There is one thing that almost all of us can agree about: We don’t like going to the dentist. What if there was a way to sooth the pain…we’re talking about the financial pain too? Even if you have dental insurance, you’ll want to listen to this story. We’re talking about a micro-cap company called Biolase Technology (Nasdaq: BLTI), a maker of lasers and related products focused on technologies for improved applications and painless procedures in dentistry and in the medical field.

Good News – Bad News Story for Micro-Cap

As is the case with many micro-caps, there is a good news/bad news scenario with California-based Biolase. First, the bad news. Year-to-date, the stock is down almost 5% and in the past year, it’s down 47%. Five years ago, this was a $10 stock, but on March 16, it closed below $2.60. Not surprisingly, the company’s expenses have been exceeding revenue and that creates an unprofitable scenario.

Now the good news. Chairman and CEO Federico Pignatelli re-joined Biolase in late 2010 and in that time, he has helped Biolase slash production costs while increasing sales. From analyst David Sterman: “Revenue jumped more than 80% to $49 million in comparison with 2010, while the gross margin spiked 11 percentage points to 45%. In addition, the annual cash burn reduced sharply from $11.5 million to $3.4 million.”

That solidifies Pignatelli’s credentials as the right guy to lead the Biolase turnaround story and best of all, he works for a salary of just $1 per year. Net revenue for the 2011 fourth quarter was $13.2 million, up 36 percent from $9.7 million in the prior year period. Net revenue for the year ended December 31, 2011 was $48.9 million, up 87 percent from $26.2 million in 2010.

20% Growth Forecast for 2012

For 2012, Biolase expects revenue of $57 million to $60 million. Even the low end of that forecast would mean growth of close to 20%, which is what analysts are forecasting for fiscal 2012 and fiscal 2013. As of December 31, 2011, cash and cash equivalents totaled approximately $3.3 million, accounts receivable totaled $8.9 million. Said another way, even though Biolase wasn’t profitable last year, it does have about $9 million in working capital, which may not sound like much, it actually is when considering the company has a market cap of less than $80 million.

Analysts Looking for 100% Increase in Stock Price

Of course it cannot be overlooked that analysts expect Biolase to turn the corner and become profitable this year. The consensus EPS estimate is 2 cents for 2012 and that’s projected to jump to 12 cents a share in 2013. And for those that follow analysts’ price target, the average for Biolase right now is $5.50. The lowest is $5. Split the difference and if $5.25 comes to fruition, that means Biolase doubles from current levels. And the fact that at least three analysts cover an $80 million company says something about Biolase’s potential.

Another thing to note is that company insiders love the stock. As analyst Bret Jensen notes “Insiders are holding tight and the company has had net insider buying over the last year.”

Capital Market Relations, a leading small cap investor relations firm, views this as an opportunity to invest in a market leading disruptive technology at a significant discount to actual market value, taking advantage of a classic turnaround story.

So next time you head to the dentist, don’t think about the Novocaine or the bill. Think about Biolase and padding your brokerage account with BLTI.

Posted by Mike Casson                                                                                                                                                                    Executive Editor