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