2008-08-14 07:30:00
DENVER, Aug. 14 /EMWNews/ -- Birner Dental Management Services, Inc. (Nasdaq: BDMS), operators of PERFECT TEETH(R) 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
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