EATONTOWN, N.J., Nov. 7 /PRNewswire-FirstCall/ -- Osteotech, Inc.
(Nasdaq: OSTE), a leader in the emerging field of biologic products for
regenerative healing, reported today that revenue for the three months ended
September 30, 2008 was $24.1 million compared to $25.7 million for the three
months ended September 30, 2007. The decline in third quarter 2008 revenue
compared to the prior year was primarily driven by a $2.8 million reduction in
private label DBM revenue, which was partially offset by a 6% increase in our
base line revenue, which includes our Grafton, Xpanse, Plexur and traditional
tissue franchises. Gross margin was 54% and 55% in the third quarter of 2008
and 2007, respectively. Net income for the three months ended September 30,
2008 was $58 thousand compared to net income of $1.6 million, or $.09 diluted
earnings per share, for the third quarter of 2007.
Revenue for the nine months ended September 30, 2008 increased 2% to $79.2
million from $77.3 million for the nine months ended September 30, 2007. The
revenue growth in 2008 compared to 2007 is mainly driven by a 6% increase in
our base line revenue and $1.0 million in incremental revenue from the
processing of donors, partially offset by a $3.1 million decline in private
label DBM revenue. Gross margin was 53% for the first nine months of 2008
compared to 51% for the first nine months of 2007. Net income for the nine
months ended September 30, 2008 was $2.6 million, or $.15 diluted earnings per
share, compared to net income of $1.8 million, or $.10 diluted earning per
share, for the same period in the prior year. Net income in 2008 included
$1.0 million associated with the settlement of certain litigation, while net
income for 2007 was negatively impacted by costs of $1.1 million related to
the settlement of certain litigation.
Sam Owusu-Akyaw, Osteotech's President and Chief Executive Officer,
stated, "The transition of our business model is almost complete. Our new
product development strategy is on track to deliver new biologic products to
the marketplace. We continue to execute on our access distribution strategy
and we built leverage into our back office structure and systems. I continue
to be encouraged by the progress we are making. We are confident the new
product introductions scheduled for 2009 and increased effectiveness of our
distribution system will be the catalysts to allow us to continue the growth
of our base line business."
Mr. Owusu-Akyaw will host a conference call on November 7, 2008 at 9:00
a.m. Eastern Time to discuss 2008 third quarter financial results. You are
invited to listen to the conference call by dialing 1-973-200-3375. The
conference will also be simultaneously webcast at http://www.osteotech.com.
Automated playback will be available two hours after completion of the live
call, through midnight, on Friday, November 21, 2008, by dialing
1-706-645-9291 and indicating access code 66480835.
Osteotech, Inc., headquartered in Eatontown, New Jersey, is a global
leader in providing OsteoBiologic solutions for regenerative medicine to
support surgeons and their patients in the repair of the musculoskeletal
system through the development of innovative therapy-driven products that
alleviate pain, promote biologic healing and restore function. For further
information regarding Osteotech, this press release or the conference call,
please go to Osteotech's website at http://www.osteotech.com.
Certain statements made throughout this press release that are not
historical facts contain forward-looking statements (as such are defined in
the Private Securities Litigation Reform Act of 1995) regarding the Company's
future plans, objectives and expected performance. Any such forward-looking
statements are based on assumptions that the Company believes are reasonable,
but are subject to a wide range of risks and uncertainties and, therefore,
there can be no assurance that actual results may not differ materially from
those expressed or implied by such forward-looking statements. Factors that
could cause actual results to differ materially include, but are not limited
to, the Company's ability to develop and introduce new products, differences
in anticipated and actual product and service introduction dates, the ultimate
success of those products in the marketplace, the continued acceptance and
growth of current products and services, the impact of competitive products
and services, the availability of sufficient quantities of suitable donated
tissue and the success of cost control and margin improvement efforts. Certain
of these factors are detailed from time to time in the Company's periodic
reports filed with the Securities and Exchange Commission. All information in
this press release is as of November 7, 2008 and the Company does not intend
to update this information.
Osteotech, Inc. and Subsidiaries
Consolidated Segment Revenue Detail
(dollars in thousands)
Three Months Nine Months
Ended September 30, Ended September 30,
2008 2007 2008 2007
DBM $ 14,023 $ 17,044 $ 47,564 $ 48,687
Hybrid/Synthetic 816 528 2,187 1,169
Traditional Tissue 5,246 3,963 15,606 13,132
Spinal Allografts 1,943 2,292 6,479 8,301
Client Services 1,706 1,664 6,527 5,536
Other Product Lines 329 160 884 513
Revenue $ 24,063 $ 25,651 $ 79,247 $ 77,338
Consolidated Statements of Operations
(dollars in thousands, except per share data)
Three Months Nine Months
Ended September 30, Ended September 30,
2008 2007 2008 2007
Revenue $ 24,063 $ 25,651 $ 79,247 $ 77,338
Cost of revenue 11,182 11,443 37,622 38,023
Gross profit 12,881 14,208 41,625 39,315
Marketing, selling and
general and administrative 10,476 10,981 33,479 33,105
Research and development 1,739 1,248 5,273 3,693
Operating income 666 1,979 2,873 2,517
Interest expense, net (276) (157) (762) (459)
Other income (loss) (270) (208) 953 (186)
Income before income taxes 120 1,614 3,064 1,872
Income tax provision 62 10 452 61
Net Income $58 $1,604 $2,612 $1,811
Earnings per share:
Basic $- $.09 $.15 $.10
Diluted $- $.09 $.15 $.10
Shares used in computing
earnings per share:
Basic 17,881,018 17,573,134 17,749,402 17,494,807
Diluted 17,993,900 17,990,101 17,854,319 17,858,501
Osteotech, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(dollars in thousands)
September 30, December 31,
2008 2007
Assets
Cash and cash equivalents $19,331 $ 22,777
Accounts receivable, net 20,420 19,353
Deferred processing costs 34,478 30,850
Inventories 1,375 1,171
Prepaid expenses and other current assets 2,842 3,957
Total current assets 78,446 78,108
Property, plant and equipment, net 35,427 34,508
Other assets 12,081 7,735
$125,954 $120,351
Liabilities and Stockholders' Equity
Accounts payable and accrued liabilities $ 21,659 $ 19,364
Current maturities of capital lease obligation 871 807
Total current liabilities 22,530 20,171
Capital lease obligation 13,407 14,069
Other liabilities 7,165 7,083
Total liabilities 43,102 41,323
Stockholders' equity 82,852 79,028
$125,954 $120,351
