Castle Dental Centers Acquires 16 Texas Dental Offices; Annualized Net Revenues of $15 Million; Most Strategic Acquisition To Date.

HOUSTON--(BUSINESS WIRE)--Jan. 5, 1999--Castle Dental Centers, Inc. (Nasdaq/NM: CASL), one of the largest dental practice management companies in the U.S., today announced the acquisition of Dental Centers of America (DCA), a San Antonio, Texas-based dental practice management company with annualized patient revenues of $15 million. With this transaction, Castle Dental's annualized patient revenues increase to approximately $100 million, with operations in four states, 85 offices and 220 dentists.

"This is our most strategic acquisition to date," said Castle Dental Chairman and Chief Executive Officer Jack H. Castle. "DCA is an excellent fit operationally; it complements our existing operations in both Austin and Dallas and extends our presence into the high-growth San Antonio marketplace which has been one of our primary targets for expansion. In addition, DCA has been using the same practice management information systems as Castle Dental, so the integration into our operations will be immediate and seamless. The two organizations have similar corporate cultures, including a strong retail orientation with a predominantly fee-for-service revenue base and similar dentist compensation programs. We can hit the ground running with minimal cultural and operational changes, creating true value."

DCA, which has been in business for more than eight years, has seven offices in San Antonio, seven in Dallas/Fort Worth, and two in Austin, brings Castle Dental's total number of dental centers under management to 85.

"Expanding into San Antonio, the eighth largest city in the U.S., gives us a significant presence in the four largest metropolitan areas in Texas and provides excellent access to dentists associated with The University of Texas Dental School in San Antonio. In addition to the attractive economics and growth potential of this market, it also provides us with a large, lower cost, non-professional labor pool. Our plans are to open a minimum of four new dental centers in San Antonio in 1999, the first of which will open before the end of the first quarter."

Castle Dental also announced that Mark Solomon, a former DCA owner and the managing director of operations for DCA, will assume the role of regional operations manager for Castle Dental's San Antonio operations. "Mark is an extremely capable operator and will be responsible for helping build out the San Antonio market," Castle said.

With the addition of DCA, Castle Dental has 15 offices in the Dallas/Fort Worth market including two new centers that will open in the first quarter of 1999. "We are the second largest dental practice management company in Dallas/Fort Worth and consider this area one of our primary growth markets for 1999," Castle said. "With 15 offices, we have much greater breadth and visibility in establishing `The Castle' brand identity and further leveraging our advertising dollars and regional infrastructure.

"We now have a total of 13 offices in Austin, including two from DCA, and have substantially completed building out this market. We will be able to absorb these offices into our existing Austin operations."

Castle added, "DCA is an important strategic addition to our company. The dentists and staff are excellent and we are excited to have them join our team. We also look forward to the near-term opportunities we have to drive revenues and expand market share through our increased presence in Texas."

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. Including the recently announced acquisitions, Castle manages 85 dental centers with 220 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 operating results, performance or condition of the Company are fluctuations in the economy, the degree and nature of competition 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.