Birner Dental Management Services, Inc.
3801 East Florida Avenue, Suite 508
Denver, Colorado 80210
303-691-0680
FOR IMMEDIATE RELEASE
November 10, 2005
BIRNER DENTAL MANAGEMENT SERVICES, INC.
ANNOUNCES REVENUES AND NET INCOME UP 13.6% AND 130% RESPECTIVELY FOR 3Q05
DENVER, COLORADO, November 10, 2005. Birner Dental Management Services, Inc.
(NASDAQ SmallCap Market: BDMS), operators of PERFECT TEETH(R) dental practices,
announced results for the quarter ended September 30, 2005. Total dental group
practice revenue increased $1.6 million, or 13.6%, to $13.3 million for the
quarter ended September 30, 2005 compared to total dental group practice revenue
of $11.7 million for the quarter ended September 30, 2004. For the quarter ended
September 30, 2005, net revenue increased $1.3 million to $9.3 million, or
15.7%, compared to net revenue of $8.0 million for the corresponding period in
2004. Net income increased 129.6% to $414,000, or $.16 per share for the quarter
ended September 30, 2005 compared to net income of $180,000, or $.07 per share
for the quarter ended September 30, 2004. Net income for the quarters ended
September 30th included an expense of $667,000 ($425,000 after tax, or $0.16 per
share) related to a restricted stock grant in the 2005 period and an after-tax
loss on discontinued operations and disposition of assets of $138,000 or $.06
per share in the 2004 period. Excluding the expenses related to the stock grant
and the discontinued operations, net income would have been $840,000, or $0.32
per share for the quarter ended September 30, 2005 compared to net income of
$319,000, or $0.13 per share for the quarter ended September 30, 2004. The
Company's earnings before interest, taxes, depreciation, amortization and
discontinued operations ("Adjusted EBITDA") increased $4,000, or .4%, to
$1,039,000 for the quarter ended September 30, 2005 compared to $1,035,000 for
the quarter ended September 30, 2004. Without the expenses related to the award
of restricted stock, the Company's Adjusted EBITDA would have been $1.6 million
for the quarter ended September 30, 2005.
Two items that affected results in the third quarter of 2005 are the expense
resulting from the previously announced restricted stock grant and the lower tax
rate during the period. The grant of restricted stock resulted in an expense of
$667,000, including $586,000 of related taxes and $81,000 of equity compensation
expense. The related tax expense will not continue in future quarters, but the
Company will record a non-cash expense of $81,000 per quarter through December
31, 2007 related to the amortization of the award. The Company's income tax
expense for the third quarter is lower than the 2004 period as a result of an
over accrual in anticipated income tax expense for 2005 in the previous two
quarters.
For the nine months ended September 30, 2005, total dental group practice
revenue increased $4.8 million, or 13.5%, to $40.0 million compared to total
dental group practice revenue of $35.2 million for the nine months ended
September 30, 2004. Net revenue increased $3.6 million, or 15.0%, to $28.0
million for the nine months ended September 30, 2005 compared to net revenue of
$24.4 million for the corresponding period in 2004. Net income increased 69.0%
to $1.7 million, or $.67 per share for the nine months ended September 30, 2005
compared to net income of $1.0 million, or $.40 per share for the nine months
ended September 30, 2004. Net income for the nine-month periods ended September
30th included the expense of $667,000 ($425,000 after tax, or $0.16 per share)
related to the restricted stock grant in the 2005 period and an after-tax loss
on discontinued operations and disposition of assets of $188,000 or $.07 per
share in the 2004 period. The Company's Adjusted EBITDA increased $528,000, or
14.6%, to $4.1 million for the nine months ended September 30, 2005 compared to
$3.6 million for the nine months ended September 30, 2004. Without the expenses
related to the award of restricted stock, the Company's Adjusted EBITDA would
have been $4.7 million and its net income would have been $2.2 million, or $0.83
per share, for the nine months ended September 30, 2005.
In August 2005, and as previously announced, the Company's stock was split
2-for-1. All shares outstanding and per share results reported herein have been
adjusted to reflect the stock split. On October 10, 2005, the Company opened a
de novo office in the Phoenix, Arizona market. Fred Birner, Chief Executive
Officer, stated, "After sifting through the unusual expense items in both
periods of 2004 and 2005, the Company's financial performance for the third
quarter of 2005 continues to build on the momentum the Company achieved earlier
in the year and believes will continue through the remainder of 2005."
Birner Dental Management Services, Inc. acquires, develops, and manages
geographically dense dental practice networks in select markets in Colorado, New
Mexico, and Arizona. Currently, the Company manages 57 dental offices, of which
36 were acquired and 21 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, 2005 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 10, 2005, at 9:00 a.m. MT. To participate in
this conference call, dial in to 1-800-231-9012 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 10, the
rebroadcast number is 1-888-203-1112 with the pass code of 7253246. This
rebroadcast will be available through November 23, 2005.
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 growth prospects and performance in 2005 and other
future periods and equity compensation expense. 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,
----------------------------- -----------------------------
2004 2005 2004 2005
------------ ------------ ----------- ------------
NET REVENUE (a) $ 8,009,327 $ 9,264,449 $24,376,525 $28,025,464
DIRECT EXPENSES:
Clinical salaries and benefits 2,995,138 3,321,931 9,031,085 10,298,277
Dental supplies 544,822 566,219 1,502,662 1,698,572
Laboratory fees 581,762 588,814 1,849,334 1,873,120
Occupancy 922,251 953,029 2,665,319 2,865,929
Advertising and marketing 229,861 223,387 565,538 794,984
Depreciation and amortization 435,584 420,998 1,356,899 1,261,990
General and administrative 967,462 1,074,880 2,852,667 3,047,312
----------- ----------- ----------- -----------
6,676,880 7,149,258 19,823,504 21,840,184
----------- ----------- ----------- -----------
Contribution from dental offices 1,332,447 2,115,191 4,553,021 6,185,280
CORPORATE EXPENSES:
General and administrative (includes $666,874
of equity compensation and
related taxes in the quarter ended
September 30, 2005 and the nine
months ended September 30, 2005) 733,134 1,578,244 2,295,090 3,385,361
Depreciation and amortization 54,117 33,595 165,039 102,887
----------- ----------- ----------- -----------
Operating income 545,196 503,352 2,092,892 2,697,032
Interest expense (income), net 13,724 (13,353) 57,343 (41,220)
----------- ----------- ----------- -----------
Income from continuing operations
before income taxes 531,472 516,705 2,035,549 2,738,252
Income tax expense (212,607) (102,315) (814,238) (990,951)
----------- ----------- ----------- -----------
Income from continuing operations 318,865 414,390 1,221,311 1,747,301
DISCONTINUED OPERATIONS
Operating (loss) attributable to assets disposed of (38,134) - (120,169) -
(Loss) recognized on dispositions (192,500) - (192,500) -
Income tax benefit 92,254 - 125,068 -
----------- ----------- ----------- -----------
Loss on discontinued operations (138,380) - (187,601) -
----------- ----------- ----------- ----------
Net income $ 180,485 $ 414,390 $ 1,033,710 $1,747,301
=========== =========== =========== ==========
Net income per share of Common Stock - Basic:
Continuing operations $ .14 $ .17 $ .51 $ .74
Discontinued operations (.06) - (.07) -
------------ ----------- ----------- ----------
Net income per share of Common Stock - Basic $ .08 $ .17 $ .44 $ .74
=========== =========== =========== ==========
Net income per share of Common Stock - Diluted:
Continuing operations $ .13 $ .16 $ .47
$ .67
Discontinued operations (.06) - (.07) -
------------ ----------- ----------- ----------
Net income per share of Common Stock - Diluted $ .07 $ .16 $.40 $ .67
=========== =========== =========== ==========
Weighted average number of shares of
Common Stock and dilutive securities:
Basic 2,405,794 2,406,789 2,387,626 2,364,493
=========== =========== =========== ==========
Diluted 2,605,794 2,662,239 2,597,282 2,613,331
=========== =========== =========== ==========
a) Total dental group practice revenue less amounts retained by group
practices. Dental group practice revenue was $13,292,104 for the three
months ended September 30, 2005 compared to $11,699,108 for the three months
ended September 30, 2004 and was $39,987,027 for the nine months ended
September 30, 2005 compared to $35,229,081 for the nine months ended
September 30, 2004.
BIRNER DENTAL MANAGEMENT SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
December 31, September 30,
ASSETS 2004 2005
----------- -------------
CURRENT ASSETS:
Cash and cash equivalents $ 756,181 $ 898,396
Accounts receivable, net of allowance for doubtful accounts
of $232,543 and $261,556, respectively 2,976,186 3,892,849
Deferred tax asset 135,826 189,013
Income tax receivable 80,318 -
Prepaid expenses and other assets 800,671 455,459
----------- -----------
Total current assets 4,749,182 5,435,717
PROPERTY AND EQUIPMENT, net 3,164,124 3,243,443
OTHER NONCURRENT ASSETS:
Intangible assets, net 13,787,093 13,224,262
Deferred charges and other assets 159,440 157,965
----------- -----------
Total assets $21,859,839 $22,061,387
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued expenses $ 4,637,927 $ 4,861,112
Income taxes payable - 99,599
Current maturities of long-term debt 167,217 155,286
----------- -----------
Total current liabilities 4,805,144 5,115,997
LONG-TERM LIABILITIES:
Deferred tax liability, net 670,893 675,226
Long-term debt, net of current maturities 1,078,711 1,740,674
Other long-term obligations 176,741 200,775
----------- -----------
Total liabilities 6,731,489 7,732,672
SHAREHOLDERS' EQUITY:
Preferred Stock, no par value, 10,000,000 shares
authorized; none outstanding - -
Common Stock, no par value, 20,000,000 shares
authorized; 2,417,020 and 2,387,768 shares issued and
outstanding, respectively 12,125,811 11,019,490
Deferred equity compensation - (729,270)
Retained earnings 3,002,539 4,038,495
----------- -----------
Total shareholders' equity 15,128,350 14,328,715
----------- -----------
Total liabilities and shareholders' equity $21,859,839 $22,061,387
=========== ===========
.
Although Adjusted EBITDA and Adjusted EBITDA before reimbursement of income
taxes related to the restricted stock grant are not generally accepted
accounting principles ("GAAP") 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 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
and Adjusted EBITDA before reimbursement of income taxes related to the
restricted stock grant are 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 can be made by adding
discontinued operations (before income tax benefit), depreciation and
amortization - offices, depreciation and amortization - corporate, amortization
of equity compensation, interest expense/(income), net and income tax expense to
net income as in the table below.
Quarters Ended Nine Months Ended
September 30, September 30,
----------------------------- ----------------------------
2004 2005 2004 2005
------------ ------------ ----------- ------------
Reconciliation of Adjusted EBITDA:
Net income $ 180,485 $ 414,390 $1,033,710 $ 1,747,301
Discontinued operations -
(before income tax benefit) 230,634 - 312,669 -
Depreciation and amortization - offices 435,584 420,998 1,356,899 1,261,990
Depreciation and amortization - corporate 54,117 33,595 165,039 102,887
Amortization of equity compensation - 81,030 - 81,030
Interest expense/(income), net 13,724 (13,353) 57,343 (41,220)
Income tax expense 120,353 102,315 689,170 990,951
----------- ---------- ----------- -----------
Adjusted EBITDA 1,034,897 1,038,975 3,614,830 4,142,939
----------- ---------- ----------- -----------
Reimbursement of income taxes related
to restricted stock grant - 585,844 - 585,844
----------- ---------- ----------- -----------
Adjusted EBITDA before reimbursement of
income taxes related to restricted stock
grant $ 1,034,897 $ 1,624,819 $ 3,614,830 $ 4,728,783
=========== =========== =========== ===========
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 GAAP.
Quarters Ended Nine Months Ended
September 30, September 30,
----------------------------- --------------------------------
2004 2005 2004 2005
------------ ------------ ----------- --------------
Total dental group practice revenue $ 11,699,108 $ 13,292,104 $ 35,229,081 $39,987,027
Amounts retained by group practices (3,689,781) (4,027,655) (10,852,556) (11,961,563)
------------ ------------ ------------ -----------
Net revenue $ 8,009,327 $ 9,264,449 $ 24,376,825 $28,025,464
============ ============ ============ ===========
The Company believes that presenting net income excluding expenses relating to
the stock grant made during the quarter and nine months ended September 30, 2005
and expenses relating to discontinued operations during the quarter and nine
months ended September 30, 2004 provides useful information to both management
and investors by excluding expenses that are non-recurring in nature and
therefore are not indicative of the Company's core operating results. In
addition, the Company believes the inclusion of this non-GAAP measure allows for
a meaningful comparison of operating results to prior periods in which these
expenses were not recognized. These measures should be considered in addition to
results prepared in accordance with GAAP and should not be considered a
substitute for or superior to those results calculated in accordance with GAAP.
Quarters Ended Nine Months Ended
September 30, September 30,
-------------------------------- --------------------------------
2004 2005 2004 2005
------------- -------------- --------------- --------------
Net income $180,485 $414,390 $1,033,710 $1,747,301
Add back expenses related to stock grant, net of
tax benefit 425,466 425,466
Add back loss on discontinued operations, net of
tax benefit 138,380 - 187,601 -
------------- -------------- --------------- --------------
Net income before expenses related to the
stock grant and discontinued operations $318,865 $839,856 $1,221,311 $2,172,767
============= ============== =============== ==============
Net income per share of Common
Stock - Diluted $ .13 $.32 $.47 $.83
============= ============== =============== ==============
Weighted average number of shares of
Common Stock - Diluted 2,605,794 2,666,239 2,597,282 2,613,331
============= ============== =============== ==============