RTI Biologics Announces 2011 Second Quarter Results

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ALACHUA, Fla.–(BUSINESS WIRE)–RTI Biologics Inc. (RTI) (Nasdaq: RTIX), a leading provider of orthopedic and other biologic implants, reported operating results for the second quarter of 2011 as follows:

“We had a solid first half of the year and made progress in many key areas”

Quarterly Highlights:

  • Achieved quarterly revenues of $43.5 million.
  • Achieved quarterly net income of $2.0 million, or $0.04 per fully diluted share.
  • Achieved quarterly revenues of $12.1 million in the sports medicine business, a 5 percent increase over the second quarter of 2010.
  • Achieved quarterly revenues of $7.2 million in the surgical specialties business, a 21 percent increase over the second quarter of 2010.
  • Achieved quarterly revenues of $12.9 million in the U.S. direct distribution organization, an 11 percent increase over the second quarter of 2010. The U.S. direct distribution organization includes sports medicine and some BGS/GO implants
  • Launched BioAdapt™ DBM Foam, a flexible demineralized bone matrix (DBM) solution.
  • Released two new spinal constructs and one bone graft substitute (BGS) for distribution with three different commercial distributors.

“We are pleased with our second quarter results, which exceeded our expectations and were driven primarily by continued growth in our surgical specialties and direct sports medicine businesses,” said Brian K. Hutchison, chief executive officer of RTI. “Revenues in the spine business were up slightly on a sequential quarter basis; however, it remains too early to determine if market pressures are abating. The decrease in reported dental revenues is the result of the change in the terms of our distributor agreement, which was announced in the third quarter of 2010. If the new terms with our distributor had been effective in the second quarter of 2010, dental revenues would have increased by 22 percent.”

Worldwide revenues of $43.5 million for the second quarter of 2011 increased 6 percent compared to the second quarter of 2010. Domestic revenues of $38.0 million for the second quarter of 2011 grew by 5 percent as we recognized increases in spine, surgical specialties and the direct sports medicine businesses. The domestic spine and surgical specialties businesses both benefited from a favorable quarterly comparison as a result of inventory reductions made by several of our distributors in the second quarter of 2010. International revenues of $5.5 million increased 11 percent due to a favorable foreign exchange rate in the quarter. On a constant currency basis, international revenues were comparable to the second quarter of 2010.

For the second quarter of 2011, the company reported net income of $2.0 million and net income per fully diluted share of $0.04, based on 55.3 million fully diluted shares outstanding, compared to net income of $948,000 or $0.02 per fully diluted share for the second quarter of 2010, based on 55.1 million fully diluted shares outstanding.

Fiscal 2011 and Third Quarter Outlook

As a result of first half results that exceeded expectations and better visibility into second half trends, the company is raising its full year revenue and EPS guidance for 2011. The company now expects full year revenues for 2011 to be between $164 million to $166 million, as compared to prior guidance of $159 million to $162 million. Full year net income per fully diluted share are now expected to be in the range of $0.12 to $0.14, based on 55.4 million shares outstanding, as compared to prior guidance of $0.11 to $0.13 per fully diluted share.

For the third quarter of 2011, the company expects revenues to be between $40 million to $41 million, and net income per fully diluted share to be approximately $0.03.

“We had a solid first half of the year and made progress in many key areas,” Hutchison said. “We are raising our annual guidance based on stronger than expected first half results and the expectation of continued momentum within our direct business.”

Conference Call

RTI will host a conference call and simultaneous audio webcast to discuss the second quarter results at 8:30 a.m. ET today. The conference call can be accessed by dialing (877) 383-7419. The webcast can be accessed through the investor section of RTI’s website at www.rtix.com. A replay of the conference call will be available on the RTI website following the call.

About RTI Biologics Inc.

RTI Biologics Inc. is a leading provider of sterile biologic 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 and using proprietary processes. These allograft and xenograft implants are used in orthopedic, dental 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® Tissue Sterilization Processand the Tutoplast® 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 Germany and France. The company is accredited by the American Association of Tissue Banks in the United States and is a member of AdvaMed.

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 website at www.rtix.com or the SEC’s website 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 Six Months Ended
June 30, June 30,
2011 2010 2011 2010
Revenues:
Fees from tissue distribution $ 41,504 $ 40,212 $ 81,023 $ 77,106
Other revenues 1,978 968 3,105 1,853
Total revenues 43,482 41,180 84,128 78,959
Costs of processing and distribution 23,763 22,322 46,072 43,044
Gross profit 19,719 18,858 38,056 35,915
Expenses:
Marketing, general and administrative 14,186 14,963 28,095 29,305
Research and development 2,479 2,254 4,897 4,934
Asset abandonments 57 15
Total expenses 16,665 17,217 33,049 34,254
Operating income 3,054 1,641 5,007 1,661
Total other expense – net (55 ) (88 ) (139 ) (196 )
Income before income tax provision 2,999 1,553 4,868 1,465
Income tax provision (981 ) (605 ) (1,602 ) (571 )
Net income $ 2,018 $ 948 $ 3,266 $ 894
Net income per common share – basic $ 0.04 $ 0.02 $ 0.06 $ 0.02
Net income per common share – diluted $ 0.04 $ 0.02 $ 0.06 $ 0.02
Weighted average shares outstanding – basic 55,158,345 54,729,595 55,024,052 54,652,704
Weighted average shares outstanding – diluted 55,268,897 55,061,127 55,127,497 54,993,690
RTI BIOLOGICS, INC. AND SUBSIDIARIES
Condensed Consolidated Revenues
(In thousands)
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
2011 2010 2011 2010
Fees from tissue distribution:
Sports medicine $ 12,120 $ 11,525 $ 23,809 $ 21,864
Spine 11,028 8,221 20,738 14,731
Dental 4,962 7,315 9,064 14,347
Surgical specialties 7,153 5,930 15,064 12,085
Bone graft substitutes and general orthopedic 6,241 7,221 12,348 14,079
Other revenues 1,978 968 3,105 1,853
Total revenues $ 43,482 $ 41,180 $ 84,128 $ 78,959
Domestic revenues 37,980 36,207 73,225 69,198
International revenues 5,502 4,973 10,903 9,761
Total revenues $ 43,482 $ 41,180 $ 84,128 $ 78,959
RTI BIOLOGICS, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(In thousands)
(Unaudited)
June 30, December 31,
2011 2010
Assets
Cash and cash equivalents $ 39,049 $ 28,212
Accounts receivable – net 16,418 20,126
Inventories – net 82,035 87,278
Prepaid and other current assets 20,268 23,456
Total current assets 157,770 159,072
Property, plant and equipment – net 42,802 43,346
Other assets – net 21,371 23,340
Total assets $ 221,943 $ 225,758
Liabilities and Stockholders’ Equity
Accounts payable $ 9,873 $ 12,570
Accrued expenses and other current liabilities 17,988 19,753
Current portion of long-term obligations 653 1,120
Total current liabilities 28,514 33,443
Deferred revenue 22,942 25,118
Long-term liabilities 2,739 5,261
Total liabilities 54,195 63,822
Stockholders’ equity:
Common stock and additional paid-in capital 409,984 408,890
Accumulated other comprehensive income (loss) 14 (1,438 )
Accumulated deficit (242,250 ) (245,516 )
Total stockholders’ equity 167,748 161,936
Total liabilities and stockholders’ equity $ 221,943 $ 225,758

 

RTI BIOLOGICS, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
2011 2010 2011 2010
Cash flows from operating activities:
Net income $ 2,018 $ 948 $ 3,266 $ 894
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization expense 2,042 1,820 3,967 3,643
Stock-based compensation 494 472 993 811
Change in working capital 3,492 (350 ) 5,743 (1,063 )
Other items to reconcile to net cash
provided by operating activities 567 (432 ) 1,124 (509 )
Net cash provided by operating activities 8,613 2,458 15,093 3,776
Cash flows from investing activities:
Purchases of property, plant and equipment (816 ) (347 ) (1,310 ) (661 )
Patent and acquired intangible asset costs (52 ) (106 ) (1,073 ) (223 )
Net cash used in investing activities (868 ) (453 ) (2,383 ) (884 )
Cash flows from financing activities:
Proceeds from exercise of common stock options 483 185 745
Net payments on short-term obligations (250 ) (1,049 )
Proceeds from long-term obligations 1,500 4,250
Payments on long-term obligations (1,975 ) (3,506 ) (2,251 ) (6,439 )
Net cash used in financing activities (1,975 ) (1,773 ) (2,066 ) (2,493 )
Effect of exchange rate changes on cash and cash equivalents 133 (56 ) 193 (52 )
Net increase in cash and cash equivalents 5,903 176 10,837 347
Cash and cash equivalents, beginning of period 33,146 17,553 28,212 17,382
Cash and cash equivalents, end of period $ 39,049 $ 17,729 $ 39,049 $ 17,729

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