DENVER, Nov. 14, 2013 /PRNewswire/ -- Birner Dental Management Services, Inc. (NASDAQ Capital Market: BDMS), operators of PERFECT TEETH® dental practices, announced results for the quarter and nine months ended September 30, 2013. For the quarter ended September 30, 2013, revenue increased $352,000, or 2.2%, to $16.1 million. The Company's earnings before interest, taxes, depreciation, amortization, and non-cash expense associated with stock-based compensation ("Adjusted EBITDA") decreased $689,000, or 44.4%, to $862,000 for the quarter ended September 30, 2013. Net income for the quarter ended September 30, 2013 decreased $382,000, or 99.8%, to $1,000 compared to $383,000 for the quarter ended September 30, 2012. Earnings per share decreased to $0.0 for the quarter ended September 30, 2013 compared to $0.21 for the quarter ended September 30, 2012.
During the quarter ended September 30, 2013 there was a remeasurement and subsequent write down of contingent liabilities by $196,000, which was recognized as other income.
For the nine months ended September 30, 2013, revenue increased $1.4 million, or 3.0%, to $49.1 million. The Company's Adjusted EBITDA decreased $519,000, or 12.7%, to $3.6 million for the nine months ended September 30, 2013. Net income for the nine months ended September 30, 2013 decreased $412,000, or 49.4%, to $422,000 compared to $834,000 for the nine months ended September 30, 2012. Earnings per share decreased to $0.23 for the nine months ended September 30, 2013 compared to $0.45 for the nine months ended September 30, 2012.
The remeasurement and subsequent write down of contingent liabilities by $196,000 was recognized as other income during the nine months ended September 30, 2013.
Since the beginning of the fourth quarter of 2012, the Company has opened three de novo offices: in Tucson, Arizona in the fourth quarter of 2012; in Erie, Colorado in the fourth quarter of 2012; and in Loveland, Colorado in July 2013. The Company has leased space for two additional de novo offices: in Monument, Colorado, anticipated to open in the fourth quarter of 2013; and in Fort Collins, Colorado, anticipated to open in the second quarter of 2014. The Company is also evaluating and negotiating leases on additional sites throughout its markets. Additionally, the Company has signed new leases for the relocation and modernization of two of its offices: in Denver, Colorado, which opened in September 2013; and in Albuquerque, New Mexico, anticipated to open in the first quarter of 2014. During the nine months ended September 30, 2013, the Company completed remodels and/or relocations on two of its offices and converted seven additional offices to digital radiography.
Fred Birner, Chief Executive Officer of the Company, stated that "While the decrease in Adjusted EBITDA for the third quarter of 2013 was disappointing, particularly in light of the increased revenue in the quarter, it reflects our substantial investments in the Company, not only in capital projects as noted above but also personnel and training. We have yet to see the corresponding returns but believe we are doing the right thing for long term growth and value."
During the first nine months of 2013, the Company had capital expenditures of approximately $3.5 million, paid approximately $1.2 in dividends to its shareholders and increased total bank debt outstanding by approximately $2.4 million. The Company's outstanding bank debt increased because of the Company's development of de novo offices and its commitment to upgrading its existing offices through extensive remodels and/or office relocations and its continued commitment to converting its offices to digital radiography.
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 66 dental offices, of which 37 were acquired and 29 were de novo developments. The Company currently has 121 dentists. 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 ended September 30, 2013 on Thursday, November 14, 2013 at 9:00 a.m. MT. In addition to current operating results, the teleconference may include discussion of management's expectations of future financial and operating results. To participate in this conference call, dial in to 1-866-598-9773 and refer to Confirmation Code 5572821 approximately five minutes prior to the scheduled time. If you are unable to join the conference call on November 14, the rebroadcast number is 1-888-203-1112 with the pass code of 5572821. This rebroadcast will be available through November 27, 2013.
Non-GAAP Disclosures
This press release includes a non-GAAP financial measure with respect to Adjusted EBITDA. Please see below for more information regarding Adjusted EBITDA and a reconciliation of Adjusted EBITDA to net income.
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 potential de novo offices and the Company's prospects and performance in future periods. These statements involve known and unknown risks, uncertainties and other factors which may cause the Company's actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. 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 |
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CONDENSED CONSOLIDATED STATEMENTS OF INCOME |
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(UNAUDITED) |
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| Quarters Ended |
| Nine Months Ended |
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| September 30, |
| September 30, |
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| 2012 |
| 2013 |
| 2012 |
| 2013 |
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REVENUE: |
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| Dental practice revenue | $ 14,214,489 |
| $ 14,654,444 |
| $ 43,341,132 |
| $ 44,830,421 |
|
| Capitation revenue | 1,494,934 |
| 1,406,627 |
| 4,343,406 |
| 4,271,244 |
|
|
| 15,709,423 |
| 16,061,071 |
| 47,684,538 |
| 49,101,665 |
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DIRECT EXPENSES: |
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| Clinical salaries and benefits | 8,823,264 |
| 9,653,405 |
| 26,912,387 |
| 29,059,351 |
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| Dental supplies | 689,283 |
| 701,332 |
| 2,078,765 |
| 2,139,576 |
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| Laboratory fees | 751,534 |
| 775,255 |
| 2,303,063 |
| 2,333,963 |
|
| Occupancy | 1,401,550 |
| 1,498,608 |
| 4,137,110 |
| 4,410,146 |
|
| Advertising and marketing | 353,004 |
| 280,516 |
| 1,730,667 |
| 858,753 |
|
| Depreciation and amortization | 725,719 |
| 855,544 |
| 2,060,675 |
| 2,513,788 |
|
| General and administrative | 1,249,314 |
| 1,294,460 |
| 3,694,149 |
| 3,562,103 |
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|
| 13,993,668 |
| 15,059,120 |
| 42,916,816 |
| 44,877,680 |
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| Contribution from dental offices | 1,715,755 |
| 1,001,951 |
| 4,767,722 |
| 4,223,985 |
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CORPORATE EXPENSES: |
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| General and administrative | 1,018,319 | (1) | 1,109,573 | (1) | 3,205,073 | (2) | 3,512,392 | (2) |
| Depreciation and amortization | 41,308 |
| 50,016 |
| 118,467 |
| 145,767 |
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OPERATING INCOME/(LOSS) | 656,128 |
| (157,638) |
| 1,444,182 |
| 565,826 |
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OTHER INCOME (EXPENSE) |
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| Change in fair value of contingent liabilities | - |
| 196,000 |
| - |
| 196,000 |
|
| Interest (expense), net | (28,018) |
| (36,795) |
| (76,796) |
| (70,307) |
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INCOME BEFORE INCOME TAXES | 628,110 |
| 1,567 |
| 1,367,386 |
| 691,519 |
|
| Income tax expense | 244,963 |
| 612 |
| 533,281 |
| 269,693 |
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NET INCOME | $ 383,147 |
| $ 955 |
| $ 834,105 |
| $ 421,826 |
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| Net income per share of Common Stock - Basic | $ 0.21 |
| $ 0.00 |
| $ 0.45 |
| $ 0.23 |
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| Net income per share of Common Stock - Diluted | $ 0.21 |
| $ 0.00 |
| $ 0.45 |
| $ 0.23 |
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| Cash dividends per share of Common Stock | $ 0.22 |
| $ 0.22 |
| $ 0.66 |
| $ 0.66 |
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| Weighted average number of shares of |
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| Common Stock and dilutive securities: |
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| Basic | 1,841,817 |
| 1,851,598 |
| 1,839,788 |
| 1,851,150 |
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| Diluted | 1,851,445 |
| 1,863,783 |
| 1,849,842 |
| 1,861,421 |
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(1) Corporate expense - general and administrative includes $127,621 of stock-based compensation expense pursuant to ASC Topic 718 for the quarter ended September 30, 2012 and $114,291 of stock-based compensation expense pursuant to ASC Topic 718 for the quarter ended September 30, 2013. (2) Corporate expense - general and administrative includes $472,585 of stock-based compensation expense pursuant to ASC Topic 718 for the nine months ended September 30, 2012 and $351,873 of stock-based compensation expense pursuant to ASC Topic 718 for the nine months ended September 30, 2013. |
BIRNER DENTAL MANAGEMENT SERVICES, INC. AND SUBSIDIARIES |
CONDENSED CONSOLIDATED BALANCE SHEETS |
(UNAUDITED) |
|
|
| December 31, |
| September 30, |
ASSETS | 2012 |
| 2013 |
CURRENT ASSETS: |
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| Cash and cash equivalents | $ 1,112,511 |
| $ 1,888,440 |
| Accounts receivable, net of allowance for doubtful |
|
|
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| accounts of approximately $304,000 and $341,000, respectively | 2,614,152 |
| 3,883,657 |
| Notes receivable | 165,718 |
| 149,268 |
| Deferred tax asset | 205,693 |
| 274,086 |
| Income tax receivable | 442,630 |
| - |
| Prepaid expenses and other assets | 482,297 |
| 675,448 |
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| Total current assets | 5,023,001 |
| 6,870,899 |
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PROPERTY AND EQUIPMENT, net | 7,894,333 |
| 9,432,789 |
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OTHER NONCURRENT ASSETS: |
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| Intangible assets, net | 10,193,488 |
| 9,518,010 |
| Deferred charges and other assets | 158,316 |
| 165,508 |
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| Total assets | $ 23,269,138 |
| $ 25,987,206 |
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LIABILITIES AND SHAREHOLDERS' EQUITY |
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CURRENT LIABILITIES: |
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| Accounts payable | $ 1,919,457 |
| $ 2,287,800 |
| Accrued expenses | 1,640,076 |
| 1,777,825 |
| Accrued payroll and related expenses | 1,718,417 |
| 2,352,055 |
| Income taxes payable | - |
| 35,694 |
| Current maturities of long-term debt | 400,000 |
| 33,033 |
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| Total current liabilities | 5,677,950 |
| 6,486,407 |
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LONG-TERM LIABILITIES: |
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| Deferred tax liability, net | 2,997,808 |
| 2,939,036 |
| Long-term debt, net of current maturities | 6,074,042 |
| 9,088,180 |
| Other long-term obligations | 1,547,369 |
| 937,499 |
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| Total liabilities | 16,297,169 |
| 19,451,122 |
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SHAREHOLDERS' EQUITY: |
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| Preferred Stock, no par value, 10,000,000 shares |
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| authorized; none outstanding | - |
| - |
| Common Stock, no par value, 20,000,000 shares authorized; |
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| 1,842,402 and 1,851,598 shares issued and outstanding, respectively | 329,236 |
| 692,438 |
| Retained earnings | 6,642,733 |
| 5,843,646 |
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| Total shareholders' equity | 6,971,969 |
| 6,536,084 |
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| Total liabilities and shareholders' equity | $ 23,269,138 |
| $ 25,987,206 |
Reconciliation of Adjusted EBITDA
Adjusted EBITDA is not a U.S. generally accepted accounting principle ("GAAP") measure of performance or liquidity. However, 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, and the Company uses Adjusted EBITDA for this purpose. Investors should not consider Adjusted EBITDA 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 and subtracting the change in fair value of contingent liabilities as in the table below.
| Quarters |
| Nine Months |
| Ended September 30, |
| Ended September 30, |
| 2012 |
| 2013 |
| 2012 |
| 2013 |
RECONCILIATION OF ADJUSTED EBITDA: |
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|
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| Net income | $383,147 |
| $955 |
| $834,105 |
| $421,826 |
| Add back: |
|
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|
|
|
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| Depreciation and amortization - Offices | 725,719 |
| 855,544 |
| 2,060,675 |
| 2,513,788 |
| Depreciation and amortization - Corporate | 41,308 |
| 50,016 |
| 118,467 |
| 145,767 |
| Stock-based compensation expense | 127,621 |
| 114,291 |
| 472,585 |
| 351,873 |
| Interest expense, net | 28,018 |
| 36,795 |
| 76,796 |
| 70,307 |
| Income tax expense | 244,963 |
| 612 |
| 533,281 |
| 269,693 |
| Less: |
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|
|
|
|
|
|
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| Change in fair value of contingent liabilities | - |
| (196,000) |
| - |
| (196,000) |
|
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Adjusted EBITDA | $1,550,776 |
| $862,213 |
| $4,095,909 |
| $3,577,254 |
