EATONTOWN, N.J., May 9 /PRNewswire-FirstCall/ -- Osteotech, Inc.
(Nasdaq: OSTE) reported today that consolidated revenues for the three
months ended March 31, 2006 increased 5% to $25.1 million as compared to
consolidated revenues of $23.8 million for the three months ended March 31,
2005. Consolidated revenues in the first quarter of 2006 increased 15% over
consolidated revenues of $21.9 million in the fourth quarter of 2005. Gross
margins increased slightly in the first quarter of 2006 to 46% from 45% in
the first quarter of 2005, mainly due to a reduced need for reserves for
expiring, excess and obsolete tissue inventories in 2006 compared to 2005.
Net income for the three months ended March 31, 2006 was $.2 million, or
$.01 diluted earnings per share, compared to a net loss of $.8 million, or
$.05 diluted net loss per share, for the three months ended March 31, 2005.
Sam Owusu-Akyaw, Osteotech's President and Chief Executive Officer,
stated, "Our team is pleased with the progress reflected in our financial
performance in the first quarter of 2006. We were able to drive revenue
growth, slightly improve gross margins and control operating expenses.
Although our profitability in the first quarter of 2006 was mainly the
result of gains related to changes in exchange rates on foreign
transactions denominated in US dollars, principally intercompany debt, and
the receipt of an additional consideration payment related to a subsidiary
sold in 2002, we still generated a small profit from operations."
Mr. Owusu-Akyaw concluded, "We are slowly beginning to see the benefits
of the initiatives started in 2005. I am proud of the dedication our
employees and independent sales agents have demonstrated to support the
many changes implemented to turn the company around."
DBM Segment revenues increased 12% to $14.5 million for the three
months ended March 31, 2006 compared to revenue of $12.9 million in the
first quarter of 2005. The increase in DBM Segment revenues is
substantially the result of increased unit sales volume in all product
categories, including increased unit sales from distribution of our
proprietary products directly to end users for which we recognize higher
per unit selling prices, partially offset by the impact of pricing
pressures on our domestic sales efforts.
Operating income in the DBM Segment was $1.4 million and $.6 million
for the three months ended March 31, 2006 and 2005, respectively. The
increase in operating income in the first quarter of 2006 was primarily due
to increased revenues and our ability to control operating expenses in 2006
compared to 2005. Gross margins in the DBM segment in the first quarter of
2006 were relatively flat with the first quarter of 2005.
Base Tissue Segment revenues declined 5% to $10.0 million in the first
quarter of 2006 as compared to $10.5 million in the corresponding period in
2005. The decline in Base Tissue Segment revenues is primarily due to a 43%
decline in service fees generated by processing allograft bone tissue for
clients in the first quarter of 2006 due to our processing 338 fewer donors
for these clients compared to the first quarter of 2005 and a 12% decline
in revenues from the distribution of Graftech(R) Bio-implants due to
continued lower demand and increased competition from polymer-based spinal
implants. Partially offsetting these declines was a 57% increase in the
worldwide distribution of traditional tissue in the first quarter of 2006
compared to the first quarter of 2005 mainly from increased unit sales
volume and the impact of a January 1 price increase, partially offset by
pricing pressures on our domestic distribution efforts.
The Base Tissue Segment generated an operating loss of $.9 million and
$1.5 million for the three months ended March 31, 2006 and 2005,
respectively. The operating loss in 2006 declined compared to 2005
primarily due to slightly improved gross margins and reduced operating
expenses, partially offset by the effects of the decline in revenues.
A conference call will be conducted by Sam Owusu-Akyaw, President and
Chief Executive Officer, as well as other members of Osteotech management,
on May 9, 2006 at 11:00 am Eastern Time to discuss first quarter results.
You are invited to listen to the conference call by dialing 706-634-5453.
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, May 23, 2006, by
dialing 706-645-9291 and indicating access code 8761706.
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 May 9, 2006 and the Company
undertakes no duty to update this information.
Osteotech, Inc., headquartered in Eatontown, New Jersey, is a leading
provider of human bone and bone connective tissue for transplantation and
an innovator in the development and marketing of biomaterial and implant
products for musculoskeletal surgery. For further information regarding
Osteotech, this press release or the conference call, please go to
Osteotech's website homepage at http://www.osteotech.com and to Osteotech's
Financial Information Request Form website page at
http://www.osteotech.com/finrequest.htm.
OSTEOTECH, INC. and SUBSIDIARIES
CONSOLIDATED REVENUE DETAIL
(dollars in thousands)
Three Months
Ended March 31,
2006 2005
DBM Segment
Domestic $12,340 $10,997
International 2,149 1,898
Total 14,489 12,895
Base Tissue Segment
Domestic:
Client Processing 1,779 3,244
Traditional Tissue 2,503 1,359
Graftech(R) Bio-implants 3,998 4,544
8,280 9,147
International:
Client Processing 141 138
Traditional Tissue 1,596 1,258
1,737 1,396
Total Base Tissue Segment 10,017 10,543
Other Product Lines 574 410
Net Revenues $25,080 $23,848
OSTEOTECH, INC. and SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(dollars in thousands, except per share data)
Three Months
Ended March 31,
2006 2005
Net revenues:
Service $24,506 $23,438
Product 574 410
25,080 23,848
Cost of services 13,165 13,063
Cost of products 336 158
13,501 13,221
Gross profit 11,579 10,627
Marketing, selling, general and
administrative 10,096 10,606
Research and development 1,172 962
11,268 11,568
Operating income (loss) 311 (941)
Interest expense and other, net (26) (296)
Income (loss) before income taxes 285 (1,237)
Income tax provision (benefit) 43 (406)
Net Income (loss) $242 $(831)
Earnings (loss) per share:
Basic $.01 $(.05)
Diluted $.01 $(.05)
Shares used in computing earnings (loss)
per share:
Basic 17,265,853 17,176,696
Diluted 17,363,156 17,176,696
OSTEOTECH, INC. and SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(dollars in thousands)
March 31, December 31,
2006 2005
Assets
Cash and cash equivalents $12,790 $13,484
Accounts receivable, net 18,021 14,879
Deferred processing costs 28,571 28,805
Inventories 1,392 1,278
Other current assets 3,679 3,438
Total current assets 64,453 61,884
Property, plant and equipment, net 39,430 39,962
Other assets 8,925 9,176
$112,808 $111,022
Liabilities and Stockholders' Equity
Accounts payable and accrued expense $18,155 $16,320
Current maturities of capital lease
obligation 672 655
Total current liabilities 18,827 16,975
Capital lease obligation 15,428 15,603
Other liabilities 7,499 7,689
Total liabilities 41,754 40,267
Stockholders' equity 71,054 70,755
$112,808 $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 of Osteotech, Inc.,
+1-732-542-2800
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