First Quarter Highlights:
    -- First-quarter revenue jumped 73% to $25.2 million
    -- First-quarter operating income increased 145% to $2.6 million
    -- First-quarter operating margin improved by 310 basis points
    -- Q1 EPS $0.15 vs. $0.11, a 36% increase
    -- Same market growth of 35% for first-quarter

    HOUSTON, May 6 /PRNewswire/ -- Castle Dental Centers (Nasdaq: CASL),
one of the largest dental management companies in the U.S., today announced
that continued internal growth drove patient revenues and net income for the
first quarter ended March 31, 1999.  Additionally the company announced that
its existing credit facility has been increased to $55.0 million from
$47.5 million.

    First Quarter Results
    Patient revenues rose 73 percent for the first quarter to $25.2 million
from $14.5 million for the same quarter a year ago.  Operating income for
the quarter increased 145 percent to $2.6 million for the quarter compared
with $1.1 million for the same quarter last year.  Net income for the quarter
was $1.0 million, or $0.15 per share (diluted) compared with $662,000, or
$0.11 per share (diluted), for the prior year period.

    Expanding Market Share Through De Novo Development
    Commenting on the company's performance, Chairman and Chief Executive
Officer, Jack H. Castle, Jr., said, "One of our stated goals has been to
increase our market share, primarily through de novo development.  During the
quarter we opened 8 new centers and we are solidly on track for the 25 new
centers we have planned for this year.  The addition of these new centers
brings the company's total to 93 dental centers.  We firmly believe that
focusing on de novo development is the right strategy to continue to build
shareholder value over the long-term.  This strategy will reduce our
dependence on acquisitions for revenue growth while maintaining our internal
growth objectives.
    "Additionally, we will be entering the Corpus Christi, Texas market solely
through the development of de novo centers.  This is a first, and we are very
excited to see what develops as we continue to refine our de novo strategy.
We have spent a significant amount of time researching the local market
demographics, the access to dental professionals, and the market potential.
We anticipate opening these centers during July of 1999," concluded Castle.
    "We have also made tremendous progress in the refinement of our management
processes.  Our centers are grouped into ten markets, with an emphasis in each
market on growing revenues and the sharing of best practices.  We continue to
strengthen our operating staff with industry and operational expertise to
support the active growth within each market.  For the quarter, overall same
market growth was 35 percent.  As we look towards the future, we will continue
to take advantage of market expansion opportunities in markets where we can
add value."
    Castle Dental Centers, Inc. develops, manages and operates integrated
dental networks through contractual affiliations with general, orthodontic and
multi-specialty dental practices in the U.S.  Castle manages 93 dental centers
with approximately 235 affiliated dentists in Texas, Florida, Tennessee and
California with annualized patient revenues of approximately $100 million.
    Information contained in this press release, other than historical
information, may be considered forward-looking in nature and is subject to
various risks, uncertainties and assumptions.  Among the key factors that may
have a direct bearing on the Company are fluctuations in the economy, the
degree and nature of competitions and the demand for the Company's services,
changes in laws and regulations affecting the Company's business, the
Company's inability at any time to complete acquisitions and integrate the
operations of acquired businesses, and numerous other factors discussed in
Castle Dental's filings with the Securities and Exchange Commission.


                         Castle Dental Centers, Inc.
                           Statement Of Operations
                    (In thousands, except per share data)


                                                    Three Months Ended
                                                         March 31,
                                                   1999            1998

    Net patient revenues                         $25,167         $14,541

    Expenses:
      Dentist salaries and other
        professional costs                         6,598           3,746
      Clinical salaries                            5,329           3,191
      Dental supplies and laboratory fees          2,294           1,318
      Rent and lease expense                       1,447             759
      Advertising and marketing                      814             594
      Depreciation and amortization                1,413             621
      Other operating expenses                     2,224           1,378
      General and administrative                   2,410           1,858
        Total expenses                            22,528          13,465

    Operating income                               2,639           1,076

    Interest expense                                 993             124
    Other income, net                                  1             (22)

    Income before income taxes                     1,645             974

    Provision for income taxes                       642             312

    Net income                                    $1,003            $662

    Income per common share:
      Basic and Diluted                            $0.15           $0.11

    Weighted average number of common and
      common equivalent shares outstanding:
        Basic                                      6,825           6,236
        Diluted                                    6,873           6,236


                                                  Period ended March 31,
                                                   1999             1998
    Selected Balance Sheet Data:

      Working capital                            $11,399          $3,824
      Intangible assets                           65,633          44,928
      Total assets                               103,984          68,177
      Long-term debt                              46,087          21,057
      Stockholders' equity                        37,400          32,026

Link to this page: