EATONTOWN, N.J., Nov. 3 /PRNewswire-FirstCall/ -- Osteotech, Inc.
(Nasdaq: OSTE) reported today that net income was $.4 million or $.02
diluted earnings per share for the three months ended September 30, 2006
compared to a net loss of $6.8 million or $.40 diluted net loss per share
for the three months ended September 30, 2005. Consolidated revenues in the
third quarter of 2006 were $23.4 million, a 5% increase over consolidated
revenues of $22.2 million in the third quarter of 2005. Gross margins
increased to 49% in the third quarter of 2006 from 31% in the third quarter
of 2005, mainly due to improved inventory and processing productivity.
Sam Owusu-Akyaw, Osteotech's President and Chief Executive Officer,
stated, "We have substantially completed the first part of Osteotech's
turnaround program by successfully achieving profitability for three
consecutive quarters. We expect to continue to realize the benefits of our
initiatives, which we believe will generate incremental profitability;
however, we expect to utilize this additional profitability to fund our
distribution channel effectiveness initiatives, the final activities in our
turnaround program."
Mr. Owusu-Akyaw concluded, "Although we expect to make additional
investments in sales and marketing initiatives and personnel, we anticipate
being profitable in the fourth quarter in a range similar to the first
three quarters of 2006 and anticipate being profitable in 2007."
Net income was $1.4 million or $.08 diluted earnings per share for the
nine months ended September 30, 2006 compared to a net loss of $9.5 million
or $.55 diluted net loss per share for the nine months ended September 30,
2005. Consolidated revenues for the nine months ended September 30, 2006
and 2005 were $73.8 million and $71.4 million, respectively. Gross margins
increased to 48% for the first nine months of 2006 from 39% for the first
nine months of 2005.
DBM Segment revenues were $12.8 million and $12.5 million for the three
months ended September 30, 2006 and 2005, respectively. The improvement in
DBM Segment revenues was substantially the result of increased domestic
unit sales volume, partially offset by continued pricing pressures on our
domestic sales efforts. We incurred an operating loss in the DBM Segment of
$.2 million and $.6 million for the three months ended September 30, 2006
and 2005, respectively. The operating loss in the third quarter of 2006 was
primarily from lower gross margins mainly resulting from lower average
selling prices in our domestic business. The operating loss declined in the
third quarter of 2006 compared to the third quarter of 2005 principally due
to our ability to control operating expenses.
DBM Segment revenues increased 4% to $41.0 million for the nine months
ended September 30, 2006 compared to revenues of $39.4 million in the
corresponding period in 2005. The increase in DBM Segment revenues was
substantially the result of increased unit sales volume, partially offset
by pricing pressures on our domestic sales efforts. Operating income in the
DBM Segment was $1.9 million and $1.3 million for the nine months ended
September 30, 2006 and 2005, respectively. The improvement in operating
income in the first nine months of 2006 was primarily due to the increase
in revenues and our ability to control operating expenses in 2006 compared
to 2005, partially offset by lower gross margins.
Base Tissue Segment revenues increased 7% to $10.0 million for the
three months ended September 30, 2006 compared to $9.4 million in the
corresponding period in 2005. Revenues from the worldwide distribution of
traditional tissue increased 53% in the third quarter of 2006 compared to
the third quarter of 2005, principally from increased unit sales volume.
Third quarter Base Tissue Segment revenues were impacted by a 8% decline in
service fees generated by processing allograft bone tissue for clients and
a 20% decline in revenues from the distribution of Graftech(R) Bio-implants
compared to the third quarter of 2005 primarily due to continued lower
demand and increased competition from polymer based spinal implants. Base
Tissue Segment revenues were $30.9 million for each of the nine months
ended September 30, 2006 and 2005. Revenues from the worldwide distribution
of traditional tissue increased 62% in the first nine months of 2006
compared to the first nine months of 2005, mainly from increased unit sales
volume. Base Tissue Segment revenues were negatively impacted by a 29%
decline in service fees generated by processing allograft bone tissue for
clients and a 19% decline in revenues from the distribution of Graftech(R)
Bio-implants for the nine months ended September 30, 2006 compared to the
corresponding period in 2005.
Operating income in the Base Tissue Segment was $1.7 million in each of
the three months and nine months ended September 30, 2006 compared to
operating losses of $5.4 million and $10.3 million for the same respective
periods in 2005. The improvement in operating income in both periods is
primarily due to a substantial increase in gross margins resulting from
improved inventory and processing productivity, which reduced the need for
tissue inventory reserves in 2006 compared to 2005, and our ability to
control operating expenses.
A conference call will be conducted by Sam Owusu-Akyaw, President and
Chief Executive Officer, as well as other members of Osteotech management,
on November 3, 2006 at 9:00 am Eastern Time to discuss second quarter
results. You are invited to listen to the conference call by dialing
1-706-643-1624. 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, November 17, 2006, by
dialing 1-706-645-9291 and indicating access code 9681394.
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 November 3, 2006 and the Company
does not intend 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)
Third Quarter Nine Months
Ended September 30, Ended September 30,
2006 2005 2006 2005
DBM Segment
Domestic $10,777 $10,399 $34,476 $33,157
International 1,994 2,108 6,496 6,257
Total DBM Segment 12,771 12,507 40,972 39,414
Base Tissue Segment
Domestic:
Client Processing 2,223 2,388 6,226 9,029
Traditional Tissue 2,895 1,950 8,357 4,959
Graftech(R) Bio-Implants 3,118 3,893 10,649 13,164
8,236 8,231 25,232 27,152
International:
Client Processing 66 110 451 357
Traditional Tissue 1,703 1,050 5,170 3,410
1,769 1,160 5,621 3,767
Total Base Tissue Segment 10,005 9,391 30,853 30,919
Other Product Lines 672 347 1,985 1,050
Net Revenues $23,448 $22,245 $73,810 $71,383
OSTEOTECH, INC. and Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(dollars in thousands, except per share data)
Third Quarter Nine Months
Ended September 30, Ended September 30,
2006 2005 2006 2005
Net revenues:
Service $22,776 $21,898 $71,825 $70,333
Product 672 347 1,985 1,050
23,448 22,245 73,810 71,383
Cost of services 10,961 15,107 36,736 43,280
Cost of products 917 132 1,865 397
11,878 15,239 38,601 43,677
Gross profit 11,570 7,006 35,209 27,706
Marketing, selling, general
and administrative 9,751 11,607 29,856 33,180
Research and development 1,192 1,101 3,507 3,287
10,943 12,708 33,363 36,467
Operating income (loss) 627 (5,702) 1,846 (8,761)
Interest expense and other,
net (350) (419) (379) (1,393)
Income (loss) before
income taxes 277 (6,121) 1,467 (10,154)
Income tax provision (benefit) (74) 676 105 (647)
Net Income (loss) $351 $(6,797) $1,362 $(9,507)
Earnings (loss) per share:
Basic $.02 $(.40) $.08 $(.55)
Diluted $.02 $(.40) $.08 $(.55)
Shares used in computing
earnings (loss) per share:
Basic 17,295,314 17,199,004 17,281,703 17,187,865
Diluted 17,352,420 17,199,004 17,356,109 17,187,865
OSTEOTECH, INC. and Subsidiaries
CONDENSED CONSOLIDATED BALANCE SHEETS
(dollars in thousands)
September 30, December 31,
2006 2005
Assets
Cash and cash equivalents $14,892 $13,484
Accounts receivable, net 16,737 14,879
Deferred processing costs 28,458 28,805
Inventories 1,170 1,278
Other current assets 3,110 3,438
Total current assets 64,367 61,884
Property, plant and equipment, net 37,250 39,962
Other assets 8,521 9,176
$110,138 $111,022
Liabilities and Stockholders' Equity
Accounts payable and accrued expense $14,643 $16,320
Current maturities of
capital lease obligation 708 655
Total current liabilities 15,351 16,975
Capital lease obligation 15,065 15,603
Other liabilities 7,270 7,689
Total liabilities 37,686 40,267
Stockholders' equity 72,452 70,755
$110,138 $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, Osteotech, +1-732-542-2800
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