RTI Biologics Announces 2010 First Quarter Results

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ALACHUA, Fla., Apr 28, 2010 (BUSINESS WIRE) — RTI Biologics Inc. (RTI) (RTIX 3.57, -0.44, -10.97%), a leading processor of orthopedic and other biologic implants, reported operating results for the first quarter ending March 31, 2010 as follows:

Quarterly Overview:

— Achieved revenues of $37.8 million and net loss of $54,000, or break even per fully diluted share

— Revenue impacted by $4.0 million inventory reduction by largest spine distributor

— Grew surgical specialties revenues 28 percent over first quarter 2009

— Launched one spinal implant, as well as three implants for bone graft substitutes and general orthopedics with three different distributors

— Launched the next-generation BTB Select(R), which allows for precision sized matching relative to the intra-articular length of BTB allografts

— Reaffirms 2010 revenues guidance of $174.5 million to $177.5 million, and $0.15 to $0.17 cents per fully diluted share

Revenues were $37.8 million for the first quarter of 2010, compared to revenues of $38.6 million for the first quarter of 2009. For the first quarter of 2010, the company reported net loss of $54,000, or break even per fully diluted share based on 54.6 million fully diluted shares outstanding, compared to net income of $1.0 million and net income per fully diluted share of $0.02 based on 54.5 million fully diluted shares outstanding for the first quarter of 2009.

“Our results were significantly impacted by inventory reductions by our largest spine distributor and lower orders in the European markets,” said Brian K. Hutchison, chairman and CEO of RTI. “Despite the reduced revenue, we controlled expenses and generated positive operating cash flow during the quarter.”

First Quarter 2010 Analysis

Domestic revenues were $33.0 million for the first quarter of 2010, representing an increase of 2 percent over the prior year period. For the first quarter 2010, the strongest domestic performance was in surgical specialties and sports medicine, with year over year growth rates of 37 percent and 20 percent, respectively. In addition, domestic dental revenues grew 2 percent, and bone graft substitutes revenues grew 11 percent compared to the prior year period. Spine revenues, which declined by 33 percent, were negatively impacted by an inventory reduction of approximately $4 million from our largest distributor.

International revenues, which include exports and distribution from our German and French facilities, were $4.8 million for the first quarter of 2010, representing a decrease of 24 percent compared to the prior year period. Decreases in revenues were directly related to economic difficulties in several European countries, which impacted orders. Foreign currency translation adjustments resulted in an increase in first quarter revenues of $248,000 compared to the prior year period.

2010 Outlook

The company has provided guidance that 2010 revenues are estimated to grow between 6 percent and 8 percent, to between $174.5 million and $177.5 million. Full year earnings per fully diluted share are expected to be in the range of $0.15 to $0.17, based on 55.7 million fully diluted shares outstanding. There are no changes to this guidance at this time.

“We are confident that we will meet our financial expectations for the full year,” Hutchison said. “Our annual guidance reflected the inventory reductions by our largest spine distributor. We expect revenues to increase sequentially in the upcoming quarters due to new product launches, business development opportunities and stronger orders from each of our distributors.”

Conference Call

RTI will hold a live conference call and simultaneous audio Web cast on Wednesday, April 28, 2010 at 9:00 a.m. ET to discuss first quarter results. The conference call can be accessed by dialing (877) 383-7419. The Web cast can be accessed through the investor section of RTI’s Web site atwww.rtix.com. A telephone replay of the call will be available through May 28, 2010 and can be accessed by calling (800) 642-1687, pass code 69679214; the replay will also be available atwww.rtix.com.

About RTI Biologics Inc.

RTI Biologics Inc. was formed when Regeneration Technologies Inc. and Tutogen Medical Inc. merged on Feb. 27, 2008. The company is now a leading provider of sterile biological implants for surgeries around the world with a commitment to advancing science, safety and innovation. RTI prepares human donated tissue and bovine tissue for transplantation through extensive testing and screening, precision shaping and when possible, using proprietary, validated sterilization processes. These allograft and xenograft implants are used in orthopedic, dental, hernia and other specialty surgeries.

RTI’s innovations continuously raise the bar of science and safety for biologics — from being the first company to offer precision-tooled bone implants and assembled technology to maximize each gift of donation, to inventing validated sterilization processes that include viral inactivation steps. Two such processes — the BioCleanse(R) Tissue Sterilization Process and the Tutoplast(R) Tissue Sterilization Process — have a combined record of more than two million implants distributed with zero incidence of allograft-associated infection. These processes have been validated by tissue type to inactivate or remove viruses, bacteria, fungi and spores from the tissue while maintaining biocompatibility and functionality.

RTI’s worldwide corporate headquarters are located in Alachua, Fla., with international locations in Neunkirchen, Germany, and Aix-en-Provence, France. The company is accredited by the American Association of Tissue Banks in the United States.

Forward Looking Statement

This communication contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on management’s current expectations, estimates and projections about our industry, our management’s beliefs and certain assumptions made by our management. Words such as “anticipates,” “expects,” “intends,” “plans,” “believes,” “seeks,” “estimates,” variations of such words and similar expressions are intended to identify such forward-looking statements. In addition, except for historical information, any statements made in this communication about anticipated financial results, growth rates, new product introductions, future operational improvements and results or regulatory approvals or changes to agreements with distributors also are forward-looking statements. These statements are not guarantees of future performance and are subject to risks and uncertainties, including the risks described in public filings with the U.S. Securities and Exchange Commission (SEC). Our actual results may differ materially from the anticipated results reflected in these forward-looking statements. Copies of the company’s SEC filings may be obtained by contacting the company or the SEC or by visiting RTI’s Web site at www.rtix.com or the SEC’s Web site at www.sec.gov.

                            RTI BIOLOGICS, INC. AND SUBSIDIARIES
                       Condensed Consolidated Statements of Operations
                       (In thousands, except share and per share data)
                                         (Unaudited)
                                                               Three Months Ended
                                                                    March 31,
                                                     ---------------------------------------
                                                            2010                2009
                                                     ------------------- -------------------
Total revenues                                           $     37,779        $     38,623
Costs of processing and distribution                           20,722              20,472
                                                           ----------          ----------
Gross profit                                                   17,057              18,151
                                                           ----------          ----------
Expenses:
  Marketing, general and administrative                        14,342              14,936
  Research and development                                      2,680               1,825
  Restructuring charges                                             -                  42
  Asset abandonments                                               15                   -
                                                           ----------          ----------
Total expenses                                                 17,037              16,803
                                                           ----------          ----------
Operating income                                                   20               1,348
                                                           ----------          ----------
Total other (expense) income - net                               (108 )                93
                                                           ---------- -        ----------
(Loss) income before income tax benefit (provision)               (88 )             1,441
Income tax benefit (provision)                                     34                (409 )
                                                           ----------          ---------- -
Net (loss) income                                        $        (54 )      $      1,032
                                                     ===== ========== =  ===== ==========
Net income per common share - basic                      $       0.00        $       0.02
                                                     ===== ==========    ===== ==========
Net income per common share - diluted                    $       0.00        $       0.02
                                                     ===== ==========    ===== ==========
Weighted average shares outstanding - basic                54,569,812          54,230,264
                                                           ==========          ==========
Weighted average shares outstanding - diluted              54,569,812          54,508,207
                                                           ==========          ==========
            RTI BIOLOGICS, INC. AND SUBSIDIARIES
               Condensed Consolidated Revenues
                       (In thousands)
                         (Unaudited)
                                      Three Months Ended
                                           March 31,
                                  --------------------------
                                      2010          2009
                                  ------------- ------------
  Fees from tissue distribution:
    Spine                            $  6,510      $  9,779
    Sports medicine                    10,339         9,375
    Dental                              7,032         7,293
    Surgical specialties                6,155         4,827
    Bone graft substitutes              4,383         3,862
    General orthopedic                  2,475         2,425
  Other revenues                          885         1,062
                                       ------        ------
       Total revenues                $ 37,779      $ 38,623
                                  ==== ======   ==== ======
Domestic revenues                      32,991        32,309
International revenues                  4,788         6,314
                                       ------        ------
       Total revenues                $ 37,779      $ 38,623
                                  ==== ======   ==== ======
                                    RTI BIOLOGICS, INC. AND SUBSIDIARIES
                                    Condensed Consolidated Balance Sheets
                                               (In thousands)
                                                 (Unaudited)
                                                                            March 31,        December 31,
                                                                              2010               2009
                                                                            --------           --------
                            Assets
  Cash and cash equivalents                                               $   17,553         $   17,382
  Accounts receivable - net                                                   17,885             22,228
  Inventories - net                                                           93,793             93,935
  Prepaid and other current assets                                            20,451             19,397
                                                                            --------           --------
           Total current assets                                              149,682            152,942
  Property, plant and equipment - net                                         44,877             46,562
  Goodwill                                                                   134,681            134,681
  Other assets - net                                                          20,318             20,322
                                                                            --------           --------
                    Total assets                                          $  349,558         $  354,507
                                                                        === ========      ==== ========
             Liabilities and Stockholders' Equity
   Accounts payable                                                       $   18,909         $   19,844
   Accrued expenses and other current liabilities                             12,187             14,191
   Short-term obligations and current portion of long-term obligations        11,339              3,963
                                                                            --------           --------
           Total current liabilities                                          42,435             37,998
   Deferred revenue                                                           10,029             10,381
   Long-term liabilities                                                       7,552             16,239
                                                                            --------           --------
           Total liabilities                                                  60,016             64,618
 Stockholders' equity:
   Common stock and additional paid-in capital                               406,981            406,380
   Accumulated other comprehensive loss                                       (1,268 )             (374 )
   Accumulated deficit                                                      (116,171 )         (116,117 )
                                                                            -------- ---       -------- ----
           Total stockholders' equity                                        289,542            289,889
                                                                            --------           --------
                    Total liabilities and stockholders' equity            $  349,558         $  354,507
                                                                        === ========      ==== ========
                           RTI BIOLOGICS, INC. AND SUBSIDIARIES
                      Condensed Consolidated Statements of Cash Flows
                                      (In thousands)
                                        (Unaudited)
                                                                    Three Months Ended
                                                                         March 31,
                                                                ---------------------------
                                                                       2010        2009
                                                                      ------      ------
Cash flows from operating activities:
  Net (loss) income                                                 $    (54 )  $  1,032
  Adjustments to reconcile net (loss) income to net cash
   provided by (used in) operating activities:
     Depreciation and amortization expense                             1,823       1,805
     Stock-based compensation                                            339         423
     Change in working capital                                          (713 )    (9,745 )
     Other items to reconcile to net cash
       provided by (used in) operating activities                        (77 )       (93 )
                                                                      ------ -    ------ -
           Net cash provided by (used in) operating activities         1,318      (6,578 )
                                                                      ------      ------ -
Cash flows from investing activities:
  Purchases of property, plant and equipment                            (314 )      (308 )
  Patent costs                                                          (117 )      (112 )
                                                                      ------ -    ------ -
           Net cash used in investing activities                        (431 )      (420 )
                                                                      ------ -    ------ -
Cash flows from financing activities:
  Proceeds from exercise of common stock options                         262          19
  Net payments on short-term obligations                                (799 )    (1,235 )
  Proceeds from long-term obligations                                  2,750       1,500
  Payments on long-term obligations                                   (2,933 )      (301 )
                                                                      ------ -    ------ -
            Net cash used in financing activities                       (720 )       (17 )
                                                                      ------ -    ------ -
Effect of exchange rate changes on cash and cash equivalents               4           -
                                                                      ------      ------
Net increase (decrease) in cash and cash equivalents                     171      (7,015 )
Cash and cash equivalents, beginning of period                        17,382      20,076
                                                                      ------      ------
Cash and cash equivalents, end of period                            $ 17,553    $ 13,061
                                                                ===== ======    = ======

SOURCE: RTI Biologics Inc.

RTI Biologics Inc. 
Thomas F. Rose, Chief Financial Officer 
or 
Wendy Crites Wacker, APR, Corporate Communications, 386-418-8888 
or 
The Sharadin Group, LLC 
Kate Sharadin, 425-869-9778

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