EATONTOWN, N.J., Aug. 1 /PRNewswire-FirstCall/ -- Osteotech, Inc. reported today that net income for the three months ended June 30, 2007 was $.9 million, or $.05 diluted earnings per share, compared to net income of $1.1 million, or $.06 diluted earnings per share, for the three months ended June 30, 2006. Revenue for the three months ended June 30, 2007 increased 5% to $26.5 million from $25.3 million for the three months ended June 30, 2006. Gross margin was 48% and 49% in the second quarter of 2007 and 2006, respectively. Net income for the three months ended June 30, 2007 was negatively impacted by the costs associated with our annual preventative maintenance activities of $.3 million and the investment in our distribution effectiveness initiatives, which we previously estimated would be $4.0 million annually.
Sam Owusu-Akyaw, Osteotech’s President and Chief Executive Officer, stated, “Our financial results continue to favorably indicate the successful execution of our strategic initiatives. We are pleased that the business is moving forward and the team is focused on revenue growth.”
Net income for the six months ended June 30, 2007 was $.2 million, or $.01 diluted earnings per share. Net income for the first half of 2007 was negatively impacted by the first quarter costs related to the settlement of certain litigation of $1.1 million, the costs associated with our annual preventative maintenance activities and the costs associated with improving our distribution capabilities. Net income for the six months ended June 30, 2006 was $1.6 million, or $.09 diluted earnings per share. Revenue for the six months ended June 30, 2007 increased 3% to $51.7 million from $50.4 million for the six months ended June 30, 2006. Gross margin was 49% for the first half of 2007 compared to 48% for the first half of 2006.
DBM Segment revenue increased 13% to $16.2 million for the three months ended June 30, 2007 from $14.3 million for the three months ended June 30, 2006, primarily as a result of increased unit sales volume. Revenue in the Hybrid/Synthetic Segment increased 3% for the three months ended June 30, 2007 as compared to the same respective period in 2006.
DBM Segment revenue increased 8% to $31.6 million for the six months ended June 30, 2007 from $29.3 million in the corresponding period in 2006, substantially as a result of increased unit sales volume. Revenue in the Hybrid/Synthetic Segment for the six months ended June 30, 2007 was relatively flat with increased revenues from our Plexur(TM) P Biocomposite and a decline in revenue from the GraftCage(TM) Spacers.
Traditional Tissue Segment revenue increased 5% and 13% in the second quarter and first half of 2007, respectively, as compared to the same corresponding periods in 2006, primarily due to increased unit volume. Revenue in the Client Services Segment, which represents fees from the processing of donors for clients, declined 21% and 12% for the three and six months ended June 30, 2007, respectively, compared to the same periods in 2006, principally as a result of a decline in the number of donors processed for the Musculoskeletal Transplant Foundation. A decrease in units sold in our Spinal Allografts Segment resulted in declines in revenue of 10% and 21% for the three and six months ended June 30, 2007, respectively, as compared to the same respective periods in 2006.
Mr. Owusu-Akyaw will host a conference call on August 1, 2007 at 9:00 a.m. Eastern Time to discuss second 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, August 15, 2007, by dialing 706-645-9291 and indicating access code 10144176.
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 August 1, 2007 and the Company does not intend to update this information.
OSTEOTECH, INC. AND SUBSIDIARIES CONSOLIDATED SEGMENT REVENUE DETAIL (dollars in thousands) Three Months Six Months Ended June 30, Ended June 30, 2007 2006 2007 2006 (restated) (restated) DBM $16,161 $ 14,348 $31,643 $ 29,322 Traditional Tissue 4,558 4,361 9,169 8,115 Spinal Allografts 3,221 3,573 6,009 7,609 Hybrid/Synthetic 408 395 641 613 Client Services 1,944 2,463 3,872 4,383 Other Product Lines 178 142 353 320 Revenue $26,470 $ 25,282 $51,687 $ 50,362 CONSOLIDATED STATEMENTS OF OPERATIONS (dollars in thousands, except per share data) Three Months Six Months Ended June 30, Ended June 30, 2007 2006 2007 2006 (restated) (restated) Revenue $26,470 $ 25,282 $ 51,687 $ 50,362 Cost of revenue 13,680 12,879 26,580 26,123 Gross profit 12,790 12,403 25,107 24,239 Marketing, selling and general and administrative 10,513 10,009 22,290 20,105 Research and development 1,202 1,143 2,279 2,315 11,715 11,152 24,569 22,420 Operating income 1,075 1,251 538 1,819 Interest expense, net (152) (249) (302) (519) Other (114) 246 22 490 Income before income taxes 809 1,248 258 1,790 Income tax provision (benefit) (46) 136 51 179 Net Income $ 855 $ 1,112 $ 207 $ 1,611 Earnings per share: Basic $ .05 $ .06 $ .01 $ .09 Diluted $ .05 $ .06 $ .01 $ .09 Shares used in computing earnings per share: Basic 17,466,368 17,273,778 17,442,969 17,274,846 Diluted 18,009,774 17,336,679 17,912,380 17,354,906 OSTEOTECH, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEET (dollars in thousands) June 30, December 31, 2007 2006 Assets Cash and cash equivalents $ 19,430 $ 17,946 Accounts receivable, net 20,209 18,507 Deferred processing costs 30,357 29,067 Inventories 1,240 1,005 Prepaid expenses and other current assets 3,147 2,795 Total current assets 74,383 69,320 Property, plant and equipment, net 34,511 36,340 Other assets 5,798 7,373 $114,692 $113,033 Liabilities and Stockholders’ Equity Accounts payable and accrued liabilities $ 18,644 $ 15,861 Current maturities of capital lease obligation 766 727 Total current liabilities 19,410 16,588 Capital lease obligation 14,484 14,876 Other liabilities 5,778 7,716 Total liabilities 39,672 39,180 Stockholders’ equity 75,020 73,853 $114,692 $113,033
Osteotech, Inc.
CONTACT: Mark H. Burroughs of Osteotech, Inc., +1-732-542-2800
Web site: http://www.osteotech.com//
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