Birner Dental Management Services, Inc. Announces Earnings for 2Q 2010

DENVER, Aug. 12 /PRNewswire-FirstCall/ -- Birner Dental Management Services, Inc. (Nasdaq: BDMS), operators of PERFECT TEETH® dental practices, announced results for the quarter and six months ended June 30, 2010. For the quarter ended June 30, 2010, revenue increased $630,000, or 4.2%, to $15.7 million. The Company's earnings before discontinued operations, interest, taxes, depreciation, amortization and non-cash expense associated with stock-based compensation ("Adjusted EBITDA") decreased $273,000, or 14.3%, to $1.6 million. Income from continuing operations for the quarter ended June 30, 2010 decreased $183,000, or 30.5%, to $419,000 compared to $602,000 for the same period of 2009. Earnings per share decreased 58.5%, to $.11 for the quarter ended June 30, 2010 compared to $.27 for the quarter ended June 30, 2009.

For the six months ended June 30, 2010, revenue increased $1.8 million, or 6.0%, to $32.2 million. The Company's Adjusted EBITDA decreased $389,000, or 9.7%, to $3.6 million.  Income from continuing operations for the six months ended June 30, 2010 decreased $306,000, or 22.6%, to $1,047,000 compared to $1,352,000 for the same period of 2009. Earnings per share decreased 37.7%, to $.39 for the six months ended June 30, 2010 compared to $.63 for the six months ended June 30, 2009.

The increase in revenue of $630,000 for the quarter ended June 30, 2010 is primarily attributable to three offices that were acquired during the fourth quarter of 2009 and one de novo office in the Albuquerque, New Mexico market that was opened in February 2010.  These four new offices accounted for an additional $1.2 million in revenue.  Same store revenue (based on 59 offices open each full quarter) decreased $527,000, or 3.5%.  The increase in revenue of $1.8 million for the six months ended June 30, 2010 is primarily attributable to the four new offices, which accounted for $2.2 million in revenue.  Same store revenue (based on 59 offices open each full six months) decreased $409,000, or 1.3%.  

For the quarter ended June 30, 2010, income from continuing operations, net of taxes, decreased $183,000, or 30.5%, to $419,000.  This quarter includes $249,000 of incremental expenses (as discussed below) that did not occur in the quarter ended June 30, 2009.  For the six months ended June 30, 2010, income from continuing operations, net of taxes, decreased $306,000, or 22.6%, to $1.0 million.  This six month period includes $312,000 of incremental expenses (as discussed below) that did not occur in the six months ended June 30, 2009.  

In May 2010, the Company closed two offices in the Phoenix, Arizona market because of poor operating performance.  As a result, net income for the quarter ended June 30, 2010 includes a loss on discontinued operations of $202,000, net of income tax benefit.  The Company anticipates no future expenses related to the closure of these two offices.  Additionally, net income and Adjusted EBITDA decreased in the quarter ended June 30, 2010 as a result of $123,000 of television advertising costs in the Denver market, $86,000 of training costs related to improving productivity of dentists and hygienists, and $40,000 of marketing expense for a new specialty dental center that the Company plans to open in the third quarter of 2010.  

Net income for the six months ended June 30, 2010 includes a loss on discontinued operations of $296,000, net of income tax benefits, related to the closure of the two Phoenix offices.  Additionally, net income and Adjusted EBITDA decreased in the six months ended June 30, 2010 as a result of $186,000 of television advertising costs in the Denver market, $86,000 of training costs related to improving productivity of dentists and hygienists, and $40,000 of marketing expense for the new specialty dental center.  

During the first six months of 2010, the Company had capital expenditures of $1.6 million, purchased 28,999 shares of its Common Stock for approximately $488,000 and paid out approximately $689,000 in dividends to its shareholders while increasing total bank debt outstanding by approximately $64,000.  On August 10, 2010 , the Company's Board of Directors approved an additional $1,000,000 of stock repurchases.  Common Stock repurchases may be made from time to time as the Company's management deems appropriate.

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 63 dental offices, of which 38 were acquired and 25 were de novo developments.  The Company currently has 120 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 June 30, 2010 on Thursday, August 12, 2010 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 1-800-388-8975 and refer to Confirmation Code 1032564 approximately five minutes prior to the scheduled time. If you are unable to join the conference call on August 12, the rebroadcast number is 1-888-203-1112 with the pass code of 1032564. This rebroadcast will be available through August 26, 2010.

Non-GAAP Disclosures

This press release includes a non-GAAP financial measure with respect to Adjusted EBITDA.  The non-GAAP financial measure 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 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 growth prospects and performance in 2010 and other future periods, results at the de novo office opened in February 2010, expenses related to the closure of the Phoenix, Arizona offices and plans for a new specialty dental center. 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, 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.

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 discontinued operations, depreciation and amortization expense - Offices, depreciation and amortization expense – Corporate, stock-based compensation expense, interest expense, net and income tax expense to net income as in the table below.

SOURCE Birner Dental Management Services, Inc.