EATONTOWN, N.J., March 8 /PRNewswire-FirstCall/ -- Osteotech, Inc.
(Nasdaq: OSTE) reported today that net income was $.5 million or $.03
diluted earnings per share for the three months ended December 31, 2006
compared to a net loss of $11.6 million or $.67 diluted net loss per share
for the three months ended December 31, 2005. As previously reported,
consolidated revenues for the fourth quarter of 2006 were $25.4 million, a
16% increase over consolidated revenues of $21.9 million for the fourth
quarter of 2005. Gross margins increased to 50% in the fourth quarter of
2006 from 19% in the fourth quarter of 2005, mainly due to implemented
productivity initiatives and increased unit sales.
Sam Owusu-Akyaw, Osteotech's President and Chief Executive Officer,
stated, "Throughout 2006, we have focused on creating a culture of
execution and accountability. Our financial results clearly show the
benefits from these efforts as we returned to profitability in the first
quarter and remained profitable for all quarters in 2006. We have high
performance expectations for the organization, but in the short-term I must
temper those expectations so we can effectuate a solid, sustainable-growth
business model."
Mr. Owusu-Akyaw continued, "Our growth will depend on our ability to
execute our distribution and new product initiatives during 2007. We
believe we will begin to realize the benefits from our investments in
distribution in the second half of year, which will then provide the
platform for growth as we introduce new products in both 2007 and 2008. We
expect revenues to grow at a 6% rate in 2007 and we are setting a minimum
growth target of 15% for 2008."
Mr. Owusu-Akyaw concluded, "We will utilize the additional
profitability from our productivity improvements to fund the investments in
our business. We anticipate sustaining our profitability in 2007 at
approximately the same level as 2006 and then expect net income to double
in 2008."
Diluted earnings per share were $.11 and net income was $1.9 million
for the year ended December 31, 2006 compared to a net loss of $21.1
million or $1.23 diluted net loss per share for the same period in 2005.
Consolidated revenues for full-year 2006 and 2005 were $99.2 million and
$93.3 million, respectively, representing a 6% increase in revenues year
over year. Gross margins increased to 48% in 2006 from 34% in 2005.
DBM Segment revenues increased 14% and 9% in the fourth quarter and
full- year 2006, respectively, compared to the corresponding periods in
2005, mainly as a result of revenue from the Xpanse(TM) Bone Inserts
introduced in the fourth quarter of 2005 and increased unit sales volume in
both Grafton(R) DBM and private label DBM tissue grafts. In the Traditional
Tissue Segment, revenues from the world-wide distribution of traditional
tissue increased 44% in the fourth quarter of 2006 and 45% for the year
ended December 31, 2006 primarily from increased unit volume. Revenues in
the Hybrid/Synthetic Segment, which are generated from our GraftCage(TM)
Spacers, were $.3 million and $1.3 million in the fourth quarter and
full-year 2006, respectively, after introduction of this product line in
the first half of 2006. In the Client Services Segment, fees from the
processing of donors increased 30% in the fourth quarter of 2006 as
compared to the same period in 2005 primarily due to processing additional
donors for our clients, while service fees for the year ended December 31,
2006 declined 19% from the prior year as a result of processing fewer
donors for our clients during the first three quarters of 2006 as compared
to the same period in 2005. A decrease in units sold in our Spinal
Allograft Segment lead to revenue declines of 17% and 19% for the three
months and year ended December 31, 2006, respectively, compared to the same
periods in 2005. Effective December 31, 2006, we have re-organized our
business segments into the segments discussed above from the DBM and Base
Tissue Segments previously reported. Segment information which will be
included in our Annual Report on Form 10-K will reflect the above noted
segment re-alignment and prior year information will be restated to conform
to the current presentation.
Mr. Owusu-Akyaw will host a conference call on March 8 at 9:00 am
Eastern Time to discuss full year and fourth quarter results. You are
invited to listen to the conference call by dialing 706-643-1624. The
conference will also be simultaneously web cast at
http://www.osteotech.com. Automated playback will be available two hours
after completion of the live call, through midnight, March 22, 2007, by
dialing 706-645-9291 and indicating access code 1509134.
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, differences in
anticipated and actual product and service introduction dates, the ultimate
success of those products in the market place, 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 March 8, 2007 and the Company
undertakes no duty to update this information.
Osteotech, Inc., headquartered in Eatontown, New Jersey, is a global
leader in providing osteo-biologic solutions to surgeons and patients for
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.
OSTEOTECH, INC. and Subsidiaries
CONSOLIDATED STATEMENTS OF OPERATIONS
(dollars in thousands, except per share data)
Three Months Year Ended
Ended December 31, December 31,
2006 2005 2006 2005
Revenues $25,431 $21,924 $99,241 $93,307
Cost of revenue 12,838 17,768 51,439 61,445
Gross profit 12,593 4,156 47,802 31,862
Marketing, selling
and general
and administrative 10,771 13,729 40,627 46,909
Research and development 1,321 1,734 4,828 5,021
12,092 15,463 45,455 51,930
Operating income (loss) 501 (11,307) 2,347 (20,068)
Interest expense, net (176) (228) (914) (774)
Other 57 56 416 (790)
Income (loss) before
income taxes 382 (11,479) 1,849 (21,632)
Income tax provision
(benefit) (163) 132 (58) (515)
Net Income (loss) $545 $(11,611) $1,907 $(21,117)
Earnings (loss) per share:
Basic $.03 $(.67) $.11 $(1.23)
Diluted $.03 $(.67) $.11 $(1.23)
Shares used in computing
loss per share:
Basic 17,347,880 17,219,856 17,298,352 17,195,868
Diluted 17,542,228 17,219,856 17,399,719 17,195,868
CONSOLIDATED SEGMENT REVENUE DETAIL
(dollars in thousands)
Three Months Year Ended
Ended December 31, December 31,
2006 2005 2006 2005
DBM $14,792 $12,960 $57,493 $52,704
Traditional Tissue 4,674 3,256 16,955 11,676
Spinal Allografts 3,027 3,665 13,795 16,960
Hybrid/Synthetic 332 -- 1,270 --
Client Services 2,456 1,893 9,128 11,277
Other Product Lines 150 150 600 690
Revenues $25,431 $21,924 $99,241 $93,307
CONDENSED CONSOLIDATED BALANCE SHEET
(dollars in thousands)
December 31,
2006 2005
Assets
Cash and cash equivalents $17,946 $13,484
Accounts receivable, net 18,507 14,879
Deferred processing costs 29,067 28,805
Inventories 1,005 1,278
Other current assets 2,795 3,438
Total current assets 69,320 61,884
Property, plant and equipment, net 36,340 39,962
Other assets 7,373 9,176
$113,033 $111,022
Liabilities and Stockholders' Equity
Accounts payable and accrued expense $15,861 $16,320
Current maturities of capital lease obligation 727 655
Total current liabilities 16,588 16,975
Capital lease obligation 14,876 15,603
Other liabilities 7,716 7,689
Total liabilities 39,180 40,267
Stockholders' equity 73,853 70,755
$113,033 $111,022
SOURCE Osteotech, Inc.
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Related links:
http://www.osteotech.com/
http://www.prnewswire.com/comp/668050.html/
CONTACT:
Mark H. Burroughs for Osteotech, Inc.,
+1-732-542-2800
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