Coast Dental Services, Inc. Anticipates Meeting Targeted Revenues, Expects Temporary Earnings Shortfall and Updates Company Share Buyback Program.

TAMPA, Fla.--(BUSINESS WIRE)--June 16, 1999--

Coast Dental Services, Inc. (the "Company") (Nasdaq:CDEN) a leading developer and operator of Dental Centers announced today that its revenues would be ahead of Wall Street's expectations but its net income would fall short of analysts expectations for the second quarter ending June 30, 1999. The Company disclosed that it expects gross revenues at managed Dental Centers for the period to be approximately $15.4 to $15.7 million and its net income to be approximately $500,000 to $600,000 or $.07 to $.09 per share.

The Company disclosed that the shortfall in net income is the result of several factors. First, the Company has incurred significant and unanticipated expense and disruption due to its Center wide software conversion that commenced this quarter. The Company believes the long-term advantages of such conversion to Windows-based Dental Center software will strongly outweigh the short-term negative impact on its net income. Upon completion, implementation of the software in all Dental Centers will provide the Company with the capability to streamline the front desk processes thus allowing greater efficiencies to be gained by the Dental Center staff. With the implementation of this software, the Dental Center will have the capability to take advantage of current and future applications utilizing the Internet, as well as new technology and processes as they become available.

The Company also believes that the addition of its Virginia operations earlier than originally anticipated has placed a temporary strain on its overall margins. Additionally, its mix of Dental Centers has impacted the Company's net income. Currently, 28% of the Company's Dental Centers are less than twelve months old. One year ago only 22% of its Dental Centers were less than twelve months old and two years ago only 7% of its Dental Centers were less than twelve months old. Management believes that the Company's continued implementation of the software conversion program coupled with the new Virginia operations and larger mix of denovo Dental Centers could combine to continue to temporarily impact the Company's net income over the next three to six months.

The Company indicated that generally its denovo Centers grow significantly each quarter after opening, but pointed out that maturity can take over two years to achieve in a Center. Profitability differs in each Dental Center but generally takes approximately three to nine months to occur in a denovo Dental Center.

Terek Diasti, Chairman and CEO of the Company indicated: "The Company believes that its substantial cash, strong cash flow, low debt position and its proven operating model will help to sustain the Company while we are suffering temporarily due to the software implementation, the Virginia additions and a larger mix of relatively new Dental Centers. We remain absolutely committed to the Coast operating model which emphasizes internally developed Dental Centers instead of higher cost acquired Dental Centers." Mr. Diasti emphasized, "We strongly believe that the results of the software conversion and the addition of over 60 internally developed Dental Centers during the last several years will provide significant long term value to our shareholders. The opportunities to grow what we have without spending on external expansion are absolutely phenomenal. We will spend the remainder of the year focused on completing the technology implementation and enhancing our returns in our existing Dental Centers, which have significant growth potential. Our confidence in the Company's strategy is evidenced through our purchase of 509,200 shares of Company stock to date and our intent to continue to aggressively buy back shares in the future."

Coast Dental Services, Inc. provides practice management services to affiliated dental care providers in Dental Centers located in Florida, Georgia, Tennessee and Virginia. As of May 31, 1999, the Company managed 123 Dental Centers.

This press release and certain information provided periodically in writing or orally by the Company's officers or its agents contain statements which constitute "forward-looking statements" within the meaning of Section 27A of the Securities Act, as amended and Section 21E of the Securities Exchange Act of 1934. The words "expect", "believe", "goal", "plan", "intend", "estimate" and similar expressions and variations thereof if used are intended to specifically identify forward-looking statements. Those statements appear in a number of places in this Press Release and include statements regarding the intent, belief or current expectations of the company, with respect to the Company's operating model, growth strategy, its competitive position and the Company's anticipated future performance and operating results. Investors and prospective investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, and that actual results may differ materially from those projected in the forward-looking statements as a result of various factors. The factors that might cause such differences are set forth in the Company's previous filings with the Securities and Exchange Commission. The Company undertakes no obligation to publicly update or revise the forward-looking statements made in the Press Release to reflect events or circumstances after the date of the Press Release or to reflect the occurrence of unanticipated events.