Exhibit 99.8
Birner Dental Management Services, Inc.
3801 East Florida Avenue, Suite 508
Denver, Colorado 80210
303-691-0680
FOR IMMEDIATE RELEASE
November 11, 2004
BIRNER DENTAL MANAGEMENT SERVICES, INC.
ANNOUNCES EARNINGS FOR THE THIRD QUARTER
AND YEAR-TO-DATE 2004
DENVER, COLORADO, November 11, 2004. Birner Dental Management Services, Inc.
(NASDAQ SmallCap Market: BDMS), operators of PERFECT TEETH(R) dental practices,
announced results for the quarter and nine months ended September 30, 2004. The
Company reported net income decreased 39.5% to $180,000, or $.14 per share of
common stock for the quarter ended September 30, 2004, compared to net income of
$298,000, or $.21 per share of common stock for the quarter ended September 30,
2003. The reported net income in the third quarter of 2004 included a loss on
discontinued operations of $(138,000) or $(.11) per share of common stock. Total
dental group practice revenue increased $830,000, or 7.7%, to $11.6 million for
the quarter ended September 30, 2004 compared to total group practice revenue of
$10.8 million for the quarter ended September 30, 2003. For the quarter ended
September 30, 2004, net revenue increased $390,000 to $7.9 million, or 5.2%,
compared to net revenue of $7.5 million for the corresponding period in 2003.
The Company's earnings before interest, taxes, depreciation and amortization
(EBITDA) decreased $122,000, or 10.6%, to $1,035,000 for the quarter ended
September 30, 2004 compared to $1,157,000 for the quarter ended September 30,
2003.
In September 2004, the Company closed an office in the Phoenix market it had
acquired in 1998 because the office was older and no longer fit the Company's
operating model and its operating performance was deteriorating. Without the
office closure in Phoenix in September, earnings per share would have been $.25
for the quarter ended September 30, 2004 compared to earnings per share of $.23
in the same period of 2003, or an increase of 8.7%. The Company's third quarter
2004 results were also negatively impacted by an operating loss on its de novo
office in Phoenix due to limited operations and significantly higher television
advertising costs.
For the nine months ended September 30, 2004, net income increased 17.0% to $1.0
million, or $.80 per share of common stock compared to net income of $884,000,
or $.60 per share of common stock for the nine months ended September 30, 2003.
The reported net income for the nine months of 2004 included a loss on
discontinued operations of $(188,000) or $(.14) per share of common stock. Total
dental group practice revenue increased $2.3 million, or 7.0%, to $34.9 million
for the nine months ended September 30, 2004 compared to $32.6 million for the
nine months ended September 30, 2003. For the nine months ended September 30,
2004, net revenue increased $1.0 million to $24.1 million, or 4.5%, when
compared to net revenue of $23.0 million for the corresponding period in 2003.
EBITDA for the nine months ended September 30, 2004 increased $99,000, or 2.8%,
to $3,615,000 compared to $3,516,000 for the nine months ended September 30,
2003.
Without the write-off for the office closure in September 2004, earnings per
share would have been $.94 per share of common stock for the nine months ended
September 30, 2004 or a 56.7% increase over earnings per share of $.64 for the
same period of 2003.
Fred Birner, Chief Executive Officer, stated "We believe the closing of a tired,
underperforming office coupled with the opening of a new office in a much better
location strengthens the Company's position in the Phoenix market. Additionally,
the Company has signed leases for three additional sites in Phoenix, all of
which are projected to open in the third quarter of 2005. The Company remains on
track to open two additional de novo sites in the Denver market, one in November
2004 and the other in January 2005."
The Company finished the third quarter of 2004 with 103 total dentists, which
represents an increase of nine dentists over the third quarter of 2003 and an
increase of eight dentists over the second quarter of 2004. Mr. Birner stated
"With this many new dentists starting during the quarter, the Company's variable
costs associated with its dentists were higher than historical levels. Once
these incremental dentists establish themselves within our networks, not only is
revenue expected to continue to increase, but profitability margins should
expand as well."
Mr. Birner stated, "During the third quarter there were really four items that
negatively impacted the Company's financial results: these include the Thomas
office write-off; the increase in variable costs associated with eight new
dentists; significantly higher advertising costs for our advertising campaign in
Denver and Colorado Springs; and the losses associated with the Company's de
novo office in Phoenix. We believe these strategic decisions will enhance the
Company's prospects for future growth and greater profitability even though they
negatively impacted short-term financial results."
The Company continues to generate strong cash flow from operations. Capital
expenditures during the third quarter of 2004 were approximately $675,000. This
increased level of capital expenditures during the third quarter of 2004 was due
to the de novo in Phoenix and two office remodel projects and equipment
purchases related to the additional specialty dentists. During the third quarter
of 2004, the Company reduced total debt outstanding by approximately $440,000 to
$1,100,000. During the first nine months of 2004, the Company has reduced its
total indebtedness by $2,000,000.
Birner Dental Management Services, Inc. acquires, develops, and manages
geographically dense dental practice networks in select markets in Colorado, New
Mexico, and Arizona. As of September 30, 2004, the Company managed 54 dental
offices, of which 36 were acquired and 18 were de novo developments. The Company
operates its dental offices under the PERFECT TEETH(R) name.
The Company previously announced it would conduct a conference call to review
year to date and quarter ended September 30, 2004 results. In addition to
current operating results, the teleconference may include discussion of
management's expectation of future financial and operating results. The call
will be held on Thursday, November 11, 2004, at 9:00 a.m. MT. To participate in
this conference call, dial in to 1-800-937-6563 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 November 11th, the
rebroadcast number is 1-800-839-0860 with the pass code of 1376. This
rebroadcast will be available through November 24, 2004.
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 and other risks are set
forth in the reports filed by the Company with the Securities and Exchange
Commission.
For Further Information Contact:
Birner Dental Management Services, Inc.
Dennis Genty
Chief Financial Officer
(303) 691-0680
BIRNER DENTAL MANAGEMENT SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
Quarters Ended Nine Months Ended
September 30, September 30,
--------------------------- -----------------------------
2003 2004 2003 2004
----------- ----------- ----------- ---------
NET REVENUE (a) $ 7,528,649 $ 7,918,689 $23,032,600 $24,076,793
DIRECT EXPENSES:
Clinical salaries and benefits 2,891,465 2,995,138 8,843,931 9,031,085
Dental supplies 447,942 544,822 1,362,814 1,502,662
Laboratory fees 568,641 581,762 1,824,213 1,849,334
Occupancy 876,387 922,251 2,585,489 2,665,319
Advertising and marketing 80,675 229,861 272,060 565,538
Depreciation and amortization 521,580 435,584 1,656,010 1,356,899
General and administrative 769,982 876,824 2,279,849 2,552,935
----------- ----------- ----------- -----------
6,156,672 6,586,242 18,824,366 19,523,772
----------- ----------- ----------- -----------
Contribution from dental offices 1,371,977 1,332,447 4,208,234 4,553,021
CORPORATE EXPENSES:
General and administrative 736,430 733,134 2,348,128 2,295,090
Depreciation and amortization 71,998 54,117 226,747 165,039
----------- ----------- ----------- -----------
Operating income 563,549 545,196 1,633,359 2,092,892
Interest expense, net 35,100 13,724 124,506 57,343
Income from continuing operations
before income taxes 528,449 531,472 1,508,853 2,035,549
Income tax expense (200,810) (212,607) (573,363) (814,238)
Income from continuing operations 327,639 318,865 935,490 1,221,311
DISCONTINUED OPERATIONS
Operating (loss) attributable to assets disposed of (47,103) (38,134) (83,614) (120,169)
(Loss) recognized on dispositions - (192,500) - (192,500)
Income tax benefit 17,899 92,254 31,773 125,068
Loss on discontinued operations (29,204) (138,380) (51,841) (187,601)
------------ ------------ ------------ -----------
Net income $ 298,435 $ 180,485 $ 883,649 $ 1,033,710
=========== ========== ============ ===========
Net income per share of Common Stock - Basic:
Continuing operations $ .26 $ .27 $ .70 $ 1.03
Discontinued operations (.02) (.12) (.04) (.16)
----------- ----------- ------------ -----------
Net income per share of Common Stock - Basic $ .24 $ .15 $ .66 $ .87
=========== =========== ============ ===========
Net income per share of Common Stock - Diluted:
Continuing operations $ .23 $ .25 $ .64 $ .94
Discontinued operations (.02) (.11) (.04) (.14)
------------ ------------ ------------ ------------
Net income per share of Common Stock - Diluted $ .21 $ .14 $ .60 $ .80
=========== =========== ============ ============
Weighted average number of shares of
Common Stock and dilutive securities:
Basic 1,260,181 1,202,897 1,335,773 1,193,813
========= ========= ========= =========
Diluted 1,388,321 1,302,897 1,465,854 1,298,641
========= ========= ========= =========
a) Total dental group practice revenue less amounts retained by group
practices. Dental practice revenue was $11,680,470 for the three months
ended September 30, 2004 compared with $10,778,903 for the three months
ended September 30, 2003 and was $34,929,349 for the nine months ended
September 30, 2004 compared to $32,647,198 for the nine months ended
September 30, 2003.
BIRNER DENTAL MANAGEMENT SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
December 31, September 30,
ASSETS 2003 2004
------------- -------------
** (Unaudited)
CURRENT ASSETS:
Cash and cash equivalents $ 1,110,786 $ 968,801
Accounts receivable, net of allowance for doubtful accounts
of $215,838 and $236,039, respectively 2,673,041 2,908,204
Deferred tax asset 121,475 121,475
Prepaid expenses and other assets 736,424 394,525
----------- ------------
Total current assets 4,641,726 4,393,005
PROPERTY AND EQUIPMENT, net 2,680,169 2,729,738
OTHER NONCURRENT ASSETS:
Intangible assets, net 14,732,349 13,974,703
Deferred charges and other assets 155,461 160,313
----------- ------------
Total assets $22,209,705 $21,257,759
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued expenses $ 3,990,467 $ 4,597,721
Income taxes payable 190,883 262,999
Current maturities of long-term debt 351,847 361,955
----------- ------------
Total current liabilities 4,533,197 5,222,675
LONG-TERM LIABILITIES:
Deferred tax liability, net 349,801 349,801
Long-term debt, net of current maturities 2,735,576 714,141
Other long-term obligations 179,884 166,753
----------- ------------
Total liabilities 7,798,458 6,453,370
SHAREHOLDERS' EQUITY:
Preferred Stock, no par value, 10,000,000 shares
authorized; none outstanding - -
Common Stock, no par value, 20,000,000 shares
authorized; 1,203,511 and 1,209,093 shares issued and
outstanding, respectively 12,428,363 12,057,098
Retained earnings 1,982,884 2,747,291
----------- ------------
Total shareholders' equity 14,411,247 14,804,389
----------- ------------
Total liabilities and shareholders' equity $22,209,705 $21,257,759
=========== ===========
** Derived from the Company's audited consolidated balance sheet
at December 31, 2003
Although EBITDA is not a generally accepted accounting principles measure of
performance or liquidity, the Company believes that it may be useful to an
investor in evaluating its 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
generally accepted accounting principles. In addition, because EBITDA is not
calculated in accordance with generally accepted accounting principles, it may
not necessarily be comparable to similarly titled measures employed by other
companies. A reconciliation of EBITDA can be made by adding Discontinued
operations (before income tax expense), Depreciation and amortization - Offices,
Depreciation and amortization - Corporate, Interest expense, net and Income tax
expense to Net income as in the table below.
Quarters Ended September 30, Nine Months Ended September 30,
----------------------------- -------------------------------
2003 2004 2003 2004
----------- ---------- ----------- -------------
RECONCILIATION OF EBITDA:
Net income $ 298,435 $ 180,485 $ 883,649 $ 1,033,710
Discontinued operations -
(before income tax expense) 47,103 230,634 83,614 312,669
Depreciation and amortization - Offices 521,580 435,584 1,656,010 1,356,899
Depreciation and amortization - Corporate 71,998 54,117 226,747 165,039
Interest expense, net 35,100 13,724 124,506 57,343
Income tax expense 182,911 120,353 541,590 689,170
----------- ---------- ----------- ------------
EBITDA $ 1,157,127 $1,034,897 $ 3,516,116 $ 3,614,830
=========== ========== =========== ===========
Total dental group practice revenue is the revenue generated at the Company's
offices from professional services provided to its patients. Amounts retained by
group practices 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 generally accepted accounting principles.
Quarters Ended September 30, Nine Months Ended September 30,
----------------------------- -------------------------------
2003 2004 2003 2004
----------- ---------- ----------- -------------
Total dental group practice revenue $ 10,778,903 $ 11,608.470 $ 32,647,198 $ 34,929,349
Amounts retained by group practices (3,250,254) (3,689,781) (9,614,598) (10,852,556)
------------- ------------- ------------- -------------
Net revenue $ 7,528,649 $ 7,918,689 $ 23,032,600 $ 24,076,793
============ ============ ============ =============