Published:
Birner Dental Management Services, Inc. Announces Earnings for 2Q 2008
DENVER, Aug. 14 /PRNewswire-FirstCall/ -- 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 theLongmont, 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 inColorado,
New Mexico, andArizona. 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
SOURCE Birner Dental Management Services, Inc.
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