AMERICAN DENTAL PARTNERS INC, S-4, 1998-06-16

AMERICAN DENTAL PARTNERS INC
S-4, 1998-06-16
MISC HEALTH & ALLIED SERVICES, NEC

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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 16, 1998

REGISTRATION NO. 333-

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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

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FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

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

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

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
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.
BAKER & HOSTETLER LLP
65 EAST STATE STREET
COLUMBUS, OHIO 43215
(614) 228-1541; (614) 462-2616 (FAX)

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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC: From time to
time after this Registration Statement becomes effective.

If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance
with General Instruction G, 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, 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. [_]

CALCULATION OF REGISTRATION FEE
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<TABLE>
<CAPTION>
PROPOSED PROPOSED
TITLE OF EACH CLASS OF AMOUNT MAXIMUM MAXIMUM
SECURITIES TO BE TO BE OFFERING PRICE AGGREGATE AMOUNT OF
REGISTERED REGISTERED PER UNIT OFFERING PRICE REGISTRATION FEE
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<S> <C> <C> <C> <C>
Common Stock, $0.01 par
value................. 750,000 shares $14.875(1) $11,156,250(1) $3,292
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Subordinated Promissory 25,000,000 Not applicable $25,000,000 $7,375
Notes................. aggregate aggregate
principal amount principal amount
</TABLE>
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(1) Estimated solely for the purpose of calculating the registration fee in
accordance with Rules 457(h)(1) and 457(c) under the Securities Act of
1933, as amended, on the basis of the average of the high and low sale
prices of the Registrant's Common Stock in the Nasdaq National Market
system on June 12, 1998.

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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 SAID SECTION 8(A), MAY DETERMINE.

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<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, JUNE 16, 1998

AMERICAN DENTAL PARTNERS, INC.

750,000 SHARES OF COMMON STOCK

AND

$25,000,000 AGGREGATE PRINCIPAL AMOUNT OF SUBORDINATED PROMISSORY NOTES

This Prospectus covers the offer and sale of up to 750,000 shares of Common
Stock, $0.01 par value (the "Common Stock"), of American Dental Partners, Inc.
(the "Company") and up to $25,000,000 aggregate principal amount of
Subordinated Promissory Notes (the "Subordinated Notes") of the Company, which
the Company may issue from time to time in connection with the future direct
and indirect acquisitions of other businesses, properties, or securities in
acquisition and affiliation transactions in accordance with Rule
415(a)(1)(viii) of Regulation C under the Securities Act of 1933, as amended
(the "Securities Act"), or as otherwise permitted under the Securities Act.

The Company expects that the terms upon which it may issue the Common Stock
and/or the Subordinated Notes in acquisition and affiliation transactions will
be determined through negotiations with the securityholders or principal owners
of the businesses whose securities or assets are to be acquired, including the
rates of interest for the Subordinated Notes. The Company expects that the
Common Stock issued will be valued at prices reasonably related to market
prices for the Common Stock prevailing either at the time an affiliation or
acquisition agreement is executed or at the time such a transaction is
consummated. The Subordinated Notes will be unsecured debt obligations of the
Company, subordinated to all Senior Indebtedness, as hereinafter defined,
payable over seven years, and on parity with all currently outstanding or
hereinafter issued Subordinated Notes.

This Prospectus will be furnished to securityholders of the business,
properties or securities to be acquired. This Prospectus will only be used in
connection with the acquisition of businesses, properties or securities in
acquisition and affiliation transactions that would be exempt from registration
but for the possibility of integration with other transactions.

Persons receiving Common Stock in connection with such transactions may be
contractually required to hold all or some portion of the Common Stock for some
period of time. Initially, the Company will issue Common Stock in connection
with such transactions subject to a lock-up period of at least 180 days from
the date of the prospectus (April 15, 1998) related to the Company's initial
public offering of 2,587,500 shares of Common Stock (the "IPO Prospectus"). In
addition, pursuant to the provisions of Rule 145 under the Securities Act, the
volume limitations and certain other requirements of Rule 144 under the
Securities Act will apply to resales of those shares by affiliates of the
businesses with which the Company affiliates or acquires for a period of two
years. The Company does not anticipate that a market for the Subordinated Notes
will develop in the foreseeable future. See "Shares Eligible for Future Sale"
and "Plan of Distribution."

The Company filed a Registration Statement on Form S-1 (Registration No. 333-
39981), as amended (the "IPO Registration Statement"), with the Securities and
Exchange Commission (the "Commission") pursuant to which it sold 2,587,500
shares of Common Stock in its initial public offering (the "IPO"). As of the
completion of the IPO, 7,416,512 shares of Common Stock were issued and
outstanding. The Common Stock trades on the Nasdaq National Market under the
symbol "ADPI." On June 12, 1998, the last reported sale price of the Common
Stock on the Nasdaq National Market was $14.875 per share.

All expenses of this offering (this "Offering") will be paid by the Company.
No underwriting discounts or commissions will be paid in connection with the
issuance of the Common Stock and/or the Subordinated Notes by the Company in
acquisition and affiliation transactions, although finder's fees may be paid
with respect to specific transactions. Any person receiving a finder's fee may
be deemed to be an Underwriter within the meaning of the Securities Act.

THE COMMON STOCK AND SUBORDINATED NOTES OFFERED HEREBY INVOLVE A HIGH DEGREE
OF RISK. SEE "RISK FACTORS" BEGINNING ON PAGE 8.

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.

-----------

The date of this Prospectus is , 1998.
<PAGE>

FROM NOVEMBER 1996 (THE DATE OF ITS FIRST AFFILIATION) THROUGH JUNE 12, 1998,
THE COMPANY HAS COMPLETED AFFILIATIONS WITH 15 DENTAL GROUP PRACTICES AND
CURRENTLY OPERATES 96 DENTAL FACILITIES WITH 759 OPERATORIES IN SEVEN 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.

[MAP OF THE UNITED STATES INDICATING LOCATION OF
THE COMPANY'S AFFILIATIONS APPEARS HERE]

The Company's corporate office is located at 301 Edgewater Place, Suite 320,
Wakefield, Massachusetts 01880. Its telephone number is (781) 224-0880.
<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 selected
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 June 12, 1998, the Company has
successfully completed affiliations with 15 dental group practices and
currently operates 94 dental facilities with 746 operatories in seven 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 six dental group
practice affiliations completed in 1998. For the year ended December 31, 1997,
the Company generated $53.3 million in net revenue and $1.1 million in net
earnings. For the three months ended March 31, 1998, the Company generated
$18.2 million in net revenue and $469,000 in net earnings. Based on the size of
the Company's affiliated network and its results of operations, the Company
believes it is a leading provider of dental practice management services in the
United States.

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 practitioners, 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.

3
<PAGE>

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.

Under its service agreements, the Company is responsible for providing all
services necessary for the administration of the non-clinical aspects of the
dental operations. The PC is responsible for the provision of dental care. 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 its management services. Each of the Company's service
agreements is for an initial term of 40 years. For 1997, the total amount of
the fees earned under the Company's service agreements ranged from
approximately 9% of the adjusted gross revenue of one PC to approximately 25%
of the adjusted gross revenue of another PC.

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.

THE OFFERING

Common Stock offered by
the Company.............. 750,000 shares of Common Stock to be issued by the
Company in connection with the acquisition of
businesses, properties or securities in acquisition
and affiliation transactions. The Company expects
that the terms upon which it may issue the Common
Stock in such acquisition and affiliation
transactions will be determined through
negotiations with the securityholders or principal
owners of the businesses whose securities or assets
are to be acquired. The Company expects that the
Common Stock issued will be valued at prices
reasonably related to market prices for the Common
Stock prevailing either at the time an acquisition
agreement is executed or at the time an acquisition
is consummated.

Subordinated Notes
offered by the Company... $25,000,000 aggregate principal amount of
Subordinated Promissory Notes to be issued by the
Company in connection with the acquisition of
businesses, properties or securities in acquisition
and affiliation transactions. The Company expects
that the terms upon which it may issue the
Subordinated Notes in such acquisition and
affiliation transactions, including the rates of
interest for the Subordinated Notes, will be
determined through negotiations with the
securityholders or principal owners of the
businesses whose securities or assets are to be
acquired. The Subordinated Notes will be unsecured
debt obligations of the Company, subordinated to
all Senior Indebtedness, payable over seven years
and on parity with all currently outstanding or
hereinafter issued Subordinated Notes.

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Transfer of Common Persons acquiring shares of Common Stock in
Stock.................... transactions pursuant to this Offering may be
contractually required to hold all or some portion
of the Common Stock for some period of time.
Initially, the Company will issue Common Stock in
connection with such transactions subject to a
lock-up period of at least 180 days from the date
of the IPO Prospectus.

Transfer of Subordinated
Notes.................... Persons acquiring Subordinated Notes in acquisition
and affiliation transactions pursuant to this
Offering should be aware that presently there is no
market for the Subordinated Notes, and it is not
anticipated that a market for the Subordinated
Notes will develop in the foreseeable future. In
addition, the acquisition agreements for the
applicable acquisition and affiliation transactions
will contain certain restrictions with respect to
the transfer of the Subordinated Notes.

Common Stock 7,416,512 shares (1)
outstanding..............

Nasdaq National Market ADPI
Symbol...................
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(1) Based on shares outstanding at June 12, 1998. Does not include shares of
Common Stock issuable upon the exercise of outstanding options issued
pursuant to the Company's stock option plans.

Unless otherwise indicated, the term "Company" includes American Dental
Partners, Inc. and (i) its management service organization ("MSO") subsidiaries
and (ii) its wholly owned subsidiaries, Orthocare, Ltd. and American Dental
Professional Services, Inc. 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.

5
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SUMMARY HISTORICAL AND PRO FORMA CONSOLIDATED FINANCIAL DATA
(IN THOUSANDS, EXCEPT RATIOS, PER SHARE AND STATISTICAL DATA)

<TABLE>
<CAPTION>
MARCH 31, 1998
DECEMBER 31, ---------------------
1997 ACTUAL PRO FORMA (3)
------------ ------- -------------
<S> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents.................. $ 4,675 $ 4,696 $11,807
Working capital............................ 759 1,740 7,971
Total assets............................... 47,959 52,198 58,429
Long-term debt, excluding current
maturities................................ 21,253 25,467 4,917
Redeemable and convertible preferred
stock..................................... 16,297 16,621 --
Total stockholders' equity................. 909 1,307 44,709
</TABLE>

See accompanying footnotes on following page.

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<PAGE>

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The following footnotes should be read in conjunction with the information
under "The Company," "Capitalization" and "Management's Discussion and Analysis
of Financial Condition and Results of Operations."

(1) Net earnings (loss) per common share are computed on the basis described in
Notes 2 and 12 to the Company's Consolidated Financial Statements and in
Note 5 to the Company's Unaudited Interim Consolidated Financial
Statements.
(2) The ratio of earnings to fixed charges is computed by dividing fixed
charges of the Company into earnings before income taxes plus fixed
charges. Fixed charges include interest expense, amortization of debt
expenses and the portion of non-reimbursed rental expense estimated to be
representative of the interest factor (approximately 1/3 of non-reimbursed
rental expense). Fixed charges ordinarily do not include any provision for
principal repayment. For the year ended December 31, 1996, earnings before
income taxes plus fixed charges were insufficient to cover fixed charges by
approximately $2.4 million.
(3) Gives effect to (i) the sale of 2,587,500 shares of Common Stock in the IPO
and receipt and application of the estimated net proceeds therefrom to
redeem the Series B Redeemable Preferred Stock and repay indebtedness under
the revolving credit facility and (ii) the conversion of 400,000 shares of
Series A Convertible Preferred Stock into 2,399,995 shares of Common Stock,
as if such transactions occurred on March 31, 1998.
(4) 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.
(5) Includes full-time general dentists employed by the PCs and full-time
specialists, some of whom are independent contractors to the PCs.

7
<PAGE>

RISK FACTORS

An investment in the securities 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 in 1997 and in the first quarter of 1998, 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

8
<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. The Company's service fees
typically consist of a fixed monthly fee and an additional variable fee. The
fixed monthly fee is determined prior to each affiliation and annually
thereafter by agreement of the Company and the affiliated dental group in a
formal budgeting process. To the extent that there is operating income after
payment of the fixed monthly fee, reimbursement of expenses incurred in
connection with the operation and administration of the dental facilities and
payment of provider expenses, an additional variable fee is paid to the
Company in the amount of such excess up to budgeted operating income and 50%
of such excess over budgeted operating income. Under certain service
agreements, the Company's service fees consist of a variable monthly fee which
is based upon a specified percentage of the amount by which the PC's adjusted
gross revenue exceeds expenses incurred in connection with the operation and
administration of its dental facilities. In those situations, no additional
variable fee is applicable.

Revenue generated from service agreements with two of the Company's
affiliated dental group practices, Park Dental and Smileage Dental Care,
represented approximately 56% and 23%, respectively, of the Company's
consolidated net revenue for the year ended December 31, 1997 and
approximately 44% and 19%, respectively, of the Company's consolidated net
revenue for the three months ended March 31, 1998. 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

9
<PAGE>

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 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 the
public sale of its Common Stock in the IPO, the 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 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 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
Subordinated 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.

SUBORDINATION OF SUBORDINATED NOTES

The Subordinated Notes will be unsecured debt obligations of the Company and
will at all times remain subordinated to all Senior Indebtedness. The
Subordinated Notes will not restrict the Company from incurring any other
indebtedness, some of which may be senior to the Subordinated Notes and
secured. Because of such subordination, in the event of the Company's
liquidation and dissolution, the holders of the Subordinated Notes may receive
less, ratably, than the other creditors of the Company. See "Description of
Subordinated Notes."

SETOFF AGAINST SUBORDINATED NOTES

Under the terms of the acquisition agreements to be entered into in
connection with the acquisition and affiliation transactions, the Subordinated
Notes will be subject to certain setoff rights in favor of the Company to
secure the indemnification obligations of the securityholders or principal
owners of the businesses whose securities or assets are to be acquired.
Consequently, the consideration to be received by such securityholders or
owners may be reduced. See "Description of Subordinated Notes."

LACK OF MARKET FOR SUBORDINATED NOTES; RESTRICTIONS ON TRANSFER

At present, there is no market for the Subordinated Notes, and it is not
anticipated that a market for the Subordinated Notes will develop in the
foreseeable future. In addition, the acquisition agreements for the

10
<PAGE>

business combination transactions will contain certain restrictions with
respect to the transfer of the Subordinated Notes. The securityholders or
principal owners of the businesses whose securities or assets are to be
acquired should be willing and have the financial ability to bear the risk of
his or her investment in the Subordinated Notes for an indefinite period of
time.

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 33% fee-for-service (which includes
indemnity plans), 14% PPO plans and 53% capitated managed care plans for the
year ended December 31, 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 payors to the affiliated dental group
practices because, to the extent that patients or enrollees covered by such
contracts require more frequent or extensive care than is anticipated by the
affiliated dental group practices, there may be a potential shortfall between
the capitated payments received by the affiliated dental group practices and
the costs to provide the contracted services. These shortfalls may impact the
Company by the possible reduction in expense reimbursement and service fees
from the affiliated dental group practices. The Company's payor mix with
respect to capitated managed care plans increases the Company's possible
exposure with respect to such shortfalls. 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 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

11
<PAGE>

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

As of June 12, 1998, Summit Partners and the other directors and executive
officers of the Company beneficially owned an aggregate of approximately 32.0%
and 15.2%, respectively, of the outstanding shares of Common Stock. If these
groups were to act together, they would have significant voting power with
respect to, and may be able to control, the election of the Company's
directors and, in general, the determination of 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

The shares of Common Stock sold in the IPO are freely tradable unless
acquired by affiliates of the Company. In addition, as of the completion of
the IPO, substantially all of the shares of Common Stock that were outstanding
prior to the IPO became eligible for sale in the public market under Rule 144
beginning 90 days after the date of the IPO Prospectus (April 15, 1998). All
such shares are subject to lock-up agreements for a period of 180 days from
the date of the IPO Prospectus.

The 750,000 shares of Common Stock issuable pursuant to this Offering
generally will be eligible for resale after their issuance as follows: (i) for
non-affiliates of the businesses with which the Company affiliates or
acquires, without restriction; and (ii) for affiliates of the businesses with
which the Company affiliates or acquires, subject to compliance with the
volume and manner-of-sale restrictions of Rule 145, unless in each case the
Company contractually restricts their resale. The Company anticipates that the
persons acquiring shares of Common Stock in acquisition and affiliation
transactions pursuant to this Offering will be contractually required to hold
all or some portion of the Common Stock for some period of time. Initially,
the Company will issue Common Stock in connection with such transactions
subject to a lock-up period of at least 180 days from the date of the IPO
Prospectus. See "Shares Eligible for Future Sale."

12
<PAGE>

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 the IPO, there was no public market for the Common Stock. The
Common Stock is traded on the Nasdaq National Market, however, there can be no
assurance that an active trading market will be sustained or that the market
price of the Common Stock will not decline below the initial public offering
price of the IPO. The initial public offering price of the Common Stock in the
IPO was determined by negotiations between the Company and the representatives
of the underwriters and may not bear any relationship to the market price of
the Common Stock after the IPO. 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.

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 the
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."

13
<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 six dental group practice affiliations 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") in November 1996; L. Crane & Associates, P.C. ("Longhorn Dental") in
December 1996; and the Wisconsin Dental Group, S.C. ("Smileage Dental Care")
in December 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") in March 1997; Malcolm R. Scott, D.D.S. in March 1997; AJS
Associates, P.C. ("Soster Dental Group") in May 1997; Wisconsin Dental
Professionals, S.C. ("Northpoint Dental Group") in July 1997; the four
professional corporations owned by Dr. Terrance R. Wilkens (the "Wilkens
Dental Group") in October 1997; and OCG, Ltd. (the "Orthocare Group") in
October 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 Transactions

Since the beginning of 1998, the Company has 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 three of the affiliated dental groups (three practices
joined existing affiliates). These dental group practices and their respective
dates of affiliation are: Associated Dental Care Providers, P.C. ("Associated
Dental Care") in January 1998; Family Care Dental Centers, Inc. in April 1998;
John E. Carey, D.D.S. and James J. Peterman, D.D.S. in April 1998; Leroy S.
Crapanzano, D.D.S. in April 1998; Reston Dental Group, P.C. in June 1998; and
TSC Dental Centers in June 1998. These transactions are referred to as the
"1998 Transactions."

14
<PAGE>

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.

PRICE RANGE OF COMMON STOCK

Since April 16, 1998, the commencement date of the IPO, the Company's Common
Stock has been traded on the Nasdaq National Market system under the symbol
"ADPI." The following table sets forth the range of the reported high and low
sales prices of the Company's Common Stock for the period indicated:

<TABLE>
<CAPTION>
HIGH LOW
------- -------
<S> <C> <C>
Year Ending December 31, 1998:
2nd Quarter (beginning April 16 through June 12, 1998).... $19.375 $14.875
</TABLE>

As of June 12, 1998, there were approximately 64 holders of record of Common
Stock, as shown on the records of the transfer agent and registrar of Common
Stock. The number of record holders does not bear any relationship to the
number of beneficial owners of the Common Stock. The last reported sale price
of the Common Stock on the Nasdaq National Market as of June 12, 1998 was
$14.875 per share.

15
<PAGE>

CAPITALIZATION

The following table sets forth as of March 31, 1998: (i) cash and cash
equivalents, current maturities of debt and the capitalization of the Company
and (ii) cash and cash equivalents, current maturities of debt and the
capitalization of the Company on a pro forma basis to reflect the sale of the
shares of Common Stock in the IPO and the application of the estimated net
proceeds, as if such events occurred on March 31, 1998:

<TABLE>
<CAPTION>
MARCH 31, 1998
------------------------------
ACTUAL PRO FORMA
------------- ---------------
(IN THOUSANDS, EXCEPT SHARE
AND PER SHARE AMOUNTS)
<S> <C> <C>
Cash and cash equivalents....................... $ 4,696 $ 11,807
============= =============
Current maturities of debt...................... $ 840 $ 840
============= =============
Long-term debt, less current maturities......... $ 25,467 $ 4,917
Series A convertible preferred stock, par value
$0.01 per share, 400,000 shares authorized,
issued and outstanding; no pro forma shares
authorized, issued or outstanding (1).......... 8,806 --
Series B redeemable preferred stock, par value
$0.01 per share, 70,000 shares authorized,
issued and outstanding; no pro forma shares
authorized, issued or outstanding (2).......... 7,815 --
Stockholders' equity:
Preferred stock, par value $0.01 per share,
530,000 shares authorized, no shares issued
or outstanding; 1,000,000 pro forma shares
authorized, no pro forma shares issued or
outstanding.................................. -- --
Common stock, par value $0.01 per share,
25,000,000 shares authorized, 2,429,017
shares issued and outstanding; 7,416,512 pro
forma shares issued and outstanding (3)...... 24 74
Additional paid-in capital.................... 2,230 45,582
Unearned compensation......................... (43) (43)
Accumulated deficit........................... (904) (904)
------------- -------------
Total stockholders' equity.................. 1,307 44,709
------------- -------------
Total capitalization...................... $ 43,395 $ 49,626
============= =============
</TABLE>
- --------
(1) In connection with the IPO, all of the Series A Convertible Preferred
Stock was converted into 2,399,995 shares of Common Stock.
(2) In connection with the IPO, all of the Series B Redeemable Preferred Stock
was redeemed for approximately $7.9 million in cash, which included unpaid
dividends through the completion date of the IPO.
(3) Excludes 1,188,684 shares of Common Stock issuable upon the exercise of
outstanding options issued pursuant to the Company's stock option plans as
of June 12, 1998. See "Management--Stock Plans."

16
<PAGE>

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

The selected consolidated statement of operations data for the years ended
December 31, 1996 and 1997 and the selected consolidated balance sheet data at
December 31, 1996 and 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 three months ended March 31, 1997 and 1998, the selected consolidated
balance sheet data at March 31, 1998 and the selected pro forma balance sheet
data set forth below as of March 31, 1998 have been derived from the Unaudited
Interim Consolidated Financial Statements of the Company which are also
included elsewhere in this Prospectus. The selected pro forma balance sheet
data is not necessarily indicative of the actual financial position that would
have existed had the IPO been completed at the date specified, nor is the
balance sheet necessarily indicative of the Company's future 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," Consolidated Financial
Statements and the related notes thereto of the Company and other financial
information included elsewhere in this Prospectus.

<TABLE>
<CAPTION>
YEARS ENDED THREE MONTHS
DECEMBER 31, ENDED MARCH 31,
---------------- ----------------
1996 1997 1997 1998
------- ------- ------- -------
<S> <C> <C> <C> <C>
CONSOLIDATED STATEMENT OF OPERATIONS DATA:
Net revenue................................ $ 3,933 $53,270 $11,226 $18,171
------- ------- ------- -------
Operating expenses:
Salaries and benefits.................... 2,098 28,438 6,189 9,649
Lab fees and dental supplies............. 534 6,435 1,334 2,196
Office occupancy......................... 389 4,814 1,008 1,609
Other operating expenses................. 773 6,264 1,366 1,645
General corporate expenses............... 2,395 3,337 735 975
Depreciation............................. 177 1,580 356 556
Amortization of intangibles.............. 48 645 93 333
------- ------- ------- -------
Total operating expenses............... 6,414 51,513 11,081 16,963
------- ------- ------- -------
Earnings (loss) from operations............ (2,481) 1,757 145 1,208
Interest expense (income), net........... (38) 563 (27) 439
------- ------- ------- -------
Earnings (loss) before income taxes........ (2,443) 1,194 172 769
Income taxes............................. -- 124 -- 300
------- ------- ------- -------
Net earnings (loss)...................... $(2,443) $ 1,070 $ 172 $ 469
======= ======= ======= =======
Net earnings (loss) per common share(1):
Basic.................................... $ (3.45) $ (0.05) $ (0.06) $ 0.06
Diluted.................................. $ (3.45) $ (0.05) $ (0.06) $ 0.06
Weighted average common shares
outstanding(1):
Basic.................................... 768 2,273 2,213 2,429
Diluted.................................. 768 2,273 2,213 2,632
Ratio of earnings to fixed charges(2)...... N/A 2.4 2.2 2.5
</TABLE>

See accompanying footnotes on following page.

17
<PAGE>

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

<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31, 1998
--------------- --------------------
1996 1997 ACTUAL PRO FORMA(3)
------- ------- ------- ------------
<S> <C> <C> <C> <C>
CONSOLIDATED BALANCE SHEET DATA:
Cash and cash equivalents................ $ 5,836 $ 4,675 $ 4,696 $11,807
Working capital.......................... 3,189 759 1,740 7,971
Total assets............................. 25,294 47,959 52,198 58,429
Long-term debt, excluding current
maturities.............................. 3,063 21,253 25,467 4,917
Redeemable and convertible preferred
stock................................... 15,105 16,297 16,621 --
Total stockholders' equity............... 164 909 1,307 44,709
</TABLE>

<TABLE>
<CAPTION>
DECEMBER 31,
-------------- MARCH 31,
1996 1997 1998
------ ------ ---------
<S> <C> <C> <C>
STATISTICAL DATA (END OF PERIOD):
Number of states...................................... 3 5 6
Number of markets..................................... 7 10 12
Number of dental facilities........................... 42 77 83
Number of operatories(4).............................. 331 566 617
Number of affiliated dentists(5)...................... 128 171 186
</TABLE>
- --------
The following footnotes should be read in conjunction with the information
under "The Company," "Capitalization" and "Management's Discussion and
Analysis of Financial Condition and Results of Operations."

(1) Net earnings (loss) per common share are computed on the basis described
in Notes 2 and 12 to the Company's Consolidated Financial Statements and
in Note 5 to the Company's Unaudited Interim Consolidated Financial
Statements.
(2) The ratio of earnings to fixed charges is computed by dividing fixed
charges of the Company into earnings before income taxes plus fixed
charges. Fixed charges include interest expense, amortization of debt
expenses and the portion of non-reimbursed rental expense estimated to be
representative of the interest factor (approximately 1/3 of non-reimbursed
rental expense). Fixed charges ordinarily do not include any provision for
principal repayment. For the year ended December 31, 1996, earnings before
income taxes plus fixed charges were insufficient to cover fixed charges
by approximately $2.4 million.
(3) Gives effect to (i) the sale of 2,587,500 shares of Common Stock in the
IPO and receipt and application of the estimated net proceeds therefrom to
redeem the Series B Redeemable Preferred Stock and repay indebtedness
under the revolving credit facility and (ii) the conversion of 400,000
shares of Series A Convertible Preferred Stock into 2,399,995 shares of
Common Stock, as if such transactions occurred on March 31, 1998.
(4) 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.
(5) Includes full-time general dentists employed by the PCs and full-time
specialists, some of whom are independent contractors to the PCs.

18
<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 Interim Consolidated Financial
Statements, and the notes thereto, of the Company included elsewhere in this
Prospectus. This Prospectus contains forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995. 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. From November 1996 through June 12, 1998, the Company has
successfully completed affiliations with 15 dental group practices and
currently operates 96 dental facilities with 759 operatories in seven 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. Under its service agreements,
the Company is responsible for providing all services necessary for the
administration of the non-clinical aspects of the dental operations. The PC is
responsible for the provision of dental care. Each of the Company's service
agreements is for an initial term of 40 years. 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 Notes and 1,613,400 shares of Common Stock. All
Subordinated Notes bear interest at 7% and are payable in seven annual
installments maturing in 2003.

19
<PAGE>

1997 Transactions

During 1997, the Company acquired substantially all the assets of six dental
group practices and Orthocare Ltd., a related entity of one of these
practices, and simultaneously entered into 40-year service agreements with
four of these affiliated dental groups (two practices joined existing
affiliates). These six 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; Northpoint Dental Group and Wilkens Dental Group in Milwaukee; and
the Orthocare Group in Minneapolis. 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 and Wilkens Dental groups expanded the
Company's market presence in Milwaukee by adding six dental facilities with 53
operatories. In total, these transactions resulted in the addition of 29
dental facilities with 199 operatories. The aggregate consideration for the
above transactions consisted of approximately $16.8 million in cash, $2.4
million in Subordinated Notes and 180,834 shares of Common Stock. All
Subordinated Notes bear interest at 7% and are payable in seven annual
installments maturing in 2004.

1998 Transaction (completed through March 31, 1998)

On January 1, 1998, the Company acquired substantially all the assets of a
dental group practice and simultaneously entered into a 40-year service
agreement with the affiliated dental group, Associated Dental Care, in Tucson,
Arizona. This affiliation resulted in the addition of six dental facilities
with 51 operatories. The aggregate consideration for this transaction
consisted of approximately $2.6 million in cash, $0.5 million in Subordinated
Notes and 34,800 shares of Common Stock.

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 was
approximately 33% fee-for-service, 14% PPO plans and 53% capitated managed
care plans for the year ended December 31, 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 (the
administrative staff and, where premitted by law, the dental hygienists and
dental assistants), 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 actual expenses incurred in
connection with the operation and administration of the dental facilities and
pay fees to the Company for its management services. The Company's service
fees typically consist of a fixed monthly fee and an additional variable fee.
The fixed monthly fee is determined prior to each affiliation and annually
thereafter by agreement of the Company and the affiliated dental group in a
formal budgeting process. To the extent that there is operating income after
payment of the fixed monthly fee, reimbursement of expenses incurred in
connection with the operation and administration of the dental facilities and
payment of provider expenses, an additional variable fee is paid to the
Company in the amount of such

20
<PAGE>

excess up to budgeted operating income and 50% of such excess over budgeted
operating income. Under certain service agreements, the Company's service fees
consist of a variable monthly fee which is based upon a specified percentage
of the amount by which the PC's adjusted gross revenue exceeds expenses
incurred in connection with the operation and administration of its dental
facilities. In those situations, no additional variable fee is applicable. For
the year ended December 31, 1997, the total amount of the monthly fees earned
under the Company's service agreements ranged from approximately 9% of the
adjusted gross revenue of one PC to approximately 25% of the adjusted gross
revenue of another PC. The amount of the additional variable fee ranged from
0% of the adjusted gross revenue of one PC to approximately 4% of the adjusted
gross revenue of another PC. 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. Such funds are applied in the following order of priority:
reimbursement of expenses incurred in connection with the operation and
administration of the dental facilities; repayment of advances, if any, made
by the Company to the PC; payment of the monthly fee; payment of provider
expenses; and payment of the additional variable fee. Additionally, the
Company's net revenue includes amounts from third party payors related to the
arrangement of the provision of care to patients.

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 administrative staff
and, where permitted by law, the dental hygienists and dental assistants. 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, 1997 and 1998 Transactions. The Company expects that
amortization of intangibles will increase in the future as a result of
intangibles recorded in connection with future affiliations.

YEAR ENDED DECEMBER 31, 1996 COMPARED TO YEAR ENDED DECEMBER 31, 1997

Overview

The Company conducted no significant operations from January 1996 until
November 1996, when it completed its first affiliation. Accordingly, the
Company generated net revenue of only $3,933,000 for 1996.

21
<PAGE>

General corporate expenses incurred during 1996 were $2,395,000 and
contributed to a net loss of $2,443,000. During 1997, net revenue generated
from completed affiliations exceeded operating expenses and general corporate
expenses resulting in net income of $1,070,000. 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 year ended December 31,
1996 as compared with the year ended December 31, 1997 are meaningful.

Results of Operations

Net Revenue. Net revenue amounted to $3,933,000 for 1996 as compared with
$53,270,000 for 1997. The 1997 period included revenue derived from service
agreements entered into in connection with the 1996 Transactions for the
entire year of 1997, plus revenue derived from service agreements entered into
in connection with the 1997 Transactions. Net revenue included expense
reimbursements ($3,175,000 for 1996 as compared with $36,386,000 for 1997),
management service fees ($720,000 for 1996 as compared with $12,056,000 for
1997) and revenue related to the arrangement of the provision of care to
patients ($38,000 for 1996 as compared with $4,828,000 for 1997). Expense
reimbursements included rent expense ($267,000 for 1996 as compared with
$3,476,000 for 1997) and other operating expenses ($2,908,000 for 1996 as
compared with $32,910,000 for 1997). Management service fees included the
monthly fee ($720,000 for 1996 as compared with $10,724,000 for 1997) and the
additional variable fee ($0 for 1996 as compared with $1,332,000 for 1997).
Net revenue derived from the Company's service agreement with Park Dental
represented approximately 56% of the Company's consolidated net revenue for
the year ended December 31, 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. Operating expenses for 1996 were $3,794,000 or
approximately 96% of net revenue as compared with $45,951,000 or approximately
86% of net revenue for 1997. The increase in the dollar amount resulted from
the full year impact of the 1996 Transactions plus the impact of the 1997
Transactions.

General Corporate Expenses. General corporate expenses were $2,395,000 or
approximately 61% of net revenue for 1996, as compared with $3,337,000 or
approximately 6% 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. Depreciation expense was $177,000 or approximately 5% of net
revenue for 1996, as compared with $1,580,000 or approximately 3% 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 Intangible Assets. Amortization of intangibles was $48,000
or approximately 1% of net revenue for 1996, as compared with $645,000 or
approximately 1% of net revenue for 1997. Amortization resulted from
intangible assets recorded in connection with the Company's nine affiliations
and one acquisition completed during 1997.

Interest Expense (Income), Net. Net interest income was $38,000 for 1996, as
compared with net interest expense of $563,000 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.

Income Taxes. The Company incurred no income tax expense for 1996, as
compared with $124,000 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 $124,000 of income tax expense.

22
<PAGE>

THREE MONTHS ENDED MARCH 31, 1997 COMPARED TO THE THREE MONTHS ENDED MARCH 31,
1998

Overview

The Company's net earnings amounted to $172,000 or $(0.06) per share for the
three months ended March 31, 1997, as compared with net earnings of $469,000
or $0.06 per share for the three months ended March 31, 1998. The increase in
net earnings resulted from incremental earnings provided from completed
acquisitions and affiliations and from internal growth.

Results of Operations

Net Revenue. Net revenue increased from $11,226,000 for 1997 to $18,171,000
for 1998, an increase of approximately 62%. The increase in net revenue in
1998 is due primarily to the inclusion of revenue derived from service
agreements entered into in connection with the 1997 and 1998 Transactions for
the entire period. In addition, same market growth from the Company's
affiliates in Austin, Milwaukee and Minneapolis resulted from the addition and
expansion of the Company's facilities, the addition of dentists to the
Company's affiliated dental group network and increases in certain affiliates'
fees. Net revenue included expense reimbursements ($7,833,000 for 1997 as
compared with $12,204,000 for 1998), management service fees ($2,399,000 for
1997 as compared with $3,925,000 for 1998) and revenue related to the
arrangement of the provision of care to patients ($994,000 for 1997 as
compared with $2,042,000 for 1998). Expense reimbursments included rent
expense ($728,000 for 1997 as compared with $1,164,000 for 1998) and other
operating expenses ($7,105,000 for 1997 as compared with $11,040,000 for
1998). Management service fees included the monthly fee ($2,299,000 for 1997
as compared with $3,740,000 for 1998) and the additional variable fee
($100,000 for 1997 as compared with $185,000 for 1998). Net revenue derived
from the Company's service agreement with Park Dental represented
approximately 63% and 44% of the Company's consolidated net revenue for 1997
and 1998, respectively. The termination of this service agreement could have a
material adverse effect on the Company. See "Risk Factors--Dependance Upon
Service Agreements."

Salaries and Benefits Expense. Salaries and benefits amounted to $6,189,000
or approximately 55% of net revenue for 1997, as compared with $9,649,000 or
approximately 53% of net revenue for 1998. The decrease in salaries and
benefits as a percentage of net revenue resulted from a combination of more
efficient utilization of staff and the acquisition of facilities with a
generally lower ratio of staffing costs to net revenue in their respective
markets compared to the existing base of facilities.

Lab Fees and Dental Supplies Expense. Lab fees and dental supplies expense
increased from $1,334,000 for 1997 to $2,196,000 for 1998. Lab fees and dental
supplies expense varies from affiliate to affiliate and is affected by the
volume and type of procedures performed. As a percentage of net revenue, these
costs remained relatively consistent at approximately 12% for 1997 and for
1998.

Office Occupancy Expense. Office occupancy expense amounted to $1,008,000
for 1997, as compared with $1,609,000 for 1998. As a percentage of net
revenue, these costs remained relatively consistent from 1997 to 1998 at
approximately 9%.

Other Operating Expenses. Other expenses amounted to $1,366,000 or
approximately 12% of net revenue for 1997, as compared with $1,645,000 or
approximately 9% of net revenue for 1998. Other costs decreased as a
percentage of net revenue due to the regionalization of administrative
functions in certain markets, a reduction of consulting costs as a result of
hiring certain personnel and efficiencies from managing certain expenses, such
as professional fees and other costs associated with operating a stand alone
dental group practice, on a national level, as opposed to on a local level.

General Corporate Expenses. General corporate expenses were $735,000 or
approximately 7% of net revenue for 1997, as compared with $975,000 or
approximately 5% of net revenue for 1998. 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, operations and
information systems. In 1998, the Company began to leverage these costs,
resulting in a reduction of general corporate expenses as a percentage of net
revenue.

23
<PAGE>

Depreciation. Depreciation expense includes depreciation charges related to
leasehold improvements and furniture, fixtures and equipment used to operate
the dental facilities. Depreciation expense was $356,000 for 1997, as compared
with $556,000 for 1998. Depreciation expense remained relatively consistent at
approximately 3% of net revenue.

Amortization of Intangible Assets. Amortization of intangibles was $93,000
or approximately 1% of net revenue for 1997, as compared with $333,000 or
approximately 2% of net revenue for 1998. The increase in amortization
resulted from intangible assets recorded in connection with the Company's
seven affiliations and one acquisition completed during 1997 and one
affiliation completed during 1998.

Interest Expense (Income), Net. Net interest expense (income) was ($27,000)
and $439,000 for 1997 and 1998, respectively. Interest income for 1997
resulted from earnings on proceeds received from the Company's private sales
of equity securities. Interest expense for 1998 resulted from borrowings under
the Company's credit facility and the issuance of subordinated notes in
connection with completed affiliations.

Income Taxes. The Company incurred no income tax expense for 1997, as
compared with $300,000 for 1998. In 1997, the Company utilized a portion of
its net operating loss carryforward which resulted in no income tax expense.
For 1998, the Company's effective tax rate was approximately 39%, resulting in
income tax expense of $300,000.

SELECTED QUARTERLY OPERATING RESULTS

The following table sets forth unaudited quarterly results of operations of
the Company for each of the quarters in the year ended December 31, 1997 and
for the three months ended March 31, 1998. 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, JUNE 30, SEPTEMBER 30, DECEMBER 31, MARCH 31,
1997 1997 1997 1997 1998
-------------- ------------- ------------- ------------- -------------
AMOUNT % AMOUNT % AMOUNT % AMOUNT % AMOUNT %
------- ----- ------- ----- ------- ----- ------- ----- ------- -----
(IN THOUSANDS) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net revenue............. $11,226 100.0% $12,076 100.0% $13,318 100.0% $16,650 100.0% $18,171 100.0%
------- ----- ------- ----- ------- ----- ------- ----- ------- -----
Operating expenses:
Salaries and benefits.. 6,189 55.1 6,339 52.5 7,097 53.3 8,813 52.9 9,649 53.1
Lab fees and dental
supplies.............. 1,334 11.9 1,505 12.5 1,652 12.4 1,944 11.7 2,196 12.1
Office occupancy....... 1,008 9.0 1,113 9.2 1,247 9.3 1,446 8.7 1,609 8.9
Other operating
expense............... 1,366 12.2 1,581 13.1 1,486 11.2 1,831 10.9 1,645 9.0
General corporate
expense............... 735 6.5 689 5.7 836 6.3 1,077 6.5 975 5.4
Depreciation........... 356 3.2 403 3.3 395 3.0 426 2.6 556 3.1
Amortization of
intangibles........... 93 0.8 121 1.0 135 1.0 296 1.8 333 1.8
------- ----- ------- ----- ------- ----- ------- ----- ------- -----
Total operating
expenses.............. 11,081 98.7 11,751 97.3 12,848 96.5 15,833 95.1 16,963 93.4
------- ----- ------- ----- ------- ----- ------- ----- ------- -----
Earnings from
operations............. 145 1.3 325 2.7 470 3.5 817 4.9 1,208 6.6
Interest expense
(income), net......... (27) (0.2) 107 0.9 115 0.8 368 2.2 439 2.4
------- ----- ------- ----- ------- ----- ------- ----- ------- -----
Earnings before income
taxes.................. 172 1.5 218 1.8 355 2.7 449 2.7 769 4.2
Income taxes........... -- -- 7 0.1 74 0.6 43 0.3 300 1.6
------- ----- ------- ----- ------- ----- ------- ----- ------- -----
Net earnings............ $ 172 1.5% $ 211 1.7% $ 281 2.1% $ 406 2.4% $ 469 2.6%
======= ===== ======= ===== ======= ===== ======= ===== ======= =====
</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
sales of equity securities, borrowings under its revolving line of credit

24
<PAGE>

and cash generated from operations. From November 1996 (the date of the
Company's first dental group practice affiliation) through June 12, 1998, the
Company completed 15 acquisitions and affiliations for aggregate consideration
of approximately $39,290,000 in cash, $6,318,000 in subordinated promissory
notes, $890,000 in deferred payments and 1,829,034 shares of Common Stock.

For the years ended December 31, 1996 and 1997, cash provided by (used for)
operating activities amounted to ($1,539,000) and $1,901,000, 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 three months ended March 31, 1997 and 1998, cash provided
by (used for) operating activities amounted to ($621,000) and $240,000,
respectively. Cash used for operating activities during the three months ended
March 31, 1997 resulted primarily from the Company's general corporate
expenses, due to investment in its infrastructure, exceeding cash generated
from operating activities. During the three months ended March 31, 1998,
earnings generated from same market growth and from acquisitions and
affiliations were sufficient to cover general corporate expenses and generate
cash from operations.

For the years ended December 31, 1996 and 1997, cash used in investing
activities amounted to $6,878,000 and $17,977,000, 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 year ended December 31, 1997, cash used for acquisitions
amounted to $14,878,000, net of cash acquired, and capital expenditures
amounted to $3,212,000. Capital expenditures for the year ended December 31,
1997 included costs associated with the opening of two new facilities in
Minneapolis and two new facilities in Milwaukee. For the three months ended
March 31, 1997 and 1998, cash used for investing activities amounted to
$3,339,000 and $3,682,000, respectively. Cash used for investing activities
included cash used for acquisitions and affiliations and for capital
expenditures. Cash used for acquisitions, net of cash acquired, was $1,913,000
for the three months ended March 31, 1997 and $2,590,000 for the three months
ended March 31, 1998. Cash used for capital expenditures was $1,028,000 and
$669,000 for the three months ended March 31, 1997 and 1998, respectively.
Capital expenditures for the three months ended March 31, 1997 included costs
associated with the addition of dental facilities in Austin and Milwaukee.
Capital expenditures for the three months ended March 31, 1998 included costs
associated with the addition of new operatories in Austin, Milwaukee and
Minneapolis. The establishment of new dental facilities and the expansion of
existing dental facilities in the future will require ongoing capital
expenditures. In addition, capital expenditures include the continued
investment in information systems.

For the years ended December 31, 1996 and 1997, cash provided from financing
activities amounted to $14,253,000 and $14,915,000, 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 year ended December 31, 1997
resulted primarily from borrowings under the Company's revolving credit
facility. For the three months ended March 31, 1997 and 1998, cash provided
from (used for) financing activities amounted to ($700,000) and $3,463,000,
respectively. Cash used for financing activities during the three months ended
March 31, 1997 resulted from the repayment of certain indebtedness. Cash
provided from financing activities for the three months ended March 31, 1998
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

25
<PAGE>

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 June 12, 1998, $2,035,000 was outstanding
under this line.

During the second quarter of 1998, the Company sold 2,587,500 shares of
Common Stock in an initial public offering at $15.00 per share. Net proceeds
to the Company after deducting underwriting discounts and commissions and
offering costs were approximately $34,596,000. Such proceeds have been used to
(i) redeem all the Series B Redeemable Preferred Stock, including unpaid
dividends, in the amount of $7,851,000 and (ii) repay outstanding indebtedness
under the Company's revolving credit facility, including accrued interest, in
the amount of $20,651,000. The remaining balance was used in connection with
affiliation transactions.

The Company believes that 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 and affiliations for at least the next 12 months.

26
<PAGE>

BUSINESS

OVERVIEW

American Dental Partners, Inc. is a leading provider of dental practice
management services to multi-disciplinary dental group practices in selected
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. From November 1996 (the date of its first affiliation) through
June 12, 1998, the Company has successfully completed affiliations with 15
dental group practices and currently operates 96 dental facilities with 759
operatories in seven 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 six dental group practice affiliations completed in
1998. For the year ended December 31, 1997, the Company generated $53.3
million in net revenue and $1.1 million in net earnings. For the three months
ended March 31, 1998, the Company generated $18.2 million in net revenue and
$469,000 in net earnings.

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 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

27
<PAGE>

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 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.

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<PAGE>

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 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.

29
<PAGE>

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 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 the Company is as follows:

THE COMPANY'S AFFILIATION MODEL

Before Affiliation After Affiliation
-------------------- ------------------------------------

Joint Policy
Board

Dentist-owned Company-owned
Dental Professional Service Management
Group Corporation Agreement Service
(PC) 40 Year Organization
(MSO)

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

30
<PAGE>

and common strategic goals and objectives. To this end, the Company conducts a
series of meetings, site visits 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 generally 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. There can be no assurance that the
Company will consummate any future transactions.

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<PAGE>

AFFILIATED NETWORK

From November 1996 (the date of its first affiliation) through June 12,
1998, the Company has successfully affiliated with 15 dental practices in
seven states consisting of 16 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>
ARIZONA
Associated Dental 6 51 Phoenix and Tucson January 1998
Care.................
LOUISIANA
Lakeside Dental Care.. 1 28 Metairie March 1997
Leroy S. Crapanzano, 1 5 Hammond April 1998
D.D.S................
MINNESOTA
Park Dental........... 29 214 Minneapolis/St. Paul November 1996
Orthocare Group....... 17 85 Minneapolis/St. Paul October 1997
PENNSYLVANIA
Soster Dental Group... 4 29 Pittsburgh May 1997
TEXAS
Longhorn Dental....... 8 43 Austin and Killeen December 1996
Malcolm R. Scott, 1 6 San Marcos March 1997
D.D.S................
TSC Dental Centers.... 3 28 Houston June 1998
VIRGINIA
Reston Dental Group... 1 39 Fairfax County June 1998
WISCONSIN
Smileage Dental Care.. 13 126 Appleton, Green Bay, December 1996
Kenosha, Madison and
Milwaukee
Northpoint Dental 2 28 Milwaukee July 1997
Group................
Wilkens Dental Group.. 4 30 Milwaukee October 1997
Family Care Dental 5 40 Janesville, Kenosha April 1998
Centers.............. and Racine
John E. Carey, D.D.S.
and
James J. Peterman,
D.D.S................ 1 7 Madison April 1998
--- ---
Total............... 96 759
=== ===
</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.

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;

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<PAGE>

(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 four new facilities with a total of 21 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
assisted in the recruitment of 17 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 Austin, Pittsburgh and Minneapolis/St. Paul. Since the
beginning of 1998, the Company has added operatories to existing facilities in
the Austin, Milwaukee and Minneapolis/St. Paul markets and expects that 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 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 85
operatories. In Wisconsin, the Company expanded its market penetration through
four affiliations with leading dental groups. In July 1997, the Company
affiliated with Northpoint Dental Group, adding two facilities with 28
operatories, and in October 1997, the Company affiliated with the Wilkens
Dental Group, adding four facilities with 30 operatories in the Milwaukee
market. In April

33
<PAGE>

1998, the Company continued to expand its market penetration in Wisconsin by
affiliating with Family Care Dental Centers and John E. Carey, D.D.S. and
James J. Peterman, D.D.S., adding six facilities with 47 operatories in
Janesville, Kenosha, Madison and Racine. In the Austin market, the Company
affiliated with Malcolm R. Scott, D.D.S. in March 1997 and the principal
dentists joined Longhorn Dental. This affiliation expanded the Company's
physical capacity and geographic reach by adding a facility with six
operatories in San Marcos. Furthermore, the Company's affiliation with Leroy
S. Crapanzano, D.D.S. in April 1998 added a facility with five operatories in
the New Orleans market.

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 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.

34
<PAGE>

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 33% fee-for-service, 14% PPO plans and
53% capitated managed care plans for the year ended December 31, 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 39
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.

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.

35
<PAGE>

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.

The PC reimburses the Company for actual 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. The

36
<PAGE>

Company's service fees typically consist of a fixed monthly fee and an
additional variable fee. The fixed monthly fee is determined prior to each
affiliation and annually thereafter by agreement of the Company and the
affiliated dental group in a formal budgeting process. To the extent that
there is operating income after payment of the fixed monthly fee,
reimbursement of expenses incurred in connection with the operation and
administration of the dental facilities and payment of provider expenses, an
additional variable fee is paid to the Company in the amount of such excess up
to budgeted operating income and 50% of such excess over budgeted operating
income. Under certain service agreements, the Company's service fees consist
of a variable monthly fee which is based upon a specified percentage of the
amount by which the PC's adjusted gross revenue exceeds expenses incurred in
connection with the operation and administration of its dental facilities. In
those situations, no additional variable fee is applicable. For the year ended
December 31, 1997, the total amount of service fees earned under the Company's
service agreements ranged from approximately 9% of the adjusted gross revenue
of one PC to approximately 25% of the adjusted gross revenue of another PC.
The amount of the additional variable fee ranged from 0% of the adjusted gross
revenue of one PC to approximately 4% of the adjusted gross revenue of another
PC. The PC is also responsible for provider expenses, which generally consist
of the salaries, benefits, and certain other expenses of the dentists.
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 applied
in the following order of priority: reimbursement of expenses incurred in
connection with the operation and administration of the dental facilities;
repayment of advances, if any, made by the Company to the PC; payment of the
monthly fee; payment of provider expenses; and payment of the additional
variable fee.

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 written 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 with respect to
providing management services to dentists, as well as those seeking to
affiliate with existing dental practices through service agreement
arrangements. 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--Highly Competitive Market."

37
<PAGE>

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."

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.

38
<PAGE>

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 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.

39
<PAGE>

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 June 12, 1998, the Company employed, either directly or through
independent contract arrangements, 966 people. This amount included 507
hygienists and dental assistants and 459 administrative and management
personnel located at the Company's 96 dental facilities and local management
offices. In addition, the Company was affiliated with 215 dentists, as well as
31 hygienists and 41 dental assistants located in states which prohibit the
Company's employment of hygienists and/or 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.

40
<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
---- --- --------
<S> <C> <C>
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................. 61 Senior Vice President--Operations
William H. Bottlinger.............. 53 Vice President--Regional Operations and
Chief Information Officer
Forrest M. Flint................... 46 Vice President--Business Development
Michael F. Frisch.................. 40 Vice President--Regional Operations
Kathryn A. Russell................. 45 Vice President--Financial Operations
Dr. Gregory T. Swenson............. 64 President of PDHC, Ltd. and Director
James T. Kelly (1)................. 51 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.

41
<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 several 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 these positions with PhyCor since 1988. 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

42
<PAGE>

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 he was Senior Vice President, National Sales.

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 2001 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.

43
<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 1997
and 1996.

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM AWARDS
-------------------------------------- ------------------------
OTHER SECURITIES
ANNUAL RESTRICTED UNDERLYING ALL OTHER
YEAR SALARY ($) BONUS ($) COMPENSATION(1) STOCK OPTIONS (#) COMPENSATION(2)
---- ---------- --------- --------------- ----------- ----------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Gregory A. Serrao....... 1997 $153,000 $123,600 $ -- $ -- 189,600 $1,946
Chairman, President and 1996 $144,000(3) $ 90,000 $136,543(4) $99,500(5) 270,270 $ 519
Chief Executive Officer
Ronald M. Levenson...... 1997 $153,000 $ 82,400 $ -- $ -- 126,000 $1,946
Senior Vice President, 1996 $101,000(3) $ 41,600 $ 23,000(6) $ -- 81,000 $ --
Chief Financial Officer
and Treasurer
George W. Robinson...... 1997 $123,000 $ 55,000 $ -- $ -- 6,480 $1,989
Senior Vice President-- 1996 $ 70,000(3) $ 43,750 $ 41,000(6) $ -- 60,000 $ 433
Operations
William H. Bottlinger... 1997 $143,000(7) $ 58,800 $ 57,900(6) $ -- 15,000 $ --
Vice President--
Regional Operations and
Chief Information
Officer
Forrest M. Flint........ 1997 $125,000 $ 30,000 $ -- $ -- 7,200 $2,340
Vice President-- 1996 $ 14,000(3) $ 15,000 $ -- $ -- 36,000 $ 288
Business Development
</TABLE>
- --------
(1) Except as specifically noted, no Other Annual Compensation for any Named
Executive Officer exceeded $50,000 or 10% of the total salary and bonus
for such officer.
(2) Represents matching contributions under the Company's 401(k) plan.
(3) Represents less than one full year's compensation.
(4) 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 $52,082.
(5) 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, 1997, 156,204 shares of restricted Common Stock
with a fair market value on such date of $2,213,411 were held by Mr.
Serrao. Dividends, if declared and paid upon the Common Stock, will be
paid on such restricted stock.
(6) Consists of moving and relocation expenses.
(7) Mr. Bottlinger's employment with the Company began in 1997.

44
<PAGE>

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, 1997.
<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....... 9,600(1) 2% $12.50 1/01/07 $ 75,467 $ 191,249
169,590(1) 31% $14.17 8/01/07 $1,511,291 $3,829,907
10,410(2) 2% $14.17 1/30/07 $ 87,047 $ 217,701
Ronald M. Levenson...... 6,000(1) 1% $12.50 1/01/07 $ 47,167 $ 119,531
109,590(1) 20% $14.17 8/01/07 $ 976,604 $2,474,907
10,410(2) 2% $14.17 1/30/07 $ 87,047 $ 217,701
George W. Robinson...... 3,480(1) 1% $12.50 1/01/07 $ 27,357 $ 69,328
3,000(1) 1% $14.17 8/01/07 $ 26,734 $ 67,750
William H. Bottlinger... 5,850(1) 1% $12.50 1/17/07 $ 45,988 $ 116,542
7,200(1) 1% $14.17 8/01/07 $ 64,162 $ 162,600
1,950(2) -- $12.50 7/18/06 $ 14,384 $ 35,973
Forrest M. Flint........ 7,200(1) 1% $14.17 8/01/07 $ 64,162 $ 162,600
</TABLE>

- --------
(1) Options issued under the 1996 Stock Option Plan. The exercise price of the
options is no less than 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.
(2) Options issued under the 1996 Time Accelerated Restricted Stock Option
Plan. The exercise price of the options is no less than the fair market
value of the Company's Common Stock on the date of grant. These options
became exercisable as of the completion of the IPO.

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, 1997.
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, 1997(#) AT DECEMBER 31, 1997 ($)
----------------------------------- ----------------------------
EXERCISABLE(1) UNEXERCISABLE EXERCISABLE(1) UNEXERCISABLE
---------------- --------------- -------------- -------------
<S> <C> <C> <C> <C>
Gregory A. Serrao....... 280,680 179,190 $3,740,537 $ 16,032
Ronald M. Levenson...... 46,410 160,590 $ 498,240 $632,820
George W. Robinson...... 27,150 39,330 $ 158,556 $197,656
William H. Bottlinger... 1,950 13,050 $ 3,257 $ 9,770
Forrest M. Flint........ 20,160 23,040 $ 117,734 $ 92,506
</TABLE>
- --------
(1) Although not all exercisable at December 31, 1997, all options became
exercisable as of the completion of the IPO.

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

45
<PAGE>

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.

The Company has a three-year employment agreement with Mr. Flint which
terminates in November 1999. Under his employment agreement, Mr. Flint
receives an annual base salary of $130,000 (subject to potential annual salary
increases) and a bonus in an amount up to $26,250 for 1997, and 25% of his
then-current base salary thereafter. Mr. Flint is also subject to non-
competition and confidentiality provisions in the employment agreement. If Mr.
Flint's employment is terminated prior to the end of the three-year term by
the Company for any reason other than for cause, he is entitled to receive
severance benefits which include severance payments in an amount equal to his
then current base salary for the remainder of such term.

STOCK PLANS

1996 Stock Option Plan

The 1996 Stock Option Plan, as amended (the "1996 Plan"), was originally
adopted in January 1996 to provide options to officers and key employees of
the Company and its subsidiaries. Options are granted at a price per share
which is no less than 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 973,246, of which options for 713,938 shares were
outstanding at June 12, 1998.

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 became exercisable at the completion of the IPO.

1996 Affiliate Stock Option Plan

The 1996 Affiliate Stock Option Plan, as amended (the "Affiliate Plan"), was
originally adopted in September 1996 to provide options to certain persons
associated with the affiliated dental practices. Options are granted at a
price per share which is no less than 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 110,000, of which options for 89,586 shares were outstanding
at June 12, 1998.

1996 Directors Stock Option Plan

The 1996 Directors Stock Option Plan, as amended (the "Directors Plan"), was
originally adopted in September 1996 to grant options to those directors of
the Company who are not employees or officers of the

46
<PAGE>

Company or any subsidiary of the Company. Options are granted at a price per
share which is no less than 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 24,800 shares were
outstanding at June 12, 1998.

1997 Employee Stock Purchase Plan

The 1997 Employee Stock Purchase Plan, as amended (the "Employee Stock
Purchase Plan"), enables 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 began concurrent with the
completion of the IPO and will end on December 31, 1998. The purchase price of
Common Stock under the Employee Stock Purchase Plan is 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. 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.

47
<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") were
parties to various agreements and transactions which were entered into in
connection with the initial capitalization of the Company. The Purchasers
included, 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 were 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 was converted into 17,600 and 2,097,599
shares of Common Stock for Mr. Serrao and Summit Partners, respectively, at
the completion of the IPO. Approximately $7.9 million of the proceeds of the
IPO were used to redeem all of the Series B Preferred Stock, including unpaid
dividends. In connection with such redemption, Mr. Serrao and Summit Partners
received $57,572 and $6,861,887, respectively. The Preferred Stock Purchase
Agreement also granted to the Purchasers preemptive rights with respect to the
Company's issuance of certain securities, which rights expired immediately
prior to the completion of the IPO.

The Company and Summit Partners were parties to a Subordinated Debenture
Purchase Agreement dated January 8, 1996, as amended, pursuant to which Summit
Partners committed to purchase up to $15,000,000 of 12% subordinated
debentures of the Company (the "Debentures") upon the Company's request. The
obligations of Summit Partners to purchase the Debentures automatically
terminated at the completion of the IPO.

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. Such
registration rights do not apply to the Common Stock being offered hereby.

48
<PAGE>

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 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 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 the IPO.

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 Preferred Stock Purchase Agreement, Mr.
Levenson purchased 4,199 shares of Common Stock at $0.33 per share. The Series
A Convertible Stock was converted into 33,600 shares of Common Stock at the
completion of the IPO. As part of the redemption of the Series B Redeemable
Preferred Stock with a portion of the proceeds of the IPO, Mr. Levenson
received $109,627. Mr. Levenson is also a party to the Purchasers Registration
Rights Agreement. 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 with the
former shareholders of Park. See "--Compensation Committee Interlocks and
Insider Participation."

49
<PAGE>

PRINCIPAL STOCKHOLDERS

The following table sets forth certain information regarding beneficial
ownership of Common Stock as of June 12, 1998, 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)
---------------------------------
NUMBER PERCENTAGE
---------------- ----------------
<S> <C> <C>
Summit Ventures(2)........................... 2,376,162 32.0%
Martin J. Mannion(2)......................... 2,376,162 32.0%
Gregory A. Serrao(3)(6)...................... 650,278 8.4%
Delta Associates, Ltd.(4).................... 378,001 5.1%
Dr. Gregory T. Swenson(5)(6)................. 335,385 4.5%
Ronald M. Levenson(6)........................ 134,057 1.8%
George W. Robinson(6)........................ 39,720 *
Forrest M. Flint(6).......................... 21,960 *
William H. Bottlinger(6)..................... 6,213 *
James T. Kelly(6)............................ 2,475 *
Derril W. Reeves(6).......................... 5,475 *
All executive officers and directors as a
group (11 persons)(7)....................... 3,580,678 45.2%
</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 are currently exerciable or exercisable within 60 days of the date
of this Prospectus. As of such date, a total of 7,416,512 shares of Common
Stock were issued and outstanding and options for 581,695 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) Includes 30,000 shares owned by a family trust. 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 325,478 shares for Mr. Serrao, 5,550 shares for Dr.
Swenson, 90,308 shares for Mr. Levenson, 39,720 shares for Mr. Robinson,
21,960 shares for Mr. Flint, 5,213 shares for Mr. Bottlinger, 2,475 shares
for Mr. Kelly and 2,475 shares for Mr. Reeves, respectively, which are
currently exercisable or exerciseable within 60 days of the date of this
Prospectus.
(7) Includes options for 500,132 shares for all executive officers and
directors as a group which are currently exercisable or exerciseable
within 60 days of the date of this Prospectus.

50
<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"). At the the closing of the IPO, the 400,000 shares of
Series A Convertible Preferred Stock (which were converted into 2,399,995
shares of Common Stock) and the 70,000 shares of Series B Redeemable Preferred
Stock (which were redeemed for cash) were restored to the status of
undesignated preferred stock available for issuance. As of June 12, 1998,
there were 7,416,512 shares of Common Stock and no shares of Preferred 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.

51
<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

BankBoston, N.A. serves as the Company's transfer agent and registrar for
its Common Stock.

52
<PAGE>

DESCRIPTION OF SUBORDINATED NOTES

Except as otherwise described below, all of the Subordinated Notes to be
issued in this Offering will be on substantially the same terms and conditions
as the currently outstanding Subordinated Notes of American Dental Partners,
Inc. ("ADP"). As of June 12, 1998, ADP had approximately $5,993,000 aggregate
principal amount of Subordinated Notes issued and outstanding. All of the
outstanding Subordinated Notes bear interest at a rate of 7% per annum, are
payable in seven equal annual principal installments plus interest on the
declining unpaid principal balance due on the first seven anniversaries from
their date of issuance, are unsecured debt obligations of ADP and are subject
to subordination agreements which are substantially the same as the
subordination agreements described below.

The Subordinated Notes offered hereby will be issued on the following terms
and conditions:

Rates of Interest; Terms of Repayment

The rates of interest on the Subordinated Notes offered hereby will be
determined through negotiations with the securityholders or principal owners
of the businesses whose securities or assets are to be acquired in acquisition
and affiliation transactions. However, the rate of interest for any
Subordinated Note will not be less than a rate which is sufficient to avoid
imputed interest under any applicable section of the Internal Revenue Code as
of the date of issuance of such Subordinated Note. The Subordinated Notes will
be payable in seven equal annual principal installments plus interest on the
declining unpaid principal balance due on the first seven anniversaries from
their date of issuance. ADP will have the right to prepay all or part of the
principal balance of the Subordinated Notes at any time, without penalty.
Payments under the Subordinated Notes will be subject to certain
indemnification setoff rights in favor of ADP. ADP will have the right, to the
extent it is entitled to indemnification from the securityholders or principal
owners of the businesses whose securities or assets are to be acquired, to
setoff the amount of damages incurred by ADP as a result of an indemnifiable
claim against amounts due from ADP under the Subordinated Notes.

Subordination Arrangements

Each of the Subordinated Notes will be unsecured debt obligations of ADP. In
addition, each of the Subordinated Notes will be subject to subordination
agreements which will be executed by each securityholder or principal owners
of the businesses whose securities or assets are to be acquired in an
acquisition or affiliation transaction. Under the subordination agreements,
the payment of the Subordinated Notes will be subordinate and junior in right
of payment to the payment in full of all obligations of ADP for borrowed money
("Senior Indebtedness"), except as follows: (a) debt arising under instruments
delivered by ADP to an unaffiliated entity or owners of such entity in
connection with the acquisition of such entity; (b) any preferred stock or
other equity security of ADP; and (c) any indebtedness owed by ADP to an
affiliate (as defined in the subordination agreement). Pursuant to the
subordination agreements, the holders of the Subordinated Notes (the
"Holders") will not be permitted to accept or receive any payment on the
Subordinated Notes; provided that the Holders may accept mandatory scheduled
payments under the Subordinated Notes unless at the time of such payment there
exists a default on any payment for the Senior Indebtedness or there exists
any other default with respect to the Senior Indebtedness permitting the
holders of Senior Indebtedness to accelerate the maturity of such
indebtedness. If a payment default exists under the Subordinated Notes, the
Holders may give written notice of such default to the holders of the Senior
Indebtedness (the "Senior Debt Holders"). Thereafter, the Senior Debt Holders
will have 180 days to either declare a default under the Senior Indebtedness
or consent to ADP making scheduled payments under the Subordinated Notes (the
"Consent") until the Consent is terminated by the Senior Debt Holders. If the
Senior Debt Holders (i) fail to do one of the foregoing alternatives or (ii)
terminate the Consent and a payment default occurs under the Subordinated
Notes on either of the next two succeeding scheduled payments, then the
Holders will have the right to enforce their respective rights under the
Subordinated Notes.

53
<PAGE>

In the event of any dissolution, winding-up, liquidation, restructuring, or
other reorganization of ADP (a "Reorganization"), all Senior Indebtedness will
be paid in full before any payment is made on the Subordinated Notes. In
addition, the Holders will, pursuant to the Subordination Agreement,
irrevocably authorize ADP or the Senior Debt Holders to, upon the occurrence
of a Reorganization, (a) prove and enforce any claims with respect to the
Subordinated Notes in the name of the Senior Debt Holders or the Holders, (b)
vote claims arising under the Subordinated Indebtedness, and (c) accept and
receive any payment or distribution made under the Subordinated Notes and
apply such payment or distribution to the Senior Indebtedness. If any payment
or distribution is made to the Holders with respect to the Subordinated Notes
before all Senior Indebtedness had been paid in full and before the
obligations of the Senior Debt Holders to extend credit have been irrevocably
terminated, such payment or distribution will be held in trust by the Holders
and promptly paid over to the Senior Debt Holders for application to the
payment of all Senior Indebtedness. The Subordination Agreement also contains
material restrictions on the Holders' enforcement of remedies under the
Subordinated Notes.

As of June 12, 1998, the amount of outstanding Senior Indebtedness was
$2,035,000.

ADP conducts all of its operations through subsidiaries and expects that it
will continue to do so in the future. The Subordinated Notes represent
indebtedness of ADP only. Creditors and holders of indebtedness (including
preferred stock, if any) of each subsidiary, although not holders of Senior
Indebtedness, will have a claim on the assets of such subsidiary prior to the
claims of the Holders.

54
<PAGE>

SHARES ELIGIBLE FOR FUTURE SALE

Prior to the IPO, there was 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

As of the completion of the IPO, the Company had a total of 7,416,512 shares
of Common Stock outstanding. Of these shares, the 2,587,500 shares of Common
Stock sold in the IPO (which includes the underwriters' over-allotment option)
are 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 are required to sell such shares under Rule 144 under the
Securities Act. The remaining 4,829,012 shares of Common Stock outstanding are
"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, 4,654,731 Restricted Shares will be eligible for
sale in the public market pursuant to Rule 144 beginning 90 days after the
date of the IPO Prospectus (April 15, 1998). 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 74,165 shares as of the date hereof) 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.

LOCK-UP AGREEMENTS

All of the stockholders of the Company, including the executive officers and
directors, who owned in the aggregate 4,829,012 shares of Common Stock as of
the completion of the IPO, 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 the
IPO Prospectus, except for certain permitted transfers or with the prior
written consent of BT Alex. Brown Incorporated.

STOCK OPTION AND PURCHASE PLANS

As of June 12, 1998, 1,503,606 shares of Common Stock were reserved for
issuance under the Company's stock plans, of which 1,188,684 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

55
<PAGE>

plans. The Company expects to file these registration statements within
approximately 90 days following the date of the IPO 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 4,259,982 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 750,000 shares of Common Stock issuable pursuant to this Offering
generally will be eligible for resale after their issuance as follows: (i) for
non-affiliates of the businesses the Company acquires, without restriction;
and (ii) for affiliates of the businesses the Company acquires, subject to
compliance with the volume and manner-of-sale restrictions of Rule 145, unless
in each case the Company contractually restricts their resale. The Company
anticipates that the persons acquiring shares of Common Stock in business
combination transactions pursuant to this Offering will be contractually
required to hold all or some portion of the Common Stock for some period of
time. Initially, the Company will issue Common Stock in connection with such
transactions subject to a lock-up period of at least 180 days from the date of
the IPO Prospectus. See "Shares Eligible for Future Sale."

56
<PAGE>

PLAN OF DISTRIBUTION

THE COMPANY

This Prospectus covers the offer and sale of up to 750,000 shares of Common
Stock and up to $25,000,000 aggregate principal amount of Subordinated Notes,
which the Company may issue from time to time in connection with the future
direct and indirect affiliations or acquisitions of other businesses,
properties, or securities in acquisition or affiliation transactions in
accordance with Rule 415(a)(1)(viii) of Regulation C under the Securities Act
or as otherwise permitted under the Securities Act.

The Company expects that the terms upon which it may issue the Common Stock
and/or the Subordinated Notes in acquisition or affiliation transactions will
be determined through negotiations with the securityholders or principal
owners of the businesses whose securities or assets are to be acquired,
including the rates of interest for the Subordinated Notes. The Company
expects that the Common Stock issued will be valued at prices reasonably
related to market prices for the Common Stock prevailing either at the time an
acquisition agreement is executed or at the time an acquisition is
consummated. The Subordinated Notes will be unsecured debt obligations of the
Company, subordinated to all Senior Indebtedness, payable over seven years and
on parity with all other Subordinated Notes (whether currently outstanding or
hereafter issued).

GENERAL

All expenses of this Offering will be paid by the Company. No underwriting
discounts or commissions will be paid in connection with the issuance of
shares of Common Stock and/or Subordinated Notes by the Company in acquisition
or affiliation transactions, although finder's fees may be paid with respect
to specific transactions. Any person receiving a finder's fee may be deemed to
be an Underwriter within the meaning of the Securities Act.

The shares of Common Stock offered hereunder will be tradeable on the Nasdaq
National Market, but such shares may be subject to certain contractual holding
period restrictions as described above. At present, there is no market for the
Subordinated Notes, and it is not anticipated that a market for the
Subordinated Notes will develop in the foreseeable future. In addition, the
acquisition agreements to be entered into in connection with the acquisition
or affiliation transactions will set forth restrictions with respect to the
transfer of the Subordinated Notes.

VALIDITY OF SECURITIES

The validity of the securities offered hereby will be passed upon for the
Company by Baker & Hostetler LLP, Columbus, Ohio. 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 1997 and for the years then ended 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 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.

57
<PAGE>

ADDITIONAL INFORMATION

The Company has filed with the Commission a Registration Statement (which
term shall encompass any and all amendments thereto) on Form S-4 (the
"Registration Statement") under the Securities Act with respect to the Common
Stock and the Subordinated Notes 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 Commission. 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 Commission at Room 1024, Judiciary Plaza, 450 Fifth
Street, N.W., Washington, D.C. 20549, and at the regional offices of the
Commission 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 Commission maintains a web site that contains reports,
proxy and information statements regarding registrants that file
electronically with the Commission. 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 Commission,
upon payment of the prescribed fees. The Common Stock has been approved for
quotation on the Nasdaq National Market. Periodic reports, proxy materials and
other information concerning the Company, when filed, may be inspected at the
offices of the Nasdaq Operations, 1735 K Street, N.W., Washington, D.C. 20006.

58
<PAGE>

INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
AMERICAN DENTAL PARTNERS, INC. AND SUBSIDIARIES--CONSOLIDATED FINANCIAL
STATEMENTS
Independent Auditors' Report............................................ F-2
Consolidated Balance Sheets as of December 31, 1996 and 1997............ F-3
Consolidated Statements of Operations for the Years Ended December 31,
1996 and 1997.......................................................... F-4
Consolidated Statements of Stockholders' Equity for the Years Ended
December 31, 1996 and 1997............................................. F-5
Consolidated Statements of Cash Flows for the Years Ended December 31,
1996 and 1997.......................................................... F-6
Notes to Consolidated Financial Statements.............................. F-7
AMERICAN DENTAL PARTNERS, INC. AND SUBSIDIARIES--UNAUDITED INTERIM
CONSOLIDATED FINANCIAL STATEMENTS
Consolidated Balance Sheets at December 31, 1997, March 31, 1998
(unaudited) and March 31, 1998 (pro forma)............................. F-22
Consolidated Statements of Earnings for the Three Months Ended March 31,
1997 and 1998 (unaudited).............................................. F-23
Consolidated Statement of Stockholders' Equity for the Three Months
Ended March 31, 1998 (unaudited) ...................................... F-24
Consolidated Statements of Cash Flows for the Three Months Ended March
31, 1997 and 1998 (unaudited).......................................... F-25
Notes to Interim Consolidated Financial Statements ..................... F-26

ACQUISITIONS AND AFFILIATIONS--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-29
Combined Balance Sheets as of December 31, 1996 and September 30, 1997.. F-30
Combined Statements of Operations for the Year Ended December 31, 1996
and the Nine Months Ended September 30, 1997........................... F-31
Combined Statements of Stockholders' Equity for the Year Ended December
31, 1996 and the Nine Months Ended September 30, 1997.................. F-32
Combined Statements of Cash Flows for the Year Ended December 31, 1996
and the Nine Months Ended September 30, 1997........................... F-33
Notes to Combined Financial Statements.................................. F-34
</TABLE>

F-1
<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 1997, and the related consolidated statements of operations, stockholders'
equity and cash flows for the years then ended. 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 financial position of American
Dental Partners, Inc. and subsidiaries as of December 31, 1996 and 1997, and
the results of their operations and their cash flows for the years then ended
in conformity with generally accepted accounting principles.

KPMG Peat Marwick LLP

Boston, Massachusetts
February 6, 1998

F-2
<PAGE>

AMERICAN DENTAL PARTNERS, INC.

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

<TABLE>
<CAPTION>
DECEMBER 31,
----------------
1996 1997
------- -------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents.................................. $ 5,836 $ 4,675
Accounts receivable........................................ 996 101
Receivables due from affiliated practices.................. 1,595 3,207
Inventories................................................ 174 387
Prepaid expenses and other receivables..................... 1,405 1,631
------- -------
Total current assets..................................... 10,006 10,001
------- -------
Property and equipment, net.................................. 5,943 8,752
------- -------
Non-current assets:
Intangible assets, net..................................... 9,173 28,975
Other assets............................................... 172 231
------- -------
Total non-current assets................................. 9,345 29,206
------- -------
Total assets............................................. $25,294 $47,959
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable........................................... $ 1,730 $ 2,618
Accrued compensation, benefits and taxes................... 2,154 3,001
Accrued expenses........................................... 2,396 2,666
Income taxes payable....................................... -- 183
Current maturities of debt................................. 537 774
------- -------
Total current liabilities................................ 6,817 9,242
------- -------
Non-current liabilities:
Long-term debt............................................. 3,063 21,253
Deferred income tax liability.............................. -- 231
Other liabilities.......................................... 145 27
------- -------
Total non-current liabilities............................ 3,208 21,511
------- -------
Total liabilities........................................ 10,025 30,753
------- -------
Series A convertible preferred stock, par value $0.01 per
share, 400,000 shares authorized, issued and outstanding.... 8,009 8,641
Series B redeemable preferred stock, par value $0.01 per
share, 70,000 shares authorized, issued and outstanding..... 7,096 7,656
Stockholders' equity:
Preferred stock, par value $0.01 per share, 530,000 shares
authorized, no shares issued or outstanding............... -- --
Common stock, par value $0.01 per share, 25,000,000 shares
authorized, 2,213,384 and 2,394,212 shares issued and
outstanding............................................... 22 24
Additional paid-in capital................................. 2,659 2,307
Unearned compensation...................................... (74) (49)
Accumulated deficit........................................ (2,443) (1,373)
------- -------
Total stockholders' equity............................... 164 909
------- -------
Commitments and contingencies
Total liabilities and stockholders' equity............... $25,294 $47,959
======= =======
</TABLE>

See accompanying notes to consolidated financial statements.

F-3
<PAGE>

AMERICAN DENTAL PARTNERS, INC.

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

<TABLE>
<CAPTION>
YEARS ENDED
DECEMBER 31,
----------------
1996 1997
------- -------
<S> <C> <C>
Net revenue.................................................. $ 3,933 $53,270
------- -------
Operating expenses:
Salaries and benefits...................................... 2,098 28,438
Lab fees and dental supplies............................... 534 6,435
Office occupancy........................................... 389 4,814
Other operating expenses................................... 773 6,264
General corporate expenses................................. 2,395 3,337
Depreciation............................................... 177 1,580
Amortization of intangible assets.......................... 48 645
------- -------
Total operating expenses................................. 6,414 51,513
------- -------
Earnings (loss) from operations.............................. (2,481) 1,757
Interest expense (income), net............................. (38) 563
------- -------
Earnings (loss) before income taxes.......................... (2,443) 1,194
Income taxes............................................... -- 124
------- -------
Net earnings (loss)........................................ $(2,443) $ 1,070
======= =======
Net loss per common share:
Basic...................................................... $ (3.45) $ (0.05)
Diluted.................................................... $ (3.45) $ (0.05)
Weighted average common shares outstanding:
Basic...................................................... 768 2,273
Diluted.................................................... 768 2,273
</TABLE>

See accompanying notes to consolidated financial statements.

F-4
<PAGE>

AMERICAN DENTAL PARTNERS, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1996 AND 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......... 181 2 840 -- -- 842
Amortization of
unearned
compensation......... -- -- -- 25 -- 25
Dividends on Series A
convertible preferred
stock................ -- -- (632) -- -- (632)
Dividends on Series B
redeemable preferred
stock................ -- -- (560) -- -- (560)
Net earnings.......... -- -- -- -- 1,070 1,070
----- ----- ------ ----- ------- -------
Balance at December 31,
1997................... 2,394 $ 24 $2,307 $ (49) $(1,373) $ 909
===== ===== ====== ===== ======= =======
</TABLE>

See accompanying notes to consolidated financial statements.

F-5
<PAGE>

AMERICAN DENTAL PARTNERS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)

<TABLE>
<CAPTION>
YEARS ENDED
DECEMBER 31,
------------------
1996 1997
-------- --------
<S> <C> <C>
Cash flows from operating activities:
Net earnings (loss)....................................... $ (2,443) $ 1,070
Adjustments to reconcile net earnings (loss) to net cash
provided by (used for) operating activities:
Depreciation............................................. 177 1,580
Amortization of intangible assets........................ 48 645
Other amortization....................................... 23 54
Changes in assets and liabilities, net of acquisitions
and affiliations:
Accounts receivable.................................... 1,417 1,871
Receivables due from affiliated practices.............. (1,707) (1,801)
Other current assets................................... 237 (37)
Accounts payable and accrued expenses.................. 941 (1,865)
Accrued compensation, benefits and taxes............... (232) 384
-------- --------
Net cash provided by (used for) operating
activities.......................................... (1,539) 1,901
-------- --------
Cash flows from investing activities:
Acquisitions and affiliations, net of cash acquired....... (6,632) (14,878)
Capital expenditures, net................................. (386) (3,212)
Other assets.............................................. 140 113
-------- --------
Net cash used for investing activities............... (6,878) (17,977)
-------- --------
Cash flows from financing activities:
Proceeds from issuance of Series A convertible preferred
stock.................................................... 7,900 --
Proceeds from issuance of Series B redeemable preferred
stock.................................................... 7,000 --
Proceeds from issuance of common stock.................... 100 --
Borrowings under revolving line of credit, net............ -- 16,700
Repayment of borrowings................................... (747) (1,543)
Payment of debt issuance costs............................ -- (242)
-------- --------
Net cash provided by financing activities............ 14,253 14,915
-------- --------
Increase (decrease) in cash and cash equivalents........... 5,836 (1,161)
Cash and cash equivalents at beginning of year............. -- 5,836
-------- --------
Cash and cash equivalents at end of year................... $ 5,836 $ 4,675
======== ========
Supplemental disclosure of cash flow information:
Cash paid during the year for interest.................... $ 3 $ 470
======== ========
Cash paid during the year for income taxes................ $ -- $ 344
======== ========
Acquisitions and Affiliations:
Assets acquired........................................... $ 20,099 $ 24,693
Liabilities assumed and issued............................ (10,063) (7,054)
Common stock issued....................................... (2,689) (842)
-------- --------
Cash paid................................................. 7,347 16,797
Less cash acquired........................................ (715) (1,919)
-------- --------
Net cash paid for acquisitions and affiliations...... $ 6,632 $ 14,878
======== ========
</TABLE>

See accompanying notes to consolidated financial statements.

F-6
<PAGE>

AMERICAN DENTAL PARTNERS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1997

(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.

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.

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. The Company's service fees typically consist

F-7
<PAGE>

AMERICAN DENTAL PARTNERS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1997

of a fixed monthly fee and an additional variable fee. Additionally, the
Company's net revenue includes amounts from third party payors related to the
arrangement of the provision of care to patients. 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 and goodwill associated with the Company's
acquisition. 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 and goodwill are amortized over
25 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 $28,000 and $673,000 at
December 31, 1996 and 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.

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

F-8
<PAGE>

AMERICAN DENTAL PARTNERS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1997

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 Statement of Financial Accounting
Standards No. 128 "Earnings per Share" ("SFAS 128"). SFAS 128 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.

EITF Issue No. 97-2

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 believes that this EITF issue will not have any material impact on the
Company's consolidated 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.

The Company's service fees typically consist of a fixed monthly fee and an
additional variable fee. The additional fee is determined by a comparison of
the actual financial performance of the affiliated dental group practice in
relation to its budget.

Net Revenue

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 actual 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. The Company's service fees typically consist of a
fixed monthly fee and an additional variable fee. The fixed monthly fee is
determined prior to each affiliation and annually thereafter by agreement of
the Company and the affiliated dental group in a formal budgeting process. To
the extent that there is operating income after payment of the fixed monthly
fee, reimbursement of expenses incurred in connection with the operation and
administration of the dental facilities and payment of provider expenses, an
additional variable fee is paid to the Company in the amount of such excess up
to budgeted

F-9
<PAGE>

AMERICAN DENTAL PARTNERS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1997

operating income and 50% of such excess over budgeted operating income. The
Company records this revenue monthly as earned. For the year ended December
31, 1997, the total amount of service fees earned under the Company's service
agreements ranged from approximately 9% of the adjusted gross revenue of one
PC to approximately 25% of the adjusted gross revenue of another PC. The
amount of the variable fee ranged from 0% of the adjusted gross revenue of one
PC to approximately 4% of the adjusted gross revenue of another PC.

For the years ended December 31, 1996 and 1997, net revenue consisted of the
following:

<TABLE>
<CAPTION>
1996 1997
------ -------
(IN THOUSANDS)
<S> <C> <C>
Reimbursement of expenses:
Rent expense.............................................. $ 267 $ 3,476
Other operating expenses.................................. 2,908 32,910
------ -------
Total reimbursement of expenses......................... 3,175 36,386
------ -------
Management service fees:
Monthly fee............................................... 720 10,724
Additional variable fee................................... -- 1,332
------ -------
Total management service fees........................... 720 12,056
------ -------
Net revenue earned by the company under service
agreements............................................. 3,895 48,442
Revenue related to the arrangement of the provision of care
to patients................................................ 38 4,828
------ -------
Total net revenue....................................... $3,933 $53,270
====== =======
</TABLE>

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 the affiliated dental practices are presented below for
illustrative purposes only:

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------------
1996 1997
--------------------- ----------------------
PARK ALL AFFILIATED PARK ALL AFFILIATED
DENTAL PRACTICES DENTAL PRACTICES
------ -------------- ------- --------------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Adjusted gross revenue--
affiliated dental practices.. $4,459 $4,920 $38,515 $64,492
Amounts retained by affiliated
dental practices............. 858 1,025 8,461 16,050
------ ------ ------- -------
Net revenue earned by the
Company under service
agreements................... $3,601 $3,895 $30,054 $48,442
====== ====== ======= =======
</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

F-10
<PAGE>

AMERICAN DENTAL PARTNERS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1997

approximately $7.3 million in cash, $2.2 million in subordinated promissory
notes and 1,613,400 shares of Common Stock.

During the year ended December 31, 1997, the Company acquired substantially
all the assets of six 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 40-year service agreements
with four of the affiliated dental groups (two practices joined existing
affiliates). The aggregate purchase price paid in connection with these
transactions consisted of approximately $16.8 million in cash, $2.4 million in
subordinated promissory notes and 180,834 shares of Common Stock. All
transactions completed in 1997 are referred to as the "1997 Transactions."

The 1996 and 1997 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 Metairie, 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 accompanying consolidated financial statements include the results of
operations under the service agreements from the date of acquisition. 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...................... $32,249
Fair value of net tangible assets acquired and liabilities
assumed.................................................... 2,601
-------
Excess of fair value of the consideration paid over the fair
value of net tangible assets acquired...................... $29,648
=======
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............. $26,257
Goodwill associated with the acquisition.................... 3,391
-------
$29,648
=======
</TABLE>

If the acquisition of Orthocare, Ltd., which was accounted for as a
purchase, occurred on January 1, 1996, the Company's unaudited net revenue,
earnings (loss) before income taxes, net earnings (loss) and net loss per
share would have been $7,661,000, $(2,465,000), $(2,465,000) and $(3.24) per
share, respectively, for the year ended December 31, 1996 and $56,346,000,
$1,248,000, $1,118,000, and $(0.03) per share for the year ended December 31,
1997, respectively. Such pro forma financial information reflects certain
adjustments, including

F-11
<PAGE>

AMERICAN DENTAL PARTNERS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1997

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.

Subsequent to December 31, 1997, the Company acquired substantially all the
assets of a dental practice and simultaneously entered into a 40-year service
agreement with the affiliated dental group. The aggregate purchase price paid
in connection with this transaction consisted of approximately $2.6 million in
cash, $0.5 million in subordinated promissory notes and 34,800 shares of the
Company's Common Stock. This transaction is referred to as the "1998
Transaction."

(5) PROPERTY AND EQUIPMENT

Property and Equipment

Property and equipment consisted of the following at December 31:

<TABLE>
<CAPTION>
1996 1997
------- -------
(IN THOUSANDS)
<S> <C> <C>
Land, buildings and leasehold improvements................. $ 3,938 $ 6,376
Equipment.................................................. 3,768 6,191
Furniture and fixtures..................................... 1,450 2,868
------- -------
Total property and equipment............................... 9,156 15,435
Less accumulated depreciation.............................. (3,213) (6,683)
------- -------
Property and equipment, net................................ $ 5,943 $ 8,752
======= =======
</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 years ended December 31, 1996 and 1997 amounted to $319,000 and
$3,926,000, respectively, of which $267,000 and $3,476,000 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 under non-cancelable operating leases and
amounts to be reimbursed under service agreements as of December 31, 1997 are
as follows:

<TABLE>
<CAPTION>
AMOUNT TO BE
TOTAL REIMBURSED
AMOUNT UNDER SERVICE NET
DUE AGREEMENTS AMOUNT
------- ------------- ------
(IN THOUSANDS)
<S> <C> <C> <C>
1998............................................ $ 3,843 $ 3,622 $221
1999............................................ 3,283 3,134 149
2000............................................ 2,566 2,459 107
2001............................................ 1,913 1,805 108
2002............................................ 1,417 1,402 15
Thereafter...................................... 4,097 4,097 --
------- ------- ----
Total minimum lease payments.................. $17,119 $16,519 $600
======= ======= ====
</TABLE>

F-12
<PAGE>

AMERICAN DENTAL PARTNERS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1997

(6) INCOME TAXES

Income tax expense (benefit) attributable to income from continuing
operations for the years ended December 31 consists of the following:

<TABLE>
<CAPTION>
1996 1997
------- -------
(IN THOUSANDS)
<S> <C> <C>
Current:
Federal.................................................... $ -- $ 54
State...................................................... -- 102
------- ------
-- 156
------- ------
Deferred:
Federal.................................................... -- (32)
State...................................................... -- --
------- ------
-- (32)
------- ------
Total income taxes....................................... $ -- $ 124
======= ======
</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
are as follows:

<TABLE>
<CAPTION>
1996 1997
------- -------
(IN THOUSANDS)
<S> <C> <C>
Deferred tax assets:
Operating loss and other carryforwards.................. $ 1,446 $ 989
Property and equipment.................................. 366 566
Organization and start-up costs......................... 251 243
Accrued expenses and other liabilities.................. 831 730
Other................................................... 168 --
------- -------
Total gross deferred tax assets......................... 3,062 2,528
Valuation allowance..................................... (3,062) (2,454)
------- -------
Net deferred tax assets................................. -- 74
------- -------
Deferred tax liabilities..................................
Intangibles............................................. -- (16)
Other................................................... -- (289)
------- -------
Total gross deferred tax liabilities.................... -- (305)
------- -------
Net deferred tax assets (liabilities)..................... $ -- $ (231)
======= =======
</TABLE>

The valuation allowance for deferred tax assets was $3,062,000 and
$2,454,000 as of December 31, 1996 and 1997, respectively. The net change in
the total valuation allowance for the years ended December 31, 1996 and 1997
was an increase of $3,062,000 and a decrease of $608,000, 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-13
<PAGE>

AMERICAN DENTAL PARTNERS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1997

Subsequent recognized tax benefits relating to the valuation allowance for
deferred tax assets as of December 31 will be allocated as follows:

<TABLE>
<CAPTION>
1996 1997
------- -------
(IN THOUSANDS)
<S> <C> <C>
Income tax benefit to be reported in the consolidated
statement of operations................................ $ 1,549 $ 371
Intangibles............................................. 1,513 2,083
------- -------
$ 3,062 $ 2,454
======= =======
</TABLE>

The net deferred tax assets (liabilities) consisted of the following at
December 31:

<TABLE>
<CAPTION>
1996 1997
----------------------- -----------------------
FEDERAL STATE TOTAL FEDERAL STATE TOTAL
------- ----- ------- ------- ----- -------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Deferred tax assets:
Current.................... $ 240 $ 46 $ 286 $ 354 $ 95 $ 449
Non-current................ 2,320 456 2,776 1,457 622 2,079
Valuation allowance........ (2,560) (502) (3,062) (1,807) (647) (2,454)
------- ----- ------- ------- ----- -------
Net deferred tax assets.. -- -- -- 4 70 74
------- ----- ------- ------- ----- -------
Deferred tax liabilities:
Current.................... -- -- -- -- -- --
Non-current................ -- -- -- (203) (102) (305)
------- ----- ------- ------- ----- -------
Total gross deferred tax
liabilities............... -- -- -- (203) (102) (305)
------- ----- ------- ------- ----- -------
Net deferred tax assets
(liabilities)........... $ -- $ -- $ -- $ (199) $ (32) $ (231)
======= ===== ======= ======= ===== =======
</TABLE>

At December 31, 1997, the Company has net operating loss carryforwards for
Federal income tax purposes of approximately $2,092,000 which are available to
offset future Federal taxable income. The net operating loss carryforward
begins to expire in the year 2011 unless utilized.

The following table reconciles the Federal statutory income tax rate to the
Company's effective income tax rate for the years ended December 31:

<TABLE>
<CAPTION>
1996 1997
------ -----
<S> <C> <C>
Income taxes at Federal statutory rate...................... (34.0)% 34.0%
State taxes, net of Federal benefit......................... (6.0) 4.0
Valuation reserve and other changes......................... 33.0 (36.6)
Intangibles and other permanent differences................. 7.0 9.0
------ -----
Effective income tax rate................................... -- % 10.4%
====== =====
</TABLE>

F-14
<PAGE>

AMERICAN DENTAL PARTNERS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1997

(7) DEBT

Long-term debt and capital lease obligations consist of the following at
December 31:

<TABLE>
<CAPTION>
1996 1997
------ -------
(IN THOUSANDS)
<S> <C> <C>
Revolving line of credit advances, collateralized by substan-
tially all assets of the Company, all at a LIBOR based rate of
approximately 7.6%............................................. $ -- $16,700
Mortgages payable, secured, interest rates ranging from 8.6% to
8.8% payable in installments through 2015...................... 788 727
Note payable, unsecured, interest rate of 8.5% payable in in-
stallments, maturing in 2004................................... 524 45
Subordinated notes payable to stockholders and former owners,
bearing interest at 7%, maturing through 2003.................. 2,182 4,308
Capital lease obligations....................................... 106 247
------ -------
Total long-term debt and capital lease obligations.............. 3,600 22,027
Less current maturities......................................... 537 774
------ -------
Long-term debt and capital lease obligations, excluding current
maturities..................................................... $3,063 $21,253
====== =======
</TABLE>

Annual maturities of long-term debt and future minimum lease payments under
capital leases as of December 31, 1997 are as follows:

<TABLE>
<CAPTION>
LONG-TERM CAPITAL
DEBT LEASES
--------- -------
(IN THOUSANDS)
<S> <C> <C>
1998..................................................... $ 692 $103
1999..................................................... 713 66
2000..................................................... 17,437 50
2001..................................................... 761 50
2002..................................................... 789 31
Thereafter............................................... 1,388 --
------- ----
Total payments......................................... $21,780 300
=======
Less amounts representing interest....................... 53
----
Total obligations under capital leases................... $247
====
</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 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.

F-15
<PAGE>

AMERICAN DENTAL PARTNERS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1997

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, 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 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 $632,000 for the years ended December 31,
1996 and 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 $8,641,000 at
December 31, 1996 and 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.

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 1997. Holders of Series B

F-16
<PAGE>

AMERICAN DENTAL PARTNERS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1997

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 $560,000 for the years ended
December 31, 1996 and 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 $7,656,000 at December 31, 1996 and 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.

Authorized Shares

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.

(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 2,394,212 shares were issued and
outstanding at December 31, 1996 and 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
$22,809 and $24,884 for the years ended December 31, 1996 and 1997,
respectively.

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.

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.

F-17
<PAGE>

AMERICAN DENTAL PARTNERS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1997

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.
Also, 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. Additionally, 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 lenders' consent.

(10) 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 December 31, 1997, options for a
total of 873,246 shares were reserved for issuance and options for 648,420
shares were outstanding under this 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 December 31, 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 December 31, 1997, options for a total of 210,000 shares were
reserved for issuance and options for 89,586 shares were outstanding under
this 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 December 31, 1997, options for a total of 60,000
shares were reserved for issuance and options for 19,800 shares were
outstanding under this Plan.

F-18
<PAGE>

AMERICAN DENTAL PARTNERS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1997

Stock Option Activity

A summary of stock option activity under all the Company's stock option
plans for the years ended December 31, 1996 and 1997 follows:

<TABLE>
<CAPTION>
EXERCISE PRICES
-----------------------
NUMBER OF WEIGHTED
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................................... 552,096 12.50- 14.17 14.04
Cancelled................................. (600) 14.17 14.17
--------- -------------- ------
Outstanding at December 31, 1997.......... 1,118,166 $ 0.33-$14.17 $ 8.69
========= ============== ======
Options exercisable at:
December 31, 1996....................... 16,320
=========
December 31, 1997....................... 70,298
=========
</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 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, no
volatility and no dividends.

The following table summarizes information about stock options outstanding
at December 31, 1997:

<TABLE>
<CAPTION>
OPTIONS OUTSTANDING OPTIONS EXERCISABLE
--------------------------------------------- ----------------------------
WEIGHTED AVERAGE
REMAINING
RANGE OF NUMBER CONTRACTUAL LIFE WEIGHTED AVERAGE NUMBER WEIGHTED AVERAGE
EXERCISE PRICES OUTSTANDING (IN YEARS) EXERCISE PRICE EXERCISABLE EXERCISE PRICE
--------------- ----------- ---------------- ---------------- ----------- ----------------
<S> <C> <C> <C> <C> <C>
$0.33 352,770 7.3 $0.33 16,500 $ 0.33
$8.33 194,700 8.5 $8.33 49,448 $ 8.33
$12.50-$14.17 570,696 9.0-9.6 $12.50-$14.17 4,350 $12.50
--------- ------
1,118,166 70,298
========= ======
</TABLE>

(11) EMPLOYEE BENEFIT PLANS

1997 Employee Stock Purchase Plan

Effective December 1, 1997, the Company adopted the 1997 Employee Stock
Purchase Plan (the "Employee Stock Purchase Plan"). The Employee Stock
Purchase Plan enables 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.

F-19
<PAGE>

AMERICAN DENTAL PARTNERS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1997

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. 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.

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 December 31, 1997, the Company had three other defined
contribution retirement plans. Total plan expense for the years ended December
31, 1996 and 1997 was $20,000 and $189,000, respectively.

(12) EARNINGS PER SHARE

Earnings per share are computed based on Statement of Financial Accounting
Standards No. 128 "Earnings per Share" ("SFAS 128"). SFAS 128 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). 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. Accordingly,
the Series A Convertible Preferred Stock and the effect of stock options were
not included in the calculation of Diluted EPS for the years ended December
31, 1996 and 1997.

The following table provides a reconciliation of the numerators and
denominators of the basic and diluted loss per share computations for the
years ended December 31:

<TABLE>
<CAPTION>
1996 1997
----------- ----------
(IN THOUSANDS, EXCEPT
PER SHARE AMOUNTS)
<S> <C> <C>
BASIC LOSS PER SHARE
Net earnings (loss)................................. $ (2,443) $ 1,070
Less: Dividends on Series A Convertible Preferred
Stock.............................................. (109) (632)
Dividends on Series B Redeemable Preferred Stock.. (96) (560)
----------- ----------
Net loss available to common stockholders........... $ (2,648) $ (122)
=========== ==========
Weighted average common shares outstanding.......... 768 2,273
=========== ==========
Net loss per share.................................. $ (3.45) $ (0.05)
=========== ==========
DILUTED LOSS PER SHARE
Net earnings (loss)................................. $ (2,443) $ 1,070
Less: Dividends on Series A Convertible Preferred
Stock.............................................. (109) (632)
Dividends on Series B Redeemable Preferred Stock.. (96) (560)
----------- ----------
Net loss available to common stockholders........... $ (2,648) $ (122)
=========== ==========
Weighted average common shares outstanding.......... 768 2,273
=========== ==========
Net loss per share.................................. $ (3.45) $ (0.05)
=========== ==========
</TABLE>

F-20
<PAGE>

AMERICAN DENTAL PARTNERS, INC.

UNAUDITED INTERIM

CONSOLIDATED FINANCIAL STATEMENTS

F-21
<PAGE>

AMERICAN DENTAL PARTNERS, INC.

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

<TABLE>
<CAPTION>
PRO FORMA
DECEMBER 31, MARCH 31, MARCH 31,
1997 1998 1998
------------ --------- ---------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents................... $ 4,675 $ 4,696 $11,807
Accounts receivable......................... 101 56 56
Receivables due from affiliated practices... 3,207 3,059 3,059
Inventories................................. 387 377 377
Prepaid expenses and other receivables...... 1,631 2,098 1,218
------- ------- -------
Total current assets...................... 10,001 10,286 16,517
------- ------- -------
Property and equipment, net................... 8,752 9,330 9,330
------- ------- -------
Non-current assets:
Intangible assets, net...................... 28,975 32,381 32,381
Other assets................................ 231 201 201
------- ------- -------
Total non-current assets.................. 29,206 32,582 32,582
------- ------- -------
Total assets.............................. $47,959 $52,198 $58,429
======= ======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable............................ $ 2,618 $ 2,770 $ 2,770
Accrued compensation, benefits and taxes.... 3,001 2,027 2,027
Accrued expenses............................ 2,666 2,287 2,287
Income taxes payable........................ 183 622 622
Current maturities of debt.................. 774 840 840
------- ------- -------
Total current liabilities................. 9,242 8,546 8,546
------- ------- -------
Non-current liabilities:
Long-term debt.............................. 21,253 25,467 4,917
Deferred income tax liability............... 231 231 231
Other liabilities........................... 27 26 26
------- ------- -------
Total non-current liabilities............. 21,511 25,724 5,174
------- ------- -------
Total liabilities......................... 30,753 34,270 13,720
======= ======= =======
Series A convertible preferred stock, par
value $0.01 per share, 400,000 shares
authorized, issued and outstanding; no pro
forma shares authorized, issued or
outstanding.................................. 8,641 8,806 --
Series B redeemable preferred stock, par value
$0.01 per share, 70,000 shares authorized,
issued and outstanding; no pro forma shares
authorized, issued or outstanding............ 7,656 7,815 --
Stockholders' equity:
Preferred stock, par value $0.01 per share,
530,000 shares authorized, no shares issued
or outstanding; 1,000,000 pro forma shares
authorized, no pro forma shares issued or
outstanding................................ -- -- --
Common stock, par value $0.01 per share,
25,000,000 shares authorized, 2,394,212 and
2,429,017 shares issued and outstanding;
7,416,512 pro forma shares issued and
outstanding................................ 24 24 74
Additional paid-in capital.................. 2,307 2,230 45,582
Unearned compensation....................... (49) (43) (43)
Accumulated deficit......................... (1,373) (904) (904)
------- ------- -------
Total stockholders' equity................ 909 1,307 44,709
------- ------- -------
Commitments and contingencies.................
Total liabilities and stockholders'
equity................................... $47,959 $52,198 $58,429
======= ======= =======
</TABLE>

See accompanying notes to interim consolidated financial statements.

F-22
<PAGE>

AMERICAN DENTAL PARTNERS, INC.

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

<TABLE>
<CAPTION>
THREE MONTHS
ENDED MARCH 31,
----------------
1997 1998
------- -------
(UNAUDITED)
<S> <C> <C>
Net revenue................................................... $11,226 $18,171
------- -------
Operating expenses:
Salaries and benefits....................................... 6,189 9,649
Lab fees and dental supplies................................ 1,334 2,196
Office occupancy............................................ 1,008 1,609
Other operating expenses.................................... 1,366 1,645
General corporate expenses.................................. 735 975
Depreciation................................................ 356 556
Amortization of intangible assets........................... 93 333
------- -------
Total operating expenses.................................. 11,081 16,963
------- -------
Earnings from operations...................................... 145 1,208
Interest expense (income), net.............................. (27) 439
------- -------
Earnings before income taxes.................................. 172 769
Income taxes................................................ -- 300
------- -------
Net earnings................................................ $ 172 $ 469
======= =======
Net earnings (loss) per common share:
Basic....................................................... $ (0.06) $ 0.06
Diluted..................................................... $ (0.06) $ 0.06
Weighted average common shares outstanding:
Basic....................................................... 2,213 2,429
Diluted..................................................... 2,213 2,632
</TABLE>

See accompanying notes to interim consolidated financial statements.

F-23
<PAGE>

AMERICAN DENTAL PARTNERS, INC.

CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE THREE MONTHS ENDED MARCH 31, 1998
(IN THOUSANDS)
(UNAUDITED)

See accompanying notes to interim consolidated financial statements.

F-24
<PAGE>

AMERICAN DENTAL PARTNERS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)

<TABLE>
<CAPTION>
THREE MONTHS
ENDED MARCH 31,
----------------
1997 1998
------- -------
(UNAUDITED)
<S> <C> <C>
Cash flows from operating activities:
Net earnings................................................ $ 172 $ 469
Adjustments to reconcile net earnings to net cash provided
by (used for) operating activities:
Depreciation............................................... 356 556
Amortization of intangible assets.......................... 93 333
Other amortization......................................... 6 25
Changes in assets and liabilities, net of acquisitions and
affiliations:
Accounts receivable....................................... 759 45
Receivables due from affiliated practices................. (863) 148
Other current assets...................................... (348) (433)
Accounts payable and accrued expenses..................... (171) (281)
Accrued compensation, benefits and taxes.................. (625) (622)
------- -------
Net cash provided by (used for) operating activities..... (621) 240
------- -------
Cash flows from investing activities:
Acquisitions and affiliations, net of cash acquired......... (1,913) (2,590)
Capital expenditures, net................................... (1,028) (669)
Other....................................................... (398) (423)
------- -------
Net cash used for investing activities................... (3,339) (3,682)
------- -------
Cash flows from financing activities:
Borrowings under revolving line of credit, net.............. -- 3,850
Repayment of borrowings..................................... (658) (387)
Payment of debt issuance costs.............................. (42) --
------- -------
Net cash provided by (used for) financing activities..... (700) 3,463
------- -------
Increase (decrease) in cash and cash equivalents............. (4,660) 21
Cash and cash equivalents at beginning of period............. 5,836 4,675
------- -------
Cash and cash equivalents at end of period................... $ 1,176 $ 4,696
======= =======
Supplemental disclosure of cash flow information:
Cash paid during the period for interest.................... $ 19 $ 341
======= =======
Cash paid during the period for income taxes................ $ 2 $ 96
======= =======
Acquisitions and Affiliations:
Assets acquired............................................. $ 2,906 $ 4,228
Liabilities assumed and issued.............................. (917) (1,391)
Common stock issued......................................... (14) (247)
------- -------
Cash paid................................................... 1,975 2,590
Less cash acquired.......................................... (62) --
------- -------
Net cash paid for acquisitions and affiliations.......... $ 1,913 $ 2,590
======= =======
</TABLE>

See accompanying notes to interim consolidated financial statements.

F-25
<PAGE>

AMERICAN DENTAL PARTNERS, INC.

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

(1) BASIS OF PRESENTATION

The interim consolidated financial statements include the accounts of
American Dental Partners, Inc. and its wholly-owned subsidiaries (the
"Company"). All intercompany balances and transactions have been eliminated in
consolidation.

The Company does not own any interests in or control the activities of the
affiliated dental practices. Accordingly, the financial statements of the
affiliated dental practices are not consolidated with those of the Company.

The interim consolidated financial statements 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 its financial
position and results of operations. Results of operations for the interim
periods are not necessarily indicative of the results to be expected for the
full year. These financial statements should be read in conjunction with the
consolidated financial statements of the Company as of and for the year ended
December 31, 1997 included in the Company's Prospectus dated April 15, 1998.

(2) INITIAL PUBLIC OFFERING

Effective April 16, 1998, the Company sold 2,250,000 shares of Common Stock
in an initial public offering at $15.00 per share. Effective May 4, 1998, the
Company sold an additional 337,500 shares of Common Stock at $15.00 per share
pursuant to the over-allotment option granted to the underwriters. Net
proceeds to the Company after deducting underwriting discounts and commissions
and offering expenses, including the over-allotment option, were approximately
$34,596,000. Such proceeds have been used to (i) redeem all the Series B
Redeemable Preferred Stock, including unpaid dividends, in the amount of
$7,851,000 and (ii) repay outstanding indebtedness under the Company's
revolving credit facility, including accrued interest, in the amount of
$20,651,000. The remaining balance will be used for general corporate
purposes, including affiliations with additional dental group practices.

In connection with the offering, all 400,000 shares of Series A Convertible
Preferred Stock were converted to 2,399,995 shares of Common Stock.

(3) PRO FORMA INFORMATION

Pro Forma Balance Sheet Information

The pro forma consolidated balance sheet at March 31, 1998 gives effect to
(1) the sale of 2,587,500 shares of Common Stock (including the underwriters'
over-allotment option) at the initial public offering price of $15.00 per
share and receipt and application of the net proceeds therefrom, estimated to
be approximately $34,596,000 after deducting underwriting discounts and
commissions and offering expenses, to (i) redeem the Series B Redeemable
Preferred Stock in the amount of $7,815,000 and (ii) repay indebtedness of
$20,550,000 under the revolving credit facility; and (2) the conversion of
400,000 shares of Series A Convertible Preferred Stock into 2,399,995 shares
of Common Stock, as if such transactions occurred on March 31, 1998.

Pro Forma Net Earnings and Net Earnings Per Share Information

Pro forma net earnings give effect to (i) the sale of 2,587,500 shares of
Common Stock; (ii) receipt and application of the net proceeds therefrom to
repay indebtedness of $20,550,000 under the revolving credit facility; (iii)
the resulting reduction of interest expense of approximately $317,000 and (iv)
an increase in income tax expense of approximately $124,000, as if such
transaction occurred on January 1, 1998.

Pro forma net earnings per share include the issuance of 2,587,500 shares
from the initial public offering, the conversion of 400,000 shares of Series A
Convertible Preferred Stock into 2,399,995 shares of Common Stock and the
dilutive effect of options, as if such transactions occurred on January 1,
1998.

F-26
<PAGE>

AMERICAN DENTAL PARTNERS, INC.

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

Pro forma interest expense, earnings before income taxes, income taxes, net
earnings and pro forma net earnings per share for the three months ended March
31, 1998 are as follows (in thousands, except per share amounts):

<TABLE>
<S> <C>
Earnings from operations........................................... $1,208
Interest expense, net.............................................. 122
------
Earnings before income taxes..................................... 1,086
Income taxes....................................................... 424
------
Net earnings..................................................... $ 662
======
Net earnings per common share:
Basic............................................................ $ 0.09
Diluted.......................................................... $ 0.09
Weighted average common shares outstanding:
Basic............................................................ 7,417
Diluted.......................................................... 7,620
</TABLE>

(4) ACQUISITIONS AND AFFILIATIONS

During 1997, the Company acquired substantially all the assets of six dental
practices and Orthocare, Ltd., a related entity of one of these practices, and
simultaneously entered into 40-year service agreements with four of the
affiliated dental groups (two practices joined existing affiliates). The
aggregate purchase price paid in connection with these transactions consisted
of approximately $16.8 million in cash, $2.4 million in subordinated
promissory notes and 180,834 shares of Common Stock. All transactions
completed in 1997 are referred to as the "1997 Transactions."

On January 1, 1998, the Company acquired substantially all the assets of a
dental group practice and simultaneously entered into a 40-year service
agreement with the affiliated dental group, Associated Dental Care Providers,
P.C., in Tucson, Arizona. The aggregate consideration for this transaction
(referred to as the "1998 Transaction") consisted of approximately $2.6
million in cash, $0.5 million in subordinated promissory notes and 34,800
shares of Common Stock.

The 1997 and 1998 Transactions completed through March 31, 1998 are as
follows:

<TABLE>
<CAPTION>
DATE AFFILIATED GROUP LOCATION
---- ---------------- --------
<S> <C> <C>
March 1997........................... Malcolm R. Scott, D.D.S San Marcos, TX
March 1997........................... Lakeside Dental Care Metairie, 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
January 1998......................... Associated Dental Care Tucson, AZ
</TABLE>

The accompanying interim consolidated financial statements include the
results of operations under the service agreements from the date of
acquisition. The excess of the purchase price of all the 1997 and 1998
Transactions over the estimated fair value of the net assets acquired has been
recorded as intangible assets.

Subsequent to March 31, 1998, the Company acquired substantially all the
assets of three dental groups. These dental groups joined existing affiliates
in the Wisconsin and Louisiana markets.

F-27
<PAGE>

AMERICAN DENTAL PARTNERS, INC.

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

(5) EARNINGS PER SHARE

Earnings per share are computed based on Statement of Financial Accounting
Standard No. 128 "Earnings per Share" ("SFAS 128"). SFAS 128 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). 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. Accordingly,
the assumed conversion of Series A Convertible Preferred Stock was not
included in the calculation of actual Diluted EPS for the three months ended
March 31, 1997 and 1998, and the effect of stock options was not included in
the calculation of actual Diluted EPS for the three months ended March 31,
1997, as the inclusion of these items would have been antidilutive.

The following table provides a reconciliation of the numerators and
denominators of the basic and diluted earnings (loss) per share computations
for the three months ended March 31:

<TABLE>
<CAPTION>
ACTUAL
-------------- PRO FORMA
1997 1998 1998
------ ------ ---------
(IN THOUSANDS, EXCEPT
PER SHARE AMOUNTS)
<S> <C> <C> <C>
BASIC EARNINGS (LOSS) PER SHARE
Net earnings........................................ $ 172 $ 469 $ 662
Less: Dividends on Series A Convertible Preferred
Stock.............................................. (158) (165) --
Dividends on Series B Redeemable Preferred Stock.. (140) (159) --
------ ------ ------
Net earnings (loss) available to common stockhold-
ers................................................ $ (126) $ 145 $ 662
====== ====== ======
Weighted average common shares outstanding.......... 2,213 2,429 2,429
Add: Conversion of Series A Convertible Preferred
Stock (1).......................................... -- -- 2,400
Shares issued in connection with the initial pub-
lic offering..................................... -- -- 2,588
------ ------ ------
Weighted average common shares as adjusted.......... 2,213 2,429 7,417
====== ====== ======
Net earnings (loss) per share....................... $(0.06) $ 0.06 $ 0.09
====== ====== ======
DILUTED EARNINGS (LOSS) PER SHARE
Net earnings........................................ $ 172 $ 469 $ 662
Less: Dividends on Series A Convertible Preferred
Stock.............................................. (158) (165) --
Dividends on Series B Redeemable Preferred Stock.. (140) (159) --
------ ------ ------
Net earnings (loss) available to common stockhold-
ers................................................ $ (126) $ 145 $ 662
====== ====== ======
Weighted average common shares outstanding.......... 2,213 2,429 2,429
Add: Dilutive effect of options..................... -- 203 203
Conversion of Series A Convertible Preferred Stock
(1).............................................. -- -- 2,400
Shares issued in connection with the initial pub-
lic offering..................................... -- -- 2,588
------ ------ ------
Weighted average common shares as adjusted.......... 2,213 2,632 7,620
------ ------ ------
Net earnings (loss) per share....................... $(0.06) $ 0.06 $ 0.09
====== ====== ======
</TABLE>
- --------
(1) In connection with the initial public offering, all 400,000 shares of
Series A Convertible Preferred Stock were converted into 2,399,995 shares
of Common Stock.

F-28
<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 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-29
<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-30
<PAGE>

THE ORTHOCARE COMPANIES

COMBINED STATEMENTS OF OPERATIONS
(IN THOUSANDS)

<TABLE>
<CAPTION>
NINE MONTHS
YEAR ENDED 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-31
<PAGE>

THE ORTHOCARE COMPANIES

COMBINED STATEMENTS OF STOCKHOLDERS' EQUITY
(IN THOUSANDS)

<TABLE>
<CAPTION>
ADDITIONAL TOTAL
COMMON PAID-IN RETAINED STOCKHOLDERS'
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-32
<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
activities............................... 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-33
<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-34
<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-35
<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:

<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-36
<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-37
<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. 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. NEITHER 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............................................................. 8
The Company.............................................................. 14
Dividend Policy.......................................................... 15
Price Range of Common Stock.............................................. 15
Capitalization........................................................... 16
Selected Historical and Pro Forma Consolidated Financial Data............ 17
Management's Discussion and Analysis of Financial Condition and Results
of Operations........................................................... 19
Business................................................................. 27
Management............................................................... 41
Certain Transactions..................................................... 48
Principal Stockholders................................................... 50
Description of Capital Stock............................................. 51
Description of Subordinated Notes........................................ 53
Shares Eligible for Future Sale.......................................... 55
Plan of Distribution..................................................... 57
Validity of Securities................................................... 57
Experts.................................................................. 57
Additional Information................................................... 58
Index to Financial Statements............................................ F-1
</TABLE>

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

AMERICAN DENTAL PARTNERS, INC.

750,000 SHARES OF COMMON STOCK

AND

$25,000,000 AGGREGATE PRINCIPAL AMOUNT OF
SUBORDINATED PROMISSORY NOTES

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

, 1998

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

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 20. 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; 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.

II-1
<PAGE>

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 for the IPO (a form of which was filed as Exhibit
1 to the IPO Registration Statement) provides for indemnification of the
Registrant's directors and officers in certain circumstances. The
indemnification provided for by the underwriters for the IPO is limited to
matters arising in connection with this Registration Statement. Reference is
made to paragraph eight of this 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 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(A) EXHIBITS

II-2
<PAGE>

<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
------- -------------------
<C> <S>
+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.
+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 and Second Amendment to Service Agreement dated
January 1, 1998.
+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 and Second
Amendment to Service Agreement dated January 1, 1998.
+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.
</TABLE>

II-3
<PAGE>

<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
------- -------------------
<C> <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.
+10(cc) Employment and Noncompetition Agreement dated November 12, 1996
between American Dental Partners, Inc. and Forrest M. Flint.
+10(dd) Amendment No. 1 to American Dental Partners, Inc. Amended and
Restated 1996 Stock Option Plan.
+10(ee) Amendment No. 1 to American Dental Partners, Inc. Amended and
Restated 1996 Affiliate Stock Option Plan.
++10(ff) Asset Purchase Agreement dated June 3, 1998, among American Dental
Partners, Inc., American Dental Partners of Virginia, Inc., Reston
Dental Group, P.C., and the shareholders of Reston Dental Group,
P.C.
*12 Computation of Ratio of Earnings to Fixed Charges.
*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.
*24 Powers of Attorney for Dr. Gregory T. Swenson, Martin J. Mannion,
James T. Kelly and Derril W. Reeves
</TABLE>
- --------
* Filed herewith.
+ Previously filed as an exhibit to the Company's Registration Statement on
Form S-1 (Registration No. 333-39981) and incorporated herein by reference.
For Exhibits 10(r) and 10(s), certain portions of these exhibits have been
omitted pursuant to confidential treatment granted under Rule 406 of the
Securities Act.
++ Previously filed as Exhibit 2 to the Company's Current Report on Form 8-K
filed with the Securities and Exchange Commission on June 11, 1998 and
incorporated herein by reference.

(B) FINANCIAL STATEMENT SCHEDULES

Not applicable.

ITEM 22. UNDERTAKINGS

The undersigned registrant hereby undertakes as follows:

(1) 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.

(2) 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.

II-4
<PAGE>

(3) 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 20, 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.

(4) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:

(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;

(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high and of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than 20 percent change in
the maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement;

(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement.

(5) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.

(6) Prior to any public reoffering of the securities registered hereunder
through use of a prospectus which is a part of this registration statement,
by any person or party who is deemed to be an underwriter within the
meaning of Rule 145(c), the issuer undertakes that such reoffering
prospectus will contain the information called for by the applicable
registration form with respect to reofferings by persons who may be deemed
underwriters, in addition to the information called for by the other items
of the applicable form.

(7) Every prospectus: (i) that is filed pursuant to the paragraph
immediately preceding, or (ii) that purports to meet the requirements of
Section 10(a)(3) of the Act and is used in connection with an offering of
securities subject to Rule 415, will be filed as a part of an amendment to
the registration statement and will not be used until such amendment is
effective, and that, for purposes of determining any lability under the
Securities Act, each such post-effective amendment 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 deemed to be the
initial bona fide offering thereof.

(8) The undersigned registrant hereby undertakes to respond to requests
for information that is incorporated by reference into the prospectus
pursuant to Item 4, 10(b), 11, or 13 of this form, within one business day
of receipt of such request, and to send the incorporated documents by the
first class mail or other equally prompt means. This includes information
contained in documents filed subsequent to the effective date of the
registration statement through the date of responding to the request.

(9) The undersigned registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it becomes effective.

II-5
<PAGE>

SIGNATURES

PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE TOWN OF WAKEFIELD, COMMONWEALTH
OF MASSACHUSETTS, ON THE 15TH DAY OF JUNE, 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 REGISTRATION
STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE CAPACITIES AND ON
THE DATES INDICATED.

SIGNATURE CAPACITY IN WHICH SIGNED DATE

/s/ Gregory A. Serrao Chairman, President June 15, 1998
- ------------------------------------- and Chief Executive
GREGORY A. SERRAO Officer and
Director (principal
executive officer)

/s/ Ronald M. Levenson Senior Vice June 15, 1998
- ------------------------------------- President, Chief
RONALD M. LEVENSON Financial Officer
and Treasurer
(principal
financial and
accounting officer)

Dr. Gregory T. Swenson* Director June 15, 1998
- -------------------------------------
DR. GREGORY T. SWENSON

Martin J. Mannion* Director June 15, 1998
- -------------------------------------
MARTIN J. MANNION

James T. Kelly* Director June 15, 1998
- -------------------------------------
JAMES T. KELLY

Derril W. Reeves* Director June 15, 1998
- -------------------------------------
DERRIL W. REEVES

* The undersigned, Gregory A. Serrao, by signing his name hereto, does hereby
execute this Registration Statement 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-6
<PAGE>

EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
------- -------------------
<C> <S>
+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(a) Form of Stock Certificate.
*4(b) Form of Subordinated Promissory Note and Form of Subordination
Agreement.
*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.
+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.).
</TABLE>
<PAGE>

<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
------- -------------------
<C> <S>
+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 and Second Amendment to Service Agreement dated
January 1, 1998.
+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 and Second
Amendment to Service Agreement dated January 1, 1998.
+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.
+10(cc) Employment and Noncompetition Agreement dated November 12, 1996
between American Dental Partners, Inc., and Forrest M. Flint.
+10(dd) Amendment No. 1 to American Dental Partners, Inc. Amended and
Restated 1996 Stock Option Plan.
+10(ee) Amendment No. 1 to American Dental Partners, Inc. Amended and
Restated 1996 Affiliate Stock Option Plan.
++10(ff) Asset Purchase Agreement dated June 3, 1998, among American Dental
Partners, Inc., American Dental Partners of Virginia, Inc., Reston
Dental Group, P.C., and the shareholders of Reston Dental Group,
P.C.
*12 Computation of Ratio of Earnings to Fixed Charges.
*21 Subsidiaries of American Dental Partners, Inc.
</TABLE>
<PAGE>

<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
------- -------------------
<C> <S>
*23(a) Consent of Baker & Hostetler LLP (included in Exhibit 5).
*23(b) Consent of KPMG Peat Marwick LLP.
*24 Powers of Attorney for Dr. Gregory T. Swenson, Martin J. Mannion,
James T. Kelly and Derril W. Reeves.
</TABLE>
- --------
* Filed herewith.
+ Previously filed as an exhibit to the Company's Registration Statement on
Form S-1 (Registration No. 333-39981) and incorporated herein by reference.
For Exhibits 10(r) and 10(s), certain portions of these exhibits have been
omitted pursuant to confidential treatment granted under Rule 406 of the
Securities Act.
++ Previously filed as Exhibit 2 to the Company's Current Report on Form 8-K
filed with the Securities and Exchange Commission on June 11, 1998 and
incorporated herein by reference.

<PAGE>

EXHIBIT 4(B)

SUBORDINATED PROMISSORY NOTE

American Dental Partners, Inc., a Delaware corporation ("Maker"), hereby
promises to pay to ("Holder"), the principal sum of $ , with
interest computed from the date of this note at the rate of % per annum on
the unpaid principal balance from time to time, payable in seven annual
installments due on each of the first seven anniversaries of the date of this
note, respectively, with each such installment to be an amount equal to
principal of $ plus all accrued but unpaid interest on the declining unpaid
principal balance, calculated at the rate stated above.

This note is being issued pursuant to the Asset Purchase Agreement dated
, among Maker, Holder, and others (the "Purchase Agreement"), which is
hereby incorporated herein by reference. This note is subject to the
Subordination Agreement having the same date as this note among Maker, Holder,
and others (the "Subordination Agreement"), which is hereby incorporated
herein by reference. All payments becoming due under this note shall be made
to Holder at the address which is applicable for Holder under the Purchase
Agreement.

Maker shall have the right to prepay this note, in whole or in part, at any
time without penalty. Any such prepayment and any offsets against this Note
shall be applied first to accrued interest and then to installments of
principal in such order as may be designated by Maker.

If Maker fails to pay any installment of principal and interest when due
under this note and such failure continues for 15 days after written notice of
such failure is given by Holder to Maker at its address for notices under the
Purchase Agreement, or if (i) Maker files a voluntary bankruptcy petition,
(ii) an involuntary bankruptcy petition is filed with respect to Maker and not
vacated within 90 days thereafter, (iii) Maker makes a general assignment for
the benefit of creditors, or (iv) Maker dissolves (which shall not be deemed
to include a merger, consolidation, or liquidation of Maker with or into any
other entity), then Holder may, at Holder's option, declare the entire unpaid
principal balance of this note to be immediately due and payable, together
with accrued and unpaid interest thereon, by written notice to Maker, subject
to the terms of the Subordination Agreement.

Without limiting any other rights of Maker, whether under the Purchase
Agreement, the Subordination Agreement, or otherwise, Maker shall have the
right to set off any amounts owing by Maker to Holder under this note against
any amounts owing to Maker by Holder. Any offset under this note shall be
treated as a prepayment of this note as of the date of such offset.

Any assignee or other subsequent holder of this note shall take this note
subject to the Subordination Agreement and all rights of Maker relating to
this note.

This note shall be governed by and construed in accordance with the laws of
the Commonwealth of Massachusetts without regard to principles of conflicts of
law.

This note is being executed and delivered by Maker effective .

American Dental Partners, Inc.

By __________________________________
(Name)
(Title)

THIS INSTRUMENT IS SUBJECT TO A SUBORDINATION AGREEMENT DATED , AS
FROM TIME TO TIME IN EFFECT, AMONG MAKER, HOLDER, AND OTHERS, WHICH, AMONG
OTHER THINGS, SUBORDINATES THE OBLIGATIONS OF MAKER HEREUNDER TO THE PRIOR
PAYMENT OF CERTAIN OBLIGATIONS TO THE HOLDERS OF SENIOR INDEBTEDNESS, AS
DEFINED THEREIN.

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<PAGE>

EXHIBIT 4(B)

SUBORDINATION AGREEMENT

This agreement is made effective , among American Dental Partners,
Inc., a Delaware corporation (the "Company"), and (the "Holder").

BACKGROUND INFORMATION

A. Concurrently with the execution of this agreement, the Company is
acquiring from the Holder substantially all of the assets of the Holder and
engaging in certain transactions with the Holder and its shareholders (the
"Shareholders") pursuant to an Asset Purchase Agreement dated , among
the Company, Holder, and the Shareholders (the "Purchase Agreement"). Under
the Purchase Agreement, the consideration being paid to the Holder consists,
in part, of a subordinated promissory note (the "Note") in the aggregate
original principal amount of $ . The Note is in substantially the form
attached to this agreement as Exhibit A.

B. Execution of this agreement by the Holder is a condition to the Company's
obligations to complete the transactions contemplated by the Purchase
Agreement, including without limitation delivery of the Note to the Holder,
and the Holder is entering into this agreement to satisfy such condition and
induce the Company to complete such transactions.

STATEMENT OF AGREEMENT

The parties to this agreement (the "Parties") hereby acknowledge the above
Background Information and agree as follows:

(S)1. Definitions. As hereafter used in this agreement, the following terms
shall have the following meanings, respectively:

(a) "Senior Indebtedness" shall mean all obligations of the Company for
borrowed money, whether outstanding on the date of this agreement or
arising hereafter, including without limitation (i) all principal of and
premium, if any, and interest on indebtedness for borrowed money which is
evidenced by notes or other written obligations (including without
limitation indebtedness secured by a mortgage, security interest, or other
lien given to secure all or part of the purchase price of property subject
thereto), (ii) principal of and premium, if any, and interest on
indebtedness of the Company evidenced by debentures, bonds, or other
similar debt securities, (iii) fees, charges, costs, expenses, and other
obligations payable under any agreement or other document evidencing or
relating to any indebtedness for borrowed money, (iv) all renewals,
extensions, and refinancing of any of the obligations described in the
preceding clauses (i) through (iii), and (v) all obligations under
guaranties of any of the foregoing; provided that Senior Indebtedness shall
not include (A) indebtedness evidenced by promissory notes, debentures,
bonds, or similar evidences of indebtedness delivered by the Company or any
Subsidiary (as defined below) to any unaffiliated corporation or other
entity, or the owners of any such entity, in connection with the
acquisition of such entity (or substantially all of its assets) by the
Company or a Subsidiary, whether in one transaction or a series of
transactions, (B) any preferred stock or other equity security of the
Company, (C) any indebtedness evidenced by any 12% Subordinated Debentures
which may hereafter be issued by the Company under the Subordinated
Debenture Purchase Agreement dated January 8, 1996, among the Company,
Summit Subordinated Debt Fund, L.P., and Summit Investors III, L.P.; or (D)
any indebtedness of the Company to an Affiliate of the Company. For
purposes of clause (D) in the preceding sentence, an "Affiliate" of the
Company shall mean any shareholder, director, officer, employee,
representative, or other agent of the Company, any person related by blood
or marriage to any such person, or any person or entity, which, directly or
indirectly, controls, is controlled by, or is under common control with,
the Company or any such other person or entity.

(b) Without limiting the foregoing, Senior Indebtedness shall expressly
include any and all interest arising or out-of-pocket costs or expenses
incurred after the date of any filing by or against the Company of

A-2
<PAGE>

any petition under the Federal Bankruptcy Code or any other bankruptcy,
insolvency, or reorganization law, regardless of whether a claim therefor
is allowed or allowable in the case or proceeding relating thereto.

(c) "Subsidiary" shall mean any corporation or other entity of which at
least 80% of the outstanding stock or other equity interests having voting
power under ordinary circumstances to elect a majority of the board of
directors or other similar governing body shall at the time be owned by the
Company, by the Company and one or more Subsidiaries, or by one or more
Subsidiaries.

(S)2. Subordination Covenants. Until all of the Senior Indebtedness has been
paid in full and all obligations of the holders of Senior Indebtedness to
extend credit under all agreements or other documents relating to the Senior
Indebtedness (collectively, the "Senior Credit Documents") have been
irrevocably terminated, each Holder shall comply with all of the following
provisions as are applicable to such Holder:

(S)2.1. Subordination. To the extent and in the manner provided in this
agreement, the payment of the Notes, including without limitation the
principal thereof, the interest thereon, and any other amounts payable
thereunder, with respect thereto, or as a result of claims thereunder
(collectively, the "Subordinated Indebtedness"), shall be expressly
subordinated and junior in right of payment to the prior payment in full of
all Senior Indebtedness, and the Subordinated Indebtedness is hereby
subordinated as a claim against the Company and all of its assets, to the
prior payment in full of the Senior Indebtedness, whether such claim be (a) in
the ordinary course of business or (b) in the event of any distribution of any
assets of the Company or upon any voluntary or involuntary dissolution,
winding-up, total or partial liquidation or reorganization, restructuring or
refinancing or other statutory or common law proceedings or arrangements,
including without limitation any proceeding under Title 11 of the United
States Code or any similar law of any other jurisdiction, involving the
Company or the readjustment of the liabilities of the Company or any
assignment for the benefit of creditors or any marshaling of the assets or
liabilities of the Company (hereinafter referred to collectively as a
"Reorganization").

(S)2.2. Restricted Payments. No Holder shall accept or receive any payment
on any Subordinated Indebtedness, whether in cash, securities or other
property or by way of conversion, exchange, or set-off (except as provided
below), or otherwise; provided each Holder shall be entitled to accept
mandatory scheduled payments of principal and interest as provided in the
Notes (other than payments of principal or interest that become due as a
result of the occurrence of a default under or acceleration of the Notes) (the
"Scheduled Payments") when and as, and only when and as, required by the terms
of the Notes, unless, at the time thereof or immediately after giving effect
thereto:

(a) There shall exist a default in the payment of principal, interest, or
other amount payable with respect to any Senior Indebtedness and such
default shall not have been waived or cured in accordance with the terms of
the Senior Credit Documents; or

(b) There shall exist any other default or event of default with respect
to the Senior Indebtedness, as defined therein or in the instrument under
which the same is outstanding, permitting (or with the passage of time,
notice or both, permitting) the holders of such Senior Indebtedness to
accelerate the maturity thereof, and such default or event of default shall
not have been cured or waived by the holders of such Senior Indebtedness or
shall not have ceased to exist.

For purposes of this (S)2.2, offsets against the Notes enforced by the
Company under the provisions of the Purchase Agreement (as defined in the
Notes) shall not be subject to restriction under this agreement.

(S)2.3. Reorganization. In the event of any Reorganization relating to the
Company or its property, all Senior Indebtedness shall first be paid in full
before any payment is made on account of any Subordinated Indebtedness, and in
any proceedings seeking to effect a Reorganization, any payment or
distribution of any kind or character, whether in cash or property or
securities, which may be payable or deliverable in respect of any Subordinated
Indebtedness shall be paid or delivered directly to the holders of Senior
Indebtedness or their authorized representative designated to the Company in
writing (the "Agent"), for application to the payment of the Senior
Indebtedness, until all Senior Indebtedness shall have been paid in full and
all obligations of the

A-3
<PAGE>

holders of Senior Indebtedness to extend credit under the Senior Credit
Documents have been irrevocably terminated.

(S)2.4. Specific Powers in Reorganization. In any proceedings with respect
to any Reorganization relating to the Company or any of its property, until
all Senior Indebtedness shall have been paid in full and all obligations of
the holders of Senior Indebtedness to extend credit under the Senior Credit
Documents have been irrevocably terminated, each Holder hereby irrevocably
authorizes the holders of Senior Indebtedness or the Agent to: (a) prove and
enforce any claims arising under or with respect to the Subordinated
Indebtedness either in the names of the holders of Senior Indebtedness or the
Agent or in the name of such Holder as the attorney-in-fact for such Holder;
(b) vote claims arising as a result of the Subordinated Indebtedness and
accept or reject on behalf of such Holder any plan proposed in connection with
any such Reorganization; (c) accept and receive any payment or distribution
made with respect to any Subordinated Indebtedness and to apply such payment
or distribution to the payment of any or all of the Senior Indebtedness; and
(d) take any and all actions, and execute any and all instruments, necessary
to effectuate the foregoing either in the names of the holders of Senior
Indebtedness or the Agent or in the name of such Holder as the attorney-in-
fact for such Holder.

(S)2.5. Payments Held in Trust. Notwithstanding the foregoing, if any
payment or distribution of the assets of the Company of any kind or character
(other than payments permitted by (S)2.2) shall be received, by way of actual
payment, distribution, set-off, or otherwise, by any Holder with respect to
the Subordinated Indebtedness before all Senior Indebtedness has been paid in
full and before the obligations of the holders of Senior Indebtedness to
extend credit under the Senior Credit Documents have been irrevocably
terminated, such payment or distribution and the amount of any such set-off
shall be held in trust by such Holder and promptly paid over to the holders of
Senior Indebtedness or their authorized representative designated to the
Company in writing (who shall have the right to convert any such assets into
cash) for application (including the application of such cash and cash
proceeds) to the payment of all Senior Indebtedness remaining unpaid until all
such Senior Indebtedness shall have been paid in full, after giving effect to
any concurrent payment or distribution on account of the Senior Indebtedness,
and the obligations of the holders of Senior Indebtedness to extend credit
under the Senior Credit Documents shall have been irrevocably terminated.

(S)2.6. Restrictions on Remedies. No Holder shall, without the prior written
consent of the holders of Senior Indebtedness or the Agent, accelerate the
maturity of, or institute proceedings to enforce the payment or performance
of, any Subordinated Indebtedness, notwithstanding any provisions to the
contrary contained in the Notes or in any agreement or instrument relating
thereto, except as permitted under this section.

If a default ("Subordinated Default") exists under the Note held by any
Holder for the non-payment of a Scheduled Payment (after expiration of all
applicable grace and cure periods) and such Scheduled Payment is at that time
prohibited under Section 2.2 of this agreement, then such Holder may give
notice (a "Default Notice"), in writing to the holders of the Senior
Indebtedness or the Agent, if any, specifying such default. The holders of the
Senior Indebtedness shall have 180 days commencing with their (or the Agent's)
receipt of the Default Notice (the "Standby Period") either to: (a) declare an
event of default under the Senior Indebtedness and accelerate the Senior
Indebtedness and take such other steps as they are permitted or required to
take pursuant to the Senior Credit Documents upon the occurrence of an event
of default thereunder, or (b) consent (the "Consent") to the Company making
the Scheduled Payments otherwise prohibited under this agreement, until the
holders of the Senior Indebtedness or the Agent provides notice in writing, to
such Holder and the Company that the holders of the Senior Indebtedness
terminate the Consent.

If the holders of the Senior Indebtedness (i) do not take action as
specified in clause (a) or (b) of the preceding paragraph on or prior to the
expiration of the Standby Period or (ii) terminate a Consent and thereafter a
Subordinated Default occurs with respect to either of the next succeeding two
Scheduled Payments under such Note, then such Holder may accelerate the
maturity of, or institute proceedings to enforce, such Note. In any event,
such Holder shall have the right to accelerate the maturity of, or institute
proceedings to enforce, such Note following an acceleration of the Senior
Indebtedness.

A-4
<PAGE>

So long as the Consent provided by the holders of the Senior Indebtedness or
the Agent has not been terminated and (A) despite the continuation or
recurrence of a Subordinated Default, if the Company has sufficient assets to
pay the Holders the Scheduled Payments and makes such payments in a timely
fashion (after expiration of all applicable grace and cure periods), or (B) if
such assets are insufficient, the holders of the Senior Indebtedness otherwise
cause or permit such Scheduled Payments to be paid in a timely fashion (after
expiration of all applicable grace and cure periods), then no Holder shall
accelerate or otherwise seek to enforce its Subordinated Indebtedness.

Notwithstanding the foregoing, if any Holder has accelerated and commenced
any such enforcement action, no Holder shall accept any payment until the
Senior Indebtedness shall have been paid in full, all as more particularly set
forth in this agreement. If the holders of the Senior Indebtedness do provide
a Consent at any time, they are not waiving their right to insist upon strict
compliance with this agreement on any subsequent occasion.

Without limiting the generality of the foregoing provisions of this section,
no Holder shall, without the prior written consent of the holders of the
Senior Indebtedness or the Agent, commence or join with any other creditor or
creditors of the Company in commencing any proceeding against the Company
seeking to effect a Reorganization of the Company.

(S)2.7. Restrictions on Acceleration. Notwithstanding any contrary provision
of the Notes or of any agreement or instrument relating thereto, the Notes
(other than payments permitted by (S)2.2) shall not become or be declared to
be due and payable prior to the date on which the Senior Indebtedness becomes
or is declared to be due and payable, except as provided under (S)2.6, above.

(S)2.8. Payment in Full. For the purpose of this agreement, no Senior
Indebtedness shall be deemed to have been paid in full unless the holder
thereof shall have received and have been permitted to retain cash, or at such
holder's option, property equal in value to the amount thereof then
outstanding, such Senior Indebtedness shall have been fully and indefeasibly
discharged, and all obligations of such holder to extend credit under the
related Senior Credit Documents shall have been irrevocably terminated.

(S)2.9. Effect of Provisions. The provisions of this agreement as to
subordination are solely for the purpose of defining the relative rights of
the holders of Senior Indebtedness on one hand and the Holders on the other
hand, and none of such provisions shall impair as between the Company and the
Holders the obligation of the Company to pay to the Holders the principal owed
by the Company to the Holders with respect to the Notes and interest thereon,
as described in the Notes, nor shall any such provisions prevent the Holders
from exercising all remedies otherwise permitted by applicable law or under
the terms of the Notes upon a default thereunder, except to the extent set
forth in this agreement.

(S)2.10. Subrogation. When all Senior Indebtedness then outstanding has been
paid in full and the obligations of the holders of Senior Indebtedness to
extend credit under the Senior Credit Documents shall have been irrevocably
terminated, the Holders shall be subrogated to the rights of the holders of
Senior Indebtedness to receive payments or distributions of assets of the
Company made on the Senior Indebtedness until the Notes have been paid in
full. For the purposes of such subrogation, no payments or distributions to
the holders of Senior Indebtedness of any cash, property or securities to
which the Holders would be entitled except for the provisions of this
agreement, and no payment pursuant to the provisions of this agreement to the
holders of Senior Indebtedness by the Holders, shall, as between the Company
and its creditors other than the holders of Senior Indebtedness, and the
Holders, be deemed to be a payment by the Company to or on account of Senior
Indebtedness, it being understood that the provisions of this agreement are
and are intended solely for the purpose of defining the relative rights of the
Holders on one hand and the holders of Senior Indebtedness on the other hand.

(S)2.11. Further Assurances. The Company and the Holders shall execute and
deliver to the holders of Senior Indebtedness or the Agent, if any, such
further instruments and take such further action as the holders of

A-5
<PAGE>

Senior Indebtedness or their authorized representative may at any time
reasonably request in order to carry out the provisions and intent of this
agreement.

(S)2.12. Security. No Holder shall have or claim any security interest,
claim, right, or other encumbrance in or on any property of the Company or any
Subsidiary.

(S)2.13. Legend. The Holders shall cause each Note to have affixed upon it
the following legend:

THIS INSTRUMENT IS SUBJECT TO A SUBORDINATION AGREEMENT DATED
, AS FROM TIME TO TIME IN EFFECT, AMONG MAKER, HOLDER,
AND OTHERS WHICH, AMONG OTHER THINGS, SUBORDINATES THE
OBLIGATIONS OF MAKER HEREUNDER TO THE PRIOR PAYMENT OF CERTAIN
OBLIGATIONS TO THE HOLDERS OF SENIOR INDEBTEDNESS, AS DEFINED
THEREIN.

(S)3. Continuing Agreement. This agreement shall be a continuing agreement,
shall be irrevocable and shall remain in full force and effect until the
payment in full of the Senior Indebtedness in accordance with the terms
thereof at a time when all obligations of the holders of Senior Indebtedness
to extend credit under the Senior Credit Documents shall have been irrevocably
terminated. No action which the holders of Senior Indebtedness or the Company
may take or refrain from taking with respect to the Senior Indebtedness,
including any amendments thereto, shall affect the provisions of this
agreement or the obligations of the Holders hereunder. No right of any present
or future holder of Senior Indebtedness shall at any time be prejudiced or
impaired by any act or failure to act on the part of the Company, or by any
act or failure to act, in good faith, by any such holder of Senior
Indebtedness, or by any noncompliance by the Company with the terms of this
agreement, regardless of any knowledge thereof which such holder of Senior
Indebtedness may have or otherwise be charged with.

(S)4. Waivers; Powers.

(S)4.1 Specific Performance. The holders of Senior Indebtedness and the
Agent, if any, are authorized to demand specific performance of this agreement
at any time when any Holder shall have failed to comply with any provision of
this agreement applicable to such Holder, and each Holder irrevocably waives
any defense based on the adequacy of a remedy at law which might be asserted
as a bar to the remedy of specific performance hereof in any action brought
therefor by any holder of Senior Indebtedness.

(S)4.2. Power to Modify. Each Holder grants, to the extent not prohibited by
applicable law that cannot be waived, to the holders of Senior Indebtedness
and the Agent, if any, full power, in its or their discretion, without notice
to such Holder and without in any way affecting the subordination of the
Subordinated Indebtedness provided in this agreement:

(a) To waive compliance with and any default under and to consent to any
amendment or change of any terms of, any Senior Credit Document, or any
guarantee thereof (each as from time to time in effect);

(b) To grant one or more extensions or renewals of all or any of the
Senior Indebtedness (for any period, no matter how long), and any other
indulgence with respect thereto and to effect any total or partial release
(by operation of law or otherwise), discharge, compromise or settlement
with respect to the obligations of the Company in respect of all or any of
the Senior Indebtedness, whether or not rights against the Company under
this agreement are reserved in connection therewith;

(c) To take security in any form for all or any of the Senior
Indebtedness and to consent to the addition to or the substitution,
exchange, release, failure to perfect or any other disposition of, and to
deal in any other manner with, to the extent permitted by applicable law
that cannot be waived, all or part of any property which may from time to
time secure all or any of the Senior Indebtedness whether or not the
property, if any, received upon the exercise of such power shall be of a
character or value the same as or different from the character or value of
any property disposed of, and to obtain, modify or release any present or
future guarantees of all or any of the Senior Indebtedness and to proceed
against any security or guarantees in any order;

A-6
<PAGE>

(d) To extend credit under any Senior Credit Document or otherwise, in
such amount as any holder of Senior Indebtedness may determine, whether for
a greater or lesser amount than is presently in effect, even though the
financial condition of the Company has deteriorated since the date hereof;
and

(e) To collect or liquidate any of the Senior Indebtedness or any
security for the Senior Indebtedness in any manner or to refrain from
collecting or liquidating any of the Senior Indebtedness or any such
security.

(S)4.3 Information Regarding the Company. Each Holder expressly waives,
acknowledges and agrees that such Holder has made such investigation as such
Holder deems desirable of the risks undertaken by such Holder in entering into
this agreement and is fully satisfied that he understands all such risks. Each
Holder waives any obligation which may now or hereafter exist on the part of
any holder of Senior Indebtedness to inform such Holder of the risks being
undertaken by entering into this agreement or of any changes in such risks
and, from and after the date hereof, each Holder undertakes to keep itself
informed of such risks and any changes therein. Each Holder expressly waives
(except to the extent prohibited by applicable law which cannot be waived) any
duty which may now or hereafter exist on the part of any holder of Senior
Indebtedness to disclose to such Holder any matter related to the business,
operations, character, collateral, credit or condition (financial or
otherwise) or prospects of the Company or its affiliates, properties or
management, whether now or hereafter known by any holder of Senior
Indebtedness. Each Holder represents, warrants and agrees that he assumes sole
responsibility for obtaining from the Company all information concerning this
agreement, the Senior Credit Documents and all other information as to the
Company and its properties, management or affiliates, or anything relating to
any of the above, as he deems necessary or desirable. The Company shall
provide to the Holders the identity of and amount owed to each holder of
Senior Indebtedness within a reasonable time after that Senior Indebtedness is
incurred by the Company, provided that the foregoing shall not require notice
with respect to interest accruals or fees and charges incurred in connection
with Senior Indebtedness disclosed to the Holders.

(S)5. Representations and Warranties. Each Holder hereby represents and
warrants that:

(S)5.1. Authority. Such Holder has all necessary power and has taken all
necessary action to enter into and perform this agreement and to make this
agreement the legal, valid, binding and enforceable obligation it purports
to be.

(S)5.2. No Legal Obstacle to Agreement. Neither the execution and
delivery of this agreement nor the consummation of any transaction
contemplated hereby nor the fulfillment of the terms hereof or of any other
agreement or instrument referred to herein has constituted or resulted in,
or will constitute or result in, a breach of the provisions of any
agreement or instrument to which such Holder is a party or by which such
Holder is bound, or the violation of any law, judgment, decree or
governmental or administrative order, rule or regulation applicable to such
Holder, or has resulted in or will result in the creation under any
agreement, instrument or lease of any lien upon any of the assets of such
Holder. No approval, authorization or other action by, or declaration to or
filing with, any governmental or administrative authority or any other
person is required to be obtained or made by such Holder in connection with
the execution, delivery and performance of this agreement.

(S)6. Transfers; Successors and Assigns.

(S)6.1. Transfers. No Holder shall sell, assign, transfer or otherwise
dispose of any Note, or any interest therein, without the prior written
consent of the Company, except to a transferee who, prior to such transfer,
agrees in writing, in form and substance satisfactory to the Company, to
become a party to (in the manner of the Holders), and be bound by, this
agreement.

(S)6.2. Successors and Assigns. The provisions of this agreement shall
inure to the benefit of the holders of Senior Indebtedness and their
successors and assigns and shall be binding upon and enforceable against
the Company and the Holders and their respective successors and assigns,
including without limitation any person or entity to whom any Note or any
interest therein is hereafter assigned or otherwise transferred, whether
voluntarily, by operation of law, or otherwise.

A-7
<PAGE>

(S)7. Notices. Any notice or other communication required or desired to be
given to any Party under this agreement shall be in writing and shall be
deemed given when delivered personally to that Party or his agent, telecopied
(which is confirmed) to that Party or his agent at the telecopy number for
that Party or his agent provided for in the Purchase Agreement, mailed by
certified mail (return receipt requested) to that Party or his agent at the
address for that Party or his agent provided for in the Purchase Agreement (or
at such other address for such Party as such Party shall have specified in a
notice to the other Parties), or delivered to Federal Express or any similar
express delivery service for delivery to that Party or his agent at that
address.

(S)8. Governing Law. This agreement shall be governed by and construed in
accordance with the laws of the Commonwealth of Massachusetts, without regard
to principles of conflicts of law. Each Holder, by his execution hereof,
hereby irrevocably submits to the nonexclusive jurisdiction of the state
courts of the Commonwealth of Massachusetts and to the nonexclusive
jurisdiction of the United States District Court for the District of
Massachusetts for the purpose of any suit, action or other proceeding arising
out of or based upon this agreement, the Senior Credit Documents or the
subject matter hereof or thereof brought by any holder of Senior Indebtedness
or any authorized representative of any holder of Senior Indebtedness or its
or their successors or assigns, and hereby waives to the extent not prohibited
by law, and agrees not to assert, by way of motion, as a defense or otherwise,
in any such proceeding, any claim that he is not subject personally to the
jurisdiction of the above-named courts, that his property is exempt or immune
from attachment or execution, that any such proceeding brought in one of the
above-named courts is brought in an inconvenient forum, that the venue of any
such proceeding brought in one of the above-named courts is improper, or that
this agreement, the Senior Credit Documents, or the subject matter hereof or
thereof, may not be enforced in or by such court.

(S)9. Waiver of Jury Trial. TO THE EXTENT NOT PROHIBITED BY APPLICABLE LAW
WHICH CANNOT BE WAIVED, EACH HOLDER HEREBY WAIVES, AND COVENANTS THAT HE WILL
NOT ASSERT (WHETHER AS PLAINTIFF, DEFENDANT OR OTHERWISE), ANY RIGHT TO TRIAL
BY JURY IN ANY FORUM IN RESPECT OF ANY ISSUE, CLAIM, DEMAND, ACTION, OR CAUSE
OF ACTION ARISING OUT OF OR BASED UPON THIS AGREEMENT, THE SENIOR CREDIT
DOCUMENTS OR THE SUBJECT MATTER HEREOF OR THEREOF OR ANY OF THE SENIOR
INDEBTEDNESS OR IN ANY WAY CONNECTED WITH THE DEALINGS OF THE HOLDERS OF
SENIOR INDEBTEDNESS, THE COMPANY OR ANY HOLDER OF SUBORDINATED INDEBTEDNESS IN
CONNECTION WITH ANY OF THE ABOVE, IN EACH CASE WHETHER NOW EXISTING OR
HEREAFTER ARISING AND WHETHER IN CONTRACT OR TORT OR OTHERWISE.

(S)10. General. The headings in this agreement are for convenience of
reference only and shall not limit, alter or otherwise affect the meaning
hereof. Where permitted by the context, each pronoun used in this agreement
shall include the same pronoun in other genders and numbers and each noun used
in this agreement shall include the same noun in other numbers. The invalidity
or unenforceability of any term or provision of this agreement shall not
affect the validity or enforceability of any other term or provision of this
agreement. This agreement constitutes the entire understanding of the parties
with respect to the subject matter hereof and supersedes all prior and current
understandings and agreements, whether written or oral. This agreement may be
executed in any number of counterparts, each of which shall be deemed to be an
original, but all of which taken together shall constitute one agreement.

American Dental Partners, Inc.

By __________________________________ By __________________________________
(Name) (Name)
(Title) (Title)

A-8

<PAGE>

EXHIBIT 5

BAKER & HOSTETLER LLP
65 EAST STATE STREET
SUITE 2100
COLUMBUS, OHIO 43215
(614) 228-1541 (GENERAL NUMBER)
(614) 462-2616 (TELECOPY NUMBER)

JUNE 15, 1998

American Dental Partners, Inc.
301 Edgewater Place
Suite 320
Wakefield, Massachusetts 01880

Ladies and Gentlemen:

We are acting as counsel to American Dental Partners, Inc., a Delaware
corporation (the "Company"), in connection with its Registration Statement on
Form S-4 (File No. 333- ) (the "Registration Statement"), filed by the
Company with the Securities and Exchange Commission under the Securities Act
of 1933, as amended, to register 750,000 shares of Common Stock, $0.01 par
value, of the Company (the "Shares") and $25,000,000 aggregate principal
amount of Subordinated Promissory Notes of the Company (the "Subordinated
Notes"). The Shares and the Subordinated Notes are hereinafter collectively
referred to as the "Securities."

In connection therewith, we have examined the Company's Second Amended and
Restated Certificate of Incorporation, the Company's Amended and Restated By-
laws, the records, as exhibited to us, of the corporate proceedings of the
Company, and such other documents and records as we considered necessary for
purposes of this opinion. In rendering this opinion, we have assumed the
genuineness, without independent investigation, of all signatures on all
documents examined by us, the conformity to original documents of all
documents submitted to us as certified or facsimile copies, and the
authenticity of all such documents.

Based upon the foregoing, we are of the opinion that:

1. The Securities have been duly authorized;

2. The Securities, when sold in the manner contemplated by the
Registration Statement, will be legally issued and fully paid and
nonassessable; and

3. The Subordinated Notes, when sold in the manner contemplated by the
Registration Statement, will be binding obligations of the Company.

We consent to the filing of this opinion as exhibit to the Registration
Statement and the reference to us under the caption "Validity of Common Stock"
in the Prospectus which is part of the Registration Statement.

Very truly yours,

/s/ Baker & Hostetler LLP

BAKER & HOSTETLER LLP

<PAGE>

EXHIBIT 12

AMERICAN DENTAL PARTNERS, INC.

COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(IN THOUSANDS, EXCEPT RATIOS)

<TABLE>
<CAPTION>
YEARS ENDED THREE MONTHS
DECEMBER 31, ENDED MARCH 31,
----------------- ---------------
1996 1997 1997 1998
------- ------ ---------------
<S> <C> <C> <C> <C>
EARNINGS:
Earnings (loss) before income taxes.......... $(2,443) $1,194 $ 172 $ 769
Add: Fixed charges........................... 44 865 147 502
------- ------ ------ --------
Earnings (loss) before income taxes, as
adjusted.................................... $(2,399) $2,059 $ 319 $ 1,271
======= ====== ====== ========
FIXED CHARGES:
Interest expense, including amortization of
debt expenses............................... $ 18 $ 674 $ 102 $ 453
Estimated interest factor of non-reimbursed
rental expense (approximately 1/3 of non-
reimbursed rental expense).................. 26 191 45 49
------- ------ ------ --------
Total fixed charges.......................... $ 44 $ 865 $ 147 $ 502
======= ====== ====== ========
Ratio of earnings to fixed charges........... N/A(1) 2.4 2.2 2.5
======= ====== ====== ========
</TABLE>
- --------
(1) Earnings before income taxes plus fixed charges were insufficient to cover
fixed charges for the year ended December 31, 1996 by $2,399,000.

<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
Family Care Dental Centers, Inc., a Wisconsin corporation
American Dental Professional Services, Inc., a Delaware corporation
American Dental Partners of Virginia, Inc., a Delaware 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 February 6, 1998 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
June 15, 1998

<PAGE>

EXHIBIT 24

POWERS OF ATTORNEY

For Registration Statement on Form S-4
for Shelf Registration for Future Affiliations

The undersigned, each of whom is a director of American Dental Partners,
Inc., a Delaware corporation (the "Company"), hereby constitutes and appoints
Gregory A. Serrao and Ronald M. Levenson, and each of them (with full power to
each of them to act alone), as his true and lawful attorneys-in-fact and
agents, with full power of substitution and resubstitution, for him and in his
name, place, and stead, in his capacity as director of the Company, to execute
the Company's Registration Statement on Form S-4, and any and all amendments
thereto (including post-effective amendments), to register under the
Securities Act of 1933, as amended (the "Securities Act"), (i) any shares of
Common Stock, par value $0.01, of the Company, and (ii) any principal amount
of Subordinated Promissory Notes of the Company, which in each case the
Company may issue from time to time in connection with the future direct and
indirect acquisitions of other businesses, properties, or securities in
acquisition and affiliation transactions in accordance with Rule
415(a)(1)(viii) of Regulation C under the Securities Act or as otherwise
permitted under the Securities Act (or any other registration statement for
the same offering that is to be effective upon filing pursuant to Rule 462(b)
under the Securities Act), and to file the same, with all exhibits thereto and
other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, and each of them,
full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully to all
intents and purposes as the undersigned might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or either
of them, or their substitutes, may lawfully do or cause to be done by virtue
hereof.

/s/ Dr. Gregory T. Swenson Date: April 16, 1998
_____________________________________

Dr. Gregory T. Swenson

Date: April 16, 1998
/s/ Martin J. Mannion

_____________________________________

Martin J. Mannion Date: April 16, 1998

/s/ James T. Kelly

_____________________________________ Date: April 16, 1998
James T. Kelly

/s/ Derril W. Reeves
_____________________________________
Derril W. Reeves