BIRNER DENTAL MANAGEMENT SERVICES, INC. EXHIBIT 99.1
3801 East Florida Avenue, Suite 508
Denver, Colorado 80210
303-691-0680
FOR IMMEDIATE RELEASE
August 9, 2006
BIRNER DENTAL MANAGEMENT SERVICES, INC.
ANNOUNCES 9.2% REVENUE INCREASE
AND 20.1% ADJUSTED EBITDA INCREASE FOR 2Q '06
DENVER, COLORADO, August 9, 2006. BIRNER DENTAL MANAGEMENT SERVICES, INC.
(NASDAQ CAPITAL MARKET: BDMS), operators of PERFECT TEETH dental practices,
announced results for the quarter ended June 30, 2006. Total dental group
practice revenue increased $1.2 million, or 9.2%, to $14.6 million. Net revenue
increased $698,000 to $10.1 million, or 7.4%. The Company's earnings before
interest, taxes, depreciation, amortization and non-cash expense associated with
stock-based compensation ("Adjusted EBITDA") increased $298,000, or 20.1%, to
$1.8 million for the quarter ended June 30, 2006 compared to $1.5 million for
the quarter ended June 30, 2005. Net income for the second quarter of 2006 was
$623,000, or $.25 per share (including $98,000 of after-tax stock-based
compensation expense versus no such expense in the second quarter of 2005)
compared to $633,000, or $.25 per share for the same period of 2005. Adjusted
net income, which excludes the after-tax effect of the amortization of
stock-based compensation, for the second quarter of 2006 was $721,000, or $.29
per share, representing a 13.9% increase in net income over the same period of
2005.
For the six months ended June 30, 2006, total dental group practice revenue
increased $2.5 million, or 9.2%, to $29.1 million. Net revenue increased $1.5
million to $20.2 million, or 7.8%. The Company's Adjusted EBITDA increased
$543,000, or 17.5%, to $3.6 million for the six months ended June 30, 2006
compared to $3.1 million for the six months ended June 30, 2005. Net income for
the six months ended June 30, 2006, was $1.3 million, or $.52 per share
(including $202,000 of after-tax stock-based compensation expense versus no such
expense in the six months ended June 30, 2005) compared to $1.3 million, or $.52
per share for the same period of 2005. Adjusted net income, which excludes the
after-tax effect of the amortization of stock-based compensation, for the second
quarter of 2006 was $1.5 million, or $.60 per share, representing a 14.6%
increase in net income over the same period of 2005.
The Company opened one de novo office in the Denver, Colorado market in June
2006 and anticipates opening two more de novo offices, one in the Phoenix,
Arizona market and the other in the Albuquerque, New Mexico market, in the third
quarter of 2006. With these office openings, together with the de novo office
the Company opened in the Phoenix, Arizona market in March 2006, the Company
will have opened a total of four de novo offices in 2006. Effective August 1,
2006, the Company consolidated two of its Scottsdale, Arizona offices into one
facility.
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.
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 58 dental offices, of which
35 were acquired and 23 were de novo developments. The Company operates its
dental offices under the PERFECT TEETH name.
The Company previously announced it will conduct a conference call to review
quarter ended June 30, 2006 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 Wednesday, August 9,
2006 at 9:00 a.m. MT. To participate in this conference call, dial in to
1-800-967-7188 and refer to "Birner Dental Management Services, Inc."
approximately five minutes prior to the scheduled time. If you are unable to
join us on August 9, the rebroadcast of the call will be available through
August 21, 2006 at 1-888-203-1112 with pass code 4831535.
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NON-GAAP DISCLOSURES
This press release includes certain non-GAAP financial measures with respect to
total dental group practice revenue, Adjusted EBITDA, adjusted net income and
adjusted net income per share. 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 two pages of this
release for more information on total dental group practice revenue, Adjusted
EBITDA, adjusted net income and adjusted net income per share, and the
reconciliation of these financial measures 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 growth prospects and performance in 2006 and other
future periods, including the new office openings in the third quarter of 2006.
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
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
Quarters Ended Six Months Ended
June 30, June 30,
------------------------------- -------------------------
2005 2006 2005 2006
------------ ------------ ----------- -----------
NET REVENUE: (a) $ 9,393,284 $ 10,091,469 $18,761,015 $20,231,498
DIRECT EXPENSES:
Clinical salaries and benefits 3,490,196 3,581,248 6,976,346 7,270,235
Dental supplies m 599,015 577,569 1,132,353 1,153,206
Laboratory fees 655,810 683,362 1,284,306 1,325,258
Occupancy 952,684 1,094,148 1,912,900 2,150,881
Advertising and marketing 312,155 251,979 571,597 460,933
Depreciation and amortization 416,620 528,688 840,992 1,008,463
General and administrative 992,319 1,139,053 1,972,432 2,329,922
------------ ------------- ----------- -----------
7,418,799 7,856,047 14,690,926 15,698,898
------------ ------------- ----------- -----------
Contribution from dental offices 1,974,485 2,235,422 4,070,089 4,532,600
CORPORATE EXPENSES:
General and administrative (includes $81,030 of deferred equity
compensation expense and $78,286 related to stock-based compensation
expense in the quarter ended June 30, 2006 and $162,060 of deferred
equity compensation expense and $166,031 related to stock-based
compensation expense in the six months ended June 30, 2006) 906,629 1,141,210 1,807,117 2,222,273
Depreciation and amortization 32,618 32,446 69,292 66,642
------------ ------------- ----------- -----------
Operating income 1,035,238 1,061,766 2,193,680 2,243,685
Interest expense (income), net (20,235) 40,467 (27,867) 80,087
------------ ------------- ----------- -----------
Income before income taxes 1,055,473 1,021,299 2,221,547 2,163,598
Income tax expense 422,205 398,133 888,636 838,107
------------ ------------- ----------- -----------
Net income $ 633,268 $ 623,166 $ 1,332,911 $ 1,325,491
============ ============== =========== ===========
Net income per share of Common Stock - Basic $ 0.27 $ 0.27 $ 0.57 $ 0.56
============ ============== =========== ===========
Net income per share of Common Stock - Diluted $ 0.25 $ 0.25 $ 0.52 $ 0.52
============ ============== =========== ===========
Cash dividends per share of Common Stock $ 0.10 $ 0.13 $ 0.20 $ 0.26
============ ============== =========== ===========
Weighted average number of shares of
Common Stock and dilutive securities:
Basic 2,306,202 2,327,419 2,342,994 2,349,824
============ ============== =========== ===========
Diluted 2,555,696 2,506,790 2,587,816 2,546,337
============ ============== ============ ===========
a) Total dental group practice revenue less amounts retained
by group practices. Dental group practice revenue was $14,566,435
for the quarter ended June 30, 2006 compared to $13,344,516 for
the quarter ended June 30, 2005. Dental group practice revenue
was $29,146,349 for the six months ended June 30, 2006 compared
to $26,694,923 for the six months ended June 30, 2005.
BIRNER DENTAL MANAGEMENT SERVICES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
December 31, June 30,
ASSETS 2005 2006
------------- -----------
** (Unaudited)
CURRENT ASSETS:
Cash and cash equivalents $ 921,742 $ 763,302
Accounts receivable, net of allowance for doubtful
accounts of $261,031 and $277,664, respectively 3,215,369 3,618,859
Deferred tax asset 160,411 210,777
Prepaid expenses and other assets 605,599 555,712
------------- -----------
Total current assets 4,903,121 5,148,650
PROPERTY AND EQUIPMENT, net 3,939,452 5,337,870
OTHER NONCURRENT ASSETS:
Intangible assets, net 13,036,652 12,662,055
Deferred charges and other assets 154,245 181,860
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Total assets $ 22,033,470 $23,330,435
============= ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 2,065,076 $ 1,768,524
Accrued expenses 1,110,526 1,325,416
Accrued payroll and related expenses 1,502,877 2,203,286
Income taxes payable 175,259 369,037
Current maturities of long-term debt 145,150 98,672
------------- -----------
Total current liabilities 4,998,888 5,764,935
LONG-TERM LIABILITIES:
Deferred tax liability, net 750,346 779,445
Long-term debt, net of current maturities 2,887,166 3,372,694
Other long-term obligations 195,723 291,836
------------- -----------
Total liabilities 8,832,123 10,208,910
COMMITMENTS AND CONTINGENCIES (Note 10)
SHAREHOLDERS' EQUITY:
Preferred Stock, no par value, 10,000,000 shares
authorized; none outstanding - -
Common Stock, no par value, 20,000,000 shares
authorized; 2,343,675 and 2,310,718 shares issued and
outstanding, respectively 9,628,457 8,670,773
Deferred equity compensation (648,240) (486,180)
Retained earnings 4,221,130 4,936,932
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Total shareholders' equity 13,201,347 13,121,525
Total liabilities and shareholders' equity $ 22,033,470 $23,330,435
============= ===========
** Derived from the Company's audited consolidated balance sheet at December 31, 2005.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
Adjusted EBITDA. The Company's earnings before interest, taxes, depreciation,
amortization and non-cash expense associated with stock-based compensation
("Adjusted EBITDA") increased $298,000, or 20.1% to $1.8 million for the three
months ended June 30, 2006 compared to $1.5 million for the corresponding three
month period in 2005. For the six months ended June 30, 2006, Adjusted EBITDA
increased $543,000, or 17.5% to $3.6 million compared to $3.1 million for six
months ended June 30, 2005. Although Adjusted EBITDA is not a 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
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 can be made by adding depreciation and amortization expense -
offices, depreciation and amortization expense - corporate, amortization of
equity compensation, stock-based compensation related to SFAS 123(R), interest
expense/(income), net and income tax expense to net income as in the table
below.
Quarters Ended June 30, Six Months Ended June 30,
--------------------------- --------------------------
2005 2006 2005 2006
--------------------------- --------------------------
RECONCILLIATION OF ADJUSTED EBITDA:
Net income $ 633,268 $ 623,166 $1,332,911 $1,325,491
Depreciation and amortization - Offices 416,620 528,688 840,992 1,008,463
Depreciation and amortization - Corporate 32,618 32,446 69,292 66,642
Amortization of deferred equity compensation expense - 81,030 - 162,060
Stock-based compensation expense relate to - 78,286 - 166,031
SFAS 123 (R)
Interest expense/(income), net (20,235) 40,467 (27,867) 80,087
Income tax expense 422,205 398,133 888,636 838,107
------------ ------------ ---------- ----------
Adjusted EBITDA $ 1,484,476 $ 1,782,216 $3,103,964 $3,646,881
------------ ------------ ---------- ----------
Total Dental Group Practice Revenue. 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 represent 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. Although total dental group practice revenue is not a
financial measure consistent with GAAP, the Company discloses total dental group
practice revenue 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 net revenue, 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.
These non-GAAP financial measures may be different from, and therefore may not
be comparable to, similar measures used by other companies.
Quarters Ended Six Months Ended
March 31, March 31,
------------------------------------ --------------------------
2005 2006 2005 2006
---------------- ------------------ ------------ ------------
Total dental group practice revenue $ 13,344,516 $ 14,566,435 $26,694,923 $29,146,349
Less - amounts retained by dental Offices (3,951,232) (4,474,966) (7,933,908) (8,914,851)
---------------- ------------------ ------------ ------------
Net revenue $ 9,393,284 $ 10,091,469 $18,761,015 $20,231,498
---------------- ------------------ ------------ ------------
Adjusted Net Income and Adjusted Net Income Per Share. Adjusted net income and
adjusted net income per share exclude the impact of amortization of equity
compensation and stock-based compensation expense related to SFAS 123(R), net of
tax. The Company's management uses adjusted net income and adjusted net income
per share to monitor and evaluate operating results and trends and to gain an
understanding of the comparative operating performance of the Company. The
Company believes these measures enable investors to assess the Company's
performance on the same basis applied by management and to ease comparisons of
the Company's operating performance from period to period. However, investors
should not consider this measure in isolation or as a substitute for net income
or any other measure for determining the Company's operating performance that is
calculated in accordance with GAAP. These adjusted financial measures may be
different from and therefore may not be comparable to, similar measures used by
other companies.
Quarters Ended Six Months Ended
March 31, March 31,
------------------------- --------------------------
2005 2006 2005 2006
------------ ----------- ------------ ------------
(unaudited)
Net income $ 633,268 $ 623,166 $ 1,332,911 $ 1,325,491
Plus:
Amortization of equity compensation
and stock-based compensation
expense related to SFAS 123(R), net
of tax - 97,979 - 201,776
------------ ----------- ------------ ------------
Adjusted net income $ 633,268 $ 721,145 $ 1,332,911 $ 1,527,267
============ =========== ============ ============
Net income per share $ 0.25 $ 0.25 $ 0.52 $ 0.52
============ =========== ============ ============
Adjusted net income per share $ 0.25 $ 0.29 $ 0.52 $ 0.60
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