varies from
market to market, the aggregate payor mix percentage of the Company's
affiliated practices was approximately 36% fee-for-service (which includes
indemnity plans), 13% PPO plans and 51% capitated managed care plans for the
nine months ended September 30, 1997. Third party payors are continually
negotiating the prices charged for dental care, with a goal of lowering
reimbursement and utilization rates. Third party payors can also deny
reimbursement for dental care if they determine that a treatment was not
performed in accordance with treatment protocols established by such third
party payors or for other reasons. Loss of revenue by the Company's affiliated
dental group practices caused by cost containment efforts could have a
material adverse effect on the Company. Additionally, some third-party payor
contracts are capitated arrangements. Under such contracts, which are
typically terminable by either party on 30 to 90 days notice, the affiliated
dental group practice receives a capitated payment, calculated on a per member
per month basis, to provide care to the covered enrollees and generally
receives a co-payment at the time care is provided. Such payment methods shift
a portion of the risk of high costs of over-utilization from the third party
payor to the affiliated dental group practice and indirectly to the Company
through the possible reduction in expense reimbursement or service fees. To
the extent that patients or enrollees covered by certain third-party payor
contracts require more frequent or extensive care than is anticipated by the
affiliated dental group practices, the revenue to the affiliated dental group
practices derived from such contracts may be insufficient to cover the costs
of the services provided. There can be no assurance that the Company will be
able to negotiate satisfactory third-party payor arrangements on behalf of the
affiliated dental practices. Insufficient revenue under capitated contracts or
other agreements with third party payors could have a material adverse effect
on the Company's business, financial condition and results of operations.

POSSIBLE EXPOSURE TO PROFESSIONAL LIABILITY

The Company's affiliated dental practices provide dental care to the public
and could be exposed to the risk of professional liability and other claims.
Such claims, if successful, could result in substantial damages which could
exceed the limits of any applicable insurance coverage. It is possible that
such claims could be asserted against the Company as well as the affiliated
dental practices, that a claim brought against an affiliated dental group
practice or dentist could materially increase professional liability insurance
premiums of the affiliated

8
<PAGE>

dental group practice, or that fees to the Company from a dental group
practice could be adversely affected, if damages payable by that practice
exceed insurance coverage limits. The Company's service agreements require
that it be named as an additional insured party under the liability insurance
policy that each affiliated dental group is required to maintain. In addition,
the Company requires each affiliated dental group practice to indemnify the
Company for actions or omissions related to the delivery of dental care by
such affiliated dental group practice. However, a successful professional
liability claim against the Company or an affiliated dental group practice
could have a material adverse effect on the Company's business, financial
condition and results of operations.

FLUCTUATIONS IN OPERATING RESULTS

The Company's results of operations may fluctuate significantly from quarter
to quarter or year to year. Results may fluctuate due to a number of factors,
including the timing of future affiliations, seasonal fluctuations in the
demand for dental care and competitive factors. Accordingly, quarterly
comparisons of the Company's revenues and operating results should not be
relied on as an indication of future performance, and the results of any
quarterly period may not be indicative of results to be expected for a full
year. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations."

HIGHLY COMPETITIVE MARKET

The business of providing practice management services is highly
competitive. The Company is aware of a number of competitors specializing in
the business of providing comprehensive management services to dental
practices and there are other companies with substantial resources that may
decide to enter the dental practice management business. In addition, the
Company's revenue depends on the success of its affiliated dental groups and
those groups face competition from several sources, including solo
practitioners and single and multi-disciplinary groups, many of which may have
more established practices. See "Business--Competition."

RISKS RELATED TO INTANGIBLE ASSETS

A significant portion of the Company's consolidated total assets are
represented by intangible assets, the amount and concentration of which are
expected to increase in connection with future acquisitions. In addition,
amortization expense associated with these intangible assets will increase in
the future as a result of intangibles recorded in connection with
affiliations. In the event of any sale or liquidation of the Company or a
portion of its assets, there can be no assurance that the value of the
Company's intangible assets will be realized. In addition, the Company
periodically evaluates whether events or circumstances have occurred
indicating that any portion of the remaining balance of the amount allocable
to the Company's intangible assets may not be recoverable. When factors
indicate that the amount allocable to the Company's intangible assets has been
impaired, the Company would be required to reduce the carrying value of such
assets. Any future determination requiring the write off of a significant
portion of unamortized intangible assets could have a material adverse effect
on the Company's business, financial condition and results of operation.

CONTROL BY EXISTING STOCKHOLDERS

Upon completion of this offering, Summit Partners, executive officers of the
Company and dentists affiliated with the Company's affiliated dental group
practices will beneficially own an aggregate of approximately 34.8%, 11.1% and
19.8%, respectively, of the outstanding shares of Common Stock. If these
groups were to act together, they would be able to elect all of the Company's
directors and determine the outcome of all corporate actions requiring
approval of stockholders, and thus control the business affairs and policies
of the Company. Such control could also have the effect of delaying or
preventing a change in control of the Company and consequently may adversely
affect the market price of the Common Stock. See "Principal Stockholders."

SHARES ELIGIBLE FOR FUTURE SALE

Upon completion of this offering, 4,635,441 shares of Common Stock,
representing approximately 67.9% of the outstanding shares of Common Stock,
will be eligible for sale in the public market under Rule 144 beginning 90
days after the date of this Prospectus, all of which are subject to lock-up
agreements for a period

9
<PAGE>

of 180 days from the date of this Prospectus. In addition, following the
completion of this offering, the Company intends to register 500,000 shares of
its Common Stock under a shelf registration for use in connection with future
affiliations. These shares generally will be eligible for resale in compliance
with the volume and manner-of-sale restrictions of Rule 145 after their
issuance, unless the Company contractually restricts their sale. Initially,
the Company will issue such shares subject to a lock-up period of up to 180
days following the date of this Prospectus. See "Shares Eligible for Future
Sale."

Sales of substantial amounts of Common Stock in the public market following
the offering, or the perception that such sales could occur, could adversely
affect prevailing market prices of the Common Stock and could impair the
future ability of the Company to raise capital through the sale of its equity
securities. The Company is unable to predict the effect, if any, that future
sales of Common Stock or the availability of Common Stock for sale may have on
the market price of the Common Stock prevailing from time to time. Certain
existing stockholders have the right to require the Company to register their
Common Stock from time to time. See "Description of Capital Stock" and "Shares
Eligible for Future Sale."

NO PRIOR PUBLIC MARKET; POSSIBLE VOLATILITY OF STOCK PRICE

Prior to this offering, there has been no public market for the Common
Stock. The Common Stock has been approved for quotation on the Nasdaq National
Market, however, there can be no assurance that an active trading market will
develop or be sustained upon completion of this offering or that the market
price of the Common Stock will not decline below the initial public offering
price. The initial public offering price of the Common Stock will be
determined by negotiations between the Company and the Representatives of the
Underwriters and may not be indicative of the prices that will prevail in the
public market. The trading prices of the Company's Common Stock could be
subject to wide fluctuations in response to quarter-to-quarter variations in
the Company's operating results, material announcements by the Company,
governmental regulatory action, general conditions in the health care
industry, or other events or factors, many of which are beyond the Company's
control. In addition, the stock market has experienced extreme price and
volume fluctuations, which have particularly affected the market prices of
many health care services companies and which have often been unrelated to the
operating performance of such companies. The Company's operating results in
the future may be below the expectations of securities analysts and investors.
In such event, the price of the Common Stock would likely decline, perhaps
substantially. See "Underwriting."

NO DIVIDENDS DUE TO POLICY AND PROHIBITIONS

The Company does not intend to pay cash dividends on the Common Stock in the
foreseeable future and anticipates that future earnings will be retained to
finance future operations and expansion. In addition, the terms of Company's
revolving credit facility prohibit the Company from paying dividends or making
other payments with respect to its Common Stock without the consent of the
lender. See "Dividend Policy."

CERTAIN ANTI-TAKEOVER PROVISIONS

Certain provisions of the Company's Second Amended and Restated Certificate
of Incorporation (the "Certificate of Incorporation") and Amended and Restated
By-laws (the "By-laws") and of Delaware law could, together or separately,
discourage potential acquisition proposals, delay or prevent a change in
control of the Company or limit the price that certain investors might be
willing to pay in the future for shares of the Common Stock. Among other
matters, the Certificate of Incorporation provides for "blank check" preferred
stock, which may be issued without stockholder approval, and requires all
actions by stockholders to be taken at meetings of stockholders. The By-laws
provide for a classified Board of Directors. The Company also is subject to
Section 203 of the Delaware General Corporation Law ("DGCL"), which, subject
to certain exceptions, prohibits a Delaware corporation from engaging in any
of a broad range of business acquisitions with an "interested stockholder" for
a period of three years following the date such stockholder became an
interested stockholder. See "Description of Capital Stock."

IMMEDIATE AND SUBSTANTIAL DILUTION

Purchasers of the Common Stock offered hereby will incur immediate and
substantial dilution in net tangible book value of $14.61 per share from this
offering. In addition, shares of Common Stock issued in connection with future
acquisitions will result in ownership dilution to investors in this offering.
See "Dilution."

10
<PAGE>

THE COMPANY

Overview

American Dental Partners, Inc. was formed as a Delaware corporation on
December 22, 1995, commenced operations in January 1996 and began engaging in
dental practice management operations in November 1996, concurrent with the
completion of its first dental group practice affiliation. The Company
acquires substantially all the assets of the dental practices with which it
affiliates, except those required by law to be owned or maintained by dentists
(such as third party contracts, certain governmental receivables and patient
records), and enters into long-term service agreements with the affiliated
dental practices. The Company provides all services necessary for the
administration of the non-clinical aspects of the dental operations. Services
provided to affiliated dental practices include assistance with information
systems, budgeting, financial reporting, facilities management, third-party
payor contracting, supplies and equipment procurement, billing and collecting
accounts receivable, marketing and recruiting, hiring and training support
staff. The Company does not employ dentists or control the clinical aspects of
dentistry. As described below, the Company's rapid growth has resulted
primarily from the affiliations completed, which consisted of three dental
group practice affiliations in 1996, six dental group practice affiliations
completed in 1997 and one dental group practice affiliation completed in 1998.
See "Management's Discussion and Analysis of Financial Condition and Results
of Operations--Affiliation Summary."

1996 Transactions

During 1996, the Company acquired substantially all the assets of three
dental group practices, except those required by law to be owned or maintained
by dentists (such as third party contracts, certain governmental receivables
and patient records), and simultaneously entered into a 40-year service
agreement with each of the affiliated dental groups. These affiliated dental
groups and their respective dates of affiliation are: PDG, P.A. ("Park
Dental") on November 12, 1996; L. Crane & Associates, P.C. ("Longhorn Dental")
on December 13, 1996; and the Wisconsin Dental Group, S.C. ("Smileage Dental
Care") on December 23, 1996. These transactions are referred to as the "1996
Transactions."

1997 Transactions

During 1997, the Company acquired substantially all the assets of six dental
group practices, except those required by law to be owned or maintained by
dentists (such as third party contracts, certain governmental receivables and
patient records), and simultaneously entered into 40-year service agreements
with four of the affiliated dental groups (two practices joined existing
affiliates). These dental group practices and their respective dates of
affiliation are: Lakeside Dental Group professional corporation ("Lakeside
Dental Care") on March 31, 1997; Malcolm R. Scott, D.D.S. on March 31, 1997;
AJS Associates, P.C. ("Soster Dental Group") on May 22, 1997; Wisconsin Dental
Professionals, S.C. ("Northpoint Dental Group") on July 1, 1997; the four
professional corporations owned by Dr. Terrance R. Wilkens (the "Wilkens
Dental Group") on October 1, 1997; and OCG, Ltd. (the "Orthocare Group") on
October 1, 1997. As part of the Orthocare Group transaction, the Company
acquired Orthocare, Ltd., a related entity that contracts with third party
payors and orthodontic providers to arrange for the provision of orthodontic
care to patients insured by such third party payors in Minneapolis/St. Paul
and Wisconsin. These transactions are referred to as the "1997 Transactions."

1998 Transaction

On January 1, 1998, the Company acquired substantially all the assets of one
dental group practice, except those required by law to be owned or maintained
by dentists (such as third party contracts, certain governmental receivables
and patient records), and simultaneously entered into a 40-year service
agreement with the affiliated dental group. This dental group practice is
Associated Dental Care Providers, P.C. ("Associated Dental Care").

11
<PAGE>

USE OF PROCEEDS

The net proceeds to the Company from the sale of 2,000,000 shares of Common
Stock offered hereby at an assumed initial public offering price of $16.00 per
share are estimated to be $28.8 million ($33.2 million if the Underwriters'
over-allotment option is exercised in full). The Company will use the net
proceeds as follows: (i) approximately $7.7 million will be used to redeem all
the Series B Redeemable Preferred Stock, including unpaid dividends; (ii)
approximately $13.7 million will be used to repay outstanding indebtedness
under the Company's revolving credit facility; and (iii) the balance of
approximately $7.4 million will be used for general corporate purposes,
including affiliations with additional dental group practices. The Company's
$30 million revolving credit facility bears interest at either prime- or
LIBOR-based rates, at the Company's option, plus a margin based upon the
Company's debt coverage ratio, which ranges up to 0.50% for prime-based loans
and up to 2.125% for LIBOR-based loans. At January 30, 1998, $16.7 million was
outstanding under this credit facility at a LIBOR-based rate of approximately
7.5%. The facility matures April 2000. To date, the proceeds from this
revolving credit facility have been used for affiliations with dental
practices. Pending the foregoing uses, the balance of the net proceeds will be
invested in short-term, investment grade, interest bearing obligations. The
Company anticipates that future affiliations will be completed using a
combination of cash, Common Stock and subordinated promissory notes.

DIVIDEND POLICY

The Company has not paid any cash dividends on its Common Stock in the past
and does not plan to pay any cash dividends on its Common Stock in the
foreseeable future. In addition, the terms of the Company's revolving credit
facility prohibit it from paying dividends or making other payments with
respect to its Common Stock without the lender's consent. The Company's Board
of Directors intends, for the foreseeable future, to retain earnings to
finance the continued operation and expansion of the Company's business.

12
<PAGE>

CAPITALIZATION

The following table sets forth as of September 30, 1997: (i) the
capitalization of the Company; (ii) the capitalization of the Company on a pro
forma basis to reflect the 1997 Transactions completed subsequent to September
30, 1997; and (iii) the pro forma capitalization of the Company as adjusted to
reflect the sale of the shares of Common Stock offered hereby (based on an
assumed offering price of $16.00 per share) and the application of the
estimated net proceeds, all as if such events occurred on September 30, 1997.
See "Use of Proceeds."

<TABLE>
<CAPTION>
SEPTEMBER 30, 1997
----------------------------------------
PRO PRO FORMA
ACTUAL FORMA(1) AS ADJUSTED
----------- ----------- -------------
(IN THOUSANDS, EXCEPT SHARE DATA)
<S> <C> <C> <C>
Cash and cash equivalents........... $ 2,459 $ 1,853 $ 9,467
=========== =========== ===========
Current maturities of debt.......... $ 534 $ 534 $ 534
=========== =========== ===========
Long-term debt, less current
maturities(2)...................... $ 5,490 $ 18,790 $ 5,090
----------- ----------- -----------
Series A convertible preferred
stock, par value $0.01 per share,
400,000 shares authorized, issued
and outstanding; no shares
authorized, issued or outstanding
pro forma as adjusted(3)........... 8,483 8,483 --
Series B redeemable preferred stock,
par value $0.01 per share, 70,000
shares authorized, issued and
outstanding; no shares authorized,
issued or outstanding pro forma as
adjusted(4)........................ 7,517 7,517 --
Stockholders' equity:
Preferred stock, par value $0.01
per share, 530,000 shares
authorized, no shares issued or
outstanding; 1,000,000 shares
authorized, no shares issued or
outstanding pro forma as
adjusted(5)...................... -- -- --
Common stock, par value $0.01 per
share, 25,000,000 shares
authorized, 2,254,736 shares
issued and outstanding; 2,394,217
shares pro forma; 6,794,217
shares pro forma as
adjusted(5)(6)................... 23 24 68
Additional paid-in capital........ 1,936 2,923 40,122
Unearned compensation(7).......... (57) (57) (57)
Accumulated deficit............... (1,689) (1,689) (1,689)
----------- ----------- -----------
Total stockholders' equity...... 213 1,201 38,444
----------- ----------- -----------
Total capitalization.......... $ 21,703 $ 35,991 $ 43,534
=========== =========== ===========
</TABLE>
- --------
(1) To reflect the 1997 Transactions completed subsequent to September 30,
1997. See "The Company."
(2) See Note 7 to the Company's Consolidated Financial Statements.
(3) Upon completion of this offering, all of the Series A Convertible
Preferred Stock will be converted into 2,400,000 shares of Common Stock.
(4) Upon completion of this offering, all of the Series B Redeemable Preferred
Stock will be redeemed for approximately $7.7 million in cash, which
includes unpaid dividends through the anticipated completion date of this
offering.
(5) Reflects the additional 530,000 shares of undesignated Preferred Stock and
22,500,000 shares of Common Stock authorized on October 31, 1997. See Note
13 to the Company's Consolidated Financial Statements.
(6) Excludes 1,118,166 shares of Common Stock issuable upon the exercise of
outstanding options issued pursuant to the Company's stock option plans at
a weighted average price of $8.70 per share, as of October 31, 1997. See
"Management--Stock Plans."
(7) Unearned compensation relates to the sale of 300,000 shares of Common
Stock in January 1996 which were subject to certain restrictions, for
which the Company is recording compensation expense ratably as the
restrictions lapse. See Note 9 to the Company's Consolidated Financial
Statements.

13
<PAGE>

DILUTION

As of September 30, 1997, after giving effect to the conversion of the
Series A Convertible Preferred Stock into 2,400,000 shares of Common Stock,
the Company had net tangible book value (deficit) of approximately
$(4,395,000) or $(0.94) per share of Common Stock. After giving effect to the
1997 Transactions completed subsequent to September 30, 1997, the Company had
pro forma net tangible book value (deficit) of approximately $(19,316,000) or
$(4.03) per share of Common Stock. The pro forma net tangible book value
(deficit) per share represents the amount of total tangible assets less total
liabilities and the Series B Redeemable Preferred Stock, divided by the number
of shares of Common Stock outstanding. After giving effect, as of such date,
to the sale of 2,000,000 shares of Common Stock at an assumed initial public
offering price of $16.00 per share and the application of the net proceeds,
the pro forma net tangible book value of the Company as of September 30, 1997
would have been approximately $9,444,000 or $1.39 per share. This represents
an immediate increase in net tangible book value of $5.42 per share to
existing stockholders and an immediate dilution of net tangible book value of
$14.61 per share to new investors purchasing Common Stock in this offering.
The following table illustrates this per share dilution:

<TABLE>
<S> <C> <C>
Assumed initial public offering price per share................. $16.00
Net tangible book value per share at September 30, 1997........ (0.94)
Decrease in net tangible book value per share attributable to
the 1997 Transactions completed subsequent to September 30,
1997.......................................................... (3.09)
-----
Pro forma net tangible book value (deficit) per share before
the offering(1)............................................... (4.03)
Increase per share attributable to new investors............... 5.42
-----
Pro forma net tangible book value per share after the offering.. 1.39
------
Dilution in net tangible book value per share to new
investors(2)................................................... $14.61
======
</TABLE>

The following table summarizes, on a pro forma basis as of September 30,
1997, the differences between existing stockholders (including 2,400,000
shares of Common Stock to be issued upon conversion of the Series A
Convertible Preferred Stock) and the new investors with respect to the number
of shares of Common Stock purchased from the Company, the total consideration
paid and the average price per share paid to the Company:

<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION AVERAGE
----------------- -------------------- PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
--------- ------- ------------ ------- ---------
<S> <C> <C> <C> <C> <C>
Existing stockholders(1)...... 4,794,217 70.6% $ 17,862,000 35.8% $ 3.73
New investors................. 2,000,000 29.4 32,000,000 64.2 16.00
--------- ----- ------------ -----
Total....................... 6,794,217 100.0% $ 49,862,000 100.0%
========= ===== ============ =====
</TABLE>
- --------
(1) Excludes Common Stock issuable upon the exercise of outstanding options to
purchase 1,118,166 shares of Common Stock at a weighted average exercise
price of $8.70 per share at October 31, 1997. To the extent these options
are exercised or additional shares of Common Stock are issued in
connection with future transactions, there will be further dilution to new
investors. See "Risk Factors--Dilution" and "Management--Stock Plans."
(2) Dilution is determined by subtracting pro forma net tangible book value
per share after giving effect to this offering at the initial public
offering price per share. Dilution to new investors will be $14.04 if the
Underwriters' over-allotment option is exercised in full.

14
<PAGE>

SELECTED HISTORICAL AND PRO FORMA CONSOLIDATED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE AND STATISTICAL DATA)

The selected consolidated statement of operations data for the year ended
December 31, 1996 and the nine months ended September 30, 1997, and the
selected consolidated balance sheet data at December 31, 1996 and September
30, 1997, have been derived from the Consolidated Financial Statements of the
Company which have been audited by KPMG Peat Marwick LLP, Independent
Certified Public Accountants, and which are included elsewhere in this
Prospectus. The selected consolidated statement of operations data for the
nine months ended September 30, 1996, have been derived from unaudited
financial statements of the Company which, in the opinion of management,
include all adjustments, consisting of normal recurring adjustments, necessary
for a fair presentation of the results of operations of the Company. The
selected pro forma financial data set forth below as of and for the nine-month
period ended September 30, 1997, for the nine-month period ended September 30,
1996 and for the year ended December 31, 1996, have been derived from the
Unaudited Pro Forma Consolidated Financial Information of the Company which is
included elsewhere in this Prospectus. The selected pro forma financial data
are not necessarily indicative of the actual results of operations or
financial position that would have been achieved had such transactions and
this offering been completed at the dates specified, nor are the statements
necessarily indicative of the Company's future results of operations or
financial position. The selected historical and pro forma financial data
provided below should be read in conjunction with "Management's Discussion and
Analysis of Financial Condition and Results of Operations," Unaudited Pro
Forma Consolidated Financial Information, Consolidated Financial Statements
and the related notes thereto of the Company and other financial information
included elsewhere in this Prospectus.

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, NINE MONTHS ENDED SEPTEMBER 30,
----------------------- --------------------------------------------
PRO FORMA PRO FORMA
ACTUAL AS ADJUSTED ACTUAL AS ADJUSTED
----------- --------------------------------- ---------------------
1996 1996(1)(2) 1996 1997 1996(1)(2) 1997(2)(3)
----------- --------------------- ------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENT
OF OPERATIONS DATA:
Net revenue............ $ 3,933 $ 54,924 $ -- $36,620 $40,390 $46,862
----------- ----------- ------- ------- ------- -------
Operating expenses:
Salaries and
benefits.............. 2,098 29,302 -- 19,625 21,543 24,503
Lab fees and dental
supplies.............. 534 6,596 -- 4,491 4,850 5,566
Office occupancy...... 389 5,153 -- 3,368 3,789 4,236
Other operating
expenses.............. 773 7,384 -- 4,433 5,406 5,465
General corporate
expenses.............. 2,395 2,395 1,521 2,260 1,797 2,260
Depreciation.......... 177 1,708 7 1,154 1,251 1,298
Amortization of
intangibles........... 48 938 -- 259 700 700
----------- ----------- ------- ------- ------- -------
Total operating
expenses.............. 6,414 53,476 1,528 35,590 39,336 44,028
----------- ----------- ------- ------- ------- -------
Earnings (loss) from
operations............ (2,481) 1,448 (1,528) 1,030 1,054 2,834
Interest expense
(income), net......... (38) 543 (14) 195 407 366
----------- ----------- ------- ------- ------- -------
Earnings (loss) before
income taxes.......... (2,443) 905 (1,514) 835 647 2,468
Income taxes........... -- 367 -- 81 262 1,000
----------- ----------- ------- ------- ------- -------
Net earnings (loss).... $ (2,443) $ 538 $(1,514) $ 754 $ 385 $ 1,468
=========== =========== ======= ======= ======= =======
Net earnings (loss) per
common share.......... $ (0.55)(4) $ 0.08 $ (0.33)(4) $ 0.07(4) $ 0.06 $ 0.22
Weighted average common
shares outstanding.... 4,625 6,567 4,606 5,025 6,553 6,606
</TABLE>

<TABLE>
<CAPTION>
DECEMBER 31, 1996 SEPTEMBER 30, 1997
----------------- -----------------------------------
PRO FORMA
ACTUAL ACTUAL PRO FORMA(5) AS ADJUSTED(6)
----------------- ------- ------------ --------------
<S> <C> <C> <C> <C>
CONSOLIDATED BALANCE
SHEET DATA:
Cash and cash
equivalents............ $ 5,836 $ 2,459 $ 1,853 $9,467
Working capital......... 3,189 743 (1,362) 6,181
Total assets............ 25,294 28,293 44,383 51,926
Long-term debt,
excluding current
maturities............. 3,063 5,490 18,790 5,090
Redeemable and
convertible preferred
stock.................. 15,105 16,000 16,000 --
Total stockholders'
equity................. 164 213 1,201 38,444
</TABLE>

See accompanying footnotes on following page.

15
<PAGE>

- --------
The following footnotes should be read in conjunction with the information
under "The Company," "Use of Proceeds," "Capitalization," "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
Unaudited Pro Forma Consolidated Financial Information.

(2) Gives effect to the sale of 1,506,000 shares of Common Stock as if it had
been completed on January 1, 1996, at an assumed initial public offering
price of $16.00 per share and the application of the estimated net
proceeds therefrom to redeem the Series B Redeemable Preferred Stock, to
reduce debt and the associated interest expense and to adjust taxes.

(3) Gives effect to the 1997 Transactions, including those transactions
completed subsequent to September 30, 1997, as if they had been completed
on January 1, 1996.

(4) Computed on the basis described in Note 2 to the Company's Consolidated
Financial Statements.

(5) Gives effect to the 1997 Transactions completed subsequent to September
30, 1997, as if they occurred on September 30, 1997.

(6) Gives effect to the conversion of the Series A Convertible Preferred Stock
into 2,400,000 shares of Common Stock and the completion of this offering
at an assumed initial public offering price of $16.00 per share and the
receipt and application of the estimated net proceeds therefrom, as if
such events occurred on September 30, 1997.

(7) An operatory is an area where dental care is performed and generally
contains a dental chair, a hand piece delivery system and other essential
dental equipment.

(8) Includes full-time general dentists employed by the PCs and full-time
specialists, some of whom are independent contractors to the PCs.

16
<PAGE>

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion of the financial condition and results of
operations of the Company should be read in conjunction with the Consolidated
Financial Statements and the Unaudited Pro Forma Consolidated Financial
Information and the notes thereto of the Company included elsewhere in this
Prospectus. This Prospectus contains forward-looking statements. Prospective
investors are cautioned that any such forward-looking statements are not
guarantees of future performance and involve risks and uncertainties. Actual
events or results may differ materially from those discussed in the forward-
looking statements as a result of various factors, including the risk factors
set forth under "Risk Factors" and the matters set forth in this Prospectus
generally.

OVERVIEW

American Dental Partners, Inc. is a leading provider of dental practice
management services to multi-disciplinary dental group practices in attractive
markets in the United States. The Company was formed in December 1995,
commenced operations in January 1996 and began engaging in dental practice
management operations in November 1996, concurrent with the completion of its
first dental group practice affiliation. The Company's rapid growth has
resulted primarily from the Company's affiliations with dental group
practices. Since its inception through January 30, 1998, the Company has
successfully completed affiliations with ten dental group practices and
currently operates 83 dental facilities with 619 operatories in six states.

An integral part of the Company's strategy is to affiliate with dental group
practices. Because of the financial impact of the Company's recent
affiliations, it is difficult to make meaningful comparisons between the
Company's actual financial statements for the periods presented. In addition,
due to the relatively small number of affiliated dental group practices, each
affiliation can impact the overall operating results of the Company. After
affiliating with a dental group practice, the Company typically takes a number
of steps designed to enhance the dental group's practice revenue, improve
practice operating efficiencies and expand practice operating margins. The
benefits of these actions generally do not occur immediately. Consequently,
the financial performance of a newly-affiliated dental group practice could
negatively affect overall operating margins in the near term. As the Company
grows, it expects that the effect of adding a new dental group practice
affiliation will be mitigated by the expanded financial base of the existing
affiliations. See "Business--Business Strategy."

AFFILIATION SUMMARY

When affiliating with a dental group practice, the Company acquires
substantially all its assets except those required by law to be owned or
maintained by dentists (such as third party contracts, certain governmental
receivables and patient records), and enters into a long-term service
agreement with the affiliated dental practice to manage the non-clinical
aspects of its dental operations. The Company does not own or control the
affiliated dental practices and, accordingly, does not consolidate the
financial statements of the PCs with those of the Company.

1996 Transactions

During 1996, the Company acquired substantially all the assets of three
dental group practices and simultaneously entered into a 40-year service
agreement with each of the affiliated dental groups. These affiliated dental
groups are: Park Dental in Minneapolis; Longhorn Dental in Austin; and
Smileage Dental Care in Milwaukee. These transactions resulted in the addition
of 42 dental facilities with 331 operatories. The aggregate consideration for
the 1996 Transactions consisted of approximately $7.3 million in cash, $2.2
million in subordinated promissory notes and 1,613,400 shares of Common Stock.
All subordinated promissory notes bear interest at 7% and are payable in seven
annual installments maturing in 2003.

1997 Transactions

During the nine months ended September 30, 1997, the Company acquired
substantially all the assets of four dental group practices and simultaneously
entered into 40-year service agreements with three of these

17
<PAGE>

affiliated dental groups (one practice joined an existing affiliate). These
four dental group practices are: Lakeside Dental Care in New Orleans; Malcolm
R. Scott, D.D.S. in San Marcos, Texas; Soster Dental Group in Pittsburgh; and
Northpoint Dental Group in Milwaukee. The Lakeside Dental Care and Soster
Dental Group affiliations represented the entry into two new markets by the
Company. The affiliation with Malcolm R. Scott, D.D.S. expanded the Company's
market presence in Austin by adding one dental facility with six operatories.
The affiliation with Northpoint Dental group expanded the Company's market
presence in Milwaukee by adding two dental facilities with 23 operatories. In
total, these transactions resulted in the addition of eight dental facilities
with 84 operatories. The aggregate consideration for the above transactions
consisted of approximately $3.6 million in cash, $0.5 million in subordinated
promissory notes and 41,352 shares of Common Stock.

On October 1, 1997, the Company acquired substantially all the assets of two
dental group practices and Orthocare, Ltd., a related entity associated with
one of these practices that contracts with third party payors and orthodontic
providers to arrange for the provision of orthodontic care to patients insured
by such third party payors in Minneapolis/St. Paul and Wisconsin. The Company
simultaneously entered into a 40-year service agreement with one of these
affiliated dental groups (one practice joined an existing affiliate). These
two dental group practices are the Wilkens Dental Group and the Orthocare
Group. In total, these affiliations resulted in the addition of 21 dental
facilities with 116 operatories. The aggregate consideration for these
transactions consisted of approximately $13.2 million in cash, $1.9 million in
subordinated promissory notes and 139,482 shares of Common Stock.

1998 Completed and Pending Transactions

On January 1, 1998, the Company acquired substantially all the assets of and
simultaneously entered into a 40-year service agreement with Associated Dental
Care. In addition, the Company currently is in discussions with a number of
dentists and owners of dental group practices about possible affiliations with
the Company. The Company currently has one letter of intent signed with a
potential affiliate, which is subject to due diligence review and completion
of final agreements. The aggregate purchase price for these two transactions
consists of approximately $4.9 million in cash, $0.8 million in subordinated
promissory notes and 82,800 shares of Common Stock. There can be no assurance
that the Company will consummate the pending or any future transactions.

COMPONENTS OF REVENUE AND EXPENSES

Affiliate Adjusted Gross Revenue and Payor Mix. The Company's affiliated
dental group practices generate revenue from patients and third party payors
under fee-for-service, PPO plans and capitated managed care plans. The
affiliated dental group practices record revenue at established rates reduced
by contractual adjustments and allowances for doubtful accounts to arrive at
adjusted gross revenue. Contractual adjustments represent the difference
between gross billable charges at established rates and the portion of those
charges allowable by third party payors pursuant to certain reimbursement and
managed care contracts. While payor mix varies from market to market, the
aggregate payor mix percentage of the Company's affiliated practices is
approximately 36% fee-for-service, 13% PPO plans and 51% capitated managed
care plans for the nine months ended September 30, 1997.

The PC reimburses the Company for expenses incurred on its behalf in
connection with the operation and administration of the dental facilities and
pays fees to the Company for management services. Expenses incurred for the
operation and administration of the dental facilities include salaries and
benefits for non dentist personnel working at the dental facilities (generally
the dental hygienists, dental assistants and administrative staff), lab fees,
dental supplies, office occupancy costs of the dental facilities (rent,
utilities, etc.) and depreciation related to the fixed assets at the dental
facilities. The PC is also responsible for provider expenses, which generally
consist of the salaries, benefits and certain other expenses of the dentists.

Net Revenue. Net revenue for the Company represents the aggregate fees
charged to the affiliated dental practices pursuant to the terms of the long-
term service agreements under which the Company agrees to manage the non-
clinical aspects of the dental practice. Under such agreements, the affiliated
dental group practices reimburse the Company for expenses incurred in
connection with the operation and administration of the dental

18
<PAGE>

facilities and pay fees to the Company for its management services. A portion
of these fees typically includes a fixed monthly amount. The Company typically
receives an additional fee if certain operating objectives are achieved. The
Company's service fees (after reimbursement of expenses) range from
approximately 9% to 22% of the PC's adjusted gross revenue. Such fees include
the additional fee which, in the aggregate, was not material for the nine
month period ended September 30, 1997. The fees payable to the Company are
determined prior to each affiliation and annually thereafter based on a formal
budgeting process. Pursuant to the terms of the service agreements, the
Company bills patients and third party payors on behalf of the affiliated PCs.
Such funds are used to pay all operating expenses, to pay fees to the Company
for its management services and are then used by the PCs to pay their provider
expenses.

Operating Expenses. Operating expenses (excluding general corporate
expenses, depreciation and amortization of intangibles) consist of the
expenses incurred by the Company in fulfilling its obligations under the
service agreements. These expenses are operating costs and expenses that would
have been incurred by the affiliated dental groups had they not affiliated
with the Company and include non-dentist salaries and benefits, lab fees and
dental supplies, office occupancy cost and other expenses related to
operations. Salaries and benefits expense are for personnel working for the
Company at the dental facilities, as well as the local operating management.
At the facility level, the Company generally employs the dental hygienists,
dental assistants and administrative staff. The local operating management
team supervises and supports the staff at the dental facilities. Office
occupancy includes rent expense and certain other operating costs such as
utilities associated with dental facilities and the local administrative
offices. Such costs vary based on the size of each facility and the market
rental rate for dental office space in the particular geographic market. Other
expenses consist of professional fees, marketing costs and other general and
administrative expenses. See "Business--Operations--Operating Structure."

General Corporate Expenses. General corporate expenses consist of
compensation expenses for the Company's corporate personnel and administrative
staff, as well as facility and other administrative costs of the Company's
corporate offices. The Company provides management, administrative, third
party contracting and other services to the affiliated groups. The Company has
built its management infrastructure in anticipation of rapid growth. This
included the hiring of key management and support staff in the areas of
finance and operations prior to the completion of any affiliations, and the
further hiring of additional management and support personnel in the areas of
operations and information systems as the Company completed its first
affiliations. The level of general corporate expenses will likely continue to
increase in the future as the Company continues to expand its management
infrastructure. However, it is anticipated that these expenses will decline as
a percentage of net revenue as the Company achieves its growth objectives.

Depreciation; Amortization of Intangibles. Depreciation expense includes
depreciation charges related to leasehold improvements and furniture, fixtures
and equipment used to operate the dental facilities. Depending on the amount
and timing of future capital expenditures, depreciation expense will likely
increase. Amortization of intangibles relates to intangible assets incurred in
connection with the 1996 and 1997 Transactions. The Company expects that
amortization of intangibles will increase in the future as a result of
intangibles recorded in connection with affiliations.

NINE MONTHS ENDED SEPTEMBER 30, 1996 COMPARED TO NINE MONTHS ENDED SEPTEMBER
30, 1997

Overview

The Company conducted no significant operations from January 1996 until
November 1996, when it completed its first affiliation and, accordingly, it
generated no revenue during this period. However, the general corporate
expenses incurred during the nine months ended September 30, 1996 resulted in
a net loss of $1,514,000. During the nine-month period ended September 30,
1997, revenue generated from completed affiliations reduced the impact of
general corporate expenses on the Company's statement of operations resulting
in net income of $754,000. As a result of the Company's recent rapid
expansion, the Company does not believe that a period-to-period comparison and
the percentage relationships of the nine months ended September 30, 1996 as
compared with the nine months ended September 30, 1997 are meaningful.

19
<PAGE>

Results of Operations

Net revenue amounted to $0 for 1996 as compared with $36,620,000 for 1997.
The 1997 period includes revenue derived from service agreements entered into
in connection with the 1996 Transactions for all nine months of 1997, plus
revenue derived from the service agreements entered into in connection with
the 1997 Transactions completed through September 30, 1997. Net revenue
derived from the Company's service agreement with Park Dental represented
approximately 60% of the Company's consolidated net revenue for the nine month
period ended September 30, 1997. The termination of this service agreement
could have a material adverse effect on the Company. See "Risk Factors--
Dependence Upon Service Agreements."

Operating expenses for 1996 were $0 as compared with $31,917,000 or 87.2% of
net revenue for 1997.

General corporate expenses were $1,521,000 for 1996, as compared with
$2,260,000 or 6.2% of net revenue for 1997. The increase resulted primarily
from the impact of additional corporate personnel hired in finance,
information systems and operations in late 1996 and early 1997 to build
infrastructure in anticipation of the Company's growth.

Depreciation expense was $7,000 for 1996, as compared with $1,154,000 or
3.2% of net revenue for 1997. Depreciation expense for 1996 resulted from
costs incurred in connection with the purchase of furniture, fixtures and
equipment for the corporate office. Depreciation expense for 1997 included
depreciation related primarily to the assets acquired and capital expenditures
incurred in connection with the Company's completed affiliations.

Amortization of intangibles was $259,000 or 0.7% of net revenue for 1997.
Amortization resulted from intangibles recorded in connection with the
Company's seven affiliations completed through September 30, 1997.

Net interest income was $14,000 for 1996, as compared with net interest
expense of $195,000 for 1997. Interest income for 1996 resulted from earnings
on proceeds received from the Company's private sales of equity securities.
Interest expense for 1997 resulted from borrowings under the Company's credit
facility, the issuance of subordinated notes and the assumption of certain
other debt in connection with completed affiliations.

The Company incurred no income tax expense for 1996, as compared with
$81,000 for 1997. The net loss incurred for 1996 resulted in the Company
creating a net operating loss carryforward for financial statement purposes.
For 1997, the Company utilized a portion of its net operating loss
carryforward which resulted in only $81,000 of income tax expense.

PRO FORMA--NINE MONTHS ENDED SEPTEMBER 30, 1996 COMPARED TO NINE MONTHS ENDED
SEPTEMBER 30, 1997

Overview

The following discussion compares on a pro forma basis the Company's results
of operations for the nine month periods ended September 30, 1996 and 1997.
The unaudited pro forma financial information for the 1996 period includes the
1996 and 1997 Transactions as if they were all completed on January 1, 1996.
The unaudited pro forma financial information for the 1997 period includes the
1997 Transactions as if they were all completed on January 1, 1997. This
information does not purport to represent what the Company's results of
operations would actually have been if such transactions had in fact occurred
on this date or to project the Company's results of operations for any future
period. This information is based on certain assumptions and adjustments and
should be read in conjunction with the Unaudited Pro Forma Consolidated
Financial Information included elsewhere in this Prospectus.

20
<PAGE>

The following table sets forth the percentage of net revenue (consisting of
fees earned pursuant to the terms of the Company's service agreements and
revenue from the Company's Orthocare, Ltd. subsidiary) of certain items
reflected in the Company's unaudited pro forma consolidated statements of
operations.

<TABLE>
<CAPTION>
PRO FORMA
NINE MONTHS ENDED
SEPTEMBER 30,
-------------------
1996 1997
-------- --------
<S> <C> <C>
Net revenue............................................. 100.0% 100.0%
-------- --------
Operating expenses:
Salaries and benefits................................. 53.3 52.3
Lab fees and dental supplies.......................... 12.0 11.9
Office occupancy...................................... 9.4 9.0
Other operating expenses.............................. 13.4 11.7
General corporate expenses............................ 4.5 4.8
Depreciation.......................................... 3.1 2.8
Amortization of intangibles........................... 1.7 1.5
-------- --------
Total operating expenses................................ 97.4 94.0
-------- --------
Earnings from operations................................ 2.6 6.0
Interest expense (income), net.......................... 3.3 2.7
-------- --------
Earnings (loss) before income taxes..................... (0.7) 3.3
Income taxes............................................ -- 1.3
-------- --------
Net earnings (loss)..................................... (0.7)% 2.0%
======== ========
</TABLE>

Results of Operations

Pro forma net revenue increased from $40,390,000 to $46,862,000, or 16.0%,
from 1996 to 1997. This revenue represents what the Company would have earned
under its service agreements had such agreements commenced January 1, 1996.
The majority of this increase came from the Company's affiliations in the
Minneapolis and Austin markets which had same market net revenue growth of
18.1% and 41.6%, respectively. The increase in revenue from the Company's
affiliate in the Minneapolis market resulted from a combination of increases
in fees, the addition of ten new dentists and the addition of a new facility
which opened in July 1997. The increase in revenue from the Company's
affiliate in the Austin market resulted primarily from the addition of two new
facilities which opened in January and February 1997.

Pro forma salaries and benefits amounted to $21,543,000 or 53.3% of net
revenue for 1996, as compared with $24,503,000 or 52.3% of net revenue for
1997. The decrease in salaries and benefits expense as a percentage of net
revenue resulted primarily from the Company's modification to staffing levels
at several of the Company's facilities.

Pro forma lab fees and dental supplies expense amounted to $4,850,000 or
12.0% of net revenue for 1996 as compared with $5,566,000 or 11.9% of net
revenue for 1997. Lab fees and dental supplies expense varies from affiliate
to affiliate and is affected by the volume and type of procedures performed.
On a pro forma basis, these costs remained constant as a percentage of net
revenue.

Pro forma office occupancy expense amounted to $3,789,000 or 9.4% of net
revenue for 1996, as compared with $4,236,000 or 9.0% of net revenue for 1997.
These costs vary based on the size of each facility and the market rental rate
for dental office space in the particular geographic market. The Company
generally assumes existing lease obligations of the affiliated dental group
practice upon completion of an affiliation.

Pro forma other operating expense amounted to $5,406,000 or 13.4% of net
revenue for 1996, as compared with $5,465,000 or 11.7% of net revenue for
1997. Other expenses decreased as a percentage of net revenue because certain
expenses, such as professional fees and other costs associated with operating
a stand alone dental group practice, have been included in general corporate
expenses after the date of affiliation.

21
<PAGE>

General corporate expenses amounted to $1,797,000 or 4.5% of net revenue for
1996, as compared with $2,260,000 or 4.8% of net revenue for 1997. The
increase resulted primarily from the impact of additional corporate personnel
hired in finance, information systems and operations in late 1996 and early
1997 to build infrastructure to support the Company's growth.

Pro forma depreciation expense amounted to $1,251,000 or 3.1% of net revenue
for 1996, as compared with $1,298,000 or 2.8% of net revenue for 1997. Pro
forma amortization of intangibles decreased from 1.7% of net revenue for 1996
to 1.5% of net revenue for 1997. The dollar amount of amortization, however,
remained constant at $700,000. The decrease as a percentage of net revenue
resulted from the growth in net revenue.

Pro forma net interest expense amounted to $1,332,000 or 3.3% of net revenue
for 1996, as compared with $1,291,000 or 2.7% of net revenue for 1997.
Interest expense for both periods resulted from borrowings under the Company's
credit facility, the issuance of subordinated notes and the assumption of
certain other debt in connection with affiliations.

Pro forma income tax expense amounted to $0 in 1996 as compared with
$625,000 or 1.3% of net revenue for 1997. The Company calculated its pro forma
income tax expense utilizing a combined federal and state statutory rate of
40.5%.

SELECTED QUARTERLY OPERATING RESULTS

The following tables set forth unaudited quarterly results of operations of
the Company for each of the quarters in the nine-month period ended September
30, 1997. This information has been prepared on the same basis as the
Consolidated Financial Statements and, in the opinion of the Company's
management, reflects all adjustments, consisting only of normal recurring
adjustments, necessary for a fair presentation of the information for the
periods presented. The quarterly operating results are not necessarily
indicative of future results of operations. This data should be read in
conjunction with the Consolidated Financial Statements included elsewhere in
this Prospectus.

<TABLE>
<CAPTION>
THREE MONTHS ENDED
-----------------------------------------------------
MARCH 31, 1997 JUNE 30, 1997 SEPTEMBER 30, 1997
----------------- ------------- --------------------
$ % $ % $ %
-------- ------- ------- ----- ---------- ---------
(IN THOUSANDS) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
Net revenue............. $ 11,226 100.0% $12,076 100.0% $ 13,318 100.0%
-------- ------ ------- ----- ---------- --------
Operating expenses:
Salaries and
benefits.............. 6,189 55.1 6,339 52.5 7,097 53.3
Lab fees and dental
supplies.............. 1,334 11.9 1,505 12.5 1,652 12.4
Office occupancy....... 1,008 9.0 1,113 9.2 1,247 9.3
Other operating
expenses.............. 1,366 12.2 1,581 13.1 1,486 11.1
General corporate
expenses.............. 735 6.5 689 5.7 836 6.3
Depreciation........... 356 3.2 403 3.3 395 3.0
Amortization of
intangibles........... 64 0.5 94 0.8 101 0.8
-------- ------ ------- ----- ---------- --------
Total operating
expenses............ 11,052 98.4 11,724 97.1 12,814 96.2
-------- ------ ------- ----- ---------- --------
Earnings from
operations............. 174 1.6 352 2.9 504 3.8
Interest expense
(income), net......... (27) (0.2) 107 0.9 115 0.9
-------- ------ ------- ----- ---------- --------
Earnings before income
taxes.................. 201 1.8 245 2.0 389 2.9
Income taxes........... -- -- 7 -- 74 0.5
-------- ------ ------- ----- ---------- --------
Net earnings............ $ 201 1.8% $ 238 2.0% $ 315 2.4%
======== ====== ======= ===== ========== ========
</TABLE>

LIQUIDITY AND CAPITAL RESOURCES

The Company has financed its operating and capital needs, including cash
used for acquisitions, capital expenditures and working capital, from its
private sales of equity securities, borrowings under its revolving line of
credit and cash generated from operations. To date, the Company has completed
ten acquisitions and affiliations for aggregate consideration of $26,690,000
in cash, $5,100,000 in subordinated promissory notes and 1,829,034 shares of
Common Stock.

22
<PAGE>

For the year ended December 31, 1996 and the nine months ended September 30,
1997, cash provided by (used for) operating activities amounted to
($1,539,000) and $633,000, respectively. Cash used for operating activities
during 1996 resulted primarily from the Company's start-up activities prior to
the completion of its first affiliation.

For the year ended December 31, 1996 and the nine months ended September 30,
1997, cash used in investing activities amounted to $6,878,000 and $5,360,000,
respectively. For 1996, this included $6,632,000 in cash used for
acquisitions, net of cash acquired, and $386,000 in capital expenditures.
Capital expenditures in 1996 included costs associated with the opening of
dental facilities in Austin and in Milwaukee. For the nine months ended
September 30, 1997, cash used for acquisitions amounted to $3,337,000, net of
cash acquired, and capital expenditures amounted to $2,102,000. Capital
expenditures for 1997 included costs associated with the opening of one new
facility in Minneapolis and two new facilities in Milwaukee. The establishment
of new dental facilities and the expansion of existing dental facilities in
the future will require ongoing capital expenditures.

For the year ended December 31, 1996 and the nine months ended September 30,
1997, cash provided from financing activities amounted to $14,253,000 and
$1,350,000, respectively. Cash provided by financing activities during 1996
resulted primarily from the Company's private sales of Preferred and Common
Stock, which included $7,900,000 in proceeds from the issuance of Series A
Convertible Preferred Stock, $7,000,000 in proceeds from the issuance of
Series B Redeemable Preferred Stock and $100,000 in proceeds from the issuance
of Common Stock. Cash provided from financing activities for the nine months
ended September 30, 1997 resulted primarily from borrowings under the
Company's revolving credit facility.

In April 1997, the Company entered into a $30 million revolving line of
credit agreement with Fleet National Bank. The credit facility is being used
for general corporate purposes, including acquisitions. Borrowings under this
line of credit bear interest at either prime- or LIBOR-based rates, at the
Company's option, plus a margin based upon the Company's debt coverage ratio,
which ranges up to 0.50% for prime-based loans and up to 2.125% for LIBOR-
based loans. In addition, the Company pays a commitment fee of 0.25% of the
average daily balance of the unused line. Borrowings are limited to an
availability formula based on adjusted EBITDA. The credit facility is secured
by a first lien on substantially all of the Company's assets, including a
pledge of the stock of the Company's subsidiaries. The Company is also
required to comply with certain financial and other covenants. The line of
credit matures in April 2000. At January 30, 1998, $16,700,000 was outstanding
under this line.

The Company will use a portion of the net proceeds from this offering to
redeem the Series B Redeemable Preferred Stock, including unpaid dividends,
and to repay outstanding balances under its revolving credit facility. The
Company believes that the remaining net proceeds from this offering, cash
generated from operations and amounts available under its revolving credit
facility will be sufficient to fund its anticipated cash needs for working
capital, capital expenditures and acquisitions for at least the next 12
months.

RECENTLY ISSUED ACCOUNTING STANDARDS

In February 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 128, "Earnings per Share" ("SFAS 128"),
which requires presentation of basic earnings per share ("Basic EPS") and
diluted earnings per share ("Diluted EPS") by all entities that have publicly
traded common stock or potential common stock (options, warrants, convertible
securities or contingent stock arrangements). SFAS 128 also requires a
presentation of earnings per share by an entity that has made a filing or is
in the process of filing with a regulatory agency in preparation for the sale
of those securities in a public market. Basic EPS is computed by dividing
income available to common stockholders by the weighted average number of
common shares outstanding during the period. Diluted EPS gives effect to all
potentially dilutive common shares outstanding during the period. The
computation of Diluted EPS does not assume conversion, exercise or contingent
exercise of securities that would have an antidilutive effect on earnings.
SFAS 128 is effective for both interim and annual periods ending after
December 15, 1997. The Company does not believe that the effect on the
Company's earnings per share resulting from the adoption of SFAS 128 will be
material.

23
<PAGE>

BUSINESS

OVERVIEW

American Dental Partners, Inc. is a leading provider of dental practice
management services to multi-disciplinary dental group practices in attractive
markets in the United States. The Company seeks to affiliate with leading
dental groups that provide a comprehensive range of dental care services, have
outstanding reputations for quality and have proven records of financial
performance. Since its inception through January 30, 1998, the Company has
successfully completed affiliations with ten dental group practices and
currently operates 83 dental facilities with 619 operatories in six states.
The Company's rapid growth has resulted primarily from these affiliations,
which consisted of three dental group practice affiliations completed in 1996,
six dental group practice affiliations completed in 1997 and one dental group
practice affiliation completed in 1998.

The Company's objective is to be the leading dental practice management
company in the United States. The Company's strategy for achieving this
objective is to: (i) expand into carefully selected and diverse geographic
markets which have favorable demographics and projected economic growth; (ii)
affiliate with leading dental group practices which have reputations for
quality care and proven records of financial performance; (iii) increase
market penetration in each of its markets through additional affiliations,
recruitment of dentists and new facility development; (iv) add value to each
affiliated dental group practice by assisting the practice in improving
operating performance; and (v) pursue various initiatives to ensure the
highest quality of care and service.

DENTAL CARE INDUSTRY

The market for dental care is large, growing and highly fragmented. The
United States Health Care Financing Administration estimates that expenditures
for dental care were approximately $45.8 billion in 1995 and will reach
approximately $79.1 billion by 2005, representing a compound annual growth
rate of approximately 5.6%. The Company believes that the growth in
expenditures for dental care will continue to be driven by both increases in
costs and increases in demand for services due to: (i) improved dental
benefits offered by employers; (ii) increased availability and use of dental
insurance, including preferred provider organization ("PPO") plans and
capitated managed care plans; (iii) increased demand for dental care from an
aging population; and (iv) increased demand for cosmetic and preventative
procedures. The Company believes that this growth will benefit not only
dentists, but companies that provide services to the dental care industry,
such as dental practice management companies. However, the failure of any of
the foregoing factors to materialize could offset increases in demand for
dental care, and any such increases may not correlate with growth in the
Company's business.

Unlike many other sectors of the health care services industry, the dental
care industry is in the early stages of consolidation. Although dental care is
typically offered by solo practitioners, the trend towards group practice is
growing. According to the American Dental Association ("ADA"), in 1995, 11.8%
of the approximately 153,300 dentists in the United States were practicing in
groups of three or more, up from 4.1% in 1991. The Company believes this
consolidation trend will continue.

Most dental care performed in the United States is categorized as general
dentistry. Based upon a 1990 survey by the ADA, general dentistry was
estimated to represent approximately 83% of all dental services

24
<PAGE>

performed in the United States. General dentistry includes preventative care,
diagnosis and treatment planning, as well as procedures such as fillings,
crowns, bridges, dentures and extractions. Specialty dentistry, which includes
orthodontics, periodontics, endodontics, prosthodontics and pediatric
dentistry, represented the remaining 17% of dental care services.

Historically, dental care was not covered by insurers and consequently was
paid for by patients on a fee-for-service basis. An increasing number of
employers have responded to the desire of employees for enhanced benefits by
providing coverage from third party payors for dental care. These third party
payors offer indemnity insurance, PPO plans and capitated managed care plans.
Under an indemnity insurance plan, the dental provider charges a fee for each
service provided to the insured patient, which is typically the same as that
charged to a patient not covered by any type of dental insurance. The Company
categorizes indemnity insurance plans as fee-for-service plans. Under a PPO
plan, the dentist charges a discounted fee for each service provided based on
a schedule negotiated with the PPO. Under a capitated managed care plan, the
dentist receives a fixed monthly fee from the managed care organization for
each member covered under the plan who selects that dentist as his or her
provider. Capitated managed care plans also typically require a co-payment by
the patient.

The National Association of Dental Plans estimated that approximately 117
million individuals, or 45.7% of the population of the United States, were
covered by some form of dental care plan in 1995. This compares to
approximately 96 million individuals, or 40.5% of the population of the United
States, in 1990. Of the 117 million individuals with coverage, 70.3% were
covered by indemnity insurance, 17.7% were covered by capitated managed care
plans and 12.0% were covered by PPO plans. The remaining 139 million
individuals, or 54.3% of the population of the United States in 1995, did not
have dental benefit coverage. The Company believes that the number of
individuals with dental benefits will continue to increase and that the
majority of this growth will be in PPO and capitated managed care plans. For
instance, according to the National Association of Dental Plans, the number of
individuals covered by capitated managed care plans increased from 7.8 million
in 1990 to 20.7 million in 1995, representing a 21.6% compound annual growth
rate.

The Company believes that the increased prevalence of dental benefits and
the shift of those benefits from traditional fee-for-service to non-fee-for-
service plans has increased the complexity of operating a dental practice and
has led dental practices to begin to affiliate or consolidate with entities,
such as the Company, that: (i) allow dentists to focus on the clinical aspects
of dentistry by providing management resources to conduct the business and
administrative aspects of dentistry; (ii) provide information and operating
systems that are required to effectively manage in an increasingly complex
reimbursement environment; (iii) assist with third-party payor contracting;
(iv) realize economies of scale in purchasing and provide access to capital;
and (v) provide dentists the opportunity to realize value for their practices.

BUSINESS STRATEGY

The Company's objective is to be the leading dental practice management
company in the United States. In order to achieve this objective, the
Company's business strategy is to:

Expand into carefully selected markets. The Company plans to expand its
network of affiliated dental group practices into carefully selected and
diverse geographic markets. The Company focuses on markets that: (i) offer
the opportunity to gain market share leadership; (ii) have a prevalence of
dental group practices; (iii) have favorable demographics and projected
economic growth; and (iv) have access to dental schools. To date, the
Company has identified approximately 125 markets that currently meet its
market selection criteria. The Company believes that operating in multiple
markets increases the attractiveness of the Company and its affiliated
dental group practices to third party payors who seek to contract with
dental providers that are strategically located in attractive markets and
that offer a comprehensive range of multi-disciplinary dental care
services.

Affiliate with leading dental group practices. In entering a new market,
the Company seeks to affiliate with a leading dental group practice in that
market as a platform for expansion. A "platform" dental group practice is
one which has a reputation for quality care, provides a comprehensive range
of dental services, has a significant market presence and has a proven
record of financial performance. The Company believes

25
<PAGE>

that by affiliating with leading dental group practices it will become more
attractive to other practices, dentists and payors.

Increase market penetration. The Company seeks to be the market share
leader in each market in which it operates. After affiliating with a
leading dental group practice, the Company seeks to increase its market
share by assisting the affiliate in recruiting new general and specialty
dentists, expanding its patient base and opening new facilities.
Additionally, the Company may affiliate with other dental practices or with
specialty group practices that complement the platform dental group
practice.

Add value to each affiliated dental group practice. The Company supports
its affiliated dental group practices with a broad range of services
designed to enhance their practice revenue, improve operating efficiencies
and expand operating margins. The Company shares the best practices of its
network with each affiliate and assists each affiliate with an analysis of
its revenue and payor mix, capacity, utilization, staffing, scheduling and
productivity. The Company also provides its affiliates assistance with
information systems, budgeting, financial reporting, facilities management,
third-party payor contracting, supplies and equipment procurement, quality
assurance initiatives, billing and collecting accounts receivable,
marketing and recruiting, hiring and training support staff.

Focus on quality care. The Company pursues various initiatives to help
its affiliates provide the highest quality of care and service. The
Company's goal is to have each affiliated dental group practice become
accredited by the Accreditation Association of Ambulatory Health Care, Inc.
("AAAHC"). Through its National Professional Advisory Forum, the Company
provides its affiliated dental group practices with the opportunity to
share clinical knowledge and best clinical practices. The Company also
implements comprehensive patient satisfaction surveys administered by
independent third parties. The Company believes that its focus on quality
care enhances: (i) its affiliates' relationships with patients; (ii) its
affiliates' ability to recruit dentists; (iii) the Company's ability to
attract new dental groups as affiliates; and (iv) the Company's
attractiveness to third party payors.

AFFILIATION PHILOSOPHY

The Company believes that dental care is an important part of an
individual's overall health care. Because the practitioner is best qualified
to manage the clinical aspects of dentistry, the provision of dental care must
be centered around the dentist. However, current market trends in health care
are increasing the complexity of operating a dental practice. Consequently,
dentists are affiliating with professional practice managers who can manage
the non-clinical aspects of dentistry and provide the business skills that can
improve practice operating performance.

The Company believes that, similar to other sectors of the health care
delivery system, the delivery of dental care is fundamentally a local
business. Therefore, the Company operates its business in a decentralized
manner and maintains the identity of the local affiliated practice. In each
affiliation, the Company strives to maintain the local culture of the
affiliated group and encourages it to retain the name of the practice,
continue its presence in community events, maintain its relationship with
patients and local third party payors and, to the extent possible, maintain
the existing management organization.

The Company's affiliation model is designed to create a partnership in
management between the Company and the affiliated dental group practice that
allows each party to maximize its strengths and retain its autonomy. Under the
Company's affiliation model, the affiliated dental group continues to own its
practice and has sole purview over the clinical aspects of the practice while
the Company manages the business aspects of the practice. The Company's method
of affiliation is consistent across practices and, even where permitted by
law, the Company does not employ dentists.

The Company believes that the core values of a business partnership are
shared governance and shared financial objectives and has structured its
affiliation model to achieve these goals. Shared governance is achieved by the
formation of a joint policy board for each affiliated dental group practice
which is comprised of an equal number of representatives from the Company and
the affiliated dental group practice. Together, members of the

26
<PAGE>

policy board develop strategies and decide on major business initiatives for
the practice. Shared financial objectives are achieved through the joint
implementation of a budgeting process that establishes the financial
performance standards for the dental practice.

The organizational structure of a dental group practice before and after its
affiliation with ADP is as follows:

ADP's AFFILIATION MODEL

[A two-column flow chart. The first column is entitled Before Affiliation, under
which is a box which contains the words Dental Group. The second column is
entitled After Affiliation, under which is a circle which contains the words
Joint Policy Board. Under such circle are three boxes which contain the words
Dentist-owned Professional Corporation (PC), Service Agreement, and ADP-Owned
Management Service Organization (MSO), respectively. Arrows point from each box
to the circle, and two-way arrows point from the Service Agreement box to the
other two boxes.]

MARKET AND GROUP SELECTION

Market Selection

The Company has well-defined market selection criteria. The Company defines
potential markets with reference to one or more Metropolitan Statistical Areas
("MSAs"). An MSA is generally a geographic area consisting of a city of at
least 50,000 people, together with adjacent communities that have a high
degree of economic and social integration with the population center. In 1996,
there were 316 MSAs in the United States. The Company typically focuses on
markets with a population of at least 250,000 people that: (i) offer the
opportunity to gain market share leadership; (ii) have a prevalence of dental
group practices; (iii) have favorable demographics and projected economic
growth; and (iv) have access to dental schools. The Company has identified
approximately 125 MSAs that currently meet its market selection criteria.

Group Selection

The Company seeks to affiliate with leading dental group practices in each
selected market. The Company focuses on group practices because they have
greater potential to be market share leaders. Group practices are also more
likely to have implemented quality assurance and peer review policies and
procedures and are better positioned to operate in an increasingly complex
reimbursement environment. When entering a new market, the Company seeks to
affiliate with a platform dental group with a: (i) reputation for quality
care; (ii) comprehensive range of dental care services; (iii) significant
market presence; and (iv) proven record of financial performance. The Company
believes that, although a limited number of platform dental group practices
exist within any given market, there are a significant number of such groups
nationwide.

Affiliation Process

Once the Company has identified a potential affiliate within a market, the
Company's management seeks to determine whether the group practice and the
Company share a common philosophy about the dental industry and common
strategic goals and objectives. To this end, the Company conducts a series of
meetings, site visits

27
<PAGE>

and presentations with the potential affiliate about the industry, the Company
and its affiliation model. The Company believes that the existence of shared
philosophical values is a critical element of the affiliation's ultimate
success.

If the Company and a potential affiliate determine that they share common
values, goals and objectives, the Company then undertakes a preliminary due
diligence review of clinical, operating and financial information. Based upon
this review, the Company formulates an offer outlining the basic terms and
conditions of the affiliation which, if accepted by the dental group practice,
is embodied in a letter of intent between the parties.

Upon signing a letter of intent, the Company and its representatives begin a
thorough review of the potential affiliate's clinical systems, processes,
facilities and compliance with licensing and credentialing requirements, as
well as performing legal and accounting due diligence. Acquisition, service
and other agreements are then prepared and the transaction is closed.
Generally, the process of identifying an acceptable affiliation candidate to
closing the transaction takes approximately six to nine months.

Potential Affiliations

The Company is constantly discussing potential affiliations with dental
group practices that meet the Company's group selection criteria, which may be
at various stages at any point in time. The Company currently has one letter
of intent signed with a potential affiliate, which is subject to due diligence
review and completion of final agreements. There can be no assurance that the
Company will consummate the pending or any future transactions.

AFFILIATED NETWORK

Since inception, the Company has successfully affiliated with ten dental
practices in six states consisting of 12 selected MSAs. The following table
lists the affiliations completed by the Company as of the date of this
Prospectus:

<TABLE>
<CAPTION>
DENTAL
MARKET FACILITIES OPERATORIES(1) MSA AFFILIATION DATE
------ ---------- -------------- --- ----------------
<S> <C> <C> <C> <C>
AUSTIN, TX
Longhorn Dental....... 8 41 Austin and Killeen December 1996
Malcolm R. Scott,
D.D.S................ 1 6 San Marcos March 1997
MILWAUKEE, WI
Smileage Dental Care.. 13 125 Appleton, Green Bay, December 1996
Kenosha, Madison and
Milwaukee
Northpoint Dental
Group................ 2 23 Milwaukee July 1997
Wilkens Dental Group.. 4 30 Milwaukee October 1997
MINNEAPOLIS, MN
Park Dental........... 27 201 Minneapolis/St. Paul November 1996
Orthocare Group....... 17 86 Minneapolis/St. Paul October 1997
NEW ORLEANS, LA
Lakeside Dental Care.. 1 28 Metairie March 1997
PITTSBURGH, PA
Soster Dental Group... 4 29 Pittsburgh May 1997
TUCSON, AZ
Associated Dental Care 6 50 Phoenix, Tucson and Yuma January 1998
--- ---
Total............... 83 619
=== ===
</TABLE>
- --------
(1) An operatory is an area where dental care is performed and generally
contains a dental chair, a hand piece delivery system and other
essential dental equipment.

28
<PAGE>

MARKET PENETRATION

After affiliating with a platform dental group practice, the Company's
strategy is to increase its market penetration by increasing the market share
of its existing affiliated dental group and by affiliating with other leading
dental groups that complement or add to the dental care provided by its
existing affiliate.

Increase Existing Groups' Market Share

Upon completing an affiliation, the Company prepares a thorough operating
evaluation of the affiliate which builds upon its operational due diligence.
Based on this evaluation, the Company prepares a plan for increasing the
affiliate's market penetration. This plan may include one or more of the
following methods: (i) opening new facilities that are conveniently located in
highly populated areas within the MSA or in contiguous MSAs; (ii) recruiting
additional general and specialty dentists that will complement or enhance the
dental care provided by each affiliated dental group; (iii) expanding physical
capacity by adding new operatories at existing facilities; (iv) increasing the
utilization of existing physical capacity by expanding hours of operation; and
(v) growing its affiliate's patient base through increased marketing efforts
and expanded relationships with third party payors.

Opening New Facilities. The Company has successfully demonstrated its
ability to open new facilities in several of the markets in which it operates.
Since its affiliation with Park Dental in Minneapolis/St. Paul, the Company
has opened two new facilities with eight operatories. Additionally, since its
affiliation with Longhorn Dental in Austin, the Company has opened two new
facilities with a total of nine operatories. Finally, in Wisconsin, the
Company has opened two new facilities with a total of 11 operatories in
Appleton and Madison, two MSAs contiguous to Milwaukee.

Recruiting Dentists. In markets where the Company has available physical
capacity and where the opportunity exists to attract new patients, the Company
assists its affiliates in recruiting new general and/or specialty dentists.
The Company assists its affiliates in recruiting dentists through a variety of
methods including recommendations from existing affiliated dentists,
participating in dental school activities, attending state dental association
meetings and advertisements in dental publications. In 1997, the Company has
assisted in the recruitment of 16 additional dentists for its affiliates.

Expanding Physical Capacity. In some cases, to facilitate an affiliate's
need for additional physical capacity, the Company adds new operatories to an
existing facility. In 1997, the Company added operatories to several of its
facilities located in San Marcos and Minneapolis/St. Paul. The Company
currently expects that in 1998 it will continue to expand capacity at selected
facilities.

Expanding Hours of Operations. The hours of operation at each of the
Company's facilities vary widely depending on patient needs and staffing
availability. In each of the Company's markets, the Company's facilities
operate on an expanded hours basis (i.e., before 8:00 a.m. and after 5:00
p.m.). Additionally, many of the Company's facilities are open on Saturdays.
In cases where the Company and its affiliated dental groups believe they can
enhance patient service and satisfaction by expanding the hours of operation,
a plan is developed to staff the facilities and implement an expanded hours
program.

Growing Patient Base. Although the Company believes that the greatest source
of new patients is referrals from existing patients, the Company proactively
assists each of its affiliates in growing their patient base through local
marketing efforts and by expanding relationships with third party payors. The
Company and its affiliates attend health fairs, sponsor community activities,
educate elementary school children on the merits of good oral health and
sponsor public awareness programs. In addition, the Company actively develops
new relationships with third party payors at the local, regional and national
level, which increases patient flow at its affiliated practices.

Affiliations in Existing Markets

The Company also increases its market penetration by affiliating with other
leading general dentistry group practices and specialty dental group practices
that complement the platform dental group practice in a given market. These
practices are selected in much the same manner as the platform dental group
practice. The

29
<PAGE>

Company identifies those practices which have an outstanding reputation for
quality and provide the type of dental care which will complement or add to
the dental care offered by the platform dental group in that market.

The Company has demonstrated its ability to affiliate with other leading
dental groups in existing markets. For example, following its affiliation with
Park Dental in Minneapolis/St. Paul, the Company affiliated with the Orthocare
Group in October 1997. The Orthocare Group is a leading provider of
orthodontic care in Minneapolis/St. Paul, operating 17 facilities with 78
operatories. In Milwaukee, the Company expanded its market penetration through
two affiliations with leading dental groups. In July 1997, the Company
affiliated with Northpoint Dental Group, adding two facilities with 23
operatories, and in October 1997, the Company affiliated with the Wilkens
Dental Group, adding four facilities with 30 operatories. In the Austin
market, the Company affiliated with Malcolm R. Scott, D.D.S., and the
principal dentists joined Longhorn Dental. This affiliation expanded the
Company's physical capacity and geographic reach by adding a facility in San
Marcos.

OPERATIONS

Operating Structure

The Company operates under a decentralized organizational structure. At the
facility level, the Company generally employs the dental hygienists, dental
assistants and administrative staff. At each facility, a practice manager
typically oversees the day-to-day business operations. The practice manager
and administrative staff are responsible for, among other things, facility
staffing, patient scheduling, on-site patient invoicing and ordering office
and dental supplies. The Company believes local office scheduling is crucial
because it allows each practice to accommodate the needs of its patients and
increase the productivity of its dentists.

In each market, the Company has a local management team that supervises the
operations of one or more affiliates. This team provides support in areas such
as recruiting, hiring and training facility staff, developing and implementing
quality assurance programs, developing and implementing operating policies and
procedures, billing and collecting accounts receivable, processing payroll,
information systems, accounting, marketing and facilities development and
management.

Each local management team reports to one of the Company's operating vice
presidents. An operating vice president is responsible for monitoring the
operating performance of multiple affiliated dental groups in multiple
markets. Each operating vice president participates as a member of the policy
board of the affiliated dental groups for which he or she has management
oversight responsibilities. The operating vice presidents are responsible for
overseeing the development of operating plans and annual budgets and
monitoring actual results. Additionally, the Company supports each of its
dental group practices with analysis of the capacity, utilization and
productivity of each dental facility. This analysis assists each practice in
improving its operating performance from both a clinical and financial
perspective.

On a national level, the Company supports its affiliated network in several
ways. The Company assists its affiliates with: (i) sharing best clinical
practices through its National Professional Advisory Forum; (ii) evaluating
and negotiating third party contracts; (iii) designing, locating and leasing
new facilities; (iv) developing budgets and implementing accounting and
financial systems; and (v) developing and implementing practice management and
other information systems. The Company also takes advantage of economies of
scale by contracting for various goods and services. For example, the Company
has arranged for national contracts for the purchase of dental supplies and
equipment, professional, casualty, and general liability insurance and payroll
processing.

National Professional Advisory Forum

The Company has organized the National Professional Advisory Forum ("NPAF")
to provide guidance to its affiliated dental group practices with respect to
the clinical aspects of dentistry. Leading dentists from the Company's
affiliated dental groups are selected to participate in the NPAF. The NPAF
meets quarterly and provides a forum for dentists to share the best clinical
practices of their respective dental groups and an

30
<PAGE>

opportunity for them to build professional relationships with other dentists
affiliated with the Company. These dentists, as a result of their affiliation
with the Company, share common long-term goals. This enables the discussion at
the NPAF to be more open than it may be in other professional settings. While
the primary emphasis of the NPAF is on the clinical aspects of dentistry, it
also provides the Company's management an opportunity to communicate with
affiliated dentists. This enables the Company to continue to build strong,
mutually beneficial partner relationships with its affiliated dental groups.

Payor Relationships and Reimbursement Mix

The Company and its affiliates believe that clinical and economic decisions
should be made separately. However, the Company recognizes that the source of
payment for services affects operating and financial performance. The Company
assists its affiliates in analyzing their revenue and payor mix on an ongoing
basis and recommends methods by which the affiliated dental group practices
can improve operating efficiency by improving their revenue and payor mix. As
a general rule, the Company believes that growth in a market is best
facilitated where the payor mix of its affiliates mirrors the payor mix for
that market. The Company assists each of its affiliated dental groups in
evaluating and negotiating third-party payor contracts on a local, regional
and national level. The aggregate payor mix percentage of the Company's
affiliated practices was approximately 36% fee-for-service, 13% PPO plans and
51% capitated managed care plans for the nine month period ended September 30,
1997.

The Company believes it is advantageous to be affiliated with dental groups
that have successfully provided care to patients under all reimbursement
methodologies. Since a shift is taking place in the dental benefits market
from traditional fee-for-service to PPO and capitated managed care dental
plans, the Company believes that its affiliates' experience in operating under
all of these plans provides them with a competitive advantage. All of the
Company's affiliated dental groups have provided care under traditional fee-
for-service plans and non-fee-for-service plans. Several of the Company's
affiliated dental groups have been providing care to patients with capitated
managed care dental benefits for more than 20 years.

Facilities Development and Management

The Company believes an inviting professional environment is a critical
aspect of overall patient satisfaction. Each of the Company's facilities is
constructed to be warm, attractive and inviting to the patients in addition to
being highly functional. The Company's dental facilities have from three to 28
operatories, and typically accommodate general and specialty dentists, dental
hygienists and dental assistants, a business manager and a receptionist.
Generally the Company's facilities are either stand alone or located within a
professional office building or medical facility and range in size from
approximately 1,500 to 10,000 square feet.

The Company works with each of its affiliated dental groups in analyzing
utilization of existing capacity and identifying facility upgrade and
expansion priorities. The Company also provides its affiliates guidance in the
site selection process. The Company initially constructs each facility as
appropriate for the market and adds and equips additional operatories as
necessary through a capacity and utilization analysis.

The Company uses architectural design services to improve the facility
design process and to further ensure that all facilities are properly
constructed and meet the standards set forth by the AAAHC. To this end, the
Company works with each affiliated dental group to establish a defined set of
standards for each facility, such as operatory design and dental equipment,
which are consistent with the desires of the dental group. The Company
believes such facility standards are necessary to speed the site development
process and create consistency across newly developed facilities, leading to
enhanced staff and provider productivity.

Budgeting and Planning; Financial Information Systems

The Company assists each affiliate with budgeting and planning. The Company
and each affiliate develop a strategic plan for increased market penetration
on an annual basis. The Company and each affiliated dental group then jointly
develop a budget which sets specific goals for revenue growth, operating
expenses and capital expenditures. Once a budget has been approved, the
Company measures the financial performance of each affiliated dental group on
a monthly basis and compares actual performance to budget.

31
<PAGE>

The Company's financial information system enables it to measure, monitor
and compare the financial performance of affiliated dental groups on a
standardized basis across its entire network. The system also allows the
Company to track and control costs and facilitates the accounting and
financial reporting process. This financial system is installed in all
affiliated dental group practices. Historically, the Company has converted all
affiliates to its system within 90 days of affiliation and intends to continue
this practice with new affiliates.

Practice Management Systems

The Company uses various dental practice management software systems to
facilitate patient scheduling, to invoice patients and insurance companies, to
assist with facility staffing and for other practice related activities. In
connection with its affiliation with Park Dental, the Company acquired the
rights to Comdent, a proprietary practice management software system which has
been used and continuously enhanced at Park Dental since 1987. The Company
believes that Comdent's scheduling, electronic data interchange and data
management features are superior to others that are commercially available. In
addition, Comdent is scalable and capable of accommodating large multi-site
dental group practices. The Company intends, when appropriate, to convert its
affiliated dental group practices to the Comdent practice management software
system. The Company is also developing a data warehouse and decision support
system to analyze information across its entire network.

AFFILIATION STRUCTURE

Service Agreement

The Company has entered into a service agreement with each of its affiliated
PCs pursuant to which the Company performs all administrative, non-clinical
aspects of such PC's dental practice. The Company expects that each new
affiliated PC will enter into a similar service agreement or become a party to
an existing service agreement at the time of its affiliation. The Company is
dependent on its service agreements for all of its operating revenue. The
termination of one or more of these service agreements could have a material
adverse effect on the Company. See "Risk Factors--Dependence Upon Service
Agreements."

The Company is responsible for providing all services necessary for the
administration of the non-clinical aspects of the dental operations. These
services include assisting its affiliates with information systems, budgeting
and financial reporting, facilities management, third-party contracting,
supplies and equipment procurement, quality assurance initiatives, billing and
collecting accounts receivable, marketing and recruiting, hiring and training
support staff.

The PC is responsible for recruiting and hiring all of the dentists
necessary to provide dental care. The Company does not assume any authority,
responsibility, supervision or control over the provision of dental care to
patients. The service agreement requires the PC to enter into employment or
independent contractor agreements with each dentist retained by the PC. The
service agreement also requires the PC to implement and maintain quality
assurance and peer review programs, maintain professional and comprehensive
general liability insurance covering the PC and each of its dentists and abide
by non-competition and confidentiality provisions.

The Company and each PC establish a joint policy board which is responsible
for developing and implementing management and administrative policies for the
dental operation. The policy board consists of an equal number of
representatives designated by the Company and the PC. The policy board members
designated by the PC must be licensed dentists employed by the PC. The policy
board's responsibilities include the review and approval of all renovation and
expansion plans and capital equipment expenditures with respect to the dental
facilities affiliated with the PC, all annual capital and operating budgets,
all advertising and marketing services, the long-term strategic and short-term
operational goals, objectives, and plans for the dental facilities and
staffing plans regarding provider and support personnel for the dental
facilities. The policy board also reviews and monitors the financial
performance of the PC with respect to the attainment of the PC's budgeted
goals. The policy board also has the authority to approve or disapprove any
merger or combination with, or acquisition of, any dental practice by the PC.
Finally, the policy board reviews and makes recommendations with respect to
contractual relationships between the PC and third-party payors. However, the
PCs have final approval over matters relating to dental care including all
third-party payor contracts and fee practices and schedules.

32
<PAGE>

The PC reimburses the Company for expenses incurred on its behalf in
connection with the operation and administration of the dental facilities and
pays fees to the Company for management services. A portion of these fees
typically includes a fixed monthly amount. The Company typically receives an
additional fee if certain operating objectives are achieved. The Company's
service fees (after reimbursement of expenses) range from approximately 9% to
22% of the PC's adjusted gross revenue. The PC is also responsible for
provider expenses, which generally consist of the salaries, benefits, and
certain other expenses of the dentist. The fees payable to the Company are
determined prior to each affiliation and annually thereafter based on a formal
budgeting process.

Each of the Company's current service agreements is for an initial term of
40 years and automatically renews for successive five-year terms, unless
terminated by notice given at least 120 days prior to the end of the initial
term or any renewal term. In addition, the service agreement may be terminated
earlier by either party upon the occurrence of certain events involving the
other party, such as its dissolution, bankruptcy, liquidation, or its failure
to perform its material duties and obligations under the service agreement. In
the event a management service agreement is terminated, the related affiliated
dental practice is required to purchase, at the Company's option, the
unamortized balance of intangible assets at the current book value, as well as
all related other assets associated with the affiliated dental practice.

Employment Agreements with Dentists

All dentists practicing full time at the dental facilities have entered into
employment agreements with their respective PCs. The employment agreements
with dentists who are owners of the PCs generally are for a specified initial
term of up to five years. The employment agreements with other dentists may be
for terms up to 18 months. Such employment agreements are usually terminable
by either party upon advance written notice, which may be 90 days in some
cases, and are terminable by the PC for cause immediately upon notice to the
dentist. Such agreements typically contain non-competition provisions which
prohibit the dentist from engaging in the practice of dentistry or otherwise
performing professional dental services within a specified geographic area,
usually a specified number of miles from the relevant dental facility,
following termination. The non-competition restrictions are generally for one
to two years following termination.

COMPETITION

The dental practice management industry, currently in its formative stage,
is highly competitive and is expected to become more competitive. The Company
competes with other dental practice management companies which seek to
affiliate with existing dental practices. The Company believes that the
principal factors of competition between dental practice management companies
are their affiliation methods and models, the reputation of their existing
affiliates, the scope of their dental care networks, their management
expertise and experience, the sophistication of their management information,
accounting, finance and other systems and their operating methods. The Company
believes that it competes effectively with other dental practice management
companies with respect to these factors. See "Risk Factors--Competition."

GOVERNMENT REGULATION

General

The practice of dentistry is highly regulated, and the operations of the
Company and its affiliated dental practices are subject to numerous state and
federal laws and regulations. Furthermore, the Company may become subject to
additional laws and regulations as it expands into new markets. There can be
no assurance that the regulatory environment in which the Company and its
affiliated dental group practices operate will not change significantly in the
future. The ability of the Company to operate profitably will depend, in part,
upon the Company and its affiliated dental group practices obtaining and
maintaining all necessary licenses, certifications and other approvals and
operating in compliance with applicable laws. See "Risk Factors--Government
Regulation."

33
<PAGE>

State Regulation

Every state imposes licensing and other requirements on individual dentists
and dental facilities and services. Except for Wisconsin, the laws of the
states in which the Company currently operates prohibit, either by specific
statutes, case law or as a matter of general public policy, entities not
wholly owned or controlled by dentists, such as the Company, from practicing
dentistry, from employing dentists and, in certain circumstances, dental
assistants and dental hygienists, or from exercising control over the
provision of dental services. Many states prohibit or restrict the ability of
a person other than a licensed dentist to own, manage or control the assets,
equipment or offices used in a dental practice. The laws of some states
prohibit the advertising of dental services under a trade or corporate name
and require all advertisements to be in the name of the dentist. A number of
states also regulate the content of advertisements of dental services and the
use of promotional gift items. These laws and their interpretation vary from
state to state and are enforced by regulatory authorities with broad
discretion.

There are certain regulatory issues associated with the Company's role in
negotiating and administering managed care contracts. To the extent that the
Company or any affiliated dental group practice contracts with third party
payors, including self-insured plans, under a capitated or other arrangement
which causes the Company or such affiliated dental group practice to assume a
portion of the financial risk of providing dental care, the Company or such
affiliated dental group practice may become subject to state insurance laws.
If the Company or any affiliated dental group practice is determined to be
engaged in the business of insurance, the Company may be required to change
the method of payment from third party payors or to seek appropriate
licensure. Any regulation of the Company or its affiliated dental group
practices under insurance laws could have a material adverse effect on the
Company's business, financial condition and results of operations.

Many states have fraud and abuse laws, including anti-kickback laws, which
are similar to the federal laws, discussed below, and in many cases these laws
apply to all referrals for items or services reimbursable by any payor. A
number of states also impose significant criminal and civil penalties for
false claims, false or improper billings, or inappropriate coding for dental
services. Many states either prohibit or require disclosure of self-referral
arrangements and impose criminal and civil penalties for violations of these
laws.

Many states also prohibit a dentist from paying a portion of fees received
for dental services to another person or entity. In some states, this "fee-
splitting" prohibition applies only to payments in exchange for referrals.
Other states flatly prohibit any rebates or split fees regardless of whether
referrals are involved. There can be no assurance that management fees paid to
the Company, to the extent based on a percentage of dental service revenues or
profits, will not be deemed to violate such laws.

Many states have antitrust laws which prohibit agreements in restraint of
trade, the exercise of monopoly power and other practices that are considered
to be anti-competitive, including cooperation by separate economic entities to
fix the prices of services. Dental practices are also subject to compliance
with state and local regulatory standards in the areas of safety and health.

Federal Regulation

The dental industry is also regulated at the federal level to the extent
that dental services are reimbursed under federal programs. Participation by
the affiliated dental group practices and their dentists in such programs
subject them, and potentially the Company, to significant regulation regarding
the provision of services to beneficiaries, submission of claims and related
matters, including the types of regulations discussed below. Violation of
these laws or regulations can result in civil and criminal penalties,
including possible exclusion of individuals and entities from participation in
federal payment programs.

The federal anti-kickback statutes prohibit, in part, and subject to certain
safe harbors, the payment or receipt of remuneration in return for, or in
order to induce, referrals, or arranging for referrals, for items or services
which are reimbursable under federal payment programs. Other federal laws
impose significant penalties for false or improper billings or inappropriate
coding for dental services regardless of the payor source. The

34
<PAGE>

federal self-referral law, or "Stark law," prohibits dentists from making
referrals for certain designated health services reimbursable under federal
payment programs to entities with which they have financial relationships
unless a specific exception applies. The Stark law also prohibits the entity
receiving such referrals from submitting a claim for services provided
pursuant to such referral. The Company may be subject to federal payor rules
prohibiting the assignment of the right to receive payment for services
rendered unless certain conditions are met. These rules prohibit a billing
agent from receiving a fee based on a percentage of collections and may
require payments for the services of the dentists to be made directly to the
dentist providing the services or to a lock-box account held in the name of
the dentist or his or her dental group. In addition, these rules provide that
accounts receivables from federal payors are not saleable or assignable.

Federal antitrust laws prohibit agreements in restraint of trade, the
exercise of monopoly power and other practices that are considered to be anti-
competitive, including cooperation by separate economic entities to fix the
prices of services. Finally, dental practices are also subject to compliance
with federal regulatory standards in the areas of safety and health.

INSURANCE

The Company maintains property-casualty insurance covering its corporate
offices and dental facilities on a replacement cost basis. Each affiliated PC
maintains, or causes to be maintained, professional liability insurance
covering itself and its employees and contractors, including the dentists,
hygienists and dental assistants employed by, or contracted by such affiliated
PC in the amount of $1 million per occurrence and $3 million annual aggregate.
The Company generally is a named insured under such policies. The Company also
maintains umbrella liability coverage for its property-casualty policies in
the amount of $10 million. Certain types of risks and liabilities may not be
covered by insurance, however, and there can be no assurance that coverage
will continue to be available upon terms satisfactory to the Company or that
the coverage will be adequate to cover losses. Malpractice insurance,
moreover, can be expensive and varies from state to state. Successful
malpractice claims asserted against the dentists, the PCs or the Company may
have a material adverse effect on the Company's business, financial condition
and operating results. While the Company believes its insurance policies are
adequate in amount and coverage for its current operations, there can be no
assurance that the coverage maintained by the Company will be sufficient to
cover all future claims or will continue to be available in adequate amounts
or at a reasonable cost.

LEGAL PROCEEDINGS

From time to time, the Company may be subject to litigation incidental to
its business. The Company is not presently a party to any material litigation.
The dentists employed by, or independent contractors of, the Company's
affiliated PCs are from time to time subject to malpractice claims. Such
claims, if successful, could result in damage awards exceeding applicable
insurance coverage.

FACILITIES AND EMPLOYEES

The Company's corporate office is located at 301 Edgewater Place, Suite 320,
Wakefield, Massachusetts, in approximately 5,300 square feet occupied under a
lease which expires in June 1999. The Company leases most of its dental
facilities. Typically, each acquired dental facility is located at the site
used by the dental group practice prior to affiliating with the Company.

As of January 30, 1998, the Company had approximately 885 employees,
including 472 hygienists and dental assistants and 413 administrative and
management employees located at the Company's 83 dental facilities and local
management offices. In addition, the Company was affiliated with 176 dentists,
as well as six hygienists and nine dental assistants located in states which
prohibit the Company's employment of hygienists and dental assistants, all of
whom were employees or independent contractors of their respective affiliated
PCs. The Company considers its relations with its employees to be good.

35
<PAGE>

MANAGEMENT

DIRECTORS AND EXECUTIVE OFFICERS

The following table sets forth information concerning each of the directors
and executive officers of the Company:

<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<C> <C> <S>
Gregory A. Serrao....... 35 Chairman, President and Chief Executive Officer
Ronald M. Levenson...... 42 Senior Vice President, Chief Financial Officer
and Treasurer
George W. Robinson...... 60 Senior Vice President--Operations
William H. Bottlinger... 53 Vice President--Regional Operations and Chief
Information Officer
Forrest M. Flint........ 45 Vice President--Business Development
Michael F. Frisch....... 39 Vice President--Regional Operations
Kathryn A. Russell...... 45 Vice President--Financial Operations
Dr. Gregory T. Swenson.. 63 President of PDHC, Ltd. and Director
James T. Kelly (1)...... 50 Director
Martin J. Mannion
(1)(2)................. 38 Director
Derril W. Reeves
(1)(2)................. 54 Director
</TABLE>
- --------
(1) Member of the Audit Committee.
(2) Member of the Compensation Committee.

Mr. Serrao, the founder of the Company, has served as President, Chief
Executive Officer and a Director of the Company since December 1995 and as
Chairman since October 1997. From 1992 through December 1995, Mr. Serrao
served as the President of National Specialty Services, Inc., a subsidiary of
Cardinal Health, Inc. ("Cardinal Health"). From 1991 to 1992, Mr. Serrao
served as Vice President--Corporate Development of Cardinal Health. Before
joining Cardinal Health, Mr. Serrao was an investment banker at Dean Witter
Reynolds Inc. where he co-founded its health care investment banking group and
specialized in mergers, acquisitions and public equity offerings.

Mr. Levenson has served as Senior Vice President, Chief Financial Officer
and Treasurer of the Company since April 1996. Prior to joining the Company,
Mr. Levenson was employed by American Medical Response, Inc. ("AMR"), a
national provider of ambulance services, where he served as Senior Vice
President and Chief Accounting Officer from October 1992 through April 1996
and also served as Treasurer from August 1995 through April 1996. Prior to
joining AMR, Mr. Levenson was a Senior Manager at KPMG Peat Marwick LLP, a
public accounting firm, where he was employed from 1979 through 1992.

Mr. Robinson has served as Senior Vice President--Operations of the Company
since May 1996. From 1994 through May 1996, Mr. Robinson served as the
President of Nanston Dental Group, a dental provider network located in
Georgia and North Carolina. From 1979 to 1994, Mr. Robinson served as an
Administrator of Kaiser Permanente's Dental Division, which was affiliated
with over 200 providers in two states and provided dental care to over 140,000
members.

Mr. Bottlinger has served as Vice President and Chief Information Officer of
the Company since January 1997 and as Vice President--Regional Operations
since November 1997. From 1985 through 1996, Mr. Bottlinger served as Senior
Vice President and Chief Information Officer for Cardinal Health and Senior
Vice President and General Manager of CORD Logistics, Inc., a Cardinal Health
subsidiary which provided pharmaceutical distribution and information
technology services for emerging biotechnical manufacturing companies. During
his career, Mr. Bottlinger has initiated the use of state of the art
information system technology in a variety of businesses engaged in retailing,
food wholesaling, pharmaceutical manufacturing and distribution, pharmacy
operations and financial services.

36
<PAGE>

Mr. Flint has served as Vice President--Business Development of the Company
since November 1996. From 1985 through November 1996, Mr. Flint served as the
Executive Director of PDHC, Ltd ("Park"), prior to its affiliation with the
Company. At Park, Mr. Flint was responsible for managing all external
relationships and contracting with third party payors. From 1984 to 1985, Mr.
Flint was an investment banker in the health care finance group of Dain
Bosworth, Inc. From 1977 to 1984, Mr. Flint was the Director of the South
Dakota Division of Health Services. Mr. Flint is a past Board Member of the
Accreditation Association for Ambulatory Health Care, Inc.

Mr. Frisch has served as Vice President--Regional Operations of the Company
since June 1997. From January 1997 to June 1997, Mr. Frisch served as the
Company's Director-National Support Initiatives. From July 1996 to January
1997, Mr. Frisch was an independent consultant to the Company. From June 1993
to July 1996, Mr. Frisch served as Vice President and General Manager of
National Specialty Services, Inc., a subsidiary of Cardinal Health. From July
1986 to June 1993, Mr. Frisch was employed by VHA, Inc., a national health
care alliance, in a variety of marketing, business development and management
positions.

Ms. Russell has served as Vice President--Financial Operations of the
Company since January 1998. From December 1996 to January 1998, Ms. Russell
served as Vice President--Finance. Prior to joining the Company, Ms. Russell
was employed by Heartland Foods Systems, Inc., a multi-concept food retailer
with 230 locations, where she served as Vice President and Assistant Secretary
from 1993 through 1995. From 1991 to 1992, Ms. Russell was Manager of Sales
Audit for The Limited, Inc., a publicly-held retailer. From 1983 to 1991, Ms.
Russell held management positions with publicly held financial services
companies. Prior to 1983, Ms. Russell was a Senior Manager at Deloitte &
Touche, a public accounting firm, where she was employed from 1974 through
1983.

Dr. Swenson has served as President of PDHC, Ltd., President of Park Dental
and a Director of the Company since November 1996. From 1983, when he co-
founded Park, to November 1996, Dr. Swenson served as Chairman and Chief
Executive Officer of Park. Dr. Swenson was a member of the American Academy of
Dental Group Practices ("AADGP") from 1980 until 1995, serving on many
occasions as a practice auditor in the AADGP's accreditation program. In 1978,
Park's predecessor was the second group practice to receive AADGP's
accreditation certificate. In 1973, a national referee committee selected Dr.
Swenson to the American Association of Endodontics, a society with which he
maintained a membership until 1989. In 1972, after practicing solo dentistry
for ten years, he formed a partnership with colleagues and helped build Park's
predecessor group practice. Dr. Swenson is a member of the Minnesota State
Dental Association, the American Dental Association, and Federation Dentaire
Internationale. From 1980 to 1996, Dr. Swenson served on the Board of
Directors of Marquette Bank Brookdale.

Mr. Kelly has served as a Director of the Company since February 1997. Mr.
Kelly has served as Chairman of the Board of Lincare Holdings Inc., a provider
of home respiratory therapy services, since April 1994. Mr. Kelly served as
the Chief Executive Officer of Lincare from June 1986 through December 1996.
Prior to 1986, Mr. Kelly served in a number of capacities within the Mining
and Metals Division of Union Carbide Corporation over a 19-year period.

Mr. Mannion has served as a Director of the Company since January 1996 and
served as Chairman from January 1996 to October 1997. Mr. Mannion is a general
partner with Summit Partners, a private equity capital firm, where he has been
employed since 1985. Through his work with Summit Partners, Mr. Mannion
currently serves as a director of Suburban Ostomy Supply Company and numerous
private companies.

Mr. Reeves has served as a Director of the Company since February 1997. Mr.
Reeves is a founder, Executive Vice President for Development and Director of
PhyCor, Inc. and has served in various positions with PhyCor since 1987. From
1974 to 1976, Mr. Reeves was with Hospital Affiliates International ("HAI")
where he served as Vice President of Hospital Management Corporation, the
hospital management subsidiary of HAI. In 1977, he joined Hospital Corporation
of America ("HCA") to head the growth function for HCA's management company.
Mr. Reeves was a Vice President of HCA and also Vice President of Development
for HCA Management Company until 1985. In 1985, he moved to HCA Health Plans
as Vice President of Sales and Marketing and was instrumental in the creation
of Equicor where was Senior Vice President, National Sales.

37
<PAGE>

BOARD OF DIRECTORS

The Company's Board of Directors is divided into three classes, with each
class elected to serve a staggered three-year term. The Class I director,
whose term will expire at the 1998 annual meeting of stockholders, is Dr.
Swenson. The Class II directors, whose terms will expire at the 1999 annual
meeting of stockholders, are Messrs. Mannion and Kelly. The Class III
directors, whose terms will expire at the 2000 annual meeting of stockholders,
are Messrs. Serrao and Reeves. The classified Board of Directors may increase
the difficulty of consummating or discourage a business combination or an
attempt to gain control of the Company that is not approved by the Board of
Directors. The Company's executive officers are elected annually by and serve
at the discretion of the Board of Directors. See "--Employment Agreements."

COMPENSATION OF DIRECTORS

Directors who are also employees of the Company or one of its subsidiaries
do not receive additional compensation for serving as directors. Each director
who is not an employee of the Company or one of its subsidiaries receives a
fee of $1,000 for attending each Board of Directors' meeting and $500 for
attending each committee meeting. In addition, each non-employee director who
is not an officer of the Company is eligible to receive options under the
Company's 1996 Amended and Restated Directors Stock Plan. These options are
issued at such times and in such amounts as may be determined by the Directors
Stock Option Plan Committee, at their discretion. See "Stock Plans--1996
Directors Stock Option Plan." Directors are also reimbursed for out-of-pocket
expenses incurred in attending meetings of the Board of Directors or
committees thereof.

38
<PAGE>

COMPENSATION OF EXECUTIVE OFFICERS

The following table sets forth information with respect to compensation paid
to or accrued on behalf of (i) the Chief Executive Officer and (ii) the other
most highly compensated executive officers of the Company whose aggregate base
salary and bonus exceeded $100,000 (the "Named Executive Officers") in 1996.

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM AWARDS
----------------------------------------- ------------------------
OTHER SECURITIES
ANNUAL RESTRICTED UNDERLYING ALL OTHER
YEAR SALARY ($)(1) BONUS ($) COMPENSATION STOCK OPTIONS (#) COMPENSATION(5)
---- ------------- --------- ------------ ---------- ----------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Gregory A. Serrao....... 1996 $144,000 $90,000 $136,461(2) $99,500(4) 270,270 $519
Chairman, President and
Chief Executive Officer
Ronald M. Levenson...... 1996 $103,000 $41,600 $ 23,000(3) -- 81,000 --
Senior Vice President,
Chief Financial Officer
and Treasurer
George W. Robinson...... 1996 $ 72,000 $43,750 $ 41,000(3) -- 60,000 $433
Senior Vice President--
Operations
</TABLE>
- --------
(1) Represents less than one full year's compensation.
(2) Consists of a tax offset bonus in the amount of $84,461 paid with respect
to the restricted Common Stock issued to Mr. Serrao in January 1996, and
moving and relocation expenses in the amount of $52,000.
(3) Consists of moving and relocation expenses.
(4) Represents the dollar value (net of consideration paid) of 300,000 shares
of restricted Common Stock issued to Mr. Serrao in January 1996, based
upon the fair market value of such shares on the date of issuance. Such
shares are subject to repurchase rights in favor of the Company upon the
occurrence of certain events, including the termination of Mr. Serrao's
employment. Such repurchase rights lapse ratably during the first four
years of Mr. Serrao's employment and upon the occurrence of certain other
events. As of December 31, 1996, 231,228 shares of restricted Common Stock
with a fair market value on such date of $2,890,350 were held by Mr.
Serrao. Dividends, if declared and paid upon the Common Stock, will be
paid on such restricted stock.
(5) Represents matching contributions under the Company's 401(k) plan.

OPTION GRANTS IN LAST FISCAL YEAR

The following table sets forth certain information about options to purchase
Common Stock which were granted during the year ended December 31, 1996.

<TABLE>
<CAPTION>
POTENTIAL REALIZEABLE
VALUE AT ASSUMED
ANNUAL RATES OF STOCK
PRICE APPRECIATION
INDIVIDUAL GRANTS FOR OPTION TERM
---------------------------------------------------- ----------------------
NUMBER OF SECURITIES EXERCISE
UNDERLYING OPTIONS % OF TOTAL PRICE EXPIRATION
GRANTED (#) OPTIONS ($/SHARE) DATE 5% ($) 10% ($)
-------------------- ---------- --------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
Gregory A. Serrao....... 270,270(1) 47% $0.33 07/08/05 $ 52,632 $ 131,629
Ronald M. Levenson...... 60,000(2) 11% $0.33 04/22/06 $ 12,452 $ 31,556
21,000(1) 4% $0.33 10/22/05 $ 4,089 $ 10,228
George W. Robinson...... 43,800(2) 8% $8.33 06/03/06 $ 229,455 $ 581,483
16,200(1) 3% $8.33 12/03/05 $ 79,633 $199,159
</TABLE>
- --------
(1) Options issued under the 1996 Time Accelerated Restricted Stock Option
Plan. The exercise price of the options is equal to the fair market value
of the Company's Common Stock on the date of grant. These options will
become exercisable upon completion of this offering.
(2) Options issued under the 1996 Stock Option Plan. The exercise price of the
options is equal to the fair market value of the Company's Common Stock on
the date of grant. Options become exercisable in equal annual installments
over a four-year period.

39
<PAGE>

AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES

The following table presents information about the value of options
outstanding for each of the Named Executive Officers as of December 31, 1996.
No options were exercised during the year.

<TABLE>
<CAPTION>
NUMBER OF SECURITIES UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS AT IN-THE-MONEY OPTIONS
DECEMBER 31, 1996 (#) AT DECEMBER 31, 1996 ($)
------------------------------------ ----------------------------
EXERCISABLE(1) UNEXERCISABLE EXERCISABLE(1) UNEXERCISABLE
---------------- --------------- -------------- -------------
<S> <C> <C> <C> <C>
Gregory A. Serrao....... 270,270 -- $3,289,186 --
Ronald M. Levenson...... 21,000 60,000 $ 255,575 $730,200
George W. Robinson...... 16,200 43,800 $ 67,540 $182,646
</TABLE>
- --------
(1) Although not exercisable at December 31, 1996, these options will become
exercisable upon the completion of this offering.

EMPLOYMENT AGREEMENTS

The Company has a five-year employment agreement with Mr. Serrao which
terminates in January 2001. Under his employment agreement, Mr. Serrao
receives an annual base salary of $150,000 (subject to potential annual salary
increases) and a bonus in an amount up to 60% of his then current base salary.
Mr. Serrao is also subject to non-competition and confidentiality provisions
in the employment agreement. If Mr. Serrao's employment is terminated prior to
the end of the five-year term by the Company without cause or by Mr. Serrao
for "good reason" (as defined in the employment agreement) he is entitled to
receive severance benefits which include severance payments in an amount equal
to his then current annual base salary and health care benefits for one year
after termination.

The Company has a three-year employment agreement with Mr. Levenson which
terminates in April 1999. Under his employment agreement, Mr. Levenson
receives an annual base salary of $150,000 (subject to potential annual salary
increases) and a bonus in an amount up to 40% of his then current base salary.
Mr. Levenson is also subject to non-competition and confidentiality provisions
in the employment agreement. If Mr. Levenson's employment is terminated prior
to the end of the three-year term by the Company without cause or by Mr.
Levenson for "good reason" (as defined in the employment agreement) he is
entitled to receive severance benefits which include severance payments in an
amount equal to his then current annual base salary and health care benefits
for one year after termination.

The Company has a three-year employment agreement with Mr. Robinson which
terminates in May 1999. Under his employment agreement, Mr. Robinson receives
an annual base salary of $125,000 and a bonus in an amount up to $75,000. Mr.
Robinson is also subject to non-competition and confidentiality provisions in
the employment agreement. If Mr. Robinson's employment is terminated prior to
the end of the three-year term by the Company without cause, he is entitled to
receive severance benefits which include severance payments in an amount equal
to his base salary for the shorter of one year or the remainder of the term of
the agreement.

STOCK PLANS

1996 Stock Option Plan

The 1996 Stock Option Plan, as amended (the "1996 Plan"), was originally
adopted in January 1996. The purpose of the 1996 Plan is to provide options to
officers and key employees of the Company and its subsidiaries. Options are
granted at a price per share which is equal to the fair market value of the
Common Stock at the time of the grant. Options granted pursuant to the 1996
Plan expire ten years from the date of grant, or may expire earlier upon
termination of the grantee's employment with the Company. The total number of
shares of Common Stock subject to the 1996 Plan is 873,246, of which options
for 648,420 shares were outstanding at October 31, 1997.

40
<PAGE>

1996 Time Accelerated Restricted Stock Option Plan

The 1996 Time Accelerated Restricted Stock Option Plan, as amended (the
"TARSOP"), was originally adopted in January 1996. The total number of shares
subject to the TARSOP is 360,360. Options to purchase all such shares have
been granted and will become exercisable upon completion of this offering.

1996 Affiliate Stock Option Plan

The Amended and Restated 1996 Affiliate Stock Option Plan (the "Affiliate
Plan") was originally adopted in September 1996. The purpose of the Affiliate
Plan is to provide options to certain persons associated with the affiliated
dental practices. Options are granted at a price per share which is equal to
the fair market value of Common Stock at the time of grant. The total number
of shares of Common Stock subject to the Affiliate Plan is 210,000, of which
options for 89,586 shares were outstanding at October 31, 1997.

1996 Directors Stock Option Plan

The 1996 Amended and Restated Directors Stock Option Plan, as amended (the
"Directors Plan"), was originally adopted in September 1996. The purpose of
the Directors Plan is to grant options to those directors of the Company who
are not employees or officers of the Company or any subsidiary of the Company.
Options are granted at a price per share which is equal to the fair market
value of Common Stock at the date of the time of grant. The total number of
shares of Common Stock subject to the Directors Plan is 60,000, of which
options for 19,800 shares were outstanding at October 31, 1997.

1997 Employee Stock Purchase Plan

On October 27, 1997, the Company approved the 1997 Employee Stock Purchase
Plan (the "Employee Stock Purchase Plan"), effective December 1, 1997. The
Employee Stock Purchase Plan is designed to enable eligible employees to
purchase shares of Common Stock at a discount on a periodic basis through
payroll deductions and is intended to meet the requirements of Section 423 of
the Internal Revenue Code. Purchases will occur at the end of option periods,
each of six months' duration, except that the first such option period will
begin concurrent with the commencement of this offering and end on June 30,
1998. The purchase price of Common Stock under the Employee Stock Purchase
Plan will be 85% of the lesser of the value of the Common Stock at the
beginning of an option period and the value of the Common Stock at the end of
the option period. Participants may elect under the Employee Stock Purchase
Plan, prior to each option period, to have from 2% to 10% of their pay
withheld and applied to the purchase of shares at the end of the option
period. However, the Employee Stock Purchase Plan imposes a maximum of $10,000
on the amount that may be withheld from any participant in any option period.
A total of 200,000 shares of Common Stock has been reserved for issuance under
the Employee Stock Purchase Plan.

41
<PAGE>

CERTAIN TRANSACTIONS

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

Prior to October 27, 1997, the Company did not have a separate Compensation
Committee or other committee performing equivalent functions. As a result,
compensation decisions prior to that time were made by the Company's Board of
Directors consisting of Messrs. Serrao, Kelly, Mannion, Reeves and Dr.
Swenson. Messrs. Mannion and Reeves serve as the current members of the
Company's Compensation Committee. There are no interlocking relationships
between any executive officers of the Company and any entity whose directors
or executive officers serve on the Company's Board of Directors or
Compensation Committee.

The Company and a group of investors (collectively, the "Purchasers") are
parties to various agreements and transactions which were entered into in
connection with the initial capitalization of the Company. The Purchasers
include, among others, Mr. Serrao and certain limited partnerships which are
affiliated with Summit Partners. Mr. Mannion, a Director of the Company, is a
general partner of Summit Partners. Summit Partners and its affiliated limited
partnerships are hereinafter collectively referred to as "Summit Partners."

The Company and the Purchasers are parties to a Series A and Series B
Preferred Stock Purchase Agreement dated January 8, 1996, as amended (the
"Preferred Stock Purchase Agreement"), pursuant to which the Purchasers
purchased, in the aggregate, 400,000 shares of Series A Convertible Preferred
Stock at a price of $19.75 per share and 70,000 shares of Series B Redeemable
Preferred Stock at a price of $100 per share. In addition, in connection with
entering into the Preferred Stock Purchase Agreement, the Purchasers purchased
an aggregate of 300,000 shares of Common Stock at $0.33 per share. The
aggregate purchase price for all Preferred and Common Stock purchased by the
Purchasers was $15,000,000. The proceeds from the sale of such shares were
used by the Company for the acquisition of dental practices and for general
working capital purposes. The following table describes the number of shares
of Series A and Series B Preferred Stock and Common Stock purchased by Mr.
Serrao and Summit Partners:

<TABLE>
<CAPTION>
NUMBER OF SHARES
------------------------------------------------
SERIES A CONVERTIBLE SERIES B REDEEMABLE COMMON
PREFERRED STOCK PREFERRED STOCK STOCK
-------------------- ------------------- -------
<S> <C> <C> <C>
Gregory A. Serrao........... 2,933 513 2,200
Summit Partners............. 349,600 61,180 278,563
</TABLE>

The Series A Convertible Stock will convert into 17,600 and 2,097,599 shares
of Common Stock for Mr. Serrao and Summit Partners, respectively, upon
completion of this offering. Approximately $7.7 million of the proceeds of
this offering will be used to redeem all of the Series B Preferred Stock,
including unpaid dividends. See "Use of Proceeds." In connection with such
redemption, Mr. Serrao and Summit Partners will receive $56,496 and
$6,733,704, respectively. The Preferred Stock Purchase Agreement also grants
to the Purchasers preemptive rights with respect to the Company's issuance of
certain securities, which rights will expire immediately prior to, and will
not apply in connection with, this offering.

The Company and Summit Partners are parties to a Subordinated Debenture
Purchase Agreement dated January 8, 1996, as amended, pursuant to which Summit
Partners has committed to purchase up to $15,000,000 of 12% subordinated
debentures of the Company (the "Debentures") upon the Company's request. To
date, the Company has not requested that Summit Partners purchase any of the
Debentures, and the Company does not anticipate that any such request will be
made. Furthermore, the obligations of Summit Partners to purchase the
Debentures will automatically terminate upon the completion of this offering.

The Company and the Purchasers are parties to a Registration Rights
Agreement dated January 8, 1996, as amended (the "Purchasers Registration
Rights Agreement"), pursuant to which the Purchasers have the right, subject
to certain restrictions, to cause the Company to effect a registration of
their shares of Common Stock under the Securities Act of 1933, as amended (the
"Securities Act"). The Purchasers also have certain "piggy back" registration
rights in the event the Company registers any of its securities for either
itself or for security holders exercising their registration rights. The
Purchasers have waived their piggy back registration rights in connection with
this offering.

42
<PAGE>

The Company and the Purchasers are parties to a Shareholders' Agreement
dated January 8, 1996, as amended (the "Shareholders' Agreement"). The
Shareholders' Agreement contains provisions granting the non-management
Purchasers (the "Investors") a right of first refusal with respect to stock
sales by management Purchasers, including Messrs. Serrao and Levenson, as well
as granting the Purchasers "drag-along" and "tag-along" rights under certain
circumstances with respect to stock sales to third parties by other
Purchasers. Finally, the Shareholders' Agreement contains provisions regarding
the composition of the Company's Board of Directors and the rights of Mr.
Serrao and Summit Partners to designate certain members to the Board of
Directors. The Shareholders' Agreement will terminate immediately prior to the
completion of this offering.

The Company acquired Park pursuant to the terms of an Acquisition and
Exchange Agreement effective November 12, 1996 (the "Acquisition Agreement"),
among the Company, Park, and all of the shareholders of Park, including Dr.
Swenson. Under the Acquisition Agreement, the shareholders of Park received an
aggregate of $3.3 million in cash, $1.5 million principal amount of
subordinated promissory notes of the Company and 1,260,000 shares of Common
Stock in consideration for the exchange of all of their Park shares. The
consideration received by Dr. Swenson for the exchange of his Park shares was
on a pro rata basis with all other shareholders of Park. The terms and
conditions of the acquisition of Park, including the consideration received
for the exchange of the Park shares, were based upon arms-length negotiations
between representatives of the Company and representatives of Park, including
Dr. Swenson. Dr. Swenson was elected as a member of the Company's Board of
Directors pursuant to the terms of the Acquisition Agreement.

The Company entered into a registration rights agreement with the former
shareholders of Park. This registration rights agreement contains provisions
which grant the former shareholders of Park piggy back registration rights,
exercisable only after an initial public offering by the Company, in the event
the Company registers any of its securities for either itself or for security
holders exercising their registration rights. In addition, this registration
rights agreement contains a provision under which the former Park shareholders
may require registration of their shares of Common Stock (subject to the other
general applicable limitations on the Company's registration obligations) on
one occasion if and to the extent that they have not otherwise had the
opportunity to register their shares during the three-year period following
the completion of an initial public offering by the Company.

The Company entered into a shareholders' agreement with the former
shareholders of Park. This agreement provides a right of first refusal in
favor of the Company or its assignee with respect to stock sales by such
shareholders. This agreement also contains drag-along rights in favor of the
Investors with respect to any stock sales by such shareholders to third
parties. Finally, so long as the Investors own a majority of the shares of
voting stock of the Company or have the right to control the vote of a
majority of the shares of such voting stock with respect to the election of
the directors of the Company, the former Park shareholders are required to
vote all of their Common Stock for the election of the directors of the
Company in such manner as may be designated by Investors holding not less than
a majority of the shares of such voting stock then owned by all Investors.
This shareholders' agreement will terminate immediately prior to the
completion of this offering.

The Company entered into a service agreement with the professional
corporation formed by the former dentist shareholders of Park, including Dr.
Swenson. This service agreement is on substantially the same terms and
conditions as all of the Company's other service agreements. See "Business--
Affiliation Structure--Service Agreement."

INITIAL CAPITALIZATION ARRANGEMENTS

Mr. Serrao and Summit Partners, of which Mr. Mannion is a general partner,
were parties to various agreements and transactions which were entered into in
connection with the initial capitalization of the Company. In addition, Mr.
Levenson, the Company's Senior Vice President and Chief Financial Officer, was
a party to such agreements and transactions. Pursuant to the Preferred Stock
Purchase Agreement, Mr. Levenson purchased 5,600 shares of Series A
Convertible Preferred Stock at a price of $19.75 per share and 980 shares of
Series B Redeemable Preferred Stock at a price of $100 per share. In addition,
in connection with entering into the

43
<PAGE>

Preferred Stock Purchase Agreement, Mr. Levenson purchased 4,199 shares of
Common Stock at $0.33 per share. The Series A Convertible Stock will convert
into 33,600 shares of Common Stock upon completion of this offering. As part
of the redemption of the Series B Redeemable Preferred Stock with a portion of
the proceeds of this offering, Mr. Levenson will receive $107,611. See "Use of
Proceeds." Mr. Levenson is also a party to the Purchasers Registration Rights
Agreement and the Shareholders' Agreement, and he is a management Purchaser
under the Shareholders' Agreement. Mr. Levenson has waived his piggy back
registration rights in connection with this offering. See "--Compensation
Committee Interlocks and Insider Participation."

AFFILIATION WITH PARK DENTAL

Dr. Swenson was a party to various agreements and transactions which were
entered into in connection with the Company's affiliation with Park. In
addition to Dr. Swenson, Delta Associates, Ltd. ("DAL"), a greater than 5%
stockholder of the Company, was a stockholder of Park and received its pro
rata share of the consideration paid by the Company for the exchange of its
Park stock. DAL is also a party to the registration rights agreement and the
shareholders' agreement with the former shareholders of Park. See "--
Compensation Committee Interlocks and Insider Participation."

44
<PAGE>

PRINCIPAL STOCKHOLDERS

The following table sets forth certain information regarding beneficial
ownership of Common Stock as of January 30, 1998, and as adjusted to reflect
the sale of Common Stock offered hereby, by: (i) each person who is known to
the Company to own beneficially more than 5% of the outstanding shares of
Common Stock; (ii) each director; (iii) the Named Executive Officers; and (iv)
all directors and executive officers as a group. Under the rules of the
Securities and Exchange Commission, a person is deemed to be a "beneficial
owner" of a security if he or she has or shares the power to vote or direct
the voting of such security, has or shares the power to dispose of or direct
the disposition of such security, or has the right to acquire the security
within 60 days. Accordingly, more than one person may be deemed to be the
beneficial owner of the same security. All persons listed have sole voting and
investment power with respect to their shares unless otherwise indicated.

<TABLE>
<CAPTION>
SHARES BENEFICIALLY OWNED(1)
----------------------------------
PERCENTAGE OWNED
---------------------
BEFORE AFTER
NUMBER OFFERING OFFERING
------------ ---------- ----------
<S> <C> <C> <C>
Summit Ventures(2).......................... 2,376,162 49.2% 34.8%
Martin J. Mannion(2)........................ 2,376,162 49.2% 34.8%
Gregory A. Serrao(3)(6)..................... 602,880 12.5% 8.8%
Delta Associates, Ltd.(4)................... 378,001 7.8% 5.5%
Dr. Gregory T. Swenson(5)(6)................ 333,885 6.9% 4.9%
Ronald M. Levenson(6)....................... 100,709 2.1% 1.5%
George W. Robinson(6)....................... 28,020 * *
James T. Kelly.............................. 1,725 * *
Derril W. Reeves............................ 1,725 * *
All executive officers and directors as a
group (11 persons)(7)....... .............. 3,471,207 71.9% 50.8%
</TABLE>
- --------
* less than 1%

(1) This table includes for each person or group of persons shares of Common
Stock that may be purchased by such person or group pursuant to options
which will become exercisable upon the completion of this offering or
within 60 days of the estimated effective date of this offering. As of
January 30, 1998, a total of 4,829,012 shares of Common Stock were issued
and outstanding and options for 437,341 shares were exercisable.

(2) Represents 2,285,869 and 90,293 shares of Common Stock owned by Summit
Ventures IV, L.P. and Summit Investors II, L.P., respectively. Summit
Partners is affiliated with both limited partnerships. Mr. Mannion, a
Director of the Company, is a general partner of Summit Partners. The
address of Summit Partners is 600 Atlantic Avenue, Suite 2800, Boston,
Massachusetts 02110.
(3) The address for Mr. Serrao is American Dental Partners, Inc. 301 Edgewater
Place, Suite 320, Wakefield, Massachusetts 01880.
(4) Represents shares received by Delta Associates, Ltd. in connection with
the Company's affiliation with PDHC, Ltd. The address of Delta Associates,
Ltd. is 7807 Creekridge Circle, Minneapolis, Minnesota 55439.
(5) Includes 96,000 shares owned by a family trust. The address for Dr.
Swenson is PDHC, Ltd., 6415 Brooklyn Blvd., Minneapolis, Minnesota 55429.

(6) Includes options for 283,808 shares for Mr. Serrao, 4,050 shares for Dr.
Swenson, 62,910 shares for Mr. Levenson and 28,020 shares for Mr.
Robinson, respectively, which will become exerciseable upon the completion
of this offering or within 60 days of the estimated effective date of this
offering.

(7) Includes options for 387,451 shares for all executive officers and
directors as a group which will become exerciseable upon the completion of
this offering or within 60 days of the estimated effective date of this
offering.

45
<PAGE>

DESCRIPTION OF CAPITAL STOCK

The Company is authorized to issue 26,000,000 shares of capital stock,
consisting of 25,000,000 shares of Common Stock, $0.01 par value (the "Common
Stock"), and 1,000,000 shares of Preferred Stock, $0.01 par value (the
"Preferred Stock"). Of the Preferred Stock, 400,000 shares have been
designated Series A Convertible Preferred Stock, all of which are currently
outstanding and will be converted into an aggregate of 2,400,000 shares of
Common Stock upon completion of this offering, and 70,000 shares have been
designated Series B Redeemable Preferred Stock, all of which are currently
outstanding and will be redeemed upon completion of this offering. Upon the
closing of this offering, the Series A Convertible Preferred Stock and the
Series B Redeemable Preferred Stock will be restored to the status of
undesignated preferred stock available for issuance. As of the date hereof,
there were 4,829,012 shares of Common Stock outstanding, which assumes
conversion of the Series A Convertible Preferred Stock, and as of the
completion of this offering there will be 6,829,012 shares of Common Stock
outstanding.

Common Stock

The holders of shares of Common Stock are entitled to one vote per share for
the election of directors and on all other matters submitted to a vote of
stockholders. Holders of shares of Common Stock are not entitled to preemptive
rights or to cumulative voting for the election of directors. Subject to any
senior rights of the Preferred Stock which may from time to time be
outstanding, holders of the Common Stock are entitled to receive such
dividends as may be declared by the Board of Directors out of funds legally
available therefor. See "Dividend Policy." Upon dissolution and liquidation of
the Company, holders of the Common Stock are entitled to a ratable share of
the net assets of the Company remaining after payments to creditors of the
Company and to the holders of the Preferred Stock of the full preferential
amounts to which they may be entitled. All outstanding shares of Common Stock
are, and the shares of Common Stock offered hereby will be, validly issued,
fully paid and nonassessable.

Preferred Stock

The Preferred Stock may be issued in one or more series as determined by the
Board of Directors without further stockholder approval, and the Board of
Directors is authorized to fix and determine the terms, limitations, and
relative rights and preferences of the Preferred Stock, and to fix and
determine the variations among series of the Preferred Stock. If any Preferred
Stock is issued following this offering, such Preferred Stock would have
priority over the Common Stock with respect to dividends and to other
distributions, including the distribution of assets upon liquidation and
dissolution. The Preferred Stock may be subject to repurchase or redemption by
the Company. The Board of Directors, without stockholder approval, could issue
Preferred Stock with voting and conversion rights that could adversely affect
the voting power of the holders of Common Stock and the issuance of which
could be used by the Board of Directors in defense of a hostile takeover of
the Company.

Certain Provisions of Certificate of Incorporation and By-laws

The Certificate of Incorporation and By-laws provide that directors may not
be removed from office by the stockholders except by the affirmative vote of
stockholders exercising at least two-thirds of the voting power in the
election of directors; provided that if two-thirds of the entire Board of
Directors recommend to the stockholders that a director be removed, then such
director may be removed by the stockholders exercising at least a majority of
the voting power in the election of directors. The Certificate of
Incorporation requires all actions by stockholders to be taken at annual or
special meetings. The By-laws divide the Board of Directors into three
classes, each with a term of three years, with the term of one class expiring
each year. No provision of the Certificate of Incorporation nor certain
provisions of the By-laws, including those relating to indemnification and
election and removal of directors, may be altered, amended or repealed nor may
any inconsistent provision be adopted except by the affirmative vote of
stockholders exercising at least two-thirds of the voting power of the
Company; provided that if any such action was previously approved by at least
two-thirds of the directors, then such action may be taken by the stockholders
exercising a majority of the voting power. The By-laws also provide than any
vacancy on the Board of Directors may be filled by a majority of the directors
than in office even though less than a quorum exits. The foregoing provisions
could have an anti-takeover effect by delaying, averting or preventing a
change in control or management of the Company.

46
<PAGE>

Statutory Business Combination Provision

The Company is subject to Section 203 of the DGCL which, with certain
exceptions, prohibits a Delaware corporation from engaging in any of a broad
range of business combinations with any "interested stockholder" for a period
of three years following the date that such stockholder became an interested
stockholder, unless: (i) prior to such date, the Board of Directors of the
corporation approved either the business combination or the transaction which
resulted in the stockholder becoming an interested stockholder; (ii) upon
consummation of the transaction which resulted in the stockholder becoming an
interested stockholder, the interested stockholder owned at least 85% of the
voting stock of the corporation outstanding at the time the transaction
commenced, excluding for purposes of determining the number of shares
outstanding those shares owned (a) by persons who are directors and officers
and (b) by employee stock plans in which employee participants do not have the
right to determine confidentially whether shares held subject to the plan will
be tendered in a tender or exchange offer; or (iii) on or after such date, the
business combination is approved by the Board of Directors and authorized at
an annual or special meeting of stockholders by the affirmative vote of at
least two-thirds of the outstanding voting stock which is not owned by the
interested stockholder. An "interested stockholder" is defined as any person
that is (a) the owner of 15% or more of the outstanding voting stock of the
corporation or (b) an affiliate or associate of the corporation and was the
owner of 15% or more of the outstanding voting stock of the corporation at any
time within the three-year period immediately prior to the date on which it is
sought to be determined whether such person is an interested stockholder.

Transfer Agent and Registrar

The Company has selected BankBoston, N.A. as the transfer agent and
registrar for its Common Stock.

47
<PAGE>

SHARES ELIGIBLE FOR FUTURE SALE

Prior to this offering, there has been no public market for the Common Stock
and no predictions can be made of the effect, if any, that the sale or
availability for sale of shares of additional Common Stock will have on the
market price of the Common Stock. Nevertheless, sales of substantial amounts
of such shares in the public market, or the perception that such sales could
occur, could materially and adversely affect the market price of the Common
Stock and could impair the Company's future ability to raise capital through
an offering of its equity securities. See "Risk Factors--Shares Eligible for
Future Sale."

SALES OF RESTRICTED SHARES

Upon completion of the offering, the Company will have a total of 6,829,012
shares of Common Stock outstanding. Of these shares, the 2,000,000 shares of
Common Stock offered hereby will be freely tradable without restriction or
registration under the Securities Act by persons other than "affiliates" of
the Company, as defined in the Securities Act, who would be required to sell
such shares under Rule 144 under the Securities Act. The remaining 4,829,012
shares of Common Stock outstanding will be "restricted securities" as that
term is defined by Rule 144 (the "Restricted Shares"). The Restricted Shares
were issued and sold by the Company in private transactions in reliance upon
exemptions from registration under the Securities Act.

Of the Restricted Shares, 4,635,441 Restricted Shares will be eligible for
sale in the public market pursuant to Rule 144 beginning 90 days after the
date of this Prospectus. All such shares are subject to the lock-up agreements
described below. In general, under Rule 144 as currently in effect, a person
(or persons whose shares are aggregated) who has beneficially owned restricted
securities for at least one year (including the holding period of any prior
owner except an affiliate), including persons who may be deemed "affiliates"
of the Company, would be entitled to sell within any three-month period a
number of shares that does not exceed the greater of (i) one percent of the
number of shares of Common Stock then outstanding (approximately 68,290 shares
upon completion of the offering) or (ii) the average weekly trading volume of
the Common Stock during the four calendar weeks preceding the filing of a Form
144 with respect to such sale. Sales under Rule 144 are also subject to
certain manner-of-sale provisions and notice requirements, and to the
availability of current public information about the Company. In addition, a
person who is not deemed to have been an affiliate of the Company at the time
during the 90 days preceding a sale, and who has beneficially owned the shares
proposed to be sold for at least two years (including the holding period of
any prior owner except an affiliate), would be entitled to sell such shares
under Rule 144 (k) without regard to the requirements described above. Rule
144 also provides that affiliates who are selling shares that are not
Restricted Shares must nonetheless comply with the same restrictions
applicable to Restricted Shares with the exception of the holding period
requirement.

Upon completion of this offering, the Company will have options for 437,341
shares of Common Stock outstanding and exercisable. Under Rule 701 promulgated
under the Securities Act, shares of Common Stock acquired pursuant to the
exercise of these options may be resold by persons other than affiliates
beginning 90 days after the date of this Prospectus, subject only to the
manner of sale provisions of Rule 144, and by affiliates, beginning 90 days
after the date of this Prospectus, subject to all provisions of Rule 144
except its one-year minimum holding period requirements.

LOCK-UP AGREEMENTS

All of the stockholders of the Company, including the executive officers and
directors, who will own in the aggregate 4,829,012 shares of Common Stock
after the offering, have agreed that they will not, directly or indirectly,
sell, offer, contract to sell, transfer the economic risk of ownership in,
make any short sale, pledge or otherwise dispose of any shares of Common Stock
of any securities convertible into or exchangeable or exercisable for or any
other rights to purchase or acquire Common Stock beneficially owned by them
during the 180-day period following the date of this Prospectus, except for
certain permitted transfers or with the prior written consent of BT Alex.
Brown Incorporated.

48
<PAGE>

STOCK OPTION AND PURCHASE PLANS

As of January 30, 1998, 1,503,606 shares of Common Stock were reserved for
issuance under the Company's stock plans, of which 1,120,166 shares were
issuable upon the exercise of outstanding stock options, and 200,000 shares of
Common Stock were reserved for issuance under the Employee Stock Purchase
Plan. See "Management--Stock Plans." The Company intends to file registration
statements on Form S-8 under the Securities Act to register all shares of
Common Stock issuable pursuant to its stock option and stock purchase plans.
The Company expects to file these registration statements within approximately
90 days following the date of this Prospectus and such registration statements
will become effective upon filing. Shares covered by these registration
statements will thereupon be eligible for sale in the public markets, subject
to Rule 144 limitations applicable to affiliates and the lock-up agreements
described above.

REGISTRATION RIGHTS

The holders of 3,959,987 shares of Common Stock have the right under certain
circumstances to require the Company to register their shares under the
Securities Act for resale to the public, and holders of approximately
4,794,212 shares have the right to include their shares in a registration
statement filed by the Company. See "Certain Transactions."

SHELF REGISTRATION FOR FUTURE AFFILIATIONS

The Company intends to register 500,000 shares of Common Stock under a shelf
registration for use in connection with future affiliations. These shares
generally will be eligible for resale in compliance with the volume and
manner-of-sale restrictions of Rule 145 after their issuance, unless the
Company contractually restricts their sale. The Company anticipates that the
agreements entered into in connection with its future acquisitions will
contractually restrict the resale of all or a portion of the shares issued in
those transactions for varying periods of time. Initially, the Company will
issue such shares subject to a lock-up period of up to 180 days following the
date of this Prospectus.

49
<PAGE>

UNDERWRITING

Subject to the terms and conditions of the Underwriting Agreement, the
Underwriters named below, through their representatives, BT Alex. Brown
Incorporated, BancAmerica Robertson Stephens and Piper Jaffray Inc. (the
"Representatives"), have severally agreed to purchase from the Company the
following respective number of shares of Common Stock:

<TABLE>
<CAPTION>
NUMBER
OF SHARES
---------
<S> <C>
BT Alex. Brown Incorporated.......................................
BancAmerica Robertson Stephens....................................
Piper Jaffray Inc.................................................
---------
Total.......................................................... 2,000,000
=========
</TABLE>

The Underwriting Agreement provides that the obligations of the Underwriters
are subject to certain conditions precedent and that the Underwriters will
purchase all of the shares of Common Stock offered hereby if any of such
shares are purchased.

The Company has been advised by the Representatives that the Underwriters
propose to offer the shares of Common Stock to the public at the initial
public offering price set forth on the cover page of this Prospectus and to
certain dealers at such price less a concession not in excess of $ per
share. The Underwriters may allow, and such dealers may re-allow, a concession
not in excess of $ per share to certain other dealers. After commencement
of this offering, the offering price and other selling terms may be changed by
the Representatives.

The Company has granted the Underwriters an option, exercisable not later
than 30 days after the date of this Prospectus, to purchase up to 300,000
additional shares of Common Stock at the initial public offering price less
the underwriting discounts and commissions set forth on the cover page of this
Prospectus. To the extent that the Underwriters exercise such option, each of
the Underwriters will have a firm commitment to purchase approximately the
same percentage thereof that the number of shares of Common Stock to be
purchased by it in the above table bears to 2,000,000, and the Company will be
obligated, pursuant to the option to sell such shares to the Underwriters. The
Underwriters may exercise such option only to cover over-allotments made in
connection with the sale of the Common Stock offered hereby. If purchased, the
Underwriters will offer such additional shares on the same terms as those on
which the 2,000,000 shares are being offered.

The Underwriting Agreement contains covenants of indemnity and contribution
between the Underwriters and the Company regarding certain liabilities,
including liabilities under the Securities Act.

To facilitate the offering of the Common Stock, the Underwriters may engage
in transactions that stabilize, maintain or otherwise affect the market price
of the Common Stock. Specifically, the Underwriters may over-allot shares of
the Common Stock in connection with this offering, thereby creating a short
position in the Underwriters' syndicate account. Additionally, to cover such
over-allotments or to stabilize the market price of the Common Stock, the
Underwriters may bid for, and purchase, shares of the Common Stock in the open
market. Any of these activities may maintain the market price of the Common
Stock at a level above that which might otherwise prevail in the open market.
The Underwriters are not required to engage in these activities, and, if
commenced, any such activities may be discontinued at any time. The
Representatives, on behalf of the Underwriters, also may reclaim selling
concessions allowed to an Underwriter or dealer, if the syndicate repurchases
shares distributed by that Underwriter or dealer.

The Company has agreed that it will not sell or offer any shares of Common
Stock or options, rights or warrants to acquire any Common Stock for a period
of 180 days after the date of this Prospectus without the prior written
consent of BT Alex. Brown Incorporated, except for shares issued: (i) in
connection with acquisitions, provided that the recipients agree not to sell
or dispose of such shares during the 180-day period;

50
<PAGE>

(ii) pursuant to the exercise of options granted under the Company's stock
plans; and (iii) upon conversion of shares of Series A Convertible Preferred
Stock. Further, the Company's directors, officers, and all other stockholders,
who beneficially own 4,829,012 shares in the aggregate, have agreed not to
directly or indirectly sell or offer for sale or otherwise dispose of any
Common Stock for a period of 180 days after the date of this Prospectus,
except for certain permitted transfers or with the prior written consent of BT
Alex. Brown Incorporated.

The Representatives have advised the Company that the Underwriters do not
intend to confirm sales to any account over which they exercise discretionary
authority.

PRICE OF THIS OFFERING

Prior to this offering, there has been no public market for the Common
Stock. Consequently, the initial public offering price for the Common Stock
will be determined by negotiations between the Company and the
Representatives. Among the factors to be considered in such negotiations are
prevailing market conditions, the results of operations of the Company in
recent periods, the market capitalization and stages of development of other
companies which the Company and the Representatives believe to be comparable
to the Company, estimates of the business potential of the Company, the
present state of the Company's development and other factors deemed relevant
by the Company and the Representatives.

51
<PAGE>

VALIDITY OF COMMON STOCK

The validity of the shares of Common Stock offered hereby will be passed
upon for the Company by Baker & Hostetler LLP, Columbus, Ohio. Certain legal
matters related to the offering will be passed upon for the Underwriters by
Ropes & Gray, Boston, Massachusetts. Gary A. Wadman, a partner of Baker &
Hostetler LLP, is the Secretary of the Company.

EXPERTS

The consolidated financial statements of American Dental Partners, Inc. as
of December 31, 1996 and September 30, 1997 and for the year ended December
31, 1996 and the nine months ended September 30, 1997, and the financial
statements of PDHC, Ltd. as of November 12, 1996 and for the period from
January 1, 1996 to November 12, 1996 have been included herein and in the
registration statement in reliance upon the reports of KPMG Peat Marwick LLP,
independent certified public accountants, appearing elsewhere herein, and upon
the authority of said firm as experts in accounting and auditing.

The financial statements of PDHC, Ltd. as of December 31, 1995 and for the
years ended December 31, 1994 and 1995 included herein and in the registration
statement in reliance upon the report of Stirtz Bernards Boyden Surdel &
Larter, P.A., independent certified public accountants, appearing elsewhere
herein, and upon the authority of said firm as experts in accounting and
auditing.

The combined financial statements of the Orthocare Companies as of December
31, 1996 and September 30, 1997 and for the year ended December 31, 1996 and
the nine months ended September 30, 1997 have been included herein and in the
registration statement in reliance upon the report of KPMG Peat Marwick LLP,
independent certified public accountants, appearing elsewhere herein, and upon
the authority of said firm as experts in accounting and auditing.

ADDITIONAL INFORMATION

The Company has filed with the Securities and Exchange Commission ("SEC") a
Registration Statement (which term shall encompass any and all amendments
thereto) on Form S-1 (the "Registration Statement") under the Securities Act
with respect to the Common Stock offered hereby. This Prospectus, which is
part of the Registration Statement, does not contain all the information set
forth in the Registration Statement and the exhibits and schedules thereto,
certain items of which are omitted in accordance with the rules and
regulations of the SEC. Statements made in this Prospectus as to the contents
of any contact, agreement or other document referred to are not necessarily
complete. With respect to each such contract, agreement or other document
filed as an exhibit to the Registration Statement, reference is hereby made to
the exhibit for a more complete description of the matter involved, and each
such statement shall be deemed qualified in its entirety by such reference.
For further information with respect to the Company, reference is hereby made
to the Registration Statement and such exhibits and schedules filed as a part
thereof, which may be inspected, without charge, at the Public Reference
Section of the SEC at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549, and at the regional offices of the SEC located at
Seven World Trade Center, 13th Floor, New York, New York 10048 and at Citicorp
Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661. The SEC
maintains a web site that contains reports, proxy and information statements
regarding registrants that file electronically with the SEC. The address of
this web site is (http://www.sec.gov). Copies of all or any portion of the
Registration Statement may be obtained from the Public Reference Section of
the SEC, upon payment of the prescribed fees.

52
<PAGE>

INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
AMERICAN DENTAL PARTNERS, INC. AND SUBSIDIARIES--UNAUDITED PRO FORMA
CONSOLIDATED FINANCIAL INFORMATION
Introduction to Unaudited Pro Forma Consolidated Financial
Information........................................................... F-3
Unaudited Pro Forma Consolidated Balance Sheet at September 30, 1997... F-4
Unaudited Pro Forma Consolidated Statement of Operations for the Year
Ended December 31, 1996............................................... F-5
Unaudited Pro Forma Consolidated Statement of Operations for the Nine
Months Ended September 30, 1996....................................... F-6
Unaudited Pro Forma Consolidated Statement of Operations for the Nine
Months Ended September 30, 1997....................................... F-7
Notes to Unaudited Pro Forma Consolidated Financial Information........ F-8
AMERICAN DENTAL PARTNERS, INC. AND SUBSIDIARIES--CONSOLIDATED FINANCIAL
STATEMENTS
Independent Auditors' Report........................................... F-10
Consolidated Balance Sheets as of December 31, 1996 and September 30,
1997.................................................................. F-11
Consolidated Statements of Operations for the Year Ended December 31,
1996 and the Nine Months Ended September 30, 1997 and the Nine Months
Ended September 30, 1996 (unaudited).................................. F-12
Consolidated Statements of Stockholders' Equity for the Year Ended
December 31, 1996 and the Nine Months Ended September 30, 1997........ F-13
Consolidated Statements of Cash Flows for the Year Ended December 31,
1996 and the Nine Months Ended September 30, 1997 and the Nine Months
Ended September 30, 1996 (unaudited).................................. F-14
Notes to Consolidated Financial Statements............................. F-15
AMERICAN DENTAL PARTNERS, INC. AND SUBSIDIARIES--ACQUISITIONS AND
AFFILIATIONS
PDHC, Ltd. ("Park")
The combined financial information presented for PDHC, Ltd. presents
the financial position and results of operations of the dental group
practice prior to its affiliation with the Company. Prior to its
affiliation with the Company, PDHC, Ltd. existed as a dental group
practice. After its affiliation, the dentist employees formed a new PC
and PDHC, Ltd. became a MSO. These financial statements are presented for
information purposes only and are not necessarily indicative of the
results of operations or financial position that would have been achieved
by PDHC, Ltd. pursuant to the service agreement with the Company, had
such service agreement been in place during the periods presented. The
information should be read in conjunction with "The Company,"
"Management's Discussion and Analysis of Financial Condition and Results
of Operations," Unaudited Pro Forma Consolidated Financial Information
and the Consolidated Financial Statements of the Company.
Financial Information
Independent Auditors' Report........................................... F-30
Independent Auditors' Report........................................... F-31
Combined Balance Sheets as of December 31, 1995 and November 12, 1996.. F-32
Combined Statements of Operations for the Years Ended December 31, 1994
and 1995 and the Period Ended November 12, 1996....................... F-33
Combined Statements of Stockholders' Equity for the Years Ended
December 31, 1994 and 1995 and the Period Ended November 12, 1996..... F-34
Combined Statements of Cash Flows for the Years Ended December 31, 1994
and 1995 and the Period Ended November 12, 1996....................... F-35
Notes to Combined Financial Statements................................. F-36
</TABLE>

F-1
<PAGE>

INDEX TO FINANCIAL STATEMENTS--(CONTINUED)

<TABLE>
<S> <C>
The Orthocare Companies
The combined financial information presented for The Orthocare
Companies presents the financial position and results of operations of
the dental group practice that provides orthodontic services, an MSO and
a related entity that arranges for orthodontic services for insurance
companies, all of which
were under common ownership prior to their affiliation with the Company.
After affiliation, the dentists employees formed a new PC which
affiliated with the MSO and the related entity became a wholly-owned
subsidiary of the Company. These financial statements are presented for
information purposes only and are not necessarily indicative of the
results of operations or financial position that would have been achieved
by The Orthocare Companies pursuant to the service agreement with the
Company, had such service agreement been in place during the periods
presented. The information should be read in conjunction with "The
Company," "Management's Discussion and Analysis of Financial Condition
and Results of Operations," Unaudited Pro Forma Consolidated Financial
Information and the Consolidated Financial Statements of the Company.
Financial Information
Independent Auditors' Report........................................... F-45
Combined Balance Sheets as of December 31, 1996 and September 30,
1997.................................................................. F-46
Combined Statements of Operations for the Year Ended December 31, 1996
and the Nine Months Ended September 30, 1997.......................... F-47
Combined Statements of Stockholders' Equity for the Year Ended December
31, 1996 and the Nine Months Ended September 30, 1997................. F-48
Combined Statements of Cash Flows for the Year Ended December 31, 1996
and the Nine Months Ended September 30, 1997.......................... F-49
Notes to Combined Financial Statements................................. F-50
</TABLE>

F-2
<PAGE>

AMERICAN DENTAL PARTNERS, INC.

INTRODUCTION TO UNAUDITED PRO FORMA
CONSOLIDATED FINANCIAL INFORMATION

Basis of Presentation

During 1996, the Company acquired substantially all the assets of three
dental practices, except those required by law to be owned or maintained by
dentists, and simultaneously entered into 40-year service agreements with the
affiliated dental groups. These transactions are referred to as the "1996
Transactions." For the nine-month period ended September 30, 1997, the Company
acquired substantially all the assets of four dental practices and
simultaneously entered into 40-year service agreements with three of the
affiliated dental groups (one practice joined an existing affiliate). In
October 1997, the Company acquired substantially all the assets of two dental
practices and a related entity associated with one of these practices,
Orthocare, Ltd., which contracts with third party payors and orthdontic
providers to arrange for the provision of orthodontic care to patients insured
by such third party payors in Minneapolis/St. Paul and Wisconsin. The Company
simultaneously entered into a 40-year service agreement with one of the
affiliated dental groups (one practice joined an existing affiliate). These
transactions are referred to as the "1997 Transactions."

The unaudited pro forma consolidated balance sheet at September 30, 1997
gives effect to (i) the 1997 Transactions completed subsequent to September
30, 1997, as if these transactions occurred on September 30, 1997 and (ii)
this offering and the application of the estimated net proceeds therefrom as
set forth in "Use of Proceeds," as if completed on September 30, 1997.

The unaudited pro forma consolidated statements of operations for the nine
months ended September 30, 1996 and 1997 and for the year ended December 31,
1996, give effect to the 1996 and 1997 Transactions and the effect of this
offering and the application of the estimated net proceeds therefrom, as if
all of these events had occurred on January 1, 1996.

The unaudited pro forma consolidated financial information does not purport
to represent what the Company's financial position or results of operations
would actually have been if such transactions had in fact occurred on those
dates or to project the Company's financial position or results of operations
for any future period. The unaudited pro forma consolidated financial
information is based on certain assumptions and adjustments described in the
notes hereto and should be read in conjunction therewith. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
the Consolidated Financial Statements and related notes thereto for American
Dental Partners, Inc. and the Combined Financial Statements for PDHC, Ltd.
included elsewhere in this Prospectus.

F-3
<PAGE>

AMERICAN DENTAL PARTNERS, INC.

UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 1997
(IN THOUSANDS)

<TABLE>
<CAPTION>
ACQUISITION PRO OFFERING PRO FORMA
ACTUAL ADJUSTMENTS(1) FORMA ADJUSTMENTS(2) AS ADJUSTED
------- -------------- ------- -------------- -----------
<S> <C> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash
equivalents.......... $ 2,459 $ (606) $ 1,853 $ 7,614 $ 9,467
Accounts receivable... 24 202 226 -- 226
Receivables due from
affiliated
practices............ 3,186 -- 3,186 -- 3,186
Inventories........... 324 58 382 -- 382
Prepaid expenses and
other receivables.... 1,313 27 1,340 (71) 1,269
------- ------- ------- -------- -------
Total current
assets............. 7,306 (319) 6,987 7,543 14,530
------- ------- ------- -------- -------
Property and equipment,
net.................... 7,683 486 8,169 -- 8,169
------- ------- ------- -------- -------
Non-current assets:
Intangible assets,
net.................. 13,091 15,909 29,000 -- 29,000
Other assets.......... 213 14 227 -- 227
------- ------- ------- -------- -------
Total non-current
assets............. 13,304 15,923 29,227 -- 29,227
------- ------- ------- -------- -------
Total assets........ $28,293 $16,090 $44,383 $ 7,543 $51,926
======= ======= ======= ======== =======
LIABILITIES AND
STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable...... $ 1,945 $ 623 $ 2,568 $ -- $ 2,568
Accrued compensation,
benefits and taxes... 2,269 508 2,777 -- 2,777
Accrued expenses...... 1,815 655 2,470 -- 2,470
Current maturities of
debt................. 534 -- 534 -- 534
------- ------- ------- -------- -------
Total current
liabilities........ 6,563 1,786 8,349 -- 8,349
------- ------- ------- -------- -------
Non-current liabilities:
Long-term debt........ 5,490 13,300 18,790 (13,700) 5,090
Other liabilities..... 27 16 43 -- 43
------- ------- ------- -------- -------
Total non-current
liabilities........ 5,517 13,316 18,833 (13,700) 5,133
------- ------- ------- -------- -------
Total liabilities... 12,080 15,102 27,182 (13,700) 13,482
------- ------- ------- -------- -------
Series A convertible
preferred stock........ 8,483 -- 8,483 (8,483)(3) --
Series B redeemable
preferred stock........ 7,517 -- 7,517 (7,517) --
Stockholders' equity:
Common stock.......... 23 1 24 44 (3) 68
Additional paid-in
capital.............. 1,936 987 2,923 37,199 (3) 40,122
Unearned
compensation......... (57) -- (57) -- (57)
Accumulated deficit... (1,689) -- (1,689) -- (1,689)
------- ------- ------- -------- -------
Total stockholders'
equity............. 213 988 1,201 37,243 38,444
------- ------- ------- -------- -------
Total liabilities
and stockholders'
equity............. $28,293 $16,090 $44,383 $ 7,543 $51,926
======= ======= ======= ======== =======
</TABLE>

See accompanying notes to unaudited pro forma consolidated financial
information.

F-4
<PAGE>

AMERICAN DENTAL PARTNERS, INC.

UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
ACQUISITION PRO OFFERING PRO FORMA
ACTUAL ADJUSTMENTS(4) FORMA ADJUSTMENTS(5) AS ADJUSTED
------- -------------- ------- -------------- -----------
<S> <C> <C> <C> <C> <C>
Net revenue............. $ 3,933 $50,991 $54,924 $ -- $54,924
------- ------- ------- ------- -------
Operating expenses:
Salaries and
benefits............. 2,098 27,204 29,302 -- 29,302
Lab fees and dental
supplies............. 534 6,062 6,596 -- 6,596
Office occupancy...... 389 4,764 5,153 -- 5,153
Other operating
expenses............. 773 6,611 7,384 -- 7,384
General corporate
expenses............. 2,395 -- 2,395 -- 2,395
Depreciation.......... 177 1,531 1,708 -- 1,708
Amortization of
intangibles.......... 48 890 938 -- 938
------- ------- ------- ------- -------
Total operating
expenses........... 6,414 47,062 53,476 -- 53,476
------- ------- ------- ------- -------
Earnings (loss) from
operations............. (2,481) 3,929 1,448 -- 1,448
Interest expense
(income), net........ (38) 1,814 1,776 (1,233) 543
------- ------- ------- ------- -------
Earnings (loss) before
income taxes........... (2,443) 2,115 (328) 1,233 905
Income taxes.......... -- -- -- 367 367
------- ------- ------- ------- -------
Net earnings (loss)..... $(2,443) $ 2,115 (328) $ 866 $ 538
======= ======= ======= ======= =======
Net earnings (loss) per
common share........... $ (0.55) $ (0.09) $ 0.08
Weighted average common
shares outstanding..... 4,625 4,625(6) 6,567(7)
</TABLE>

See accompanying notes to unaudited pro forma consolidated financial
information.

F-5
<PAGE>

AMERICAN DENTAL PARTNERS, INC.

UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
ACQUISITION PRO OFFERING PRO FORMA
ACTUAL ADJUSTMENTS(8) FORMA ADJUSTMENTS(9) AS ADJUSTED
------- -------------- ------- -------------- -----------
<S> <C> <C> <C> <C> <C>
Net revenue............. $ -- $40,390 $40,390 $ -- $40,390
------- ------- ------- ----- -------
Operating expenses:
Salaries and
benefits............. -- 21,543 21,543 -- 21,543
Lab fees and dental
supplies............. -- 4,850 4,850 -- 4,850
Office occupancy...... -- 3,789 3,789 -- 3,789
Other operating
expenses............. -- 5,406 5,406 -- 5,406
General corporate
expenses............. 1,521 276 1,797 -- 1,797
Depreciation.......... 7 1,244 1,251 -- 1,251
Amortization of
intangibles.......... -- 700 700 -- 700
------- ------- ------- ----- -------
Total operating
expenses........... 1,528 37,808 39,336 -- 39,336
------- ------- ------- ----- -------
Earnings (loss) from
operations............. (1,528) 2,582 1,054 -- 1,054
Interest expense
(income), net........ (14) 1,346 1,332 (925) 407
------- ------- ------- ----- -------
Earnings (loss) before
income taxes........... (1,514) 1,236 (278) 925 647
Income taxes.......... -- -- -- 262 262
------- ------- ------- ----- -------
Net earnings (loss)..... $(1,514) $ 1,236 $ (278) $ 663 $ 385
======= ======= ======= ===== =======
Net earnings (loss) per
common share........... $ (0.33) $ (0.07) $ 0.06
Weighted average common
shares outstanding..... 4,606 4,606(10) 6,553(11)
</TABLE>

See accompanying notes to unaudited pro forma consolidated financial
information.

F-6
<PAGE>

AMERICAN DENTAL PARTNERS, INC.

UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
ACQUISITION PRO OFFERING PRO FORMA
ACTUAL ADJUSTMENTS(12) FORMA ADJUSTMENTS(13) AS ADJUSTED
------- --------------- ------- --------------- -----------
<S> <C> <C> <C> <C> <C>
Net revenue............. $36,620 $10,242 $46,862 $ -- $46,862
------- ------- ------- ----- -------
Operating expenses:
Salaries and
benefits............. 19,625 4,878 24,503 -- 24,503
Lab fees and dental
supplies............. 4,491 1,075 5,566 -- 5,566
Office occupancy...... 3,368 868 4,236 -- 4,236
Other operating
expenses............. 4,433 1,032 5,465 -- 5,465
General corporate
expenses............. 2,260 -- 2,260 -- 2,260
Depreciation.......... 1,154 144 1,298 -- 1,298
Amortization of
intangibles.......... 259 441 700 -- 700
------- ------- ------- ----- -------
Total operating
expenses........... 35,590 8,438 44,028 -- 44,028
------- ------- ------- ----- -------
Earnings from
operations............. 1,030 1,804 2,834 -- 2,834
Interest expense
(income), net........ 195 1,096 1,291 (925) 366
------- ------- ------- ----- -------
Earnings before income
taxes.................. 835 708 1,543 925 2,468
Income taxes.......... 81 544 625 375 1,000
------- ------- ------- ----- -------
Net earnings............ $ 754 $ 164 $ 918 $ 550 $ 1,468
======= ======= ======= ===== =======
Net earnings per common
share.................. $ 0.07 $ 0.10 $ 0.22
Weighted average common
shares outstanding..... 5,025 5,025(14) 6,606(15)
</TABLE>

See accompanying notes to unaudited pro forma consolidated financial
information.

F-7
<PAGE>

AMERICAN DENTAL PARTNERS, INC.

NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION

UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET AT SEPTEMBER 30, 1997

(1) To include the 1997 Transactions which occurred subsequent to September
30, 1997. The aggregate consideration for these transactions consisted of
approximately $13.2 million in cash, $1.9 million in subordinated promissory
notes and 139,482 shares of the Company's Common Stock.

(2) Gives effect to the sale of 2,000,000 shares of Common Stock at an
assumed initial public offering price of $16.00 per share and receipt and
application of the net proceeds therefrom, estimated to be approximately
$28,760,000 after deducting underwriters discounts and commissions and
offering expenses, to (i) redeem the Series B Redeemable Preferred Stock in
the amount of $7,517,000 and (ii) repay indebtedness of $13,700,000 under the
revolving credit facility.

(3) Gives effect to the conversion of 400,000 shares Series A Convertible
Preferred Stock into 2,400,000 shares of Common Stock.

UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS FOR THE YEAR ENDED
DECEMBER 31, 1996

(4) To include the effects of the 1996 and 1997 Transactions as if such
transactions occurred on January 1, 1996, including: (i) the impact of
applying the Company's service fee to the historical adjusted gross revenue of
each dental practice in accordance with the service agreements entered into
between the Company and the affiliated dental practices, as if such service
agreements were in place at the beginning of the periods presented; (ii) the
following significant adjustments made to the operating results of Park for
periods prior to its acquisition on November 12, 1996: (a) reduction of salary
and bonus expense of $2,275,000; (b) the elimination of costs of $320,000
incurred in connection with the transaction; and (c) the write-off of property
and equipment of $1,199,000; (iii) increased interest expense associated with
additional borrowings of $1,814,000 and (iv) increased amortization of
intangibles of $890,000. The Company believes that any changes in the dentist-
owner's incentive structure in connection with the transactions are unlikely
to have affected the conduct of the dental practices in an adverse manner.

(5) Gives effect to the offering of 1,506,000 shares which would have
necessary to redeem the Series B Redeemable Preferred Stock of $7,706,000, to
pay the $13,700,000 in outstanding indebtedness under the Company's revolving
credit facility and to pay approximately $1,000,000 of offering costs, which
include primarily accounting fees, legal fees, printing costs and other costs
directly attributable to the offering. Also includes an increase in income tax
expense as a result of the increase in earnings before income taxes to arrive
at an effective rate of 40.6% on a pro forma as adjusted basis.

(6) Reflects an increase in weighted average shares of 1,608,000 resulting
from the issuance of shares issued in connection with the 1996 and 1997
Transactions to arrive at pro forma earnings per share.

(7) Pro forma as adjusted earnings per share includes the issuance of an
additional 1,506,000 shares which would have necessary to redeem the Series B
Redeemable Preferred Stock of $7,706,000, to pay the $13,700,000 in
outstanding indebtedness under the Company's revolving credit facility and to
pay approximately $1,000,000 of offering costs, which include primarily
accounting fees, legal fees, printing costs and other costs directly
attributable to the offering.

UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS FOR THE NINE MONTHS
ENDED SEPTEMBER 30, 1996

(8) To include the effects of the 1996 and 1997 Transactions as if such
transactions occurred on January 1, 1996, including: (i) the impact of
applying the Company's service fee to the historical adjusted gross revenue of
each dental practice in accordance with the service agreements entered into
between the Company and the affiliated dental practices, as if such service
agreements were in place at the beginning of the periods presented;

F-8
<PAGE>

AMERICAN DENTAL PARTNERS, INC.

NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION--(CONTINUED)

(ii) the following significant adjustments made to the operating results of
Park for periods prior to its acquisition on November 12, 1996: (a) reduction
of salary and bonus expense of $275,000; (b) the elimination of costs of
$320,000 incurred in connection with the transaction and (c) the write-off of
property and equipment of $1,199,000; (iii) increased interest expense of
$1,346,000 and (iv) increased amortization of intangibles of $700,000. The
Company believes that any changes in the dentist-owner's incentive structure
in connection with the transactions are unlikely to have affected the conduct
of the dental practices in an adverse manner.

(9) Gives effect to the offering of 1,506,000 shares which would have
necessary to redeem the Series B Redeemable Preferred Stock of $7,706,000, to
pay the $13,700,000 in outstanding indebtedness under the Company's revolving
credit facility and to pay approximately $1,000,000 of offering costs. Also
includes an increase in income tax expense as a result of the increase in
earnings before income taxes to arrive at an effective rate of 40.6% on a pro
forma as adjusted basis.

(10) Reflects actual weighted average shares and an increase in weighted
average shares of 1,794,000 resulting from the shares issued in connection
with the 1996 and 1997 Transactions to arrive at pro forma earnings per share.

(11) Pro forma as adjusted earnings per share includes the issuance of an
additional 1,506,000 shares which would have necessary to redeem the Series B
Redeemable Preferred Stock of $7,706,000, to pay the $13,700,000 in
outstanding indebtedness under the Company's revolving credit facility and to
pay approximately $1,000,000 of offering costs, which include primarily
accounting fees, legal fees, printing costs and other costs directly
attributable to the offering.

UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS FOR THE NINE MONTHS
ENDED SEPTEMBER 30, 1997

(12) To include the effects of the 1997 Transactions as if such transactions
occurred on January 1, 1996, including: (i) the impact of applying the
Company's service fee to the historical adjusted gross revenue of each dental
practice in accordance with the service agreements entered into between the
Company and the affiliated dental practices, as if such service agreements
were in place at the beginning of the periods presented; (ii) increased
interest expense of $1,096,000; (iii) increased amortization of intangibles of
$441,000; and (iv) increased tax expense associated with these transactions of
$544,000. The Company believes that any changes in the dentist-owner's
incentive structure in connection with the transactions are unlikely to have
affected the conduct of the dental practices in an adverse manner.

(13) Gives effect to the offering of 1,506,000 shares which would have
necessary to redeem the Series B Redeemable Preferred Stock of $7,706,000, to
pay the $13,700,000 in outstanding indebtedness under the Company's revolving
credit facility and to pay approximately $1,000,000 of offering costs, which
include primarily accounting fees, legal fees, printing costs and other costs
directly attributable to the offering. Also includes an increase in income tax
expense as a result of the increase in earnings before income taxes to arrive
at an effective rate of 40.6% on a pro forma as adjusted basis.

(14) Reflects actual weighted average shares and an increase in weighted
average shares of 162,000 to reflect the shares issued in connection with the
1996 and 1997 Transactions to arrive at pro forma earnings per share.

(15) Pro forma as adjusted earnings per share includes the issuance of an
additional 1,506,000 shares which would have necessary to redeem the Series B
Redeemable Preferred Stock of $7,706,000, to pay the $13,700,000 in
outstanding indebtedness under the Company's revolving credit facility and to
pay approximately $1,000,000 of offering costs, which include primarily
accounting fees, legal fees, printing costs and other costs directly
attributable to the offering.

F-9
<PAGE>

INDEPENDENT AUDITORS' REPORT

The Board of Directors
American Dental Partners, Inc.:

We have audited the accompanying consolidated balance sheets of American
Dental Partners, Inc. and subsidiaries (the "Company") as of December 31, 1996
and September 30, 1997, and the related consolidated statements of operations,
stockholders' equity and cash flows for the year ended December 31, 1996 and
the nine months ended September 30, 1997. These consolidated financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position
of American Dental Partners, Inc. and subsidiaries as of December 31, 1996 and
September 30, 1997, and the results of their operations and their cash flows
for the year ended December 31, 1996 and the nine months ended September 30,
1997, in conformity with generally accepted accounting principles.

KPMG Peat Marwick LLP

Boston, Massachusetts
October 27, 1997, except for Note 13
as to which date is November 7, 1997

F-10
<PAGE>

AMERICAN DENTAL PARTNERS, INC.

CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
1996 1997
------------ -------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents......................... $ 5,836 $ 2,459
Accounts receivable............................... 996 24
Receivables due from affiliated practices......... 1,595 3,186
Inventories....................................... 174 324
Prepaid expenses and other receivables............ 1,405 1,313
------- -------
Total current assets............................ 10,006 7,306
------- -------
Property and equipment, net......................... 5,943 7,683
------- -------
Non-current assets:
Intangible assets, net............................ 9,173 13,091
Other assets...................................... 172 213
------- -------
Total non-current assets........................ 9,345 13,304
------- -------
Total assets.................................... $25,294 $28,293
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable.................................. $ 1,730 $ 1,945
Accrued compensation, benefits and taxes.......... 2,154 2,269
Accrued expenses.................................. 2,396 1,815
Current maturities of debt........................ 537 534
------- -------
Total current liabilities....................... 6,817 6,563
------- -------
Non-current liabilities:
Long-term debt.................................... 3,063 5,490
Other liabilities................................. 145 27
------- -------
Total non-current liabilities................... 3,208 5,517
------- -------
Total liabilities............................... 10,025 12,080
------- -------
Series A convertible preferred stock, par value
$0.01 per share, 400,000 shares authorized, issued
and outstanding.................................... 8,009 8,483
Series B redeemable preferred stock, par value $0.01
per share, 70,000 shares authorized, issued and
outstanding........................................ 7,096 7,517
Stockholders' equity:
Common stock, par value $0.01 per share,
25,000,000 shares authorized, 2,213,384 and
2,254,736 shares issued and outstanding at
December 31, 1996 and September 30, 1997,
respectively..................................... 22 23
Additional paid-in capital........................ 2,659 1,936
Unearned compensation............................. (74) (57)
Accumulated deficit............................... (2,443) (1,689)
------- -------
Total stockholders' equity...................... 164 213
------- -------
Commitments and contingencies
Total liabilities and stockholders' equity...... $25,294 $28,293
======= =======
</TABLE>
See accompanying notes to consolidated financial statements.

F-11
<PAGE>

AMERICAN DENTAL PARTNERS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEAR ENDED SEPTEMBER 30,
DECEMBER 31, -------------------
1996 1996 1997
------------ ----------- -------
(UNAUDITED)
<S> <C> <C> <C>
Net revenue................................... $ 3,933 $ -- $36,620
------- ------- -------
Operating expenses:
Salaries and benefits....................... 2,098 -- 19,625
Lab fees and dental supplies................ 534 -- 4,491
Office occupancy............................ 389 -- 3,368
Other operating expenses.................... 773 -- 4,433
General corporate expenses.................. 2,395 1,521 2,260
Depreciation................................ 177 7 1,154
Amortization of intangibles................. 48 -- 259
------- ------- -------
Total operating expenses.................. 6,414 1,528 35,590
------- ------- -------
Earnings (loss) from operations............... (2,481) (1,528) 1,030
Interest expense (income), net.............. (38) (14) 195
------- ------- -------
Earnings (loss) before income taxes........... (2,443) (1,514) 835
Income taxes................................ -- -- 81
------- ------- -------
Net earnings (loss)........................... $(2,443) $(1,514) $ 754
======= ======= =======
Net earnings (loss) per common share.......... $ (0.55) $ (0.33) $ 0.07
Weighted average common shares outstanding.... 4,625 4,606 5,025
</TABLE>

See accompanying notes to consolidated financial statements.

F-12
<PAGE>

AMERICAN DENTAL PARTNERS, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE YEAR ENDED DECEMBER 31, 1996 AND
THE NINE MONTHS ENDED SEPTEMBER 30, 1997
(IN THOUSANDS)

<TABLE>
<CAPTION>
COMMON STOCK ADDITIONAL TOTAL
------------- PAID-IN UNEARNED ACCUMULATED STOCKHOLDERS'
SHARES AMOUNT CAPITAL COMPENSATION DEFICIT EQUITY
------ ------ ---------- ------------ ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Balance at January 1,
1996................... -- $-- $ -- $-- $ -- $ --
Issuance of common
stock for
acquisitions......... 1,613 16 2,673 -- -- 2,689
Sale of common stock.. 600 6 191 (97) -- 100
Amortization of
unearned
compensation......... -- -- -- 23 -- 23
Dividends on Series A
convertible preferred
stock................ -- -- (109) -- -- (109)
Dividends on Series B
redeemable preferred
stock................ -- -- (96) -- -- (96)
Net loss.............. -- -- -- -- (2,443) (2,443)
----- ---- ------ ---- ------- -------
Balance at December 31,
1996................... 2,213 22 2,659 (74) (2,443) 164
Issuance of common
stock for
acquisitions......... 42 1 171 -- -- 172
Amortization of
unearned
compensation......... -- -- -- 17 -- 17
Dividends on Series A
convertible preferred
stock................ -- -- (474) -- -- (474)
Dividends on Series B
redeemable preferred
stock................ -- -- (420) -- -- (420)
Net earnings.......... -- -- -- -- 754 754
----- ---- ------ ---- ------- -------
Balance at September 30,
1997................... 2,255 $ 23 $1,936 $(57) $(1,689) $ 213
===== ==== ====== ==== ======= =======
</TABLE>

See accompanying notes to consolidated financial statements.

F-13
<PAGE>

AMERICAN DENTAL PARTNERS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)

<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEAR ENDED SEPTEMBER 30,
DECEMBER 31, -------------------
1996 1996 1997
------------ ----------- -------
(UNAUDITED)
<S> <C> <C> <C>
Cash flows from operating activities:
Net earnings (loss)........................ $ (2,443) $(1,514) $ 754
Adjustments to reconcile net earnings
(loss) to net cash provided by (used for)
operating activities:
Depreciation............................. 177 7 1,154
Amortization of intangible assets........ 48 -- 259
Other amortization....................... 23 18 49
Changes in assets and liabilities, net of
acquisitions:
Accounts receivable.................... 1,417 -- 1,778
Receivables due from affiliated
practices............................. (1,707) -- (1,820)
Other current assets................... 237 (7) 56
Accounts payable and accrued expenses.. 941 199 (1,431)
Accrued compensation, benefits and
taxes................................. (232) 169 (166)
-------- ------- -------
Net cash provided by (used for)
operating activities................ (1,539) (1,128) 633
-------- ------- -------
Cash flows from investing activities:
Acquisitions, net of cash acquired......... (6,632) -- (3,337)
Capital expenditures, net.................. (386) (139) (2,102)
Other assets............................... 140 (14) 79
-------- ------- -------
Net cash used for investing
activities.......................... (6,878) (153) (5,360)
-------- ------- -------
Cash flows from financing activities:
Proceeds from issuance of Series A
convertible preferred stock............... 7,900 1,023 --
Proceeds from issuance of Series B
redeemable preferred stock................ 7,000 907 --
Proceeds from issuance of common stock..... 100 100 --
Borrowings under revolving line of credit,
net....................................... -- -- 2,300
Repayment of borrowings.................... (747) -- (708)
Payment of debt issuance costs............. -- -- (242)
-------- ------- -------
Net cash provided by financing
activities.......................... 14,253 2,030 1,350
-------- ------- -------
Increase (decrease) in cash and cash
equivalents................................. 5,836 749 (3,377)
Cash and cash equivalents at beginning of
period...................................... -- -- 5,836
-------- ------- -------
Cash and cash equivalents at end of period... $ 5,836 $ 749 $ 2,459
======== ======= =======
Supplemental disclosure of cash flow
information:
Cash paid during the period for interest... $ 3 $ -- $ 112
======== ======= =======
Cash paid during the period for income
taxes..................................... $ -- $ -- $ 60
======== ======= =======
Acquisitions:
Assets acquired............................ $ 20,099 $ -- $ 5,816
Liabilities assumed and issued............. (10,063) -- (2,061)
Common stock issued........................ (2,689) -- (172)
-------- ------- -------
Cash paid.................................. 7,347 -- 3,583
Less cash acquired......................... (715) -- (246)
-------- ------- -------
Net cash paid for acquisitions....... $ 6,632 $ -- $ 3,337
======== ======= =======
</TABLE>

See accompanying notes to consolidated financial statements.

F-14
<PAGE>

AMERICAN DENTAL PARTNERS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 1996 AND THE NINE MONTHS ENDED SEPTEMBER 30,
1997 AND THE NINE MONTHS ENDED SEPTEMBER 30, 1996 (UNAUDITED)

(1) DESCRIPTION OF BUSINESS

American Dental Partners, Inc. (the "Company") was formed in December 1995
to provide management services to dental practices and commenced operations in
January 1996. The Company acquires substantially all the assets of the dental
practices with which it affiliates, except those required by law to be owned
or maintained by dentists (such as third party contracts, certain governmental
receivables and patient records), and enters into long-term service agreements
with these affiliated dental practices. The Company provides all services
necessary for the administration of the non-clinical aspects of the dental
operations. Services provided to the affiliated dental practices include
assistance with information systems, budgeting, financial reporting,
facilities management, third-party payor contracting, supplies and equipment
procurement, billing and collecting accounts receivable, marketing and
recruiting, hiring and training support staff.

(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying consolidated financial statements have been prepared on the
accrual basis of accounting. The Company does not own any interests in or
control the activities of the affiliated dental practices. Accordingly, the
consolidated financial statements of the affiliated dental practices are not
consolidated with those of the Company.

The consolidated statements of operations and cash flows for the nine months
ended September 30, 1996 are unaudited, but in the opinion of management
include all adjustments, which consist only of normal and recurring
adjustments, necessary for a fair presentation of the unaudited interim
financial statements.

Principles of Consolidation

The consolidated financial statements include the accounts of the Company
and its wholly-owned subsidiaries. All intercompany balances and transactions
have been eliminated in consolidation.

Use of Estimates

The preparation of these consolidated financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements and the reported amounts
of revenue and expenses during the reporting period. Actual results could
differ from those estimates.

Cash and Cash Equivalents

For purposes of the statement of cash flows, the Company considers all
highly liquid instruments with an original maturity of three months or less to
be cash equivalents.

Fair Value of Financial Instruments

The Company believes the carrying amount of cash and cash equivalents,
accounts receivable, receivables due from affiliated practices, accounts
payable and accrued expenses approximate fair value because of the short-term
nature of these items. The carrying amount of long-term debt approximates fair
value because the interest rates approximate rates at which similar types of
borrowing arrangements could be obtained by the Company.

F-15
<PAGE>

AMERICAN DENTAL PARTNERS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
FOR THE YEAR ENDED DECEMBER 31, 1996 AND THE NINE MONTHS ENDED SEPTEMBER 30,
1997 AND THE NINE MONTHS ENDED SEPTEMBER 30, 1996 (UNAUDITED)

Net Revenue

The Company's net revenue represents the aggregate amounts charged to
affiliated dental practices pursuant to the terms of the service agreements.
Under such agreements, the affiliated dental practices reimburse the Company
for expenses incurred on their behalf in connection with the operation and
administration of the dental facilities and pay fees to the Company for its
management services. A portion of these fees typically includes a fixed
monthly amount. The Company typically receives an additional fee if certain
operating objectives are achieved. The Company records all revenue monthly as
earned.

Inventories

Inventories consist primarily of dental supplies and are stated at the lower
of cost or market.

Property and Equipment

Property and equipment are stated at cost. Depreciation and amortization are
recorded using the straight-line method over the estimated useful lives of the
related assets which are 30-40 years for buildings, 3-7 years for equipment
and 3-7 years for furniture and fixtures.

Property and equipment under capital leases are stated at the present value
of minimum lease payments at inception of the lease. Equipment held under
capital leases and leasehold improvements are amortized over the shorter of
the lease term or estimated useful life of the asset. Amortization of assets
subject to capital leases is included in depreciation expense.

Intangible Assets

Identifiable intangible assets result from management service agreements
with the affiliated dental groups. The estimated fair value of the management
service agreements is the excess of the purchase price over the estimated fair
value of the tangible assets acquired and liabilities assumed of dental
practices. Intangible assets associated with management service agreements are
generally amortized over the period of expected benefit, which ranges from 25
to 40 years. In the event a management service agreement is terminated, the
related affiliated dental practice is required to purchase, at the Company's
option, the unamortized balance of intangible assets at the current book
value, as well as all related other assets associated with the affiliated
dental practice. Accumulated amortization amounted to $48,000 and $307,000 at
December 31, 1996 and September 30, 1997, respectively.

The Company reviews the carrying value of intangible assets on an entity by
entity basis to determine if facts and circumstances exist which would suggest
that the intangible assets may be impaired or that the amortization period
needs to be modified. Among the factors the Company considers in making the
evaluation are changes in the practices' market position, reputation,
profitability and geographical penetration. If conditions are present which
indicate impairment is probable, the Company will prepare a projection of the
undiscounted cash flows of the specific practice and determine if the
intangible assets are recoverable based on these undiscounted cash flows. If
impairment is indicated, then an adjustment will be made to reduce the
carrying amount of the intangible assets to their fair value.

Income Taxes

Deferred income taxes are recognized for the tax consequences of temporary
differences by applying enacted statutory tax rates applicable to future years
to differences between the financial statement carrying amounts and the tax
basis of existing assets and liabilities. The effect on deferred taxes of
changes in the tax rate is recognized in operations in the period that
includes the enactment date.

F-16
<PAGE>

AMERICAN DENTAL PARTNERS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
FOR THE YEAR ENDED DECEMBER 31, 1996 AND THE NINE MONTHS ENDED SEPTEMBER 30,
1997 AND THE NINE MONTHS ENDED SEPTEMBER 30, 1996 (UNAUDITED)

Stock Option Plans

Statement of Financial Accounting Standards No. 123 ("SFAS 123"), Accounting
for Stock-Based Compensation, allows companies to recognize expense for the
fair value of stock-based awards or to continue to apply the provisions of APB
Opinion No. 25, Accounting for Stock Issued to Employees, and disclose the
effects of SFAS 123 as if the fair-value-based method defined in SFAS No. 123
had been applied. Under APB Opinion No. 25, compensation expense is recognized
only if on the measurement date the fair value of the underlying stock exceeds
the exercise price. The Company has elected to apply the provisions of APB
Opinion No. 25 and provide the pro forma disclosure provisions of SFAS 123.

Earnings Per Share

Earnings per share are computed based on the weighted average number of
shares outstanding during the period plus common stock equivalents related to
stock options, if such common stock equivalents cause dilution in earnings per
share in excess of 3% and if their inclusion is not anti-dilutive. In
accordance with Securities and Exchange Commission Staff Accounting Bulletin
No. 83, Common Stock issued and stock options granted at prices lower than the
assumed initial public offering price within a one-year period prior to the
initial filing date of the offering have been included in the earnings per
share calculation (using the treasury stock method) as if they were
outstanding for all periods presented. The number of shares outstanding for
all periods presented have been retroactively adjusted to reflect the issuance
of Common Stock upon the contemplated conversion of Series A Convertible
Preferred Stock in connection with the planned public offering (see Note 13).

In February 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 128 "Earnings per Share" ("SFAS 128")
which requires presentation of basic earnings per share ("Basic EPS") and
diluted earnings per share ("Diluted EPS") by all entities that have publicly
traded common stock or potential common stock (options, warrants, convertible
securities or contingent stock arrangements). SFAS 128 also requires
presentation of earnings per share by an entity that has made a filing or is
in the process of filing with a regulatory agency in preparation for the sale
of those securities in a public market. Basic EPS is computed by dividing
income available to common stockholders by the weighted average number of
common shares outstanding during the period. Diluted EPS gives effect to all
dilutive potential common shares outstanding during the period. The
computation of Diluted EPS does not assume conversion, exercise or contingent
exercise of securities that would have an antidilutive effect on earnings. The
statement is effective for both interim and annual periods ending after
December 15, 1997. The Company does not believe that the effect on the
Company's earnings per share resulting from the adoption of SFAS 128 will be
material.

Pending Pronouncements

The Emerging Issues Task Force ("EITF") has issued EITF Issue No. 97-2 which
addresses certain matters relating to the physician practice management
industry, which include the criteria for the consolidation of professional
service corporation revenue and the accounting for business combinations. The
Company is unable to predict the impact, if any, that this EITF issue may have
on the Company's financial statements.

(3) ACCOUNTS RECEIVABLE AND NET REVENUE

Accounts Receivable

Accounts receivable represent amounts due from patients and third party
payors for dental services provided by affiliated dental practices that were
outstanding at the time the Company acquired the assets of the practice.

Receivables Due From Affiliated Dental Practices

Receivables due from affiliated practices represent amounts due pursuant to
the terms of the service agreements as described below.

F-17
<PAGE>

AMERICAN DENTAL PARTNERS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
FOR THE YEAR ENDED DECEMBER 31, 1996 AND THE NINE MONTHS ENDED SEPTEMBER 30,
1997 AND THE NINE MONTHS ENDED SEPTEMBER 30, 1996 (UNAUDITED)

Net Revenue--Management Services

The Company's net revenue represents the aggregate fees charged to
affiliated dental practices pursuant to the terms of the service agreements.
Under such agreements, the affiliated dental practices reimburse the Company
for expenses incurred on their behalf in connection with the operation and
administration of the dental facilities and pay fees to the Company for its
management services. A portion of these fees typically includes a fixed
amount. The Company typically receives an additional fee if certain operating
objectives are achieved. The Company records this revenue monthly as earned.
The Company's service fees (after reimbursement of expenses) ranged from
approximately 9% to 22% of the PC's adjusted gross revenue for the nine months
ended September 30, 1997. Such fees include the additional fee which, in the
aggregate, was not material for the nine month period ended September 30,
1997.

Revenue--Affiliated Dental Practices

The affiliated dental practices record revenue at established rates reduced
by contractual adjustments and allowances for doubtful accounts to arrive at
adjusted gross revenue. Contractual adjustments represent the difference
between gross billable charges at established rates and the portion of those
charges allowable by third party payors pursuant to certain reimbursement and
managed care contracts.

The Company does not consolidate the financial statements of its affiliated
dental practices with those of the Company. The adjusted gross revenue and
amounts retained by Park Dental and all other affiliated dental practices are
presented below for illustrative purposes only:

<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEAR ENDED SEPTEMBER 30,
DECEMBER 31, 1996 1997
----------------- ------------------
ALL ALL
PARK AFFILIATED PARK AFFILIATED
DENTAL PRACTICES DENTAL PRACTICES
------ ---------- ------- ----------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Adjusted gross revenue--affiliated
dental practices..................... $4,459 $4,958 $28,242 $47,521
Amounts retained by affiliated dental
practices............................ 858 1,025 6,101 10,901
------ ------ ------- -------
Net revenue (amounts earned by the
Company under service agreements).... $3,601 $3,933 $22,141 $36,620
====== ====== ======= =======
</TABLE>

(4) ACQUISITIONS AND AFFILIATIONS

During the year ended December 31, 1996, the Company acquired substantially
all the assets of three dental practices and simultaneously entered into 40-
year service agreements with the affiliated dental groups. The aggregate
purchase price paid in connection with these transactions (the "1996
Transactions") consisted of approximately $7.3 million in cash, $2.2 million
in subordinated promissory notes and 1,613,400 shares of Common Stock.

During the nine months ended September 30, 1997, the Company acquired
substantially all the assets of four dental practices and simultaneously
entered into 40-year service agreements with three of the affiliated dental
groups (one practice joined an existing affiliate). The aggregate purchase
price paid in connection with these transactions consisted of approximately
$3.6 million in cash, $0.5 million in subordinated promissory notes and 41,352
shares of Common Stock.

F-18
<PAGE>

AMERICAN DENTAL PARTNERS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
FOR THE YEAR ENDED DECEMBER 31, 1996 AND THE NINE MONTHS ENDED SEPTEMBER 30,
1997 AND THE NINE MONTHS ENDED SEPTEMBER 30, 1996 (UNAUDITED)

On October 1 1997, the Company acquired substantially all the assets of two
dental practices and a related entity associated with one of these practices,
Orthocare, Ltd. (now a wholly-owned subsidiary), which contracts with third
party payors and orthodontic providers to arrange for the provision of
orthodontic care to patients insured by such third party payors. The Company
simultaneously entered into a 40-year service agreement with one of the
affiliated dental groups (one practice joined an existing affiliate). The
aggregate purchase price paid in connection with the Orthocare, Ltd
transaction, which was accounted for as a purchase, consisted of $3.2 million
in cash, $0.6 million in subordinated promissory notes and 56,472 shares of
Common Stock. The aggregate purchase price paid in connection with all the
October 1, 1997 affiliations and the acquisition consisted of $13.2 million in
cash, $1.9 million in subordinated promissory notes and 139,482 shares of
Common Stock. All transactions completed in 1997 are referred to as the "1997
Transactions."

The excess of the purchase price and expenses associated with the 1996 and
1997 Transactions over the estimated fair value of the net assets acquired has
been recorded as intangible assets. The accompanying consolidated financial
statements include the results of operations under the service agreements from
the date of acquisition. These transactions are as follows.

<TABLE>
<CAPTION>
DATE AFFILIATED DENTAL GROUP LOCATION
---- ----------------------- --------
<S> <C> <C>
November 1996...................... Park Dental Minneapolis, MN
December 1996...................... Longhorn Dental Austin, TX
December 1996...................... Smileage Dental Care Milwaukee, WI
March 1997......................... Malcolm R. Scott D.D.S. San Marcos, TX
March 1997......................... Lakeside Dental Care Metaire, LA
May 1997........................... Soster Dental Group Pittsburgh, PA
July 1997.......................... Northpoint Dental Group Milwaukee, WI
October 1997....................... Wilkens Dental Group Milwaukee, WI
October 1997....................... Orthocare Group Minneapolis, MN
</TABLE>

The excess of the purchase price associated with all of the 1996 and 1997
Transactions over the estimated fair value of net assets acquired has been
recorded as intangible assets which are summarized as follows:

<TABLE>
<CAPTION>
AMOUNT
------
(IN THOUSANDS)
<S> <C>
Fair value of total consideration paid.................... $32,439
Fair value of net tangible assets acquired and liabilities
assumed.................................................. 3,132
-------
Excess of fair value of consideration paid over fair value
of net tangible assets acquired.......................... $29,307
=======
The excess of the fair value of the consideration paid
over the fair value of the net tangible assets acquired
has been allocated as follows:
Service agreements associated with affiliations........... $25,916
Goodwill associated with the acquisition.................. 3,391
-------
$29,307
=======
</TABLE>

If the acquisition of Orthocare, Ltd. occurred on January 1, 1996, the
Company's unaudited net revenue, earnings (loss) before income taxes, net
earnings (loss) and net earnings (loss) per share would have been $7,661,000,
$(2,442,000), $(2,442,000), and $(0.55) per share, respectively, for the year
ended December

F-19
<PAGE>

AMERICAN DENTAL PARTNERS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
FOR THE YEAR ENDED DECEMBER 31, 1996 AND THE NINE MONTHS ENDED SEPTEMBER 30,
1997 AND THE NINE MONTHS ENDED SEPTEMBER 30, 1996 (UNAUDITED)

31, 1996 and $36,696,000, $873,000, $759,000, and $0.07 per share for the nine
month period ended September 30, 1997, respectively. Such pro forma financial
information reflects certain adjustments, including amortization of
intangibles, income tax effects and an increase in the weighted average shares
outstanding. This unaudited pro forma information does not necessarily reflect
the results of operations that would have occurred had the acquisition taken
place at the beginning of 1996 and is not necessarily indicative of results
that may be obtained in the future.

(5) PROPERTY AND EQUIPMENT

Property and Equipment

Property and equipment consisted of the following at December 31, 1996 and
September 30, 1997:

<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
1996 1997
------------ -------------
(IN THOUSANDS)
<S> <C> <C>
Land, buildings and leasehold improvements....... $ 3,938 $ 5,403
Equipment........................................ 3,768 5,982
Furniture and fixtures........................... 1,450 2,595
------- -------
Total property and equipment..................... 9,156 13,980
Less accumulated depreciation.................... (3,213) (6,297)
------- -------
Property and equipment, net...................... $ 5,943 $ 7,683
======= =======
</TABLE>

Operating Leases

The Company is obligated under non-cancelable operating leases for premises
and equipment expiring in various years through the year 2009. Rent expense
for the year ended December 31, 1996 and nine months ended September 30, 1997
amounted to $319,000 and $2,751,000, respectively, of which $267,000 and
$2,416,000 were reimbursed under service agreements. The Company has several
leases with stockholders that were assumed in connection with its 1996 and
1997 Transactions. Such amounts are generally reimbursed pursuant to the terms
of the service agreements.

Minimum future rental payments and amounts to be reimbursed under service
agreements under non-cancelable operating leases as of September 30, 1997 are
as follows:

<TABLE>
<CAPTION>
AMOUNT TO BE
TOTAL REIMBURSED
AMOUNT UNDER SERVICE NET
DUE AGREEMENTS AMOUNT
------- ------------- ------
(IN THOUSANDS)
<S> <C> <C> <C>
Quarter ending December 31, 1997................ $ 774 $ 725 $ 49
Fiscal year ending:
1998.......................................... 2,965 2,801 164
1999.......................................... 2,721 2,618 103
2000.......................................... 2,274 2,211 63
2001.......................................... 1,608 1,540 68
2002.......................................... 1,373 1,373 --
Thereafter.................................... 4,648 4,648 --
------- ------- ----
Total minimum lease payments................ $16,363 $15,916 $447
======= ======= ====
</TABLE>

F-20
<PAGE>

AMERICAN DENTAL PARTNERS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
FOR THE YEAR ENDED DECEMBER 31, 1996 AND THE NINE MONTHS ENDED SEPTEMBER 30,
1997 AND THE NINE MONTHS ENDED SEPTEMBER 30, 1996 (UNAUDITED)

(6) INCOME TAXES

Income tax expense attributable to income from continuing operations
consists of:

<TABLE>
<CAPTION>
CURRENT DEFERRED TOTAL
------- -------- -----
(IN THOUSANDS)
<S> <C> <C> <C>
Year ended December 31, 1996:
Federal............................................ $ -- $ -- $ --
State.............................................. -- -- --
----- ----- -----
$ -- $ -- $ --
===== ===== =====
Nine months ended September 30, 1997:
Federal............................................ $ -- $ -- $ --
State.............................................. 81 -- 81
----- ----- -----
$ 81 $ -- $ 81
===== ===== =====
</TABLE>

The tax effects of temporary differences that give rise to significant
portions of deferred tax assets and deferred tax liabilities as of December
31, 1996 and September 30, 1997 are as follows:

<TABLE>
<CAPTION>
YEAR ENDED NINE MONTHS ENDED
DECEMBER 31, SEPTEMBER 30,
1996 1997
------------ -----------------
(IN THOUSANDS)
<S> <C> <C>
Deferred tax assets:
Operating loss carryforward................ $ 1,882 $ 1,824
Property and equipment..................... 366 418
Organization and start-up costs............ 251 195
Accrued expenses and other liabilities..... 831 148
Other...................................... 168 --
------- -------
Total gross deferred tax assets............ 3,498 2,585
Valuation allowance........................ (3,498) (2,398)
------- -------
Net deferred tax asset..................... $ -- $ 187
------- -------
Deferred tax liabilities:
Intangibles................................ $ -- $ (184)
Other...................................... -- (3)
------- -------
Total gross deferred tax liabilities....... $ -- $ (187)
------- -------
Net deferred tax asset....................... $ -- $ --
======= =======
</TABLE>

The valuation allowance for deferred tax assets was $3,498,000 and
$2,398,000 as of December 31, 1996 and September 30, 1997, respectively. The
net change in the total valuation allowance for the year ended December 31,
1996 and the nine months ended September 30, 1997 was an increase of
$3,498,000 and a decrease of $1,100,000, respectively. The valuation allowance
has been established because, based on the limited operating history of the
Company and other available evidence, it is more likely than not that the
deferred tax asset will not be realized.

F-21
<PAGE>

AMERICAN DENTAL PARTNERS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
FOR THE YEAR ENDED DECEMBER 31, 1996 AND THE NINE MONTHS ENDED SEPTEMBER 30,
1997 AND THE NINE MONTHS ENDED SEPTEMBER 30, 1996 (UNAUDITED)

Subsequent recognized tax benefits relating to the valuation allowance for
deferred tax assets as of December 31, 1996 and September 30, 1997 will be
allocated as follows:

<TABLE>
<CAPTION>
YEAR ENDED NINE MONTHS ENDED
DECEMBER 31, SEPTEMBER 30,
1996 1997
------------ -----------------
(IN THOUSANDS)
<S> <C> <C> <C>
Income tax benefit to be reported in
the consolidated statement of
operations............................ $2,185 $1,666
Intangibles............................ 1,313 732
------ ------
$3,498 $2,398
====== ======
</TABLE>

At December 31, 1996 and September 30, 1997, the net deferred tax asset
consisted of the following:

<TABLE>
<CAPTION>
YEAR ENDED NINE MONTHS ENDED
DECEMBER 31, 1996 SEPTEMBER 30, 1997
----------------------- -----------------------
FEDERAL STATE TOTAL FEDERAL STATE TOTAL
------- ----- ------- ------- ----- -------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Deferred tax liability:
Current..................... $ -- $ -- $ -- $ -- $ -- $ --
Non-current................. -- -- -- (158) (29) (187)
------- ----- ------- ------- ----- -------
$ -- $ -- $ -- $ (158) $ (29) $ (187)
------- ----- ------- ------- ----- -------
Deferred tax asset:
Current..................... $ 240 $ 46 $ 286 $ 978 $ 177 $ 1,155
Non-current................. 2,712 500 3,212 1,049 194 1,243
Valuation allowance......... (2,952) (546) (3,498) (2,027) (371) (2,398)
------- ----- ------- ------- ----- -------
Net deferred tax asset.... $ -- $ -- $ -- $ -- $ -- $ --
======= ===== ======= ======= ===== =======
</TABLE>

At December 31, 1996 and September 30, 1997, the Company has net operating
loss carryforwards for Federal income tax purposes of approximately $4,706,000
and $4,561,000, respectively which are available to offset future Federal
taxable income. The net operating loss carryforward begins to expire in the
year 2012 unless utilized.

The following table reconciles the Federal statutory income tax rate and the
Company's effective income tax rate for the year ended December 31, 1996 and
nine months ended September 30, 1997:

<TABLE>
<CAPTION>
YEAR ENDED NINE MONTHS ENDED
DECEMBER 31, SEPTEMBER 30,
1996 1997
------------ -----------------
<S> <C> <C>
Income taxes at Federal
statutory rate......... (34.0)% 34.0%
State taxes, net of
Federal benefit........ (6.0) 6.0
Valuation reserve and
other changes.......... 33.0 (36.0)
Intangibles and other
permanent differences.. 7.0 6.0
----- -----
Effective income tax
rate................... -- % 10.0%
===== =====
</TABLE>

F-22
<PAGE>

AMERICAN DENTAL PARTNERS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
FOR THE YEAR ENDED DECEMBER 31, 1996 AND THE NINE MONTHS ENDED SEPTEMBER 30,
1997 AND THE NINE MONTHS ENDED SEPTEMBER 30, 1996 (UNAUDITED)

(7) DEBT

Long-term debt and capital lease obligations consist of the following at
December 31, 1996 and September 30, 1997 (in thousands):

<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
1996 1997
------------ -------------
<S> <C> <C>
Revolving line of credit advances, collaterized
by substantially all assets of the Company, all
at a LIBOR based rate of approximately 7.5%.... $ -- $2,300
Mortgages payable, secured, interest rates
ranging from 8.6% to 8.8% payable in
installments through 2015...................... 788 741
Notes payable, unsecured, interest rates ranging
from 8.0% to 8.9% payable in installments,
maturing in 2004............................... 524 48
Subordinated notes payable to stockholders and
former owners, bearing interest at 7%, maturing
through 2003................................... 2,182 2,673
Capital lease obligations....................... 106 262
------ ------
Total long-term debt and capital lease
obligations.................................... 3,600 6,024
Less current maturities......................... 537 534
------ ------
Long-term debt and capital lease obligations,
excluding current maturities................... $3,063 $5,490
====== ======
</TABLE>

Annual maturities of long-term debt and future minimum lease payments under
capital leases as of September 30, 1997 are as follows (in thousands):

<TABLE>
<CAPTION>
LONG-TERM CAPITAL
DEBT LEASES
--------- -------
<S> <C> <C>
Quarter Ending December 31, 1997........................... $ 328 $ 20
Fiscal Year Ending:
1998..................................................... 453 103
1999..................................................... 459 66
2000..................................................... 2,767 50
2001..................................................... 474 50
2002..................................................... 483 33
Thereafter............................................... 798 --
------ ----
Total payments......................................... $5,762 322
======
Less amounts representing interest....................... 60
----
Total obligations under capital leases................. $262
====
</TABLE>

Revolving Line of Credit

In April 1997, the Company entered into a $30 million revolving line of
credit agreement with a bank. The credit facility is being used for general
corporate purposes including acquisitions. Borrowings under this line of
credit bear interest at either prime- or LIBOR-based rates, at the Company's
option, plus a margin based upon the Company's debt coverage ratio, which
ranges up to 0.50% for prime-based loans and up to 2.125% for LIBOR-based
loans. In addition, the Company pays a commitment fee of 0.25% of the average
daily balance of the unused line. Borrowings are limited to an availability
formula based on adjusted EBITDA. The credit facility

F-23
<PAGE>

AMERICAN DENTAL PARTNERS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
FOR THE YEAR ENDED DECEMBER 31, 1996 AND THE NINE MONTHS ENDED SEPTEMBER 30,
1997 AND THE NINE MONTHS ENDED SEPTEMBER 30, 1996 (UNAUDITED)

is secured by a first lien on substantially all of the Company's assets,
including a pledge of the stock of the Company's subsidiaries. The Company is
also required to comply with certain financial and other covenants. The line
of credit matures in April 2000.

Subordinated Debentures

The Company is a party to a Subordinated Debenture Purchase Agreement dated
January 8, 1996 pursuant to which it has received a commitment from a
principal stockholder for the purchase of up to $15,000,000 of 12%
subordinated debentures. The purchase of such debentures is contingent upon
the satisfaction of certain conditions. For each debenture issued, the Company
is also obligated to issue Common Stock at a purchase price equal to the $0.01
per share par value of the Company's Common Stock. The number of shares of
Common Stock to be issued is subject to a predetermined formula.

The principal amount of the debentures, if issued, will be payable in three
equal installments due in the years 2002, 2003 and 2004 or upon the occurrence
of a Liquidity Event, as defined. Any debentures outstanding are subordinated
to any indebtedness owed to any bank. The Company is not obligated to issue
any debentures and has not issued any debentures through December 31, 1996 and
September 30, 1997. The obligation to purchase any debentures will
automatically terminate upon completion of an initial public offering.

(8) CONVERTIBLE AND REDEEMABLE PREFERRED STOCK

Series A Convertible Preferred Stock

The Company is authorized to issue up to 400,000 shares of Series A
convertible preferred stock, $0.01 par value, all of which were issued and
outstanding at December 31, 1996 and September 30, 1997.

Holders of Series A convertible preferred stock have the same number of
votes as the shares of Common Stock into which their Series A convertible
preferred stock could be converted. The Series A convertible preferred stock
is entitled to receive dividends at a cumulative rate of $1.58 per share,
compounded annually ($109,000 and $474,000 for the year ended December 31,
1996 and nine months ended September 30, 1997, respectively) which have not
been declared. Such dividends will be paid when, as and if declared by the
Board of Directors. In the event of liquidation, dissolution, or winding up of
the Company, holders of the Series A convertible preferred stock will be
entitled to receive, prior to any distribution to holders of Common Stock, all
accumulated unpaid dividends plus $19.75 per share. However, if holders of the
Series A convertible preferred stock would, receive a greater amount if their
stock had been converted to Common Stock immediately prior to such
liquidation, dissolution, or winding up, then they will be entitled to receive
such greater amount. The Series A convertible preferred stock is recorded at
$8,009,000 and $8,483,000 at December 31, 1996 and September 30, 1997,
respectively, and includes accrued but unpaid dividends.

The Series A convertible preferred stock may be converted into shares of
Common Stock at any time at the option of the holder. The 400,000 shares of
Series A convertible preferred stock will convert to 2,400,000 shares of
Common Stock upon completion of the Company's initial public offering and all
accrued dividends will be canceled. This same conversion ratio applies in the
event a holder of this preferred stock converts such shares into Common Stock
prior to the completion of this offering.

If not previously converted, the Series A convertible preferred stock will
be subject to redemption at the option of the Company or a majority of the
holders of the Series A convertible preferred stock in three equal
installments in the years 2002, 2003 and 2004.

F-24
<PAGE>

AMERICAN DENTAL PARTNERS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
FOR THE YEAR ENDED DECEMBER 31, 1996 AND THE NINE MONTHS ENDED SEPTEMBER 30,
1997 AND THE NINE MONTHS ENDED SEPTEMBER 30, 1996 (UNAUDITED)

Series B Redeemable Preferred Stock

The Company is authorized to issue 70,000 shares of Series B redeemable
preferred stock, par value $0.01 per share, all of which were issued and
outstanding at December 31, 1996 and September 30, 1997.

Holders of Series B redeemable preferred stock have no voting rights. The
Series B redeemable preferred stock is entitled to receive dividends at a
cumulative rate of $8.00 per share, compounded annually ($96,000 and $421,000
for the year ended December 31, 1996 and nine months ended September 30, 1997,
respectively) which have not been declared. Such dividends will be paid when,
as and if declared by the Board of Directors. In the event of liquidation,
dissolution, or winding up of the Company, holders of the Series B redeemable
preferred stock will be entitled to receive, prior to any distributions to
holders of Common Stock, all accumulated unpaid dividends plus $100 per share.
The Series B redeemable preferred stock is recorded at $7,096,000 and
$7,517,000 at December 31, 1996 and September 30, 1997, respectively and
includes accrued but unpaid dividends.

The Series B redeemable preferred stock will be redeemed concurrently, or
within 90 days thereafter, of the consummation of the first sale of securities
by the Company pursuant to a registration statement filed under the Securities
Act of 1933, as amended. If not previously redeemed, the Series B redeemable
preferred stock will be subject to redemption at the option of the Company or
of holders of a majority of the Series B redeemable preferred stock in three
equal installments in the years 2002, 2003 and 2004.

(9) STOCKHOLDERS' EQUITY

Common Stock

The Company is authorized to issue up to 25,000,000 shares of Common Stock,
$0.01 par value, of which 2,213,384 and 2,254,736 shares were issued and
outstanding at December 31, 1996 and September 30, 1997, respectively. In
January and February of 1996, the Company sold 300,000 shares of its Common
Stock for $100,000. Additionally, in January 1996, the Company sold 300,000
shares of its Common Stock, which were subject to certain restrictions, for
$500. In connection with this transaction, the Company is recording
compensation expense ratably as the restrictions lapse. Compensation expense
amounted to $18,662 and $22,809 for the year ended December 31, 1996 and the
nine months ended September 30, 1997, respectively.

Dividend Restriction

The Company has not paid any cash dividends on its Common Stock and does not
plan to pay any cash dividends on its Common Stock in the foreseeable future.
Additionally, no dividends may be paid on the Common Stock (other than
dividends paid solely in Common Stock) without the consent of at least 51% of
the then current holders of the Series A convertible and Series B redeemable
preferred stock.

(10) COMMITMENTS AND CONTINGENCIES

Letters of Credit

At December 31, 1996 and September 30, 1997, the Company had an outstanding
letter of credit in the amount of $75,000 which expires on November 15, 1999.

F-25
<PAGE>

AMERICAN DENTAL PARTNERS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
FOR THE YEAR ENDED DECEMBER 31, 1996 AND THE NINE MONTHS ENDED SEPTEMBER 30,
1997 AND THE NINE MONTHS ENDED SEPTEMBER 30, 1996 (UNAUDITED)

(11) STOCK OPTION PLANS

1996 Stock Option Plan

The Company's 1996 Stock Option Plan (the "1996 Plan") provides for the
grant of stock options to key employees. The 1996 Plan permits the granting of
options that qualify as incentive stock options and non-qualified options. The
exercise price of such options is no less than the fair market value of the
Common Stock at the time of grant. Options granted pursuant to the 1996 Plan
expire ten years after the date of grant. At September 30, 1997, options for a
total of 873,246 shares were reserved for issuance under the 1996 Plan. At
September 30, 1997, options for 627,420 shares were outstanding under the 1996
Plan.

1996 Time Accelerated Restricted Stock Option Plan

The Company's 1996 Time Accelerated Restricted Stock Option Plan ("TARSOP
Plan") provides for the grant of stock options to key employees. Only non-
qualified options may be granted pursuant to the TARSOP Plan. The exercise
price of such options is no less than the fair market value of the Common
Stock at the time of grant. These options vest at the end of the ninth year,
but are subject to accelerated vesting based on achievement of certain
performance measures. Options granted pursuant to the TARSOP Plan expire nine
and one-half years after the date of grant. At September 30, 1997, options for
a total of 360,360 shares were reserved for issuance under the TARSOP Plan,
all of which have been issued.

1996 Affiliate Stock Option Plan

The Company's 1996 Affiliate Stock Option Plan (the "Affiliate Plan")
provides for the grant of stock options to certain persons associated with the
affiliated dental practices. Only non-qualified options may be granted
pursuant to the Affiliate Plan. The exercise price of such options is no less
than the fair market value of the Common Stock at the time of grant. Options
granted pursuant to the Affiliate Plan expire ten years after the date of
grant. At September 30, 1997, options for a total of 210,000 shares were
reserved for issuance under the Affiliate Plan. At September 30, 1997, options
for 87,186 shares were outstanding under the Affiliate Plan.

1996 Directors Stock Option Plan

The Company's 1996 Directors Stock Option Plan (the "Directors Plan")
provides for the granting of options to outside directors. Only non-qualified
options may be granted pursuant to the Directors Plan. The exercise price of
such options is no less than the fair market value of the Common Stock at the
time of grant. Options granted pursuant to the Directors Plan expire ten years
after the date of grant. At September 30, 1997, options for a total of 60,000
shares were reserved for issuance under the Directors Plan. At September 30,
1997, options for 19,800 shares were outstanding under the Directors Plan.

F-26
<PAGE>

AMERICAN DENTAL PARTNERS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
FOR THE YEAR ENDED DECEMBER 31, 1996 AND THE NINE MONTHS ENDED SEPTEMBER 30,
1997 AND THE NINE MONTHS ENDED SEPTEMBER 30, 1996 (UNAUDITED)

Stock Option Activity

A summary of stock option activity under all the Company's stock option
plans for the year ended December 31, 1996 and the nine months ended September
30, 1997 follows:

<TABLE>
<CAPTION>
EXERCISE PRICES
-----------------------
NUMBER WEIGHTED
OF OPTIONS RANGE AVERAGE
---------- -------------- --------
<S> <C> <C> <C>
Outstanding at January 1, 1996.............. -- --
Granted..................................... 571,170 $0.33 - $12.50 $ 3.50
Cancelled................................... (4,500) 0.33 0.33
--------- -------------- ------
Outstanding at December 31, 1996............ 566,670 $0.33 - $12.50 $ 3.50
Granted..................................... 528,696 12.50 - 14.17 14.03
Cancelled................................... (600) 14.17 14.17
--------- -------------- ------
Outstanding at September 30, 1997........... 1,094,766 $0.33 - $14.17 $ 8.58
========= ============== ======
Options exercisable at:
December 31, 1996......................... 16,320
=========
September 30, 1997........................ 42,798
=========
</TABLE>

The Company has adopted the disclosure-only provisions of SFAS 123.
Accordingly, no compensation cost has been recognized for stock options
issued. In accordance with the provisions of SFAS No. 123, there would be no
compensation cost using the minimum value method with the following
assumptions: risk free interest rate of 6.7%, expected life of four years, and
no dividends.

F-27
<PAGE>

AMERICAN DENTAL PARTNERS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
FOR THE YEAR ENDED DECEMBER 31, 1996 AND THE NINE MONTHS ENDED SEPTEMBER 30,
1997 AND THE NINE MONTHS ENDED SEPTEMBER 30, 1996 (UNAUDITED)

The following table summarizes information about stock options outstanding
at September 30, 1997:

<TABLE>
<CAPTION>
OPTIONS OUTSTANDING OPTIONS EXERCISABLE
-------------------------------------- --------------------------
WEIGHTED
AVERAGE
REMAINING
CONTRACTUAL WEIGHTED WEIGHTED
RANGE OF NUMBER LIFE AVERAGE NUMBER AVERAGE
XERCISE PRICESE OUTSTANDING (IN YEARS) EXERCISE PRICE EXERCISABLE EXERCISE PRICE
- --------------- ----------- ----------- -------------- ----------- --------------
<S> <C> <C> <C> <C> <C>
$0.33 352,770 7.5 $0.33 16,500 $0.33
$8.33 194,700 8.8 $8.33 26,298 $8.33
$12.50-- $12.50--
$14.17 547,296 9.2--9.8 $14.17 -- --
--------- ------
1,094,766 42,798
========= ======
</TABLE>

(12) EMPLOYEE BENEFIT PLANS

Retirement Plans

The Company has a Savings and Retirement Plan (401(k) Plan), adopted October
1, 1996, which is the Company's principal defined contribution retirement
plan, which provides for a match of up to 3% of an employee's compensation.
Additionally, at September 30, 1997, the Company had three other defined
contribution retirement plans. Total plan expense for the year ended December
31, 1996 and the nine months ended September 30, 1997 was $20,000 and
$136,000, respectively.

(13) SUBSEQUENT EVENTS

Letters of Intent

At October 31, 1997, the Company had two letters of intent signed with
potential affiliates to acquire substantially all the assets and enter into
long-term service agreements with these dental practices. The aggregate
purchase price under these letters of intent consists of approximately $5.9
million in cash, $0.8 million in subordinated promissory notes and 82,236
shares of Common Stock. Completion of these transactions is subject to due
diligence review and completion of final agreements. There can be no assurance
that the Company will consummate these transactions.

Initial Public Offering

Effective October 27, 1997, the Company authorized the filing of a
registration statement for an initial public offering of the Company's Common
Stock.

Stock Split and Authorized Shares

Effective October 31, 1997, the Company increased its authorized shares of
Common Stock from 2,500,000 to 25,000,000 shares. The increase in authorized
shares has been reflected retroactively in the accompanying consolidated
financial statements.

Additionally, effective October 31, 1997, the Company increased its
authorized shares of Preferred Stock from 470,000 to 1,000,000 shares. The
additional 530,000 shares are undesignated Preferred Stock which can be issued
in one or more series.

F-28
<PAGE>

AMERICAN DENTAL PARTNERS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
FOR THE YEAR ENDED DECEMBER 31, 1996 AND THE NINE MONTHS ENDED SEPTEMBER 30,
1997 AND THE NINE MONTHS ENDED SEPTEMBER 30, 1996 UNAUDITED

On November 7, 1997, the Company approved a 6-for-1 split of the Company's
Common Stock effected in the form of a stock dividend. All share and per share
amounts in the accompanying consolidated financial statements have been
retroactively restated to reflect this split.

1997 Employee Stock Purchase Plan

On October 27, 1997, the Company approved the 1997 Employee Stock Purchase
Plan (the "Employee Stock Purchase Plan"), effective December 1, 1997. The
Employee Stock Purchase Plan is designed to enable eligible employees to
purchase shares of Common Stock at a discount on a periodic basis through
payroll deductions and is intended to meet the requirements of Section 423 of
the Internal Revenue Code. Purchases will occur at the end of option periods,
each of six months' duration, except that the first such option period will
begin concurrent with the commencement of the Company's initial public
offering and end on June 30, 1998. The purchase price of Common Stock under
the Employee Stock Purchase Plan will be 85% of the lesser of the value of the
Common Stock at the beginning of an option period and the value of the Common
Stock at the end of the option period. Participants may elect under the
Employee Stock Purchase Plan, prior to each option period, to have from 2% to
10% of their pay withheld and applied to the purchase of shares at the end of
the option period. However, the Employee Stock Purchase Plan imposes a maximum
of $10,000 on the amount that may be withheld from any participant in any
option period. A total of 200,000 shares of Common Stock has been reserved for
issuance under the Employee Stock Purchase Plan.

F-29
<PAGE>

INDEPENDENT AUDITORS' REPORT

The Board of Directors
PDHC, Ltd.:

We have audited the accompanying balance sheet of PDHC, Ltd. as of November
12, 1996 and the related statements of operations, stockholders' equity and
cash flows for the period from January 1, 1996 to November 12, 1996. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.

We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of PDHC, Ltd. and the results
of its operations and its cash flows for the period January 1, 1996 to
November 12, 1996, in conformity with generally accepted accounting
principles.

KPMG Peat Marwick LLP

Minneapolis, Minnesota
March 26, 1997

F-30
<PAGE>

INDEPENDENT AUDITORS' REPORT

The Board of Directors
PDHC, Ltd.:

We have audited the accompanying balance sheet of PDHC, Ltd. as of December
31, 1995, and the related statements of operations, stockholders' equity and
cash flows for the years ended December 31, 1994 and 1995. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of PDHC, Ltd. as of December
31, 1995, and the results of its operations and its cash flows for the years
ended December 31, 1994 and 1995, in conformity with generally accepted
accounting principles.

Stirtz Bernards Boyden
Surdel & Larter, P.A.

Edina, Minnesota
October 16, 1997

F-31
<PAGE>

PDHC, LTD.

BALANCE SHEETS
DECEMBER 31, 1995 AND NOVEMBER 12, 1996
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
DECEMBER 31, NOVEMBER 12,
1995 1996
------------ ------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents.......................... $ 3,034 $ 8
Accounts receivable, net of allowances for doubtful
accounts and contractual adjustments of $250 in
1995 and $702 in 1996............................. 1,817 2,345
Refundable income taxes............................ -- 1,000
Supplies........................................... 113 111
Prepaid expenses and other receivables............. 294 234
Deferred income taxes.............................. 210 430
------- ------
Total current assets............................. 5,468 4,128
------- ------
Property and equipment, net.......................... 5,144 4,045
------- ------
Non-current assets:
Deferred income taxes.............................. 420 600
Other assets....................................... 98 97
------- ------
Total non-current assets......................... 518 697
------- ------
Total assets..................................... $11,130 $8,870
======= ======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable................................... $ 705 $ 532
Income taxes payable............................... 737 --
Accrued compensation, benefits and taxes........... 1,205 1,568
Accrued expenses................................... 321 543
Customer prepayments............................... -- 540
Current maturities of long-term debt............... 536 158
------- ------
Total current liabilities........................ 3,504 3,341
------- ------
Non-current liabilities:
Long-term debt, less current maturities............ 601 721
Other liabilities.................................. 68 118
------- ------
Total non-current liabilities.................... 669 839
------- ------
Total liabilities................................ 4,173 4,180
------- ------
Stockholders' equity:
Common stock, par value $1 per share, 50,000 shares
authorized, 12,057 shares issued and outstanding.. 12 12
Additional paid-in capital......................... 3,648 3,415
Notes receivable from stock sales.................. -- (155)
Retained earnings.................................. 3,297 1,418
------- ------
Total stockholders' equity....................... 6,957 4,690
------- ------
Commitments and contingencies
Total liabilities and stockholders' equity....... $11,130 $8,870
======= ======
</TABLE>
See accompanying notes to financial statements.

F-32
<PAGE>

PDHC, LTD.

STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1994 AND 1995
AND THE PERIOD ENDED NOVEMBER 12, 1996
(IN THOUSANDS)

<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31, PERIOD ENDED
--------------- NOVEMBER 12,
1994 1995 1996
------- ------- ------------
<S> <C> <C> <C>
Net revenue........................................ $26,139 $30,211 $27,680
------- ------- -------
Operating expenses:
Salaries and benefits............................ 13,457 17,117 16,731
Special bonuses.................................. -- -- 2,000
Lab fees and dental supplies..................... 2,444 2,642 2,771
Office occupancy................................. 2,149 2,185 2,120
Other expenses................................... 6,247 5,877 5,738
Depreciation..................................... 1,106 1,265 1,124
Amortization of intangibles...................... 10 18 26
------- ------- -------
Total operating expenses....................... 25,413 29,104 30,510
------- ------- -------
Earnings (loss) from operations.................... 726 1,107 (2,830)
Interest expense (income), net................... 228 67 (31)
------- ------- -------
Earnings (loss) before income taxes................ 498 1,040 (2,799)
Income taxes expense (benefit)................... 210 460 (920)
------- ------- -------
Net earnings (loss)................................ $ 288 $ 580 $(1,879)
======= ======= =======
</TABLE>

See accompanying notes to financial statements.

F-33
<PAGE>

PDHC, LTD.

STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1994 AND 1995
AND THE PERIOD ENDED NOVEMBER 12, 1996
(IN THOUSANDS)

<TABLE>
<CAPTION>
COMMON STOCK
$1 PAR VALUE ADDITIONAL NOTE
------------- PAID-IN RECEIVABLE RETAINED
SHARES AMOUNT CAPITAL STOCK SALES EARNINGS TOTAL
------ ------ ---------- ----------- -------- -------
<S> <C> <C> <C> <C> <C> <C>
Balance at December 31,
1993, as previously
stated................. 6 $ 6 $ 118 $ -- $ 1,766 $ 1,890
Pooling of interests
with Brookpark Dental
Center, P.A.......... 3 3 (1) -- 744 746
--- ---- ------ ----- ------- -------
Balance at December 31,
1993, as restated...... 9 9 117 -- 2,510 2,636
Issuance of common
stock................ -- -- 105 -- -- 105
Purchase of common
stock................ -- -- (106) -- (81) (187)
Net earnings.......... -- -- -- -- 288 288
--- ---- ------ ----- ------- -------
Balance at December 31,
1994................... 9 9 116 -- 2,717 2,842
Issuance of common
stock................ 3 3 3,616 -- -- 3,619
Purchase of common
stock................ -- -- (84) -- -- (84)
Net earnings.......... -- -- -- -- 580 580
--- ---- ------ ----- ------- -------
Balance at December 31,
1995................... 12 12 3,648 -- 3,297 6,957
Issuance of common
stock................ 1 1 185 (155) -- 31
Purchase of common
stock................ (1) (1) (418) -- -- (419)
Net loss.............. -- -- -- -- (1,879) (1,879)
--- ---- ------ ----- ------- -------
Balance at November 12,
1996................... 12 $ 12 $3,415 $(155) $ 1,418 $ 4,690
=== ==== ====== ===== ======= =======
</TABLE>

See accompanying notes to financial statements.

F-34
<PAGE>

PDHC, LTD.

STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1994 AND 1995
AND THE PERIOD ENDED NOVEMBER 12, 1996
(IN THOUSANDS)

<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31, PERIOD ENDED
---------------- NOVEMBER 12,
1994 1995 1996
------- ------- ------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net earnings (loss)............................ $ 288 $ 580 $(1,879)
Adjustments to reconcile net earnings (loss) to
net cash provided by (used for) operating
activities:
Depreciation and amortization................ 1,116 1,283 1,150
Deferred income taxes........................ (50) (430) (400)
Loss on disposition of assets................ -- -- 924
Accounts receivable.......................... (133) (335) (528)
Other current assets......................... (50) 85 62
Other assets................................. (11) (40) 1
Accounts payable and accrued expenses........ 682 353 (785)
Other........................................ -- 68 63
------- ------- -------
Net cash provided by (used for) operating
activities................................ 1,842 1,564 (1,392)
------- ------- -------
Cash flows used for investing activities:
Capital expenditures, net...................... (1,793) (1,162) (988)
------- ------- -------
Cash flows from financing activities:
Proceeds from issuance of common stock......... 105 3,619 31
Issuance of subordinated debenture............. -- 10 (35)
Net change in note payable--bank............... 360 (460) --
Purchase of common stock....................... (45) -- (419)
Repayment of borrowings........................ (557) (474) (223)
Repayment of capital lease obligations......... (172) (199) --
------- ------- -------
Net cash provided by (used for) financing
activities................................ (309) 2,496 (646)
------- ------- -------
Net change in cash and cash equivalents.......... (260) 2,898 (3,026)
Cash and cash equivalents at beginning of
period.......................................... 396 136 3,034
------- ------- -------
Cash and cash equivalents at end of period....... $ 136 $ 3,034 $ 8
======= ======= =======
Cash paid during the period for:
Interest....................................... $ 149 $ 157 $ 78
======= ======= =======
Income taxes................................... $ 338 $ 199 $ 1,214
======= ======= =======
Non-cash investing and financing activities:
Purchase of common stock with note payable..... $ 142 $ 84 $ --
======= ======= =======
Purchase of equipment with capital lease
obligation.................................... $ -- $ 5 $ --
======= ======= =======
Issuance of common stock for note receivable... $ -- $ -- $ 155
======= ======= =======
</TABLE>

See accompanying notes to financial statements.

F-35
<PAGE>

PDHC, LTD.

NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1994 AND 1995
AND THE PERIOD ENDED NOVEMBER 12, 1996

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Business

The Company provides dental services to patients throughout the greater
Minneapolis/St. Paul, Minnesota area.

Estimates and Assumptions

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of net revenue and expenses during the
reporting period. Actual results could differ from those estimates.

Net Patient Service Revenue

The Company generates its revenue from patients and third party payors under
fee for service, preferred provider and capitation arrangements. The Company's
preferred provider agreements and capitation agreements with health
maintenance organizations are generally on a yearly basis subject to
cancellation by either party upon advance written notice.

Preferred provider revenue is recognized when the service is provided based
on predetermined rates for the respective service. Capitation revenue is due
monthly and recognized as revenue in the month the Company is obligated to
provide service to the patients under the capitation agreement.

Cash Equivalents

The Company considers all highly liquid instruments purchased with a
maturity of less than three months to be cash equivalents.

Supplies

Supplies consist of dental supplies and are stated at the lower of cost or
market. Cost is determined by the first-in, first-out (FIFO) method.

Property and Equipment

Property and equipment are carried at cost. Depreciation is computed using
the straight-line method over the estimated useful lives of the assets which
are 31 years for buildings, 5 years for equipment and 7 years for furniture
and fixtures and leasehold improvements. When assets are retired or otherwise
disposed of, the cost and related accumulated depreciation are removed from
the accounts and any resulting gain or loss is recognized. The cost of
maintenance and repairs is expensed as incurred and significant renewals and
betterments are capitalized.

Advertising Costs

Advertising costs are expensed as incurred. Advertising costs (including
yellow pages) charged to operations were $265,000 in 1994, $336,000 in 1995
and $455,000 in 1996.

F-36
<PAGE>

PDHC, LTD.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
FOR THE YEARS ENDED DECEMBER 31, 1994 AND 1995
AND THE PERIOD ENDED NOVEMBER 12, 1996

Income Taxes

Income taxes are provided for the tax effects of transactions reported in
the financial statements and consist of income taxes currently due plus
deferred income taxes. Deferred income taxes relate to differences between the
financial and tax bases of certain assets and liabilities. Temporary
differences that result in significant deferred income taxes are allowance for
doubtful accounts, accrual for vacation pay and book accumulated depreciation
in excess of tax accumulated depreciation.

Concentrations of Credit Risk

The Company has cash and cash equivalents which exceed the federally insured
limit. These consist principally of demand deposits and money market funds.
These deposits generally have maturities of three months or less. The Company
has not experienced any losses on its cash deposits.

The Company grants credit to patients and third party payors without
collateral. Net patient service revenue from patients and third party payors
were as follows:

<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER
31, PERIOD ENDED
------------ NOVEMBER 12,
1994 1995 1996
----- ----- ------------
<S> <C> <C> <C>
Fee-for-service plans............................. 37.3% 40.6% 43.8%
Preferred provider organization plans............. 13.6 12.2 12.4
Capitated managed care plans...................... 49.1 47.2 43.8
----- ----- -----
100.0% 100.0% 100.0%
===== ===== =====
</TABLE>

Net patient service revenue from patients under a major dental benefit
carrier and affiliated entities' plan was 21.1% in 1994, 22.9% in 1995 and
20.2% in 1996. The major dental benefit carrier became a stockholder of the
Company in 1995.

(2) MERGER

On March 31, 1995, the Company completed a merger with Brookpark Dental
Center, P.A. whereby Brookpark was merged directly into PDHC, Ltd. Under the
terms of the agreement, Brookpark stockholders received 0.158 of a share of
the Company's common stock for each Brookpark share. Accordingly, the Company
issued 2,733 shares of its common stock for all the outstanding common stock
of Brookpark. In addition, outstanding employee stock options to purchase
Brookpark common stock were converted into options to purchase 58 shares of
the Company's common stock. Prior to the merger, certain stockholders of the
Company were also stockholders of Brookpark.

F-37
<PAGE>

PDHC, LTD.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
FOR THE YEARS ENDED DECEMBER 31, 1994 AND 1995
AND THE PERIOD ENDED NOVEMBER 12, 1996

The transaction has been accounted for as pooling of interests and therefore
the financial statements are presented as if the merger took place at the
beginning of 1994. Separate and combined results of PHDC, Ltd. and Brookpark
during the year ended December 31, 1994 are as follows:

<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31, 1994
-----------------
(IN THOUSANDS)
(UNAUDITED)
<S> <C>
Net revenue:
PDHC, Ltd.............................................. $21,828
Brookpark Dental Center, P.A........................... 4,714
Less intercompany sales................................ (403)
-------
$26,139
=======
Net earnings:
PDHC, Ltd.............................................. $ 164
Brookpark Dental Center, P.A........................... 124
-------
$ 288
=======
</TABLE>

(3) PROPERTY AND EQUIPMENT

Property and equipment consisted of the following:

<TABLE>
<CAPTION>
DECEMBER 31, NOVEMBER 12,
1995 1996
------------ ------------
(IN THOUSANDS)
<S> <C> <C>
Land, buildings and leasehold improvements......... $ 5,376 $ 5,773
Equipment.......................................... 4,497 3,661
Furniture and fixtures............................. 1,443 2,775
------- -------
Total property and equipment....................... 11,316 12,209
Less accumulated depreciation...................... (6,172) (8,164)
------- -------
Property and equipment, net........................ $ 5,144 $ 4,045
======= =======
</TABLE>

(4) NOTE PAYABLE--BANK

The Company had a $1.2 million line of credit with interest payable monthly
at 1% above the prime rate. The Company paid off the note in 1995 and elected
not to renew the note. The note was secured by the assets of the Company.

F-38
<PAGE>

PDHC, LTD.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
FOR THE YEARS ENDED DECEMBER 31, 1994 AND 1995
AND THE PERIOD ENDED NOVEMBER 12, 1996

(5) LONG-TERM OBLIGATIONS

Long-term obligations consisted of the following:

<TABLE>
<CAPTION>
DECEMBER 31, NOVEMBER 12,
1995 1996
------------ ------------
(IN THOUSANDS)
<S> <C> <C>
Note payable to bank bears interest at 8.63%. The
note is payable in monthly installments of $6,684,
including principal and interest due March, 2003.
The note is secured by property.................... $ 429 $ 392
Note payable to bank bears interest at 7.36%. The
note is payable in monthly installments of $3,617,
including principal and interest due March, 1997.
The note is secured by property.................... 49 14
Note payable to bank bears interest at 9.75%. The
note is payable in monthly installments of $21,436,
including principal and interest due November,
1996. The note is secured by the assets of the
Company............................................ 214 --
Notes payable to related parties bear interest at 8%
to 9%. The notes are payable in monthly
installments through October, 2004. The notes are
unsecured.......................................... 271 473
Capital lease obligations (Note 6).................. 132 --
Subordinated debentures to three employees bear
interest at 8%. The debentures are payable over
five to ten years after the employees' termination.
(Note 8)........................................... 35 --
Covenant not to compete, payable in monthly
installments of $683 through October, 1996......... 7 --
------ -----
1,137 879
Less current maturities............................. (536) (158)
------ -----
$ 601 $ 721
====== =====
</TABLE>

Future maturities of long-term obligations are as follows:

<TABLE>
<CAPTION>
(IN THOUSANDS)
<S> <C>
Years Ending December 31:
1997..................................................... $158
1998..................................................... 119
1999..................................................... 129
2000..................................................... 141
2001..................................................... 154
Thereafter............................................... 178
----
$879
====
</TABLE>

(6) LEASE COMMITMENTS

The Company leases its facilities under non-cancelable long-term operating
lease agreements ranging from one to fourteen years with certain leases
containing renewal options exercisable at the end of the lease term. Certain
lease agreements provide for the Company to pay their proportionate share of
real estate taxes, insurance and other operating costs. In addition, parts of
the leased facilities have been subleased with one-year terms. Rent expense
under facility leases was $1,282,000 in 1994, $1,044,000 in 1995 and $956,000
in 1996, which is net of sublease income of $32,000 in 1994, $72,000 in 1995
and $123,000 in 1996.

F-39
<PAGE>

PDHC, LTD.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
FOR THE YEARS ENDED DECEMBER 31, 1994 AND 1995
AND THE PERIOD ENDED NOVEMBER 12, 1996

The Company leases copiers, fax machines and various other equipment under
non-cancelable operating lease agreements. Rent expense for equipment under
operating leases was $97,000 in 1994, $111,000 in 1995 and $32,000 in 1996.

Future minimum lease payments for operating leases as of November 12, 1996
are as follows:

<TABLE>
<CAPTION>
(IN THOUSANDS)
<S> <C>
Years Ending December 31:
1997..................................................... $1,340
1998..................................................... 1,186
1999..................................................... 994
2000..................................................... 751
2001..................................................... 619
Thereafter............................................... 3,006
------
$7,896
======
</TABLE>

Future minimum rentals to be received under subleases in the remainder of
1996 was $11,000. The subleases expired as of December 31, 1996.

The Company leased computer equipment and software under a capital lease
that required monthly payments of $13,772 including interest through August,
1996. The Company had an option to purchase the equipment and software at fair
market value at the end of the lease term. The Company leased telephone
equipment under a capital lease that required monthly payments of $2,036
through May, 1996.

Assets recorded under capital leases consisted of the following:

<TABLE>
<CAPTION>
DECEMBER 31,
1995
--------------
(IN THOUSANDS)
<S> <C>
Computer equipment and software............................. $ 515
Telephone equipment......................................... 63
-----
578
(156)
-----
Less accumulated depreciation............................... $ 422
=====
</TABLE>

F-40
<PAGE>

PDHC, LTD.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
FOR THE YEARS ENDED DECEMBER 31, 1994 AND 1995
AND THE PERIOD ENDED NOVEMBER 12, 1996

(7) INCOME TAXES

The provision for income taxes is comprised of the following:

<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER
31, PERIOD ENDED
----------- NOVEMBER 12,
1994 1995 1996
---- ----- ------------
(IN THOUSANDS)
<S> <C> <C> <C>
Current:
Federal........................................ $190 $ 670 $(467)
State.......................................... 70 220 (53)
---- ----- -----
260 890 (520)
---- ----- -----
Deferred:
Federal........................................ (38) (330) (260)
State.......................................... (12) (100) (140)
---- ----- -----
(50) (430) (400)
---- ----- -----
$210 $ 460 $(920)
==== ===== =====
</TABLE>

Deferred income taxes reflect temporary differences in the recognition of
revenue and expense for tax reporting and financial statement purposes.
Deferred tax assets were comprised of the following at December 31, 1994,
1995, and November 12, 1996:

<TABLE>
<CAPTION>
DECEMBER 31, NOVEMBER 12,
1995 1996
------------ ------------
(IN THOUSANDS)
<S> <C> <C>
Depreciation and amortization.................... $392 $ 485
Reserves deductible in future years.............. 101 199
Accrued expenses................................. 109 172
Other............................................ 28 174
---- ------
Total deferred tax asset....................... $630 $1,030
==== ======
</TABLE>

A reconciliation between the federal statutory tax rate and the Company's
effective tax rate is as follows:

<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED PERIOD ENDED
DECEMBER 31, DECEMBER 31, NOVEMBER 12,
1994 1995 1996
-------------- -------------- ---------------
AMOUNT PERCENT AMOUNT PERCENT AMOUNT PERCENT
------ ------- ------ ------- ------ -------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Income taxes at federal
statutory tax rate............ $174 35.0% $364 35.0% $(898) (34.0)%
Acquisition costs.............. -- -- -- -- 82 3.0
Officers' life insurance....... 9 1.6 22 2.1 24 1.0
Meals and entertainment........ 7 1.4 27 2.6 2 0.0
State income taxes, net of
federal tax benefit........... 20 4.2 47 4.5 (130) (5.0)
---- ---- ---- ---- ----- -----
$210 42.2% $460 44.2% $(920) (35.0)%
==== ==== ==== ==== ===== =====
</TABLE>

F-41
<PAGE>

PDHC, LTD.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
FOR THE YEARS ENDED DECEMBER 31, 1994 AND 1995
AND THE PERIOD ENDED NOVEMBER 12, 1996

(8) SUBORDINATED DEBENTURES

The Company had issued $35,000 of subordinated debentures to three
employees. The debentures accrued interest at 8% and were to be redeemed by
the Company at the employee's termination of employment. The debentures were
payable over either a five or ten-year period with interest at 8%, as
determined under the agreements. The Company had also issued options to three
employees and a consultant to the Company to purchase a total of $374,000 of
additional subordinated debentures. Employees had committed to purchase
$58,000 of these debentures.

The subordinated debentures carried with them stock appreciation rights.
Under the agreements, the debenture holders participated in the common stock
appreciation over a base price per share as determined in each of the
respective agreements. The number of shares available for appreciation rights
were determined by the amount of debentures purchased divided by the base
price per share. The rights vested over periods ranging from six to ten years
and were payable when services were no longer performed for the company or
employment was terminated. The amount payable to the debenture holders would
have been equal to the value of such specific number of shares less the amount
of the debentures which would have been paid less accrued and paid interest on
the debentures. The amounts were payable over a five or ten-year period with
interest at 8%, as determined under the agreements. Compensation expense
charged to operations related to these stock appreciation rights was $0 in
1994, $18,000 in 1995 and $0 in 1996. These agreements were terminated
November 11, 1996.

(9) STOCKHOLDERS' EQUITY

Stock Options

The Company has granted nonqualified stock options to key employees at an
exercise price not less than market price as of the date of grant. Each grant
awarded specifies the period for which the stock options are exercisable and
provides that the stock options shall expire at the end of such period. Option
transactions for the years ended December 31, 1994 and 1995 and period ended
November 12, 1996 are summarized as follows:

<TABLE>
<CAPTION>
NUMBER OF OPTIONS
SHARES PRICES
--------- --------
<S> <C> <C>
Outstanding at December 31, 1993......................... -- $ --
Granted.................................................. 332 255
---- --------
Outstanding at December 31, 1994......................... 332 255
Brookpark options converted to Company options........... 58 350
Granted.................................................. 69 291
---- --------
Outstanding at December 31, 1995......................... 459 255-350
Granted.................................................. 69 350
Cancelled................................................ (528) 255-350
---- --------
Outstanding at November 12, 1996......................... -- $ --
==== ========
</TABLE>

The Company has adopted the disclosure-only provisions of SFAS No. 123, and
applies APB Opinion 25 and related interpretations in accounting for its plan.
Under APB Opinion 25, when the exercise price of employee stock options equals
the market price of the underlying stock on the date of the grant, no
compensation expense is recognized.

F-42
<PAGE>

PDHC, LTD.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
FOR THE YEARS ENDED DECEMBER 31, 1994 AND 1995
AND THE PERIOD ENDED NOVEMBER 12, 1996

The effect of applying SFAS No. 123's fair value method to the Company's
stock-based awards results in net income that is not materially different from
amounts reported.

Stock Redemption Agreement

The Company has a stock redemption agreement with its individual
stockholders. The agreement requires the Company to purchase the stockholders'
share upon termination of employment, in the event of death or total
disability. The stockholders will receive payment for their stock from life
insurance proceeds and/or in 120 monthly installments, including interest at
9%. The Company has approximately $5,990,000 of life insurance on its
individual stockholders at December 31, 1995 and at November 12, 1996 to
provide partial, and in some cases full, funding for this agreement.

Stock Redemption Commitment

The Company has an agreement to purchase 788 shares of common stock at
November 12, 1996 from a current stockholder as follows:

<TABLE>
<CAPTION>
PRICE
NUMBER PER AGGREGATE
OF SHARES SHARE PRICE PAYMENT TERMS
--------- ------- --------- -------------
<S> <C> <C> <C>
50 $556.80 $ 27,840 12 monthly installments with interest at 9% beginning
December 1, 1996
100 $560.00 $ 56,000 12 monthly installments with interest at 9% beginning
December 1, 1996
638 $569.76 $363,510 60 monthly installments with interest at 9% beginning
December 1, 1997
</TABLE>

(10) DEFERRED COMPENSATION AGREEMENT

In August, 1995, the Company entered into an agreement with an officer of
the Company which calls for the officer to be credited with $50,000 of
deferred compensation on August 17, 1995, and an additional $50,000 on each
anniversary date up to and including the tenth anniversary date. The deferred
compensation becomes fully vested upon the earlier of termination of
employment or August, 2005. Amounts payable under the agreement are to be paid
in a lump sum in cash, as soon as administratively practicable. Compensation
expense charged to operations under this agreement was $0 in 1994, $50,000 in
1995 and 1996.

(11) BENEFIT PLANS

Defined Benefit Pension Plan

The Company had a defined benefit pension plan which covered substantially
all employees after certain age and service requirements were met. In July,
1994, the plan was terminated effective September 30, 1994. Participants
became 100% vested in their accrued benefits through the date of termination
and were paid the value of those benefits in September, 1995. Plan expenses
charged to operations were $696,000 in 1994 and $533,000 in 1995.

F-43
<PAGE>

PDHC, LTD.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
FOR THE YEARS ENDED DECEMBER 31, 1994 AND 1995
AND THE PERIOD ENDED NOVEMBER 12, 1996

Profit Sharing Plan

The Company had a profit sharing plan which covered employees who had
attained the age of 21 and completed 12 months of service. No contributions
had been made to the plan since July, 1984 and no contributions were permitted
by the participants. The plan was terminated effective June 30, 1995 and
participants became 100% vested in their account balances. All participant
balances were paid out in 1995.

401(k) Profit Sharing Plan

The Company has a 401(k) profit sharing plan that covers employees who have
attained the age of 21 and completed 6 months of service. Eligible employees
can contribute up to 15% of their compensation. The Company makes matching
contributions of 30% on the first 6% of employee deferrals. The Company can
also make discretionary contributions to the plan as determined by the Board
of Directors. Contributions to the plan were $36,000 in 1994, $60,000 in 1995
and $133,000 in 1996.

(12) OTHER RELATED PARTY TRANSACTION

The Company paid provider fees of $173,000 in 1994, $82,000 in 1995 and
$11,000 in 1996 to a related entity. Provider fees payable to the related
entity were $5,000 at December 31, 1995 and $0 at November 12, 1996. Certain
stockholders of the Company are also stockholders in the related entity and
the related entity is a stockholder of the Company.

(13) FAIR VALUES OF FINANCIAL INSTRUMENTS

The estimated fair values of the Company's financial instruments at December
31, 1995 and November 12, 1996, and the methods and assumptions used to
estimate such fair values, are as follows:

The fair values of cash and cash equivalents, accounts receivable and
accounts payable approximate the carrying amounts because of the short
maturity of those financial instruments.

The fair values of long-term obligations, long-term capital lease
obligations and subordinated debentures approximate the carrying amounts, as
their interest rates approximate current interest rates.

(14) RECLASSIFICATIONS

Certain reclassifications were made to the 1995 statement of operations to
conform with the 1994 and 1996 presentations which had no effect on net
earnings.

(15) SUBSEQUENT EVENTS

Effective November 12, 1996, substantially all the assets and liabilities of
PDHC, Ltd. were acquired by American Dental Partners, Inc. In connection with
this transaction (i) the dentists employees formed a new professional
corporation, PDG, P.A. and (ii) PDHC, Ltd. simultaneously entered into a 40-
year service agreement with PDG, P.A. Immediately prior to the completion of
this transaction, PDHC, Ltd. paid special bonuses of $2,000,000 to
shareholders and certain employees which are recorded as expense in the
accompanying statement of operations.

F-44
<PAGE>

INDEPENDENT AUDITORS' REPORT

The Board of Directors
The Orthocare Companies:

We have audited the accompanying combined balance sheets of The Orthocare
Companies (the "Company") as of December 31, 1996 and September 30, 1997, and
the related combined statements of operations, stockholders' equity and cash
flows for the year ended December 31, 1996 and the nine months ended September
30, 1997. These combined financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
combined financial statements based on our audits.

In our opinion, the combined financial statements referred to above present
fairly, in all material respects, the combined financial position of The
Orthocare Companies as of December 31, 1996 and September 30, 1997, and the
results of their operations and their cash flows for the year ended December
31, 1996 and the nine months ended September 30, 1997, in conformity with
generally accepted accounting principles.

KPMG Peat Marwick LLP

Boston, Massachusetts
December 29, 1997

F-45
<PAGE>

THE ORTHOCARE COMPANIES

COMBINED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)

<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
1996 1997
------------ -------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents......................... $1,558 $2,101
Accounts receivable, net of allowance for
uncollectible billings of $50,000 in 1996 and
1997............................................. 1,001 852
Inventories....................................... 46 48
Prepaid expenses.................................. 26 43
------ ------
Total current assets............................ 2,631 3,044
------ ------
Property and equipment, net......................... 252 240
------ ------
Total assets.................................... $2,883 $3,284
====== ======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable.................................. $ 48 $ 134
Accrued compensation, benefits and taxes.......... 195 456
Accrued and deferred income tax liability......... 96 226
Amounts payable to providers...................... 250 241
Deferred revenue.................................. 703 816
Notes payable to stockholders..................... 103 22
------ ------
Total current liabilities....................... 1,395 1,895
------ ------
Noncurrent liabilities:
Deferred income tax liability..................... 326 231
------ ------
Total liabilities............................... 1,721 2,126
------ ------
Stockholders' equity:
Common stock...................................... 181 181
Additional paid-in capital........................ 105 105
Retained earnings................................. 876 872
------ ------
Total stockholders' equity...................... 1,162 1,158
------ ------
Commitments and contingencies
Total liabilities and stockholders' equity...... $2,883 $3,284
====== ======
</TABLE>

See accompanying notes to combined financial statements.

F-46
<PAGE>

THE ORTHOCARE COMPANIES

COMBINED STATEMENTS OF OPERATIONS
(IN THOUSANDS)

<TABLE>
<CAPTION>
YEAR ENDED NINE MONTHS ENDED
DECEMBER 31, SEPTEMBER 30,
1996 1997
------------ -----------------
<S> <C> <C>
Revenue.......................................... $8,868 $7,208
Operating expenses:
Salaries and benefits.......................... 6,821 5,671
Lab fees and dental supplies................... 404 326
Office occupancy............................... 599 460
Other operating expenses....................... 528 535
Depreciation................................... 129 51
------ ------
Total operating expenses..................... 8,481 7,043
------ ------
Earnings from operations..................... 387 165
Interest (income), net........................... (35) (40)
------ ------
Earnings before income taxes................. 422 205
Income taxes..................................... 152 144
------ ------
Net earnings..................................... $ 270 $ 61
====== ======
</TABLE>

See accompanying notes to combined financial statements.

F-47
<PAGE>

THE ORTHOCARE COMPANIES

COMBINED STATEMENTS OF STOCKHOLDERS' EQUITY
(IN THOUSANDS)

<TABLE>
<CAPTION>
ADDITIONAL TOTAL
PAID-IN RETAINED STOCKHOLDERS'
COMMON STOCK CAPITAL EARNINGS EQUITY
------------ ---------- -------- -------------
<S> <C> <C> <C> <C>
Balance at December 31, 1995.... $181 $105 $709 $995
Net earnings.................. -- -- 270 270
Dividends paid................ -- -- (103) (103)
---- ---- ---- ------
Balance at December 31, 1996.... 181 105 876 1,162
Net earnings.................. -- -- 61 61
Dividends paid................ -- -- (65) (65)
---- ---- ---- ------
Balance at September 30, 1997... $181 $105 $872 $1,158
==== ==== ==== ======
</TABLE>

See accompanying notes to combined financial statements.

F-48
<PAGE>

THE ORTHOCARE COMPANIES

COMBINED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)

<TABLE>
<CAPTION>
YEAR ENDED NINE MONTHS ENDED
DECEMBER 31, SEPTEMBER 30,
1996 1997
------------ -----------------
<S> <C> <C>
Cash flows from operating activities:
Net earnings.................................. $ 270 $ 61
Adjustments to reconcile net earnings to net
cash provided by operating activities:
Depreciation................................ 129 51
Deferred income tax liability............... 82 (95)
Changes in assets and liabilities:
Accounts receivable....................... 12 149
Other current assets...................... 86 (19)
Accounts payable.......................... 8 86
Accrued compensation, benefits and taxes.. 7 261
Accrued and deferred income tax
liability................................ 19 130
Amounts payable to providers.............. 1 (9)
Deferred revenue.......................... 96 113
------ -------
Net cash provided by operating activi-
ties................................... 710 728
------ -------
Cash flows from investing activities:
Capital expenditures, net..................... (245) (39)
------ -------
Net cash used for investing activities.. (245) (39)
------ -------
Cash flows from financing activities:
Proceeds (repayments) of notes payable to
stockholders, net............................ 59 (81)
Dividends paid................................ (103) (65)
------ -------
Net cash used for financing activities.. (44) (146)
------ -------
Increase in cash and cash equivalents........... 421 543
Cash and cash equivalents at beginning of
period......................................... 1,137 1,558
------ -------
Cash and cash equivalents at end of period...... $1,558 $ 2,101
====== =======
Supplemental disclosure of cash flow
information:
Cash paid during the period for income taxes.. $ 51 $ 109
====== =======
Cash paid during the period for interest...... $ 2 $ 3
====== =======
</TABLE>

See accompanying notes to combined financial statements.

F-49
<PAGE>

THE ORTHOCARE COMPANIES

NOTES TO COMBINED FINANCIAL STATEMENTS

(1) NATURE OF BUSINESS

The accompanying combined financial statements include Orthodontic Care
Specialists ("OCS"), Apple Park Associates, Inc. ("APA") and Orthocare Limited
("Orthocare"), collectively the ("Orthocare Companies", or the "Company"). The
Orthocare Companies provide orthodontic services to patients in the
Minneapolis/St. Paul, Minnesota area and arrange for the provision of
orthodontic services for insurance companies in Minnesota and Wisconsin.

(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying combined financial statements have been prepared on the
accrual basis of accounting. The operations of all entities described in Note
1 are combined for reporting purposes due to their common ownership.
Intercompany balances and transactions have been eliminated upon the
combination.

Use of Estimates

The preparation of these combined financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities at
the date of the financial statements and the reported amounts of revenue and
expenses during the reporting period. Actual results could differ from those
estimates.

Revenue Recognition

Revenue is recognized in accordance with the proportional performance method
of accounting for service contracts. Under this method, revenue is recognized
as services are performed and the costs associated therewith are incurred,
under the terms of contractual agreements with each patient. A significant
portion, approximately 20% of the services are performed and revenue
recognized in the initial month of the contract. Billings under each contract,
which vary in duration from 12 to 30 months, are made throughout the term of
the contract. Patient prepayments represent collections from patients or their
insurance companies which are received in advance of the performance of the
related services.

Accounts receivable represent billed and unbilled amounts due from patients
and third party payors for orthodontic services provided.

Cash and Cash Equivalents

For purposes of the statements of cash flows, the Company considers all
highly liquid instruments with an original maturity of three months or less to
be cash equivalents.

Fair Value of Financial Instruments

The Company believes the carrying amount of cash and cash equivalents,
accounts receivable, accounts payable, accrued expenses, deferred revenue and
notes payable to stockholders approximate fair value because of the short-term
nature of these items.

Inventories

Inventories consist primarily of dental supplies and are stated at the lower
of FIFO cost or market.

F-50
<PAGE>

THE ORTHOCARE COMPANIES

NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)

Property and Equipment

Property and equipment are stated at cost. Depreciation and amortization are
recorded using the straight-line method over the estimated useful lives of the
related assets which are 5 years for leasehold improvements, equipment and
furniture and fixtures.

Income Taxes

OCS and APA have elected to be treated as an "S Corporation" under Section
1362 of the Internal Revenue Code. As such, taxable income earned or taxable
losses incurred by these entities passes through to the shareholders and is
not subject to federal income tax at the corporate level. Accordingly, these
entities do not have a federal tax expense or benefit. Orthocare is a "C
Corporation" and is subject to federal and state income taxes.

Deferred income taxes are recognized for the tax consequences of temporary
differences by applying enacted statutory tax rates applicable to future years
to differences between the financial statement carrying amounts and the tax
basis of existing assets and liabilities. The effect on the deferred taxes of
changes in the tax rate is recognized in operations in the period that
includes the enactment date.

(3) PROPERTY AND EQUIPMENT

Property and Equipment

Property and equipment consisted of the following at December 31, 1996 and
September 30, 1997:

<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
1996 1997
------------ -------------
(IN THOUSANDS)
<S> <C> <C>
Leasehold improvements............................ $ 337 $ 337
Equipment......................................... 337 376
Furniture and fixtures............................ 120 120
----- -----
Total property and equipment...................... 794 833
Less accumulated depreciation..................... (542) (593)
----- -----
Property and equipment, net....................... $ 252 $ 240
===== =====
</TABLE>

Operating Leases

The Company is obligated under non-cancelable operating leases for premises
and equipment expiring in various years through the year 2001. Rent expense
for the year ended December 31, 1996 and nine months ended September 30, 1997
amounted to $552,000 and $416,000, respectively (see Note 7).

Minimum future rental payments under non-cancelable operating leases as of
September 30, 1997 are as follows:

<TABLE>
<CAPTION>
(IN THOUSANDS)
<S> <C>
Quarter ending December 31, 1997.............................. $ 101
Fiscal year ending:
1998.......................................................... 415
1999.......................................................... 317
2000.......................................................... 260
2001.......................................................... 200
------
Total minimum lease payments.................................. $1,293
======
</TABLE>

F-51
<PAGE>

THE ORTHOCARE COMPANIES

NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)

(4) INCOME TAXES

Income tax expense (benefit) attributable to earnings before income taxes
consists of:

<TABLE>
<CAPTION>
CURRENT DEFERRED TOTAL
------- -------- -----
(IN THOUSANDS)
<S> <C> <C> <C>
Year ended December 31, 1996:
Federal............................................. $ 54 $ 65 $119
State............................................... 16 17 33
---- ---- ----
$ 70 $ 82 $152
==== ==== ====
Nine months ended September 30, 1997:
Federal............................................. $188 $(75) $113
State............................................... 51 (20) 31
---- ---- ----
$239 $(95) $144
==== ==== ====
</TABLE>

The tax effects of temporary differences that give rise to significant
portions of deferred tax assets and deferred tax liabilities as of December
31, 1996 and September 30, 1997 are as follows:

<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
1996 1997
------------ -------------
(IN THOUSANDS)
<S> <C> <C>
Deferred tax assets:
Property and equipment.......................... $ 4 $ 2
---- ----
Total gross deferred tax assets................. 4 2
---- ----
Deferred tax liabilities:
Cash to accrual adjustments..................... 407 310
---- ----
Total gross deferred tax liabilities............ 407 310
---- ----
Net deferred tax liability........................ $403 $308
==== ====
</TABLE>

The following table reconciles the Federal statutory income tax rate and the
Company's effective income tax rate for the year ended December 31, 1996 and
nine months ended September 30, 1997:

<TABLE>
<CAPTION>
NINE MONTHS
YEAR ENDED ENDED
DECEMBER 31, SEPTEMBER 30,
1996 1997
------------ -------------
<S> <C> <C>
Income taxes at Federal statutory rate............ 34% 34%
State taxes, net of Federal benefit............... 9 9
Effective S corporation losses.................... (7) 27
--- ---
Effective income tax rate......................... 36% 70%
=== ===
</TABLE>

(5) NOTES PAYABLE TO STOCKHOLDERS

Notes payable to stockholders consisted of the following at December 31,
1996 and September 30, 1997 (in thousands):

<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
1996 1997
------------ -------------
(IN THOUSANDS)
<S> <C> <C>
Notes payable, unsecured, interest rate 8%,
payable in installments, maturing in February
1998.......................................... $ 63 $22
Notes payable, unsecured, non-interest bearing,
payable on demand............................. 40 --
---- ---
$103 $22
==== ===
</TABLE>

F-52
<PAGE>

THE ORTHOCARE COMPANIES

NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)

(6) STOCKHOLDERS' EQUITY

Common Stock

Common stock for each of the combined entity's consisted of the following at
December 31, 1996 and September 30, 1997:

<TABLE>
<CAPTION>
SHARES
----------------------
PAR VALUE AUTHORIZED OUTSTANDING AMOUNT
--------- ---------- ----------- --------------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Orthocare.................... No Par 25,000 1,000 $ 1
OCS.......................... No Par 50,000 28,484 95
APA.......................... No Par 25,000 1,000 66
DSM.......................... No Par 25,000 600 19
------ ----
31,084 $181
====== ====
</TABLE>

(7) RELATED PARTY TRANSACTIONS

The Company has an Orthodontists Service Agreement with Midwest Dental Care
to provide orthodontic services to participants in Midwest Dental Plan.
Midwest Dental Plan, a Wisconsin corporation, is partially owned by Company
stockholders. The Company received capitated revenue of approximately $290,000
and $217,000 for the year ended December 31, 1996 and the nine months ended
September 30, 1997, respectively.

The Company leases space from Apple Park Partners, which is 100% owned by
the Company's majority stockholder. Payments made to Apple Park Partners under
the lease were approximately $178,000 and $157,000 for the year ended December
31, 1996 and the nine months ended September 30, 1997, respectively.

The Company has an informal agreement with College Park Lab, a Wisconsin
corporation, to contract labor for four administrative employees in its
Wisconsin office. Under the agreement, College Park Lab performs the hiring
and all payroll and benefit administration for the Company's administrative
staff. The Company reimburses College Park Lab for the cost of salaries and
benefits plus a 11% markup to cover administrative costs. Total amounts paid
to College Park Lab were approximately $99,000 and $91,000 for the year ended
December 31, 1996 and the nine months ended September 30, 1997, respectively.
College Park Lab is partially owned by a minority stockholder of the Company.

(8) SUBSEQUENT EVENTS

Effective October 1, 1997, substantially all the assets of the Company were
acquired by American Dental Partners, Inc. In connection with this transaction
Apple Park Associates, Inc. entered into a 40-year service agreement with
Orthodontic Care Specialists, Ltd.

F-53
<PAGE>

- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------

NO PERSON HAS BEEN AUTHORIZED IN CONNECTION WITH THE OFFERING MADE HEREBY TO
GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PRO-
SPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR ANY UNDERWRITER. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF ANY OFFER
TO BUY ANY OF THE SECURITIES OFFERED HEREBY TO ANY PERSON OR BY ANYONE IN ANY
JURISDICTION IN WHICH IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEI-
THER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER
ANY CIRCUMSTANCES, CREATE ANY IMPLICATIONS THAT THE INFORMATION CONTAINED
HEREIN IS CORRECT AS OF ANY DATE SUBSEQUENT TO THE DATE HEREOF.

-----------

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary....................................................... 3
Risk Factors............................................................. 6
The Company.............................................................. 11
Use of Proceeds.......................................................... 12
Dividend Policy.......................................................... 12
Capitalization........................................................... 13
Dilution................................................................. 14
Selected Historical and Pro Forma Consolidated Financial Data............ 15
Management's Discussion and Analysis of Financial Condition and Results
of Operations........................................................... 17
Business................................................................. 24
Management............................................................... 36
Certain Transactions..................................................... 42
Principal Stockholders................................................... 45
Description of Capital Stock............................................. 46
Shares Eligible for Future Sale.......................................... 48
Underwriting............................................................. 50
Validity of Common Stock................................................. 52
Experts.................................................................. 52
Additional Information................................................... 52
Index to Financial Statements............................................ F-1
</TABLE>

-----------

UNTIL , 1998 (25 DAYS AFTER THE DATE OF THIS PROSPECTUS), ALL DEALERS EF-
FECTING TRANSACTIONS IN THE SECURITIES OFFERED HEREBY, WHETHER OR NOT PARTICI-
PATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS IS
IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN ACTING
AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.

- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------

2,000,000 Shares

[AMERICAN DENTAL PARTNERS LOGO]

Common Stock

-----------
PROSPECTUS
-----------

BT ALEX. BROWN

BANCAMERICA ROBERTSON STEPHENS

PIPER JAFFRAY INC.

, 1998

- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

The following table sets forth the expenses (other than underwriting
compensation expected to be incurred) in connection with the offering
described in this Registration Statement. All of such amounts (except the SEC
Registration Fee, NASD Filing Fee and Nasdaq National Market Listing Fee) are
estimated.

<TABLE>
<S> <C>
SEC Registration Fee........................................... $ 11,849
NASD Filing Fee................................................ 4,410
Nasdaq National Market Listing Fee............................. 34,486
Blue Sky Fees and Expenses.....................................
Printing and Engraving Costs...................................
Legal Fees and Expenses........................................
Accounting Fees and Expenses...................................
Transfer Agent and Registrar Fees and Expenses.................
Miscellaneous..................................................
----------
Total........................................................ $1,000,000
==========
</TABLE>

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS

Section 145 of the Delaware General Corporation Law, as amended (the
"DGCL"), provides that a corporation may indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal or investigative
(other than an action by or in the right of the corporation) by reason of the
fact that he is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, against expenses (including
attorneys' fees), judgments, fines and amount paid in settlement actually and
reasonably incurred by him in connection with such action, suit or proceeding
if he acted in good faith and in a manner he reasonably believed to be in or
not opposed to the best interests of the corporation, and, with respect to any
criminal action or proceeding, had no reasonable cause to believe his conduct
was unlawful. Section 145 further provides that a corporation similarly may
indemnify any such person serving in any such capacity who was or is a party
or is threatened to be made a party to any threatened, pending or completed
action or suit by or in the right of the corporation to procure a judgment in
its favor, against expenses actually and reasonably incurred in connection
with the defense or settlement of such action or suit if he acted in good
faith and in a manner he reasonably believed to be in or not opposed to the
best interests of the corporation and except that no indemnification shall be
made in respect to any claim, issue or matter as to which such person shall
have been adjudged to be liable to the corporation unless and only to the
extent that the Delaware Court of Chancery or such other court in which such
action or suit was brought shall determine upon application that, despite the
adjudication of liability but in view of all the circumstances of the case,
such person is fairly and reasonably entitled to indemnity for such expenses
which the Court of Chancery or such other court shall deem proper.

Article 6 of the Amended and Restated By-Laws of the Company, a copy of
which is filed as Exhibit 3(b), contains certain indemnification provisions
adopted pursuant to authority contained in Section 145 of the DGCL. The By-
Laws provide for the indemnification of its officers, directors, employees,
and agents against all expenses with respect to any judgments, fines, and
amounts paid in settlement, or with respect to any threatened, pending, or
completed action, suit, or proceeding to which they were or are parties or are
threatened to be made parties by reason of acting in such capacities, provided
that it is determined, either by a majority vote of a quorum of disinterested
directors of the Company or by the stockholders of the Company or otherwise as
provided in Section 6.4 of Article 6 of the By-Laws, that: (i) they acted in
good faith and in a manner they reasonably believed to be in or not opposed to
the best interests of the Company; (ii) in any action, suit, or proceeding by
or in the right of the Company, they were not, and have not been adjudicated
to have been liable to the Company;

II-1
<PAGE>

and (iii) with respect to any criminal action or proceeding, that they had no
reasonable cause to believe that their conduct was unlawful. Section 6.3 of
Article 6 of the By-Laws provides that to the extent a director, officer,
employee, or agent has been successful on the merits or otherwise in defense
of any such action, suit, or proceeding, he shall be indemnified against
expenses actually and reasonably incurred in connection therewith. At present,
there are no claims, actions, suits, or proceedings pending where
indemnification would be required under these provisions, and the Company does
not know of any threatened claims, actions, suits, or proceedings which may
result in a request for such indemnification.

Under Section 145 of the Delaware Law and Section 6.7 of the By-Laws, the
Company may purchase and maintain insurance on behalf of any person who is or
was a director, officer, employee, or agent of the Company, or who, while
serving in such capacity, is or was at the request of the Company, a director,
officer, employee or agent of another corporation or legal entity or of an
employee benefit plan, against liability asserted against or incurred by such
person in any such capacity whether or not the corporation would have the
power to provide indemnity under Section 145 or the By-Laws. The Company has
purchased a liability policy to indemnify its officers and directors against
loss arising from claims by reason of their legal liability for acts as
officers and directors, subject to limitations and conditions set forth in the
policy.

Section 102(b)(7) of the DGCL permits a corporation to include in its
certificate of incorporation a provision eliminating or limiting the personal
liability of a director to the corporation or its stockholders for monetary
damages for breach of fiduciary duty as a director, provided that such
provision shall not eliminate or limit the liability of a director (i) for any
breach of the director's duty of loyalty to the corporation or its
stockholders, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) under Section 174
of the DGCL (relating to unlawful payment of dividends and unlawful stock
purchase and redemption) or (iv) for any transaction from which the director
derived an improper personal benefit.

Article Ninth of the Second Amended and Restated Certificate of
Incorporation of the Company, a copy of which is filed as Exhibit 3(a),
eliminates personal liability of a director to the Company and its
stockholders for monetary damages for breach of fiduciary as a director to the
maximum extent permitted by Section 102(b)(7) of the DGCL.

The Underwriting Agreement (a form of which appears as Exhibit 1 hereto)
provides for indemnification of the Registrant's directors and officers in
certain circumstances. The indemnification provided for by the Underwriters is
limited to matters arising in connection with this Registration Statement.
Reference is made to paragraph eight of the Underwriting Agreement for
information concerning indemnification undertaken among the Company and the
Underwriters.

The above discussion of the Company's Certificate of Incorporation and By-
Laws and of Section 145 of the DGCL is not intended to be exhaustive and is
respectively qualified in its entirety by such Certificate of Incorporation,
By-Laws and statutes.

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.

Since the Company's formation in December 1995, the Company has issued the
following securities that were not registered under the Securities Act of
1933, as amended (the "Securities Act"). The following numbers give effect to
the 6-to-1 stock split effected in the form of a stock dividend on November 7,
1997. No underwriters were engaged in connection with any of the following
transactions, and accordingly, no underwriting discounts or commissions were
paid. The shares of capital stock and other securities issued in the following
transactions were offered and sold in reliance upon the following exemptions:
(i) in the case of the transactions described in (a), below, Section 4(2) of
the Securities Act or Regulation D promulgated thereunder relative to sales by
an issuer not involving a public offering; and (ii) in the case of the
transactions described in (b), below, Section 3(b) of the Securities Act and
Rule 701 promulgated thereunder relative to sales pursuant to certain
compensatory benefits plans.

II-2
<PAGE>

(a) Issuances of Capital Stock

(i) On January 8, 1996, the Company issued 300,000 shares of Common Stock to
Mr. Serrao for a cash purchase price of $500; (ii) pursuant to and in
connection with the Preferred Stock Purchase Agreement, between January 12,
1996 and December 11, 1996, the Company issued to the Purchasers a total of
300,000 shares of Common Stock for a total purchase price of $100,000, 400,000
shares of Series A Convertible Preferred Stock for a total purchase price of
$7,900,000, and 70,000 shares of Series B Redeemable Preferred Stock for a
total purchase price of $7,000,000; (iii) on November 12, 1996, the Company
issued 1,260,000 shares of Common Stock to the stockholders of Park as part of
the consideration (along with subordinated promissory notes in the aggregate
original principal amount of $1,500,000 and cash) paid by the Company in
exchange for all of the outstanding capital stock of Park; (iv) on December
13, 1996, the Company issued 49,200 shares of Common Stock to the sole
stockholder of Les L. Crane, D.D.S., P.C. as part of the consideration (along
with a subordinated promissory note in the original principal amount of
$435,000 and cash) paid by the Company in connection with the purchase of the
allowable assets of Les L. Crane, D.D.S., P.C.; (v) on December 23, 1996, the
Company issued 304,200 shares of Common Stock to the stockholders of Smileage
Dental Care, Inc. as part of the consideration (along with subordinated
promissory notes in the aggregate original principal amount of $247,500 and
cash) paid by the Company in exchange for all of the outstanding capital stock
of Smileage Dental Care, Inc.; (vi) on March 31, 1997, the Company issued
7,944 shares of Common Stock to Lakeside Dental Group as part of the
consideration (along with a subordinated promissory note in the original
principal amount of $225,000 and cash) paid by the Company in connection with
the purchase of the allowable assets of Lakeside Dental Group; (vii) on May
22, 1997, the Company issued 14,118 shares of Common Stock to the sole
stockholder of Soster Dental, Inc. as part of the consideration (along with a
subordinated promissory note in the original principal amount of $200,000 and
cash) paid by the Company in exchange for all of the outstanding capital stock
of Soster Dental, Inc.; (viii) on July 1, 1997, the Company issued 19,290
shares of Common Stock to the stockholders of Northpoint Dental Group, Ltd. as
part of the consideration (along with subordinated promissory notes in the
aggregate original principal amount of $65,000 and cash) paid by the Company
in connection with the purchase of the allowable assets of Northpoint Dental
Group, Ltd. and the performance of other obligations by the selling
stockholders; (ix) on October 1, 1997, the Company issued 83,010 shares of
Common Stock to the stockholders of Apple Park Associates, Inc. and
Orthodontic Care Specialists, Ltd. as part of the consideration (along with
subordinated promissory notes in the aggregate original principal amount of
$900,000 and cash) paid by the Company in connection with the purchase of the
allowable assets of Apple Park Associates, Inc. and Orthodontic Care
Specialists, Ltd.; (x) on October 1, 1997, the Company issued 56,472 shares of
Common Stock to the stockholders of Dental Specialty Management, Ltd.,
Orthocare, Ltd., and two 80%-owned subsidiaries of Orthocare, Ltd. as part of
the consideration (along with subordinated promissory notes in the aggregate
original principal amount of $600,000 and cash) paid by the Company in
exchange for all of the outstanding capital stock of those companies; and (xi)
on January 1, 1998, the Company issued 34,800 shares of Common Stock to the
stockholders of Innovative Practice Concepts, Inc. as part of the
consideration (along with subordinated promissory notes in the aggregate
original principal amount of $500,000 and cash) paid by the Company in
exchange for all of the outstanding capital stock of Innovative Practice
Concepts, Inc.

(b) Grants of Stock Options

(i) As of January 30, 1998, options to purchase 650,420 shares of Common
Stock were outstanding under the Company's 1996 Stock Option Plan, as amended,
of which options to purchase 70,981 shares were then exercisable. None of the
outstanding options had been exercised. All such options were granted between
January 8, 1996 and January 1, 1998 to executive officers and other key
employees of the Company and its subsidiaries in connection with their
employment; (ii) as of January 30, 1998, options to purchase 360,360 shares of
Common Stock were outstanding under the Company's 1996 Time Accelerated
Restricted Stock Option Plan, as amended, none of which were then exercisable.
All such options were granted between January 8, 1996 and August 1, 1997 to
executive officers and other key employees of the Company and its subsidiaries
in connection with their employment; (iii) as of Januaray 30, 1998, options to
purchase 89,586 shares of Common Stock were outstanding under the Company's
Amended and Restated 1996 Affiliate Stock Option Plan, of which options to

II-3
<PAGE>

purchase 6,000 shares were exercisable. All such options were granted between
November 12, 1996 and October 1, 1997 to advisors and consultants of the
Company and its subsidiaries; (iv) as of January 30, 1998, options to purchase
19,800 shares of Common Stock were outstanding under the Company's Amended and
Restated 1996 Directors Stock Option Plan, none of which were exercisable. All
such options were granted between February 17, 1997 and August 1, 1997 to
directors of the Company.

On October 1, 1997, the Company issued a subordinated promissory note in the
aggregate original principal amount of $400,000 to the sole stockholder of
Terrance R. Wilkens, D.D.S., SC, Brookfield Dental Center, SC, Waukesha Dental
Center, SC, Hales Corner Dental Center, SC, and West Allis Dental Center, SC
(the "Wilkens Dental Group") as part of the consideration (along with cash)
paid by the Company in connection with the purchase of the allowable assets of
the Wilkens Dental Group. The Company does not believe that the promissory
notes issued in this or the other transactions described in (a), above,
constitute "securities" as defined in Section 2(1) of the Securities Act;
however, in the event the promissory notes are deemed to be securities, these
transactions were exempt from the registration requirements of the Securities
Act pursuant to Section 4(2) or Regulation D thereunder relative to sales by
an issuer not involving a public offering.

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(A) EXHIBITS

II-4
<PAGE>

<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
------- -------------------
<C> <S>
10(h) American Dental Partners, Inc. Amended and Restated 1996 Directors
Stock Option Plan, as amended by Amendment No. 1
10(i) Employment and Non-Competition Agreement dated January 8, 1996,
between American Dental Partners, Inc. and Gregory A. Serrao.
10(j) Employment Agreement dated April 22, 1996, between American Dental
Partners, Inc. and Ronald M. Levenson.
10(k) Employment Agreement dated May 31, 1996, between American Dental
Partners, Inc. and George W. Robinson, as amended by Amendment to
Employment Agreement dated August 27, 1997.
10(l) Employment and Noncompetition Agreement dated November 12, 1996,
between PDHC, Ltd. and Gregory T. Swenson, D.D.S.
10(m) Registration Rights Agreement dated November 11, 1996, among
American Dental Partners, Inc. and certain of its stockholders (the
former stockholders of PDHC, Ltd.).
10(n) Registration Rights Agreement dated December 13, 1996, between
American Dental Partners, Inc. and Les L. Crane, D.D.S.
10(o) Registration Rights Agreement dated December 23, 1996, among
American Dental Partners, Inc. and certain of its stockholders (the
former stockholders of Smileage Dental Care, Inc.)
10(p) Registration Rights Agreement dated March 31, 1997, between
American Dental Partners, Inc. and Lakeside Dental Group.
10(q) Registration Rights Agreement dated May 22, 1997, between American
Dental Partners, Inc. and Abel J. Soster, DMD.
**10(r) Service Agreement dated November 12, 1996, between PDHC, Ltd. and
PDG, P.A., as amended by First Amendment to Service Agreement dated
January 1, 1997.
**10(s) Services Agreement dated December 23, 1996, between Smileage Dental
Care, Inc. and Wisconsin Dental Group, S.C., as amended by First
Amendment to Services Agreement dated January 1, 1997.
10(t) Revolving Credit Agreement dated April 24, 1997, between Fleet
National Bank, as Agent, and American Dental Partners, Inc.
10(u) Acquisition and Exchange Agreement dated November 11, 1996, among
American Dental Partners, Inc., PDHC, Ltd., and the Shareholders of
PDHC, Ltd.
10(v) Asset Purchase Agreement dated December 13, 1996, among American
Dental Partners, Inc., Texas Dental Partners, Inc., Les L. Crane,
D.D.S., P.C., and Les L. Crane, D.D.S.
10(w) Agreement and Plan of Merger and Reorganization dated December 23,
1996, among American Dental Partners, Inc., American Dental
Partners of Wisconsin, Inc., Smileage Dental Care, Inc., and the
Shareholders of Smileage Dental Care, Inc.
10(x) Registration Rights Agreement dated July 1, 1997, among American
Dental Partners, Inc. and John M. Werwie, D.D.S., James F. Ruzicka,
D.D.S., and Jon J. Pagenkopf, D.D.S.
10(y) Registration Rights Agreement dated October 1, 1997, among American
Dental Partners, Inc. and Karl H. Biewald, D.D.S., J.E. Cutliffe,
D.D.S., Timothy J. Montgomery, D.D.S., Curtis R. Dunn, D.D.S., and
Christopher S. Hipp, D.D.S.
10(z) Registration Rights Agreement dated October 1, 1997, among American
Dental Partners, Inc. and Karl H. Biewald, D.D.S. and Terri M.
Lawler.
10(aa) Asset Purchase Agreement dated October 1, 1997, among American
Dental Partners, Inc., Apple Park Associates, Inc., APAM, Inc., OC
Specialists, Ltd., and the Shareholders of APAM, Inc. and OC
Specialists, Ltd.
</TABLE>

II-5
<PAGE>

<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
------- -------------------
<C> <S>
10(bb) Asset Purchase Agreement dated October 1, 1997 among American Dental
Partners, Inc., American Dental Partners of Wisconsin, Inc.,
Terrance R. Wilkens, D.D.S., Terrance R. Wilkens, D.D.S., S.C.,
Brookfield Dental Center, S.C., Waukesha Dental Center, S.C., Hales
Corners Dental Center, S.C., and West Allis Dental Center, S.C.
11 Computation of Earnings Per Share
*21 Subsidiaries of American Dental Partners, Inc.
23(a) Consent of Baker & Hostetler LLP (included in Exhibit 5)
*23(b) Consent of KPMG Peat Marwick LLP
*23(c) Consent of Stirtz Bernards Boyden Sturdel & Larter, P.A.
24 Powers of Attorney
27 Financial Data Schedule

- --------
* Filed herewith.
** Certain portions of this exhibit have been omitted pursuant to a request
for confidential treatment.

(B) FINANCIAL STATEMENT SCHEDULES

Not applicable
</TABLE>

ITEM 17. UNDERTAKINGS

The undersigned registrant hereby undertakes as follows:

(1) The undersigned will provide to the underwriters at the closing
specified in the underwriting agreement certificates in such denominations
and registered in such names as required by the underwriters to permit
prompt delivery to each purchaser.

(2) For purposes of determining any liability under the Securities Act of
1933, the information omitted from the form of prospectus filed as part of
this registration statement in reliance on Rule 430A and contained in a
form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it is declared effective.

(3) For the purpose of determining any liability under the Securities Act
of 1933, each post-effective amendment that contains a form of prospectus
shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that
time shall be the initial bona fide offering thereof.

(4) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the registrant pursuant to the provisions described
in Item 14, or otherwise, the registrant has been advised that in the
opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in
the successful defense of any action, suit or proceeding) is asserted by
such director, officer or controlling person in connection with the
securities being registered, the registrant will, unless in the opinion of
its counsel the matter has been settled by controlling precedent, submit to
a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issues.

II-6
<PAGE>

SIGNATURES

PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
HAS DULY CAUSED THIS AMENDMENT NO. 2 TO THE REGISTRATION STATEMENT TO BE
SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE
TOWN OF WAKEFIELD, COMMONWEALTH OF MASSACHUSETTS, ON THE 30TH DAY OF JANUARY,
1998.

American Dental Partners, Inc.

/s/ Gregory A. Serrao
By: _________________________________
GREGORY A. SERRAO Chairman,
President and Chief Executive
Officer

PURSUANT TO THE REQUIREMENT OF THE SECURITIES ACT OF 1933, THIS AMENDMENT
NO. 2 TO THE REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS
IN THE CAPACITIES AND ON THE DATES INDICATED.

<TABLE>
SIGNATURE CAPACITY IN WHICH SIGNED DATE
<S> <C> <C>
/s/ Gregory A. Serrao Chairman, President January 30,
- ------------------------------------- and Chief Executive 1998
GREGORY A. SERRAO Officer and
Director (principal
executive officer)

/s/ Ronald M. Levenson Senior Vice January 30,
- ------------------------------------- President, Chief 1998
RONALD M. LEVENSON Financial Officer
and Treasurer
(principal
financial and
accounting officer)

Dr. Gregory T. Swenson* Director January 30,
- ------------------------------------- 1998
DR. GREGORY T. SWENSON

Martin J. Mannion* Director January 30,
- ------------------------------------- 1998
MARTIN J. MANNION

James T. Kelly* Director January 30,
- ------------------------------------- 1998
JAMES T. KELLY

Derril W. Reeves* Director January 30,
- ------------------------------------- 1998
DERRIL W. REEVES
</TABLE>

* The undersigned, Gregory A. Serrao, by signing his name hereto, does hereby
execute this Amendment No. 2 to the Registration on his own behalf
personally and on behalf of each of the above-named directors of the
Registrant pursuant to the Powers of Attorney executed by such directors and
filed with the Securities and Exchange Commission as exhibits to the
Registration Statement.

/s/ Gregory A. Serrao
- -------------------------------------
GREGORY A. SERRAO

II-7
<PAGE>

EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
------- -------------------
<C> <S>
1 Form of Underwriting Agreement
3(a) Second Amended and Restated Certificate of Incorporation of American
Dental Partners, Inc.
3(b) Amended and Restated By-laws of American Dental Partners, Inc.
4 Form of Stock Certificate
5 Opinion of Baker & Hostetler LLP
10(a) American Dental Partners, Inc. Series A and Series B Preferred Stock
Purchase Agreement dated January 8, 1996, among American Dental
Partners, Inc., Summit Ventures IV, L.P., Summit Investors, III,
L.P., and Gregory A. Serrao, as amended by First Amendment to Series
A and Series B Preferred Stock Purchase Agreement dated February 19,
1996, Second Amendment to Series A and Series B Preferred Stock
Purchase Agreement dated May 1, 1996, and Third Amendment to Series
A and Series B Preferred Stock Purchase Agreement dated November 1,
1996.
10(b) American Dental Partners, Inc. Subordinated Debenture Purchase
Agreement dated January 8, 1996, among American Dental Partners,
Inc., Summit Subordinated Debt Fund, L.P., and Summit Investors III,
L.P., as amended by First Amendment to Subordinated Debenture
Purchase Agreement dated May 1, 1996, and Second Amendment to
Subordinated Debenture Purchase Agreement dated November 1, 1996.
10(c) Registration Rights Agreement dated January 8, 1996, among American
Dental Partners, Inc., Summit Venture IV, L.P., Summit Investors
III, L.P., Gregory A. Serrao, and others, as amended by Amendment to
Registration Rights Agreement dated November 1, 1996.
10(d) Reformation Agreement dated December 23, 1996, among American Dental
Partners, Inc., Summit Ventures IV, L.P., Summit Investors III,
L.P., Summit Investors II, L.P., and Gregory A. Serrao.
10(e) American Dental Partners, Inc. Amended and Restated 1996 Stock
Option Plan.
10(f) American Dental Partners, Inc. 1996 Time Accelerated Stock Option
Plan, as amended by Amendment No. 1
10(g) American Dental Partners, Inc. Amended and Restated 1996 Affiliate
Stock Option Plan.
10(h) American Dental Partners, Inc. Amended and Restated 1996 Directors
Stock Option Plan, as amended by Amendment No. 1
10(i) Employment and Non-Competition Agreement dated January 8, 1996,
between American Dental Partners, Inc. and Gregory A. Serrao.
10(j) Employment Agreement dated April 22, 1996, between American Dental
Partners, Inc. and Ronald M. Levenson.
10(k) Employment Agreement dated May 31, 1996, between American Dental
Partners, Inc. and George W. Robinson, as amended by Amendment to
Employment Agreement dated August 27, 1997.
10(l) Employment and Noncompetition Agreement dated November 12, 1996,
between PDHC, Ltd. and Gregory T. Swenson, D.D.S.
10(m) Registration Rights Agreement dated November 11, 1996, among
American Dental Partners, Inc. and certain of its stockholders (the
former stockholders of PDHC, Ltd.).
10(n) Registration Rights Agreement dated December 13, 1996, between
American Dental Partners, Inc. and Les L. Crane, D.D.S.
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
------- -------------------
<C> <S>
10(o) Registration Rights Agreement dated December 23, 1996, among
American Dental Partners, Inc. and certain of its stockholders (the
former stockholders of Smileage Dental Care, Inc.)
10(p) Registration Rights Agreement dated March 31, 1997, between American
Dental Partners, Inc. and Lakeside Dental Group.
10(q) Registration Rights Agreement dated May 22, 1997, between American
Dental Partners, Inc. and Abel J. Soster, DMD.
**10(r) Service Agreement dated November 12, 1996, between PDHC, Ltd. and
PDG, P.A., as amended by First Amendment to Service Agreement dated
January 1, 1997.
**10(s) Services Agreement dated December 23, 1996, between Smileage Dental
Care, Inc. and Wisconsin Dental Group, S.C., as amended by First
Amendment to Services Agreement dated January 1, 1997.
10(t) Revolving Credit Agreement dated April 24, 1997, between Fleet
National Bank, as Agent, and American Dental Partners, Inc.
10(u) Acquisition and Exchange Agreement dated November 11, 1996, among
American Dental Partners, Inc., PDHC, Ltd., and the Shareholders of
PDHC, Ltd.
10(v) Asset Purchase Agreement dated December 13, 1996, among American
Dental Partners, Inc., Texas Dental Partners, Inc., Les L. Crane,
D.D.S., P.C., and Les L. Crane, D.D.S.
10(w) Agreement and Plan of Merger and Reorganization dated December 23,
1996, among American Dental Partners, Inc., American Dental Partners
of Wisconsin, Inc., Smileage Dental Care, Inc., and the Shareholders
of Smileage Dental Care, Inc.
10(x) Registration Rights Agreement dated July 1, 1997, among American
Dental Partners, Inc. and John M. Werwie, D.D.S., James F. Ruzicka,
D.D.S., and Jon J. Pagenkopf, D.D.S.
10(y) Registration Rights Agreement dated October 1, 1997, among American
Dental Partners, Inc. and Karl H. Biewald, D.D.S., J.E. Cutliffe,
D.D.S., Timothy J. Montgomery, D.D.S., Curtis R. Dunn, D.D.S., and
Christopher S. Hipp, D.D.S.
10(z) Registration Rights Agreement dated October 1, 1997, among American
Dental Partners, Inc. and Karl H. Biewald, D.D.S. and Terri M.
Lawler.
10(aa) Asset Purchase Agreement dated October 1, 1997, among American
Dental Partners, Inc., Apple Park Associates, Inc., APAM, Inc., OC
Specialists, Ltd., and the Shareholders of APAM, Inc. and OC
Specialists, Ltd.
10(bb) Asset Purchase Agreement dated October 1, 1997 among American Dental
Partners, Inc., American Dental Partners of Wisconsin, Inc.,
Terrance R. Wilkens, D.D.S., Terrance R. Wilkens, D.D.S., S.C.,
Brookfield Dental Center, S.C., Waukesha Dental Center, S.C., Hales
Corners Dental Center, S.C., and West Allis Dental Center, S.C.
11 Computation of Earnings Per Share
* 21 Subsidiaries of American Dental Partners, Inc.
23(a) Consent of Baker & Hostetler LLP (included in Exhibit 5)
* 23(b) Consent of KPMG Peat Marwick LLP
* 23(c) Consent of Stirtz Bernards Boyden Sturdel & Larter, P.A.
24 Powers of Attorney
27 Financial Data Schedule
</TABLE>
- --------
* Filed herewith.
** Certain portions of this exhibit have been omitted pursuant to a request for
confidential treatment.

<PAGE>

EXHIBIT 21

SUBSIDIARIES OF AMERICAN DENTAL PARTNERS, INC.

PDHC, Ltd., a Minnesota corporation
Texas Dental Partners, Inc., a Texas corporation
Smileage Dental Care, Inc., a Wisconsin corporation
American Dental Partners of Louisiana, Inc., a Delaware corporation
Soster Dental, Inc., a Pennsylvania corporation
American Dental Partners of Wisconsin, Inc., a Delaware corporation
Apple Park Associates, Inc., a Delaware corporation
Orthocare, Ltd., a Minnesota corporation

Oral Healthcare Corporation, a Delaware corporation

Innovative Practice Concepts, Inc., an Arizona corporation

<PAGE>

EXHIBIT 23(B)

The Board of Directors
American Dental Partners, Inc.:

We consent to the use of our reports on American Dental Partners, Inc. and
subsidiaries dated October 27, 1997, except for note 13 as to which date is
November 7, 1997, PDHC, Ltd. dated March 26, 1997, and The Orthocare Companies
dated December 29, 1997 included herein and to the reference to our firm under
the headings "Selected Historical and Pro Forma Consolidated Financial Data"
and "Experts" in the prospectus.

/s/ KPMG Peat Marwick LLP

Boston, Massachusetts

January 30, 1998

<PAGE>

EXHIBIT 23(C)

The Board of Directors
PDHC, Ltd.:

We consent to the use of our reports dated October 16, 1997, included herein
and to the reference to our firm under the heading "Experts" in the
prospectus.

/s/ Stirtz Bernards Boyden Surdel &
Larter, P.A.

Edina, Minnesota

January 30, 1998