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Osteotech, Inc. (OSTE) Reports Third Quarter 2010 Financial Results


11/5/2010 11:03:07 AM

EATONTOWN, N.J., Nov. 4, 2010 /PRNewswire-FirstCall/ -- Osteotech, Inc. (Nasdaq: OSTE), a leader in the emerging field of biologic products for regenerative healing, today reported financial results for the third quarter ended September 30, 2010.

During the third quarter, we focused a significant amount of our internal resources on activities associated with our merger with Medtronic, Inc., which we continue to believe is in the best interest of our stockholders, and a good path forward for our organization and products, said Sam Owusu-Akyaw, President and Chief Executive Officer of Osteotech. We believe we remain on track to finalize the transaction during the fourth quarter of 2010 and, as previously announced, intend to hold our special meeting of stockholders to approve the transaction on November 9, 2010. The third quarter 2010 financial results reflect increased costs and expenses associated with our strategic alternatives process and the merger.

Financial Results

Revenue for the three months ended September 30, 2010 was $23.1 million, including $3.0 million from the companys new products (primarily MagniFuse® Bone Graft and Plexur M® Innovative Grafting) compared with $23.0 million for the three months ended September 30, 2009. Client services and private label revenue was $1.2 million in the third quarter of 2010 compared with $0.8 million during the same period of 2009. Excluding client services and private label revenue, third quarter 2010 revenue was $21.9 million compared with $22.2 million in the third quarter of 2009.

Revenue for the first nine months ended September 30, 2010 was $69.6 million compared with revenue of $70.4 million for the nine-month period ended September 30, 2009. Excluding client services and private label revenue, revenue for the first nine months of 2010 was $66.7 million compared with $65.5 million in the first nine months of 2009. Client services and private label revenue declined, as expected, by $2.0 million year-over-year during the first nine months of 2010.

Net loss for the third quarter ended September 30, 2010 was $2.5 million, or $0.14 per share, compared with a net loss of $1.9 million, or $0.11 per share, for the third quarter of 2009. Net loss for the nine months ended September 30, 2010 was $3.9 million, or $0.22 per share, compared with $4.9 million, or $0.27 per share, for the nine-month period ended September 30, 2009.

About Osteotech

Osteotech, Inc., headquartered in Eatontown, New Jersey, is a global leader in providing biologic 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, please go to Osteotechs website at www.osteotech.com.

Additional Information about the Proposed Transaction and Where You Can Find It

Osteotech has filed with the Securities and Exchange Commission (the SEC) a definitive proxy statement and other relevant materials in connection with the proposed acquisition of Osteotech by Medtronic. The definitive proxy statement has been mailed to Osteotech stockholders. Before making any voting or investment decisions with respect to the transaction, investors and security holders of Osteotech are urged to read the proxy statement and the other relevant materials because they contain important information about the transaction, Osteotech and Medtronic. Investors and security holders may obtain free copies of these documents and other documents filed with the SEC at the SECs website at www.sec.gov. In addition, investors and security holders may obtain free copies of the documents filed with the SEC by accessing Osteotechs website at www.osteotech.com or by writing to Osteotechs Assistant Secretary at 51 James Way, Eatontown, New Jersey, 07724.

Information Regarding Participants

Osteotech, Medtronic and their respective directors, executive officers, certain other members of management and certain employees may be soliciting proxies from Osteotech stockholders in favor of the merger. Information regarding the persons who may, under the rules of the SEC, be considered participants in the solicitation of the Osteotech stockholders in connection with the proposed merger is set forth in the proxy statement as filed with the SEC. You can find information about Medtronics executive officers and directors in its definitive proxy statement filed with the SEC on July 16, 2010. You can obtain a free copy of this document at the SECs website at www.sec.gov or by accessing Medtronics website at www.medtronic.com and clicking on the investors link. You can find information about Osteotechs executive officers and directors in its definitive proxy statement filed with the SEC August 3, 2010. You can obtain a free copy of this document at the SECs website at www.sec.gov or by accessing Osteotechs website at www.osteotech.com or by writing Osteotech at 51 James Way, Eatontown, New Jersey, 07724.

Safe Harbor

Certain statements made throughout this press release that are not historical facts are forward-looking statements (as defined in the Private Securities Litigation Reform Act of 1995) regarding the Companys 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 (including but not limited to the risk that the acquisition of Osteotech by Medtronic may not close due either to litigation filed by certain stockholders seeking to enjoin the merger or to a failure by the Company to satisfy certain closing conditions such as obtaining certain regulatory approvals of the propose acquisition and the approval of the transaction by Osteotechs stockholders) and, therefore, there can be no assurance that actual results may not differ materially from those expressed or implied by such forward-looking statements. Other factors that could cause actual results to differ materially include, but are not limited to, the Companys 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. For a more detailed discussion of certain of these factors, see the Companys periodic reports filed with the Securities and Exchange Commission from time to time, including the latest Annual Report on Form 10-K and Quarterly Reports on Form 10-Q. All information in this press release is as of November 4, 2010 and the Company does not intend to update this information.

OSTEOTECH, INC. and SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(dollars in thousands, except per share data)

(unaudited)


Three Months


Nine Months


Ended September 30,


Ended September 30,


2010

2009


2010

2009







Revenue

$ 23,104

$ 22,961


$ 69,628

$ 70,363

Cost of revenue

11,521

12,502


35,000

36,406

Gross profit

11,583

10,459


34,628

33,957







Marketing, selling and






general and administrative expenses

13,096

10,648


34,189

33,034

Research and development expenses

920

1,544


3,179

5,195


14,016

12,192


37,368

38,229







Operating loss

(2,433)

(1,733)


(2,740)

(4,272)







Other income (expense):






Interest expense, net

(310)

(354)


(965)

(1,063)

Other

136

58


(198)

106


(174)

(296)


(1,163)

(957)

Loss before income taxes

(2,607)

(2,029)


(3,903)

(5,229)







Income tax provision (benefit)

(150)

(122)


22

(322)

Net loss

$ (2,457)

$ (1,907)


$ (3,925)

$ (4,907)

Loss per share:






Basic

$ (0.14)

$ (0.11)


$ (0.22)

$ (0.27)

Diluted

$ (0.14)

$ (0.11)


$ (0.22)

$ (0.27)

Shares used in computing loss per share:






Basic

18,182,443

18,120,350


18,134,819

17,925,718

Diluted

18,182,443

18,120,350


18,134,819

17,925,718



CONSOLIDATED SEGMENT REVENUE DETAIL

(dollars in thousands)

(unaudited)


Three Months


Nine Months


Ended September 30,


Ended September 30,


2010

2009


Read at BioSpace.com

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