Check out the 5/11 news on Yahoo! or I can paste it in if you can't access it. BWT opened an outlet in Lakewood, CO, a suburb of Denver, in affiliation with a leading cosmetic dentist. They also upped the charge from $500 to $600 for the whitening treatment. I wish I still had all my shares (bought at 4 1/2, sold 3/4 at 7 and 11). The price may bounce around a bit but don't fight the tape - it is definitely up. I read yesterday's release and am drooling for BWT to open a center here in the DC area so I can go for it (I'm 53 but not a smoker).
Also - here's an article from todays II Online:
BriteSmile: White Teeth Could Generate a lot of Green (5/12)
Individual Investor Online Analysis
Tell us what you think in the BWT Board.
By Craig Schneider 5/12/99
Making 876% over the past year has got to put a smile on your face. Now meet the company that is
delivering these returns and is making those smiles whiter, too.
BriteSmile (NYSE: BWT - Quotes, News, Boards) is tapping into the hottest trend to hit the cosmetic
dental industry since braces. Just check out the number of toothpaste brands touting whitening power
in the dental hygiene aisle of your local drug store. About 1.2 million Americans choose to whiten
their teeth each year, according to BriteSmile.
So, it is betting that there enough image-conscious people willing to plunk down $600 for its
one-hour procedure using its proprietary technology. No surprise, there are many skeptics out there.
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And so far word of mouth is slow to build.
However, the skeptics doubted the prospects for the laser vision correction (LVC) industry, given that
the few-minute procedure was to cost about $5,000. But, one look at how high those stocks have
climbed of late proves those skeptics were wrong.
BriteSmile's proprietary technology uses a gas plasma light with a new, wavelength-specific
(light-activated) bleaching chemistry. Patients see the results for an average of two-to-three years.
The active ingredient in the whitening gel is hydrogen peroxide, with 15% concentration,
significantly lower than the 35-50% used in other in-office whitening systems. "We believe given our
advantage in technology, we'll garner a big chunk of the market growth," says CFO Michael F.
Bonner.
The current alternatives include tray systems, which can run around $700 and require a patient to
wear the dental device for about three weeks, and a $2,000 laser-whitening procedure that takes
about three hours to perform. BriteSmile's procedure works on all teeth at once, unlike lasers, which
some doctors say can cause sensitivity problems from heat. The procedure also won't soften enamel
or existing fillings.
For BriteSmile, 1998 was a rough year, as it discontinued its laser-based and take-home and in-office
whitening kit businesses in favor of its new technology. During the last few months of the year,
BriteSmile reported no revenue.
What's getting investors most excited is BriteSmile's new retail concept: a stand-alone center devoted
entirely to the whitening procedure.
Indeed, shares closed up about 25% at a new 52-week high of $15.25 on Tuesday on news of its
newly-opened Denver whitening center. That's up from about a buck at the end of 1998. Now that the
stock sports a $259-million market capitalization and trades 350,000 shares on average each day,
seven times its recent average, analysts are bound to start noticing.
That's right, this low-key stock has no coverage yet.
The company, nonetheless, has been on a rather aggressive expansion plan of late. In the past
couple months, it has opened four locations in California: Beverly Hills, Irvine, Pasadena and Walnut
Creek. The next California openings will be in La Jolla (expected in July). It also opened its first
international operation in Toronto.
In addition to these centers, BriteSmile has opened an Associate Center in Louisville, KY. and most
recently, Denver. They are partnerships with local dentists who administer the treatment in their
established practice. Raleigh, N.C., and Houston, TX, are just a few of the many on the way. There
are plans for three Los Angeles centers.
The Denver Associated Center is already profitable after one-month of operation, says Anthony
Palaro, Chairman of BriteSmile. "The doctor wants us to open a center (6 seats versus 3)," and he
wants to do the procedures there. In the Associated Centers and in its international locals, BriteSmile
leases the proprietary equipment, provides $200,000 in marketing, and sells the gel to the dentist.
In return, BriteSmile collects a per-procedure fee from its Associated Center. Palaro says it charges a
comparable per procedure fee to VISX's (NASDAQ: VISX - Quotes, News, Boards) $260 fee.
What does VISX have to do with LVC?
Afterall, VISX is a leading supplier of excimer lasers in the United States with over 240 lasers and
80% market share. Well, Palaro was a founder of VISX, whose stock is up almost five-fold since we
recommended it and the industry in mid-November. Dr. John Warner, who was a developer of VISX's
technology, also helped develop BriteSmile's system.
Other than marketing, LVC and BriteSmile share another difficulty: "Word of mouth takes time to
build a base," says Palaro. "But the trend is up." Companies such as VISX, however, also had years of
experience developing abroad before coming to the states.
What's more, unlike VISX, which just supplies the laser systems to the centers of other companies,
BriteSmile delivers the product and controls the whitening centers. Is this double profits or double
trouble?
Well, many companies in the LVC industry took a while to become profitable. BriteSmile's model,
still unable to prove itself to the market, will be no different. "You'll see the centers generally lose
money in the early stages," says Bonner. Indeed, the company's net loss in the quarter ended
December 31, 1998 was $0.30 per share, compared to a net loss of $0.24 in the year-ago period.
Still, Palaro insists without revealing numbers: "We are ahead of plan by a wide margin by the
number of procedures per center per day." The company is looking to increase a half a procedure per
month per chair.
There are still a few bumps in the road for BriteSmile. Palaro says he didn't anticipate the time it
takes to identify a piece of real estate for centers. With several letters of intent, he says "we expect to
have all the centers on our rollout list for this year." Palaro also says it is in the process of raising $15
million in funding, but adds "we fundamentally have the money. That's ample funding with a
cushion."
Although not deemed an economic issue, the company is in an ongoing discussion in California with
the dental board over regulation issues. Some states differ in laws over what procedures a dental
hygienist can perform. For BriteSmile's procedure, a licensed dentist is always on premises for the
screening and to oversee the whitening procedure, but the hygienist performs most of the work.
Palaro says the company's system is exempt from the U.S. Food and Drug Administration but it's
currently seeking approval from the American Dental Association and the European Union.
Bottom Line:
As BriteSmile, which is scheduled to report its quarterly earnings later in the week, continues to
execute its roll-out strategy for its centers and build word of mouth, it won't be long before the rest of
the market catches on. There's still some upside.
Tell us what you think in the BWT Board. |
