Birner Dental Management Services, Inc. Announces Earnings For Fourth Quarter And Year Ended 2013

Birner Dental Management Services, Inc. Announces Earnings For Fourth Quarter
                             And Year Ended 2013

PR Newswire

DENVER, March 25, 2014

DENVER, March 25, 2014 /PRNewswire/ -- Birner Dental Management Services, Inc.
(NASDAQ Capital Market: BDMS), operators of PERFECT TEETH®  dental practices,
announced results for the quarter and year ended December 31, 2013. For the
year ended December 31, 2013, revenue increased $1.8 million, or 2.8%, to
$64.1 million. The Company's earnings before interest, taxes, depreciation,
amortization and non-cash expense associated with stock-based compensation
("Adjusted EBITDA") decreased $805,000, or 16.0%, to $4.2 million for the year
ended December 31, 2013 compared to $5.0 million for the year ended December
31, 2012. Net income for the year ended December 31, 2013 decreased $718,000,
or 89.0%, to $89,000 compared to $807,000 for the year ended December 31,
2012. Earnings per share decreased to $0.05 for the year ended December 31,
2013 compared to $0.44 for the year ended December 31, 2012.

During the year ended December 31, 2013, the Company remeasured and wrote down
contingent liabilities by $196,000, which the Company recognized as other
income, related to two offices that were acquired during 2009.

For the quarter ended December 31, 2013, revenue increased $335,000, or 2.3%,
to $15.0 million. The Company's Adjusted EBITDA decreased $286,000, or 31.1%,
to $633,000 for the quarter ended December 31, 2013 compared to $919,000 for
the quarter ended December 31, 2012. Net loss for the quarter ended December
31, 2013 increased $306,000 to $(333,000) compared to $(27,000) for the same
period of 2012. Net loss per share increased to $(0.18) for the quarter ended
December 31, 2013 compared to $(0.01) for the quarter ended December 31,
2012.

Since the beginning of the fourth quarter of 2012, the Company has opened four
de novo offices: in Tucson, Arizona in the fourth quarter of 2012; in Erie,
Colorado in the fourth quarter of 2012; in Loveland, Colorado in July 2013;
and in Monument, Colorado in December 2013. The Company has leased space for
an additional de novo office in Fort Collins, Colorado, which is anticipated
to open in the second quarter of 2014. The Company is also evaluating and
negotiating leases for additional sites throughout its markets. Additionally,
the Company has relocated and modernized one of its offices in Albuquerque,
New Mexico, which opened in March 2014. During 2013, the Company completed
remodels and/or relocations for two of its offices and converted eight
additional offices to digital radiography. During December 2013, the Company
consolidated the dental services of one of its offices, which it subsequently
closed, into another office.

Fred Birner, Chief Executive Officer of the Company, stated that "While the
decrease in Adjusted EBITDA in 2013 was disappointing, particularly in light
of the increased revenue, 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 shareholder value. We believe
to achieve our long-term growth objectives, we need to continue to convert and
upgrade our offices to digital radiography and continue to open additional de
novo offices. These activities obviously affect Adjusted EBITDA in the
short-term. However, we believe the four de novo offices noted above are now
moving in the right direction and making good progress."

During 2013, the Company had capital expenditures of approximately $5.0
million, paid approximately $1.6 million in dividends to its shareholders and
increased total bank debt outstanding by approximately $1.6 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 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 114 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 year and quarter ended December 31, 2013 on Tuesday, March 25,
2014 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 1-888-364-3108 and refer to Confirmation Code 6868662 approximately five
minutes prior to the scheduled time. If you are unable to join the conference
call on March 25, 2014, the rebroadcast number is 1-888-203-1112 with the pass
code of 6868662. This rebroadcast will be available through April 8, 2014.

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 (loss).

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 prospects and performance in future periods, including
performance of de novo offices. 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
CONSOLIDATED STATEMENTS OF INCOME
                 Quarters Ended                   Years Ended
                 December 31,                     December 31,
                 2012            2013             2012            2013
REVENUE:
 Dental practice $             $               $             $    
 revenue         13,172,684      13,630,865      56,513,816      58,461,286
 Capitation      1,496,967       1,373,344        5,840,373       5,644,588
 revenue
                 14,669,651      15,004,209       62,354,189      64,105,874
DIRECT EXPENSES:
 Clinical
 salaries and    8,490,442       9,112,144        35,402,831      38,171,494
 benefits
 Dental supplies 614,839         659,942          2,693,604       2,799,518
 Laboratory fees 830,419         774,580          3,133,481       3,108,544
 Occupancy       1,412,540       1,412,362        5,549,650       5,822,508
 Advertising and 287,597         223,281          2,018,264       1,082,034
 marketing
 Depreciation
 and             777,907         934,918          2,838,582       3,448,707
 amortization
 General and     1,240,779       1,212,498        4,934,926       4,774,597
 administrative
                 13,654,523      14,329,725       56,571,338      59,207,402
 Contribution
 from dental     1,015,128       674,484          5,782,851       4,898,472
 offices
CORPORATE
EXPENSES:
 General and     1,002,608  ^(1) 1,091,928   ^(1) 4,207,681  ^(2) 4,604,320  ^(2)
 administrative
 Depreciation
 and             43,226          54,664           161,693         200,431
 amortization
OPERATING INCOME (30,706)        (472,108)        1,413,477       93,721
(LOSS)
OTHER INCOME
(EXPENSE)
 Change in fair
 value of        -               -                -               196,000
 contingent
 liabilities
 Gain from early
 extinguishment  -               22,059           -               22,059
 of debt
 Interest        (27,352)        (30,339)         (104,147)       (100,647)
 (expense), net
INCOME BEFORE    (58,058)        (480,388)        1,309,330       211,133
INCOME TAXES
 Income tax
 expense         (31,215)        (147,732)        502,066         121,960
 (income)
NET INCOME       $           $             $           $    
(LOSS)           (26,843)        (332,656)        807,264            
                                                                  89,173
Net income       $                            $           $    
(loss) per share              $                            
of Common Stock  (0.01)            (0.18)       0.44            0.05
- Basic
Net income       $                            $           $    
(loss) per share              $                            
of Common Stock  (0.01)            (0.18)       0.44            0.05
- Diluted
Cash dividends   $           $           $           $    
per share of                    0.22                         
Common Stock     0.22                            0.88            0.88
Weighted average
number of shares
of Common Stock
and dilutive
securities:
 Basic           1,842,402       1,852,364        1,839,149       1,850,257
 Diluted         1,851,315       1,870,935        1,848,714       1,861,088

     Corporate expense - general and administrative includes $128,351 of
     stock-based compensation expense pursuant to ASC Topic 718 for the
^(1) quarter ended December 31, 2012 and $115,155 of stock-based compensation
     expense pursuant to ASC Topic 718 for the quarter ended December 31,
     2013.
     Corporate expense - general and administrative includes $600,936 of
^(2) stock-based compensation expense pursuant to ASC Topic 718 for the year
     ended December 31, 2012 and $467,028 of stock-based compensation expense
     pursuant to ASC Topic 718 for the year ended December 31, 2013.







BIRNER DENTAL MANAGEMENT SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
                                        December 31,
ASSETS                                  2012             2013
CURRENT ASSETS:
 Cash and cash equivalents              $   1,112,511  $       469,827
 Accounts receivable, net of allowance
 for doubtful
 accounts of approximately $304,000 and 2,614,152        3,250,319
 $420,000, respectively
 Notes Receivable                       165,718          34,195
 Deferred tax asset                     205,693          272,523
 Income tax receivable                  442,630          176,935
 Prepaid expenses and other assets      482,297          455,158
 Total current assets                   5,023,001        4,658,957
 PROPERTY AND EQUIPMENT, net            7,894,333        10,126,399
OTHER NONCURRENT ASSETS:
 Intangible assets, net                 10,193,488       9,292,868
 Deferred charges and other assets      158,316          165,661
 Notes receivable                       -                109,501
 Total assets                           $  23,269,138   $    24,353,386
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
 Accounts payable                      $   1,919,457  $     2,548,240
 Accrued expenses                       1,640,076        1,641,509
 Accrued payroll and related expenses   1,718,417        2,192,495
 Current maturities of long-term debt   400,000          -
 Total current liabilities              5,677,950        6,382,244
LONG-TERM LIABILITIES:
 Deferred tax liability, net            2,997,808        3,030,205
 Long-term debt, net of current         6,074,042        8,091,790
 maturities
 Other long-term obligations            1,547,369        965,959
 Total liabilities                      16,297,169       18,470,198
COMMITMENTS AND CONTINGENCIES
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 1,852,565
 shares issued and
 outstanding, respectively              329,236          779,758
 Retained earnings                      6,642,733        5,103,430
 Total shareholders' equity             6,971,969        5,883,188
 Total liabilities and shareholders'    $  23,269,138   $    24,353,386
 equity



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. 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 change in fair value of contingent
liabilities and gain from early extinguishment of debt as in the table below.



                                 Quarters Ended         Years Ended
                                 December 31,           December 31,
                                 2012       2013        2012        2013
RECONCILIATION OF ADJUSTED
EBITDA:
 Net income (loss)               ($26,843)  ($332,656)  $807,264    $89,173
 Add back:
  Depreciation and amortization  777,907    934,918     2,838,582   3,448,707
  - Offices
  Depreciation and amortization  43,226     54,664      161,693     200,431
  - Corporate
  Stock-based compensation       128,351    115,155     600,936     467,028
  expense
  Interest expense, net          27,352     30,339      104,147     100,647
  Income tax expense (income)    (31,215)   (147,732)   502,066     121,960
 Less:
  Change in fair value of        -          -           -           (196,000)
  contingent liabilities
  Gain from early extinguishment -          (22,059)    -           (22,059)
  of debt
Adjusted EBITDA                  $918,778   $632,629    $5,014,688  $4,209,887

SOURCE Birner Dental Management Services, Inc.
 
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