Birner Dental Management Services, Inc. Announces Earnings For 3Q 2013

    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.