Birner Dental Management Services, Inc. Announces Earnings For 3Q 2013 PR Newswire DENVER, Nov. 14, 2013 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 CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) Quarters Ended Nine Months Ended September 30, September 30, 2012 2013 2012 2013 REVENUE: Dental practice $ $ $ $ revenue 14,214,489 14,654,444 43,341,132 44,830,421 Capitation 1,494,934 1,406,627 4,343,406 4,271,244 revenue 15,709,423 16,061,071 47,684,538 49,101,665 DIRECT EXPENSES: Clinical salaries and 8,823,264 9,653,405 26,912,387 29,059,351 benefits Dental supplies 689,283 701,332 2,078,765 2,139,576 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 353,004 280,516 1,730,667 858,753 marketing Depreciation and 725,719 855,544 2,060,675 2,513,788 amortization General and 1,249,314 1,294,460 3,694,149 3,562,103 administrative 13,993,668 15,059,120 42,916,816 44,877,680 Contribution from dental 1,715,755 1,001,951 4,767,722 4,223,985 offices CORPORATE EXPENSES: General and 1,018,319 ^(1) 1,109,573 ^(1) 3,205,073 ^(2) 3,512,392 ^(2) administrative Depreciation and 41,308 50,016 118,467 145,767 amortization OPERATING 656,128 (157,638) 1,444,182 565,826 INCOME/(LOSS) OTHER INCOME (EXPENSE) Change in fair value of - 196,000 - 196,000 contingent liabilities Interest (28,018) (36,795) (76,796) (70,307) (expense), net INCOME BEFORE 628,110 1,567 1,367,386 691,519 INCOME TAXES Income tax 244,963 612 533,281 269,693 expense NET INCOME $ $ $ $ 383,147 955 834,105 421,826 Net income per $ $ $ $ share of Common 0.21 0.00 0.45 0.23 Stock - Basic Net income per $ $ $ $ share of Common 0.21 0.00 0.45 0.23 Stock - Diluted Cash dividends $ $ $ $ per share of 0.22 0.22 0.66 0.66 Common Stock Weighted average number of shares of Common Stock and dilutive securities: Basic 1,841,817 1,851,598 1,839,788 1,851,150 Diluted 1,851,445 1,863,783 1,849,842 1,861,421 (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: Cash and cash equivalents $ 1,112,511 $ 1,888,440 Accounts receivable, net of allowance for doubtful accounts of approximately $304,000 and 2,614,152 3,883,657 $341,000, respectively 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 Total current assets 5,023,001 6,870,899 PROPERTY AND EQUIPMENT, net 7,894,333 9,432,789 OTHER NONCURRENT ASSETS: Intangible assets, net 10,193,488 9,518,010 Deferred charges and other assets 158,316 165,508 Total assets $ 23,269,138 $ 25,987,206 LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: 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 Total current liabilities 5,677,950 6,486,407 LONG-TERM LIABILITIES: 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 Total liabilities 16,297,169 19,451,122 SHAREHOLDERS' EQUITY: Preferred Stock, no par value, 10,000,000 shares authorized; none outstanding - - Common Stock, no par value, 20,000,000 shares authorized; 1,842,402 and 1,851,598 shares issued and 329,236 692,438 outstanding, respectively Retained earnings 6,642,733 5,843,646 Total shareholders' equity 6,971,969 6,536,084 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: Net income $383,147 $955 $834,105 $421,826 Add back: Depreciation and amortization 725,719 855,544 2,060,675 2,513,788 - Offices Depreciation and amortization 41,308 50,016 118,467 145,767 - Corporate Stock-based compensation 127,621 114,291 472,585 351,873 expense Interest expense, net 28,018 36,795 76,796 70,307 Income tax expense 244,963 612 533,281 269,693 Less: Change in fair value of - (196,000) - (196,000) contingent liabilities Adjusted EBITDA $1,550,776 $862,213 $4,095,909 $3,577,254 SOURCE Birner Dental Management Services, Inc.
Birner Dental Management Services, Inc. Announces Earnings For 3Q 2013