EX-99.1 2 v123410_ex99-1.htm
 
 
Birner Dental Management Services, Inc.
Exhibit No. 99.1
3801 East Florida Avenue, Suite 508
Denver, Colorado 80210
303-691-0680

FOR IMMEDIATE RELEASE
August 14, 2008

BIRNER DENTAL MANAGEMENT SERVICES, INC.
ANNOUNCES EARNINGS FOR 2Q 2008
 
DENVER, COLORADO, August 14, 2008. Birner Dental Management Services, Inc. (NASDAQ Capital Market: BDMS), operators of PERFECT TEETHâ dental practices, announced results for the quarter and six months ended June 30, 2008. For the quarter ended June 30, 2008, total dental group practice revenue decreased $185,000, or 1.2%, to $14.9 million. Net revenue decreased $221,000, or 2.2%, to $10.0 million. The Company’s earnings before interest, taxes, depreciation, amortization and non-cash expense associated with stock-based compensation (“Adjusted EBITDA”) decreased $316,000, or 16.1%, to $1.6 million from $2.0 million. Net income for the quarter ended June 30, 2007 decreased 26.4%, to $450,000 compared to $612,000 for the same period of 2007. Earnings per share decreased 22.0%, to $.21 for the quarter ended June 30, 2008 compared to $.26 for the quarter ended June 30, 2007.
 
For the six months ended June 30, 2008, total dental group practice revenue decreased $665,000, or 2.2%, to $30.2 million. Net revenue decreased $707,000, or 3.4%, to $20.2 million. The Company’s Adjusted EBITDA decreased $738,000, or 17.6%, to $3.4 million from $4.2 million. Net income for the six months ended June 30, 2008 decreased 30.6%, to $968,000 compared to $1.4 million for the same period of 2007. Earnings per share decreased 26.8%, to $.44 for the six months ended June 30, 2008 compared to $.60 for the six months ended June 30, 2007.
 
The decrease in net revenue of $221,000 for the quarter ended June 30, 2008 consisted of a decrease in net revenue from general dentistry of $319,000 partly offset by an increase in net revenue from specialty dentistry of $98,000. The decrease in net revenue of $707,000 for the six months ended June 30, 2008 consisted of a decrease from general dentistry of $989,000 partly offset by an increase in net revenue from specialty dentistry of $282,000. The Company attributes the decline in net revenue to a general weakness in the economy in the Company’s markets as reflected by a reduced number of patient procedures and in particular fewer crown and bridge procedures.
 
The Company opened one de novo office in the Longmont, Colorado market in May 2008.
 
During the first six months of 2008, the Company had capital expenditures of $893,000, purchased 32,178 shares of its Common Stock for approximately $649,000, distributed $676,000 in dividends to its shareholders, and reduced total bank debt outstanding by $1.3 million.
 
In May 2008, the Company’s Board of Directors approved up to $2 million of stock repurchases. This amount represents the largest amount that has ever been approved by the Board of Directors for stock repurchases. The Company continues to remain confident that stock repurchases are a good investment of the Company’s resources. On July 16, 2008, the Company purchased 89,201 shares of its Common Stock for approximately $1.4 million. On July 30, 2008, the Board of Directors of the Company approved an additional $1 million of stock repurchases which increased the amount available for stock repurchases up to approximately $1.5 million.
 
Birner Dental Management Services, Inc. acquires, develops, and manages geographically dense dental practice networks in select markets in Colorado, New Mexico, and Arizona. The Company currently manages 61 dental offices, of which 35 were acquired and 26 were de novo developments. At June 30, 2008, the Company had 110 general and specialty dentists affiliated with the organization. The Company operates its dental offices under the PERFECT TEETH name.
 
The Company previously announced it would conduct a conference call to review results for the quarter and six months ended June 30, 2008. In addition to current financial and operating results, the teleconference may include discussion of management’s expectation of future financial and operating results. The call will be held on Thursday, August 14, 2008, at 9:00 a.m. MT. To participate in this conference call, dial in to 1-866-814-1919 and refer to “Birner Dental Management Services, Inc.” approximately five minutes prior to the scheduled time. If you are unable to join in on the conference call on August 14, the rebroadcast number is 1-888-266-2081 with the pass code of 1268564. This rebroadcast will be available through August 28, 2008.
 
 
Non-GAAP Disclosures
 
This press release includes certain non-GAAP financial measures with respect to total dental group practice revenue and Adjusted EBITDA. The non-GAAP financial measures included in this press release may be different from, and therefore may not be comparable to, similar measures used by other companies. Please see the last page of this release for more information on the reconciliation of total dental group practice revenue and Adjusted EBITDA to GAAP measures.
 
Forward-Looking Statements
 
Certain of the matters discussed herein may contain forward-looking statements that are subject to certain risks and uncertainties that could cause actual results to differ materially from expectations. These include statements regarding the Company’s cash flow, growth prospects and performance in 2008 and stock repurchases. These and other risks and uncertainties are set forth in the reports filed by the Company with the Securities and Exchange Commission. The Company disclaims any obligation to update these forward-looking statements.

For Further Information Contact:
Birner Dental Management Services, Inc.
Dennis Genty 
Chief Financial Officer
(303) 691-0680
 


BIRNER DENTAL MANAGEMENT SERVICES, INC. AND SUBSIDIARIES
  
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
  
(UNAUDITED)
  
   
Quarters Ended
      
Six Months Ended
      
   
June 30,
      
June 30,
      
   
2007
      
2008
      
2007
      
2008
      
                                   
NET REVENUE: (1)
  
$
10,265,570
        
$
10,044,161
        
$
20,955,907
        
$
20,249,109
        
                                                   
DIRECT EXPENSES:
                                                  
Clinical salaries and benefits
    
3,621,786
         
3,742,574
         
7,314,011
         
7,668,500
       
Dental supplies
    
593,981
         
624,037
         
1,154,906
         
1,218,222
       
Laboratory fees
    
689,207
         
739,161
         
1,369,412
         
1,391,874
       
Occupancy
    
1,141,105
         
1,203,227
         
2,274,157
         
2,388,906
       
Advertising and marketing
    
267,317
         
119,099
         
416,078
         
226,548
       
Depreciation and amortization
    
610,526
         
602,018
         
1,221,079
         
1,203,033
       
General and administrative
    
1,119,165
         
1,266,972
         
2,295,661
         
2,436,989
       
     
8,043,087
         
8,297,088
         
16,045,304
         
16,534,072
       
                                                   
Contribution from dental offices
    
2,222,483
         
1,747,073
         
4,910,603
         
3,715,037
       
                                                   
CORPORATE EXPENSES:
                                                  
General and administrative
   
1,054,125
   
(2
)
  
889,204
   
(2
)
  
2,300,652
   
(3
)
  
1,830,308
   
(3
)
Depreciation and amortization
    
27,275
         
23,186
         
58,103
         
46,654
       
                                                   
Operating income
   
1,141,083
         
834,683
         
2,551,848
         
1,838,075
       
                                                   
Interest expense (income), net
    
89,166
         
58,369
         
195,319
         
135,997
       
                                                   
Income before income taxes
    
1,051,917
         
776,314
         
2,356,529
         
1,702,078
       
Income tax expense
    
439,976
         
326,057
         
961,822
         
734,265
       
                                                   
Net income
  
$
611,941
        
$
450,257
        
$
1,394,707
        
$
967,813
        
                                                   
                                                   
Net income per share of Common Stock - Basic
  
$
0.29
        
$
0.21
        
$
0.66
        
$
0.46
        
                                                   
Net income per share of Common Stock - Diluted
  
$
0.26
        
$
0.21
        
$
0.60
        
$
0.44
        
                                                   
Cash dividends per share of Common Stock
  
$
0.15
        
$
0.17
        
$
0.30
        
$
0.34
        
                                           
Weighted average number of shares of
                                                  
Common Stock and dilutive securities:
                                                 
Basic
    
2,123,900
          
2,107,415
          
2,125,131
          
2,109,250
        
                                                   
Diluted
    
2,310,103
          
2,178,816
          
2,307,829
          
2,188,583
        
 
(1)
Total dental group practice revenue less amounts retained by dental offices. Dental group practice revenue was $14,916,479 for the quarter ended June 30, 2008 compared to $15,101,800 for the quarter ended June 30, 2007. Dental group practice revenue was $30,170,730 for the six months ended June 30, 2008 compared to$30,835,494 for the six months ended June 30, 2007.
 
(2)
Corporate expense - general and administrative includes $81,030 of equity compensation for a stock award and $100,523 related to stock-based compensation expense in the quarter ended June 30, 2007, and $184,618 related to stock-based compensation expense in the quarter ended June 30, 2008.
 
(3)
Corporate expense - general and administrative includes $162,060 of equity compensation for a stock award and $190,587 related to stock-based compensation expense in the six months ended June 30, 2007, and $358,030 related to stock-based compensation expense in the six months ended June 30, 2008.
 
 
 
 


BIRNER DENTAL MANAGEMENT SERVICES, INC. AND SUBSIDIARIES
  
CONDENSED CONSOLIDATED BALANCE SHEETS
  
           
   
December 31,
 
June 30,
 
ASSETS
  
2007
  
2008
  
   
**
  
(Unaudited)
  
CURRENT ASSETS:
          
Cash and cash equivalents
  
$
964,150
  
$
682,794
  
Accounts receivable, net of allowance for doubtful
              
accounts of $291,827 and $289,677, respectively
    
3,008,550
   
3,302,801
 
Deferred tax asset
    
178,591
   
240,615
 
Income taxes receivable
    
26,817
   
-
 
Prepaid expenses and other assets
    
620,365
   
774,303
 
               
Total current assets
    
4,798,473
   
5,000,513
 
               
PROPERTY AND EQUIPMENT, net
    
4,533,531
   
4,558,396
 
               
OTHER NONCURRENT ASSETS:
              
Intangible assets, net
    
11,393,590
   
11,011,949
 
Deferred charges and other assets
    
171,687
   
161,433
 
               
Total assets
  
$
20,897,281
  
$
20,732,291
  
               
LIABILITIES AND SHAREHOLDERS’ EQUITY
              
               
CURRENT LIABILITIES:
              
Accounts payable
 
$
1,945,420
  
$
1,824,359
  
Accrued expenses
    
1,334,785
   
1,146,224
 
Accrued payroll and related expenses
    
1,456,477
   
2,085,759
 
Income taxes payable
    
-
   
423,102
 
Current maturities of long-term debt
    
920,000
   
920,000
 
               
Total current liabilities
    
5,656,682
   
6,399,444
 
               
LONG-TERM LIABILITIES:
              
Deferred tax liability, net
    
633,667
   
734,246
 
Long-term debt, net of current maturities
    
4,784,511
   
3,517,445
 
Other long-term obligations
    
291,266
   
280,746
 
               
Total liabilities
    
11,366,126
   
10,931,881
 
               
SHAREHOLDERS' EQUITY:
              
Preferred Stock, no par value, 10,000,000 shares
              
authorized; none outstanding
    
-
   
-
 
Common Stock, no par value, 20,000,000 shares
              
authorized; 2,123,440 and 2,116,947 shares issued and
              
outstanding, respectively
    
3,028,515
   
3,045,027
 
Retained earnings
    
6,536,796
   
6,786,231
 
Accumulated other comprehensive loss
    
(34,156
)
  
(30,848
)
Total shareholders' equity
    
9,531,155
   
9,800,410
 
               
Total liabilities and shareholders' equity
  
$
20,897,281
  
$
20,732,291
  
               
** Derived from the Company’s audited consolidated balance sheet at December 31, 2007.
  

 
Reconciliation of Total Dental Group Practice Revenue and Adjusted EBITDA

Total dental group practice revenue is the revenue generated at the Company’s offices from professional services provided to its patients. Amounts retained by dental offices represents compensation expense to the dentists and hygienists and is subtracted from total dental group practice revenue to arrive at net revenue. The Company reports net revenue in its financial statements to comply with Emerging Issues Task Force Issue No. 97-2, Application of SFAS No. 94 (Consolidation of All Majority Owned Subsidiaries) and APB Opinion No. 16 (Business Combinations) to Physician Practice Management Entities and Certain Other Entities With Contractual Management Arrangements. Total dental group practice revenue is disclosed because it is a critical component for management’s evaluation of office performance. However, investors should not consider this measure in isolation or as a substitute for operating income, cash flows from operating activities or any other measure for determining the Company’s operating performance or liquidity that is calculated in accordance with U.S. generally accepted accounting principles (“GAAP”). The table below reconciles total dental group practice revenue to net revenue.
 
   
Quarters Ended
  
Six Months Ended
  
   
June 30,
  
June 30,
  
   
2007
  
2008
  
2007
  
2008
  
                   
Total dental group practice revenue
  
$
15,101,800
  
$
14,916,479
  
$
30,835,494
  
$
30,170,730
  
Less - amounts retained by dental Offices
    
(4,836,230
)
  
(4,872,318
)
  
(9,879,587
)
  
(9,921,621
)
                           
Net revenue
  
$
10,265,570
  
$
10,044,161
  
$
20,955,907
  
$
20,249,109
  
 
 

Although Adjusted EBITDA is not a GAAP measure of performance or liquidity, the Company believes that it may be useful to an investor in evaluating the Company’s ability to meet future debt service, capital expenditures and working capital requirements. However, investors should not consider these measures in isolation or as a substitute for operating income, cash flows from operating activities or any other measure for determining the Company’s operating performance or liquidity that is calculated in accordance with GAAP. In addition, because Adjusted EBITDA is not calculated in accordance with GAAP, it may not necessarily be comparable to similarly titled measures employed by other companies. A reconciliation of Adjusted EBITDA to net income can be made by adding depreciation and amortization expense - offices, depreciation and amortization expense - corporate, stock-based compensation expense, interest expense, net and income tax expense to net income as in the table below.
 
   
Quarters
  
Six Months
 
   
Ended June 30,
  
Ended June 30,
  
   
2007
  
2008
  
2007
  
2008
  
RECONCILIATION OF ADJUSTED EBITDA:
                  
Net income
  
$
611,941
  
$
450,257
  
$
1,394,707
  
$
967,813
  
Add back:
                          
Depreciation and amortization - Offices
    
610,526
   
602,018
   
1,221,079
   
1,203,033
 
Depreciation and amortization - Corporate
    
27,275
   
23,186
   
58,103
   
46,654
 
Stock-based compensation expense
   
181,553
   
184,618
   
352,647
   
358,030
 
Interest expense, net
    
89,166
   
58,369
   
195,319
   
135,997
 
Income tax expense
    
439,976
   
326,057
   
961,822
   
734,265
 
                           
Adjusted EBITDA
  
$
1,960,437
  
$
1,644,505
  
$
4,183,677
  
$
3,445,792