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Form 8-K BIRNER DENTAL MANAGEMENT For: Nov 13

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November 13, 2014 8:31 AM EST

�

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

�

FORM 8-K

�

CURRENT REPORT PURSUANT

TO SECTION 13 OR 15(D) OF THE

SECURITIES EXCHANGE ACT OF 1934

�

�

Date of report (Date of earliest event reported) November 13, 2014

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Birner Dental Management Services, Inc.

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�

�(Exact Name of Registrant as Specified in Its Charter)

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Colorado

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(State or Other Jurisdiction of Incorporation)

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0-23367 84-1307044
�(Commission File Number) (IRS Employer Identification No.)

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1777 S. Harrison Street, Suite 1400, Denver, CO 80210
�(Address of Principal Executive Offices) �(Zip Code)

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(303) 691-0680

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(Registrant's Telephone Number, Including Area Code)

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�

�(Former Name or Former Address, if Changed Since Last Report.)

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Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

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�Written communications pursuant to Rule 425 under the Securities Act (17 DFR 230.425)

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�Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

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�Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

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�Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

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Item�2.02.Results of Operations and Financial Condition..

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On November 13, 2014, Birner Dental Management Services, Inc. issued the attached press release reporting its financial results for the quarter and nine months ended September 30, 2014. The press release is attached as Exhibit 99.1.

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Item�9.01Financial Statements and Exhibits

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Exhibit No. � Description
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99.1 � �Press Release of Birner Dental Management Services, Inc. dated November 13, 2014.

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SIGNATURES

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Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized.

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� BIRNER DENTAL MANAGEMENT SERVICES, INC. �
� a Colorado corporation �
� � � �
� � � �
Date:��November 13, 2014 �By: /s/ Dennis N. Genty �
� Name: Dennis N. Genty �
� Title: Chief Financial Officer, Secretary, and Treasurer �
� � (Principal Financial and Accounting Officer) �

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EXHIBIT INDEX

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Exhibit No. � Description
� � �
99.1 � �Press Release of Birner Dental Management Services, Inc. dated November 13, 2014.

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�

Birner Dental Management Services, Inc. Announces Results For 3Q 2014

DENVER, Nov. 13, 2014 /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, 2014. For the quarter ended September 30, 2014, revenue increased $40,000, or 0.2%, to $16.1 million. The Company's earnings before interest, taxes, depreciation, amortization, non-cash expense associated with stock-based compensation, accrued severance compensation expense and accrued office consolidation expense ("Adjusted EBITDA") increased $151,000, or 17.5%, to $1.0 million for the quarter ended September 30, 2014. Net income/(loss) for the quarter ended September 30, 2014 decreased $404,000 to $(403,000) compared to $1,000 for the quarter ended September 30, 2013. Earnings/(loss) per share decreased to $(0.22) for the quarter ended September 30, 2014 compared to $0.00 for the quarter ended September 30, 2013.

For the nine months ended September 30, 2014, revenue increased $682,000, or 1.4%, to $49.8 million. The Company's Adjusted EBITDA decreased $251,000, or 7.0%, to $3.3 million for the nine months ended September 30, 2014. Net income/(loss) for the nine months ended September 30, 2014 decreased $834,000 to $(413,000) compared to $422,000 for the nine months ended September 30, 2013. Earnings/(loss) per share decreased to $(0.22) for the nine months ended September 30, 2014 compared to $0.23 for the nine months ended September 30, 2013.

Fred Birner, Chief Executive Officer of the Company, stated "As we outlined in our second quarter, 2014 press release, the Company made certain expense reductions at the end of the second quarter, 2014 to more align its cost structure with the Company's revenue growth. We believe that you are beginning to see the results of these efforts in the third quarter of 2014 as evidenced by the Company's growth in Adjusted EBITDA for this quarter."

Since the beginning of the fourth quarter of 2012, the Company has opened six de novo offices: in Tucson, Arizona and in Erie, Colorado in the fourth quarter of 2012; in Loveland, Colorado in July 2013; in Monument, Colorado in December 2013; in Fort Collins, Colorado in May 2014; and in Scottsdale, Arizona, in October 2014. The Company has leased space for three additional de novo offices: in Albuquerque, New Mexico, Westminster, Colorado and Commerce City, Colorado, which are anticipated to open in 2015. The Company is also evaluating and negotiating leases for additional sites throughout its markets.

During the first nine months of 2014, the Company had capital expenditures of approximately $4.3 million, paid approximately $1.2 million in dividends to its shareholders and increased total bank debt outstanding by approximately $2.2 million. During the nine months ended September 30, 2014, the Company completed remodels and/or relocations of three of its offices and converted six additional 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 67 dental offices, of which 36 were acquired and 31 were de novo developments. The Company currently has 115 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, 2014 on Thursday, November 13, 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 1-888-299-7209 and refer to Confirmation Code 5032167 approximately five minutes prior to the scheduled time. If you are unable to join the conference call on November 13, 2014, the rebroadcast number is 1-888-203-1112 with the pass code of 5032167. This rebroadcast will be available through November 26, 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 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 OPERATIONS

(UNAUDITED)


Quarters Ended

Nine Months Ended


September 30,

September 30,


2013

2014

2013

2014

REVENUE:








Dental practice revenue

$ �14,654,444

$ �14,823,803

$ �44,830,421

$ �45,867,717

Capitation revenue

1,406,627

1,277,041

4,271,244

3,916,049


16,061,071

16,100,844

49,101,665

49,783,766










DIRECT EXPENSES:








Clinical salaries and benefits

9,653,405

9,643,784

29,059,351

29,471,225

Dental supplies

701,332

776,431

2,139,576

2,230,122

Laboratory fees

775,255

797,007

2,333,963

2,493,786

Occupancy

1,498,608

1,511,804

4,410,146

4,429,726

Advertising and marketing

280,516

209,061

858,753

678,310

Depreciation and amortization

855,544

1,103,335

2,513,788

3,097,413

General and administrative

1,294,460

1,304,149

3,562,103

4,129,054


15,059,120

15,345,571

44,877,680

46,529,636











Contribution from dental offices

1,001,951

755,273

4,223,985

3,254,130










CORPORATE EXPENSES:








General and administrative�

1,109,573

(1)

1,327,993

(1)

3,512,392

(2)

3,677,019

(2)


Depreciation and amortization

50,016

56,132

145,767

167,426










OPERATING INCOME/(LOSS)

(157,638)

(628,852)

565,826

(590,315)










OTHER INCOME (EXPENSE)








Change in fair value of contingent liabilities

196,000

-

196,000

-

Interest (expense), net

(36,795)

(31,293)

(70,307)

(86,072)










INCOME/(LOSS) BEFORE INCOME TAXES

1,567

(660,145)

691,519

(676,387)

Income tax expense/(benefit)

612

(257,457)

269,693

(263,791)










NET INCOME/(LOSS)

$ � � � � � � �955

$ � � �(402,688)

$ � � � 421,826

$ � � �(412,596)











Net income/(loss) per share of Common Stock - Basic

$ � � � � � � 0.00

$ � � � � � �(0.22)

$ � � � � � � 0.23

$ � � � � � �(0.22)











Net income/(loss) per share of Common Stock - Diluted

$ � � � � � � 0.00

$ � � � � � �(0.22)

$ � � � � � � 0.23

$ � � � � � �(0.22)











Cash dividends per share of Common Stock

$ � � � � � � 0.22

$ � � � � � � 0.22

$ � � � � � � 0.66

$ � � � � � � 0.66











Weighted average number of shares of








Common Stock and dilutive securities:�








Basic

1,851,598

1,860,089

1,851,150

1,858,232











Diluted

1,863,783

1,860,089

1,861,421

1,858,232












(1)

Corporate expense - general and administrative includes $114,291 of stock-based compensation expense pursuant to ASC Topic 718 for the quarter ended September 30, 2013 and� $62,765 of stock-based compensation expense pursuant to ASC Topic 718 and $338,861 of accrued severance compensation expense for the quarter ended September 30, 2014.

(2)

Corporate expense - general and administrative includes $351,873 of stock-based compensation expense pursuant to ASC Topic 718 for the nine months ended September 30, 2013 and� $232,800 of stock-based compensation expense pursuant to ASC Topic 718 and $338,861 of accrued severance compensation expense for the nine months ended September 30, 2014.�

BIRNER DENTAL MANAGEMENT SERVICES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

December 31,�

September 30,

ASSETS

2013

2014

CURRENT ASSETS:



Cash and cash equivalents

$ � � � �469,827

$ � � � � 277,707


Accounts receivable, net of allowance for doubtful



accounts of approximately $420,000 and $420,000, respectively

3,250,319

3,195,181


Notes receivable

34,195

34,195


Deferred tax asset

272,523

297,240


Income tax receivable

176,935

-


Prepaid expenses and other assets

455,158

656,047




Total current assets

4,658,957

4,460,370



PROPERTY AND EQUIPMENT, net

10,126,399

11,814,428



OTHER NONCURRENT ASSETS:



Intangible assets, net

9,292,868

8,621,999


Deferred charges and other assets

165,661

161,728


Notes receivable

109,501

89,653




Total assets

$ � 24,353,386

$ � �25,148,178



LIABILITIES AND SHAREHOLDERS' EQUITY







CURRENT LIABILITIES:



Accounts payable�

$ � � 2,548,240

$ � � �2,002,037


Accrued expenses

1,641,509

1,811,147


Accrued payroll and related expenses

2,192,495

2,722,881


Income taxes payable

-

539,820




Total current liabilities

6,382,244

7,075,885



LONG-TERM LIABILITIES:



Deferred tax liability, net

3,030,205

2,230,830


Long-term debt

8,091,790

10,301,988


Other long-term obligations

965,959

988,031




Total liabilities

18,470,198

20,596,734



SHAREHOLDERS' EQUITY:



Preferred Stock, no par value, 10,000,000 shares



authorized; none outstanding

-

-


Common Stock, no par value, 20,000,000 shares authorized;



1,852,565 and 1,860,089 shares issued and outstanding, respectively

779,758

1,088,269


Retained earnings

5,103,430

3,463,175




Total shareholders' equity

5,883,188

4,551,444




Total liabilities and shareholders' equity

$ � 24,353,386

$ � �25,148,178



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/(loss) can be made by adding depreciation and amortization expense - Offices, depreciation and amortization expense  Corporate, stock-based compensation expense, interest expense, net, income tax expense/(benefit), accrued severance compensation expense and accrued office consolidation expense to net income/(loss) and subtracting the change in fair value of contingent liabilities as in the table below.





Quarter

Nine Months


Ended September 30,

Ended September 30,


2013

2014

2013

2014

RECONCILIATION OF ADJUSTED EBITDA:







Net income/(loss)

$955

$ (402,688)

$421,826

$ (412,596)


Add back:








Depreciation and amortization - Offices

855,544

1,103,335

2,513,788

3,097,413

Depreciation and amortization - Corporate

50,016

56,132

145,767

167,426

Stock-based compensation expense

114,291

62,765

351,873

232,800

Interest expense, net

36,795

31,293

70,307

86,072

Income tax expense/(benefit)

612

(257,457)

269,693

(263,791)

Accrued severance compensation expense

-

338,861

-

338,861

Accrued Office consolidation expense

-

80,560

-

80,560


Less:









Change in fair value of contingent liabilities

(196,000)

-

(196,000)

-









Adjusted EBITDA

$862,213

$1,012,801

$3,577,254

$3,326,745












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