EATONTOWN, N.J., May 9 /PRNewswire-FirstCall/ -- Osteotech, Inc.
(Nasdaq: OSTE) reported today that revenue for the first quarter of 2007
was $25.2 million, a slight increase over revenue of $25.1 million for the
first quarter of 2006. Gross margins increased to 49% in the first quarter
of 2007 from 47% in the first quarter of 2006, mainly due to the benefits
realized from our productivity initiatives related to tissue utilization
and operational productivity implemented in 2006. We generated a net loss
of $.6 million or $.04 diluted net loss per share for the three months
ended March 31, 2007 including the costs associated with the settlement of
certain litigation and related legal fees of $1.1 million. Adjusted
non-GAAP net income for the first quarter of 2007 was $.4 million or $.02
diluted net income per share excluding the aforementioned litigation
settlement charge and related legal fees. Net income for the three months
ended March 31, 2006 was $.5 million or $.03 diluted earnings per share.
Sam Owusu-Akyaw, Osteotech's President and Chief Executive Officer,
stated, "Exclusive of the charge for the settlement of certain litigation
discussed above, financial results in the first quarter met our
expectations. We made the investment in our distribution channel
effectiveness initiatives, which we expect will result in an annualized
cost of approximately $4.0 million. We anticipate this investment will
provide incremental revenue growth in the second half of 2007. We believe
we have taken the appropriate actions to effectuate our initiatives and
reconfirm our outlook for revenue to grow at a 6% rate in 2007 and for 2007
diluted earnings per share to be approximately $.11."
Mr. Owusu-Akyaw continued, "We continue to execute on our distribution
and new product initiatives. All of the first-phase OsteoBiologic
specialists have been hired and trained and they are beginning to make
inroads in the marketplace. The Plexur(TM) P Biocomposite began shipping to
certain centers of excellence in late-March."
Mr. Owusu-Akyaw concluded, "We are also pleased to report we will
introduce the Grafton(R) A-Flex(TM) Acetabular Graft to the market in the
second quarter. The A-Flex(TM) Acetabular Graft, which utilizes our
proprietary fiber technology, was specifically designed to fill defects in
the acetabular wall during revision hip surgery. The A-Flex(TM) Acetabular
Graft follows our strategic initiative to develop OsteoBiologic solutions
for procedure-specific therapies. We continue to identify and investigate
new procedural-specific products and technologies, including new product
opportunities from our human collagen technologies."
DBM Segment revenue increased 3% in the first quarter of 2007 compared
to the corresponding period in 2006, mainly as a result of increased unit
volume from the Xpanse(TM) Bone Inserts and private label DBM tissue
grafts, partially offset by a decline in unit volume from Grafton(R) DBM.
In the Traditional Tissue Segment, revenue from the worldwide distribution
of traditional tissue increased 23% in the first quarter of 2007 from the
first quarter of 2006 primarily due to increased unit volume. Revenue in
the Hybrid/Synthetic Segment, which is primarily generated from our
GraftCage(TM) Spacers, was $.2 million in both the first quarter of 2007
and 2006. Revenue in the Client Services Segment, which represents fees
from the processing of donors for clients, was $1.9 million in each of the
first quarterly periods in 2007 and 2006. A decrease in units sold in our
Spinal Allografts Segment resulted in a revenue decline of 31% for the
three months ended March 31, 2007 compared to the same period in 2006.
Effective January 1, 2007, the Company adopted the provisions of
Financial Accounting Standard Staff Position Aug Air-1, "Accounting for
Planned Major Maintenance Activities" ("AIR-1"). AIR-1 prohibits the
accrue-in-advance method of accounting for planned major maintenance
activities, which impacts the Company due to its annual or semi-annual
plant shutdowns. The provisions of AIR-1 require that prior period
financial information must be restated to reflect the impact of AIR-1 in
the earliest period presented. The adoption of the provisions of AIR-1 does
not have any impact on the Company's historical annual financial position,
results of operations or cash flows, but does impact the interim financial
results. The adoption of AIR-1 increased net income by $.3 million for the
quarter ended March 31, 2006. First quarter 2006 financial position,
results of operations and cash flows have been restated for the impact of
AIR-1.
Mr. Owusu-Akyaw will host a conference call on May 9 at 9:00 a.m.
Eastern Time to discuss first quarter results. You are invited to listen to
the conference call by dialing 706-643-1624. 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,
May 23, 2007, by dialing 706-645-9291 and indicating access code 7443978.
Osteotech, Inc., headquartered in Eatontown, New Jersey, is a global
leader in providing OsteoBiologic 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.
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 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 May 9, 2007 and the Company does
not intend to update this information.
To supplement Osteotech's financial results presented in accordance
with GAAP, Osteotech provided non-GAAP net income and non-GAAP net income
per share data for the three months ended March 31, 2007. The presentation
of these non-GAAP financial measures should be considered in addition to
the GAAP results and should not be considered in isolation or as a
substitute for the financial information prepared and presented in
accordance with GAAP.
Osteotech's management believes these non-GAAP financial measures
provide meaningful supplemental information regarding the performance of
the Company by excluding certain charges that may not be indicative of the
core business operating results. Osteotech believes that management and
investors benefit from these non-GAAP financial measures to facilitate
comparisons to historical financial performance allowing for greater
transparency with respect to supplemental information used by management in
its decision making. GAAP measures are reconciled to comparable non-GAAP
measures in the table entitled "Unaudited Reconciliation of Adjusted Net
Income" following the text of this press release.
OSTEOTECH, INC. and Subsidiaries
CONSOLIDATED STATEMENTS OF OPERATIONS
(dollars in thousands, except per share data)
Three Months
Ended March 31,
2007 2006
(restated)
Revenue $ 25,217 $ 25,080
Cost of revenue 12,900 13,244
Gross profit 12,317 11,836
Marketing, selling and general and
administrative 11,777 10,096
Research and development 1,077 1,172
12,854 11,268
Operating income (loss) (537) 568
Interest expense, net (150) (270)
Other 136 244
Income (loss) before income taxes (551) 542
Income tax provision 97 43
Net Income (loss) $(648) $499
Earnings (loss) per share:
Basic $(.04) $.03
Diluted $(.04) $.03
Shares used in computing earnings
(loss) per share:
Basic 17,419,332 17,265,853
Diluted 17,419,332 17,363,156
CONSOLIDATED SEGMENT REVENUE DETAIL
(dollars in thousands)
Three Months
Ended March 31,
2007 2006
(restated)
DBM $15,482 $14,974
Traditional Tissue 4,611 3,754
Spinal Allografts 2,788 4,036
Hybrid/Synthetic 233 218
Client Services 1,928 1,920
Other Product Lines 175 178
Revenues $25,217 $25,080
OSTEOTECH, INC. and Subsidiaries
Unaudited Reconciliation of Adjusted Net Income (Loss)
(dollars in thousands, except per share amounts)
Three Months
Ended March 31,
2007
Net income (loss) - as reported $(648)
Adjustment to net income (loss) -
litigation settlement and related legal fees 1,060
Adjusted net income $412
Adjusted earnings per share:
Basic $.02
Diluted $.02
Adjusted shares used in computing earnings
(loss) per share - basic 17,419,332
Adjustment for restricted stock units 123,244
Adjustment for stock options 257,772
Adjusted shares used in computing earning
per share - diluted 17,800,348
OSTEOTECH, INC. and Subsidiaries
CONDENSED CONSOLIDATED BALANCE SHEET
(dollars in thousands)
March 31, December 31,
2007 2006
Assets
Cash and cash equivalents $18,848 $17,946
Accounts receivable, net 18,179 18,507
Deferred processing costs 30,337 29,067
Inventories 1,191 1,005
Other current assets 2,517 2,795
Total current assets 71,072 69,320
Property, plant and equipment, net 35,194 36,340
Other assets 6,512 7,373
$112,778 $113,033
Liabilities and Stockholders' Equity
Accounts payable and accrued expense $16,161 $15,861
Current maturities of capital lease obligation 746 727
Total current liabilities 16,907 16,588
Capital lease obligation 14,682 14,876
Other liabilities 7,724 7,716
Total liabilities 39,313 39,180
Stockholders' equity 73,465 73,853
$112,778 $113,033
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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