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Birner Dental Management Services, Inc. Announces Net Income up 31% for the Quarter
Date:5/14/2009

DENVER, May 14 /PRNewswire-FirstCall/ -- Birner Dental Management Services, Inc. (Nasdaq: BDMS), operators of PERFECT TEETH dental practices, announced results for the quarter ended March 31, 2009. Total dental group practice revenue increased $87,000, or 0.6%, to $15.3 million. Net revenue increased $94,000, or 1.0%, to $9.0 million. The Company's earnings before interest, taxes, depreciation, amortization and non-cash expense associated with stock-based compensation ("Adjusted EBITDA") increased $214,000, or 11.9%, to $2.0 million from $1.8 million. Net income for the quarter ended March 31, 2009 increased $159,000 or 30.8% to $677,000 compared to $518,000 for the same period of 2008. Earnings per share increased 52.8%, to $.36 for the quarter ended March 31, 2009 compared to $.24 for the quarter ended March 31, 2008.

The increase in net revenue of $94,000 in the quarter ended March 31, 2009 consisted of an increase in same store net revenue from specialty dentistry of $94,000 along with a de novo office the Company opened in May 2008 producing $45,000 in net revenue offset by a decrease in same store net revenue from general dentistry of $46,000. Despite a slight increase in net revenue for the quarter ended March 31, 2009 compared to the quarter ended March 31, 2008, the Company believes it continues to experience a general weakness in the economy in its markets

The increase in total dental group practice revenue and net revenue in the 2009 quarter versus the 2008 quarter was accomplished with two fewer revenue producing days in the quarter ended March 31, 2009 compared to the quarter ended March 31, 2008. In addition, cost containment measures implemented by the Company during 2008 favorably affected the Company's profitability in the 2009 quarter relative to the 2008 quarter. Fred Birner, Chief Executive Officer stated, "We are very pleased with the operating performance achieved by the Company in the quarter particularly in light of the weak economic environment."

During the first quarter of 2009, the Company had capital expenditures of $100,000, purchased 6,106 shares of its Common Stock for approximately $69,000, distributed $317,000 in dividends to its shareholders, and decreased total bank debt outstanding by $1.4 million.

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 61 dental offices, of which 35 were acquired and 26 were de novo developments. At March 31, 2009, the Company had 113 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 ended March 31, 2009 on Thursday, May 14, 2009 at 9:00 a.m. MT. In addition to current financial and operating results, the teleconference may include discussion of management's expectation of future financial and operating results. To participate in this conference call, dial in to 1-866-283-8244 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 May 14, the rebroadcast number is 1-888-266-2081 with the pass code of 1357183. This rebroadcast will be available through May 28, 2009.

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, performance in 2009 and other future periods and the current economic environment. These statements involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements to be materially different from any future results, performances, 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
                                                  March 31,
                                            2008             2009

         NET REVENUE:                    $8,946,997 (1) $9,040,511 (1)

         DIRECT EXPENSES:
                 Clinical salaries and
                  benefits                2,667,975      2,576,545
                 Dental supplies            594,185        539,149
                 Laboratory fees            652,713        637,962
                 Occupancy                1,185,680      1,213,926
                 Advertising and
                  marketing                 107,449         84,932
                 Depreciation and
                  amortization              601,014        617,610
                 General and
                  administrative          1,170,015      1,161,960

                                          6,979,031      6,832,084

                 Contribution from
                  dental offices          1,967,966      2,208,427

         CORPORATE EXPENSES:
                 General and
                  administrative            941,104 (2)    975,189 (2)
                 Depreciation and
                  amortization               23,469         22,389

                 Operating income         1,003,393      1,210,849

                 Interest expense            77,628         42,415

                 Income before income
                  taxes                     925,765      1,168,434
                 Income tax expense         408,208        491,408

                 Net income                $517,557       $677,026


                 Net income per share of
                  Common Stock - Basic        $0.25          $0.36

                 Net income per share of
                  Common Stock - Diluted      $0.24          $0.36

                 Cash dividends per
                  share of Common Stock       $0.17          $0.17

                 Weighted average number
                  of shares of
                 Common Stock and
                  dilutive securities:
                 Basic                    2,111,085      1,860,320

                 Diluted                  2,200,230      1,883,528


    (1)   Total dental group practice revenue less amounts retained by dental
          offices. Dental group practice revenue was  $15,254,252 for the
          three months ended March 31, 2008, and $15,341,714 for the three
          months ended March 31, 2009.
    (2)   Corporate expense - general and administrative includes $173,413
          related to stock-based compensation expense in the three months
          ended March 31, 2008, and $164,178 related to stock-based
          compensation expense in the three months ended March 31, 2009.

              BIRNER DENTAL MANAGEMENT SERVICES, INC. AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEETS

                                                   December 31,    March 31,
                         ASSETS                        2008          2009
                                                        **        (Unaudited)
     CURRENT ASSETS:
        Cash and cash equivalents                   $1,234,991    $1,265,726
        Accounts receivable, net of allowance
         for doubtful
        accounts of $290,688 and $280,026,
         respectively                                2,875,732     3,132,356
        Deferred tax asset                             195,091       251,929
        Prepaid expenses and other assets              418,653       678,046

        Total current assets                         4,724,467     5,328,057

        PROPERTY AND EQUIPMENT, net                  3,887,919     3,534,366

     OTHER NONCURRENT ASSETS:
        Intangible assets, net                      10,621,918    10,435,236
        Deferred charges and other assets              160,289       151,956

        Total assets                               $19,394,593   $19,449,615

             LIABILITIES AND SHAREHOLDERS' EQUITY

     CURRENT LIABILITIES:
        Accounts payable                            $1,551,851    $1,558,785
        Accrued expenses                             1,462,258     1,502,776
        Accrued payroll and related expenses         1,714,550     2,300,634
        Income taxes payable                           371,569       756,650
        Current maturities of long-term debt           920,000       920,000

        Total current liabilities                    6,020,228     7,038,845

     LONG-TERM LIABILITIES:
        Deferred tax liability, net                    618,913       619,778
        Long-term debt, net of current
         maturities                                  5,988,202     4,580,000
        Other long-term obligations                    259,678       242,745

        Total liabilities                           12,887,021    12,481,368

     SHAREHOLDERS' EQUITY:
        Preferred Stock, no par value,
         10,000,000 shares authorized;
         none outstanding                                    -             -
        Common Stock, no par value, 20,000,000
         shares authorized; 1,863,587 and
         1,857,481 shares issued and
         outstanding, respectively                           -             -
        Treasury Stock purchased in excess of
         Common Stock basis                           (266,786)     (171,671)
        Retained earnings                            6,817,449     7,178,704
        Accumulated other comprehensive loss           (43,091)      (38,786)

        Total shareholders' equity                   6,507,572     6,968,247

        Total liabilities and shareholders'
         equity                                    $19,394,593   $19,449,615

      **  Derived from the Company's audited consolidated balance sheet at
          December 31, 2008.



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, dental hygienists and dental assistants 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 a non-GAAP measure that 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 March 31,
                                      2008            2009

    Total dental group practice
     revenue                      $15,254,252     $15,341,714
    Less - amounts retained by
     dental offices                (6,307,255)     (6,301,203)

    Net revenue                    $8,946,997      $9,040,511


Adjusted EBITDA is not a 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 related to SFAS 123(R), interest expense, net and income tax expense to net income as in the table below.


                                                            Quarters
                                                        Ended March 31,
                                                      2008           2009
    RECONCILIATION OF ADJUSTED EBITDA:
     Net income                                     $517,557       $677,026
     Add back:
        Depreciation and amortization - Offices      601,014        617,610
        Depreciation and amortization - Corporate     23,469         22,389
        Stock-based compensation expense             173,413        164,178
        Interest expense, net                         77,628         42,415
        Income tax expense                           408,208        491,408

    Adjusted EBITDA                               $1,801,289     $2,015,026



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SOURCE Birner Dental Management Services, Inc.
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