RTI Biologics Announces 2009 Year End, Fourth Quarter Results, Estimates 2010 Revenues and EPS

ALACHUA, Fla.–(BUSINESS WIRE)–RTI Biologics Inc. (RTI) (Nasdaq: RTIX), a leading processor of orthopedic and other biologic implants, reported operating results for the fourth quarter and full year ending Dec. 31, 2009.

Quarterly Highlights:

• Revenues of $42.0 million, an increase of 12 percent over the prior year period
• Net income of $1.5 million, or $0.03 per fully diluted share
• Surgical specialties revenues increased 86 percent compared to the prior year period
• Sports medicine revenues increased 9 percent sequentially and 22 percent compared to the prior year period
• Launched three implants in orthopedics and bone graft substitutes for three different distributors

2009 Full Year Highlights:

• Record revenues of $164.5 million, an increase of 12 percent over the prior year period
• Net income of $5.9 million, or $0.11 per fully diluted share
• Closed $11.75 million financing agreement with Mercantile Bank on Jan. 28, 2009
• Increased number of direct biologic representatives to a total of 36, compared to 30 at the beginning of the year
• Amended agreement for exclusive worldwide distribution rights for dermal allografts for use in hernia repair with Davol Inc., a subsidiary of C.R.Bard Inc., to include dermal allografts for breast reconstruction
• Signed a new agreement to provide spinal allograft implants to Aesculap Implant Systems, Inc.
• Launched 13 new implants and two line extensions in the spine and orthopedics markets, which accounted for over $6 million of revenue for the year
• Launched five new implants, including bovine pericardium line and initial dermis implant with ENTrigue for use in the otolaryngology market, and three line extensions in surgical specialties
• Introduced two new sports medicine implants – Matrix HD™, which surpassed $1 million in revenue for the year, and Fresh OC Talus, an extension of the fresh osteochondral line, which increased by 98 percent in revenues compared to the previous year

Revenues were $42.0 million for the fourth quarter of 2009, representing a 12 percent increase compared to revenues of $37.4 million for the fourth quarter of 2008. Revenues for the full year 2009 were $164.5 million, representing a 12 percent increase compared to revenues of $146.6 million for 2008. The increase in year over year revenues reflects the inclusion of Tutogen Medical for the full 12 months of 2009 compared to the period of Feb. 28 to Dec. 31, 2008 in the prior year. Tutogen Medical revenues for the period Jan. 1, 2008 to Feb. 27, 2008 were $8.5 million, including international revenues of $3.0 million.

For the fourth quarter of 2009, the company reported net income of $1.5 million and net income per fully diluted share of $0.03 based on 54.9 million fully diluted shares outstanding, compared to net loss of $102.5 million and net loss per fully diluted share of $1.89 based on 54.1 million fully diluted shares outstanding for the fourth quarter of 2008. The net loss in the fourth quarter of 2008 reflected asset impairments and abandonments of $104.4 million, or a $1.92 decrease per fully diluted share.

For the full year 2009, the company reported net income of $5.9 million and net income per fully diluted share of $0.11 based on 54.8 million fully diluted shares outstanding, compared to net loss of $100.0 million and net loss per fully diluted share of $2.00 based on 49.9 million fully diluted shares outstanding for 2008.

“In a very challenging and difficult-to-predict environment, we were able to increase our revenues by 12 percent,” said Brian K. Hutchison, chairman and CEO of RTI. “Our sports medicine and surgical specialties businesses have been the fastest-growing businesses over the year, offsetting a decline in dental business. We worked very diligently over the past 12 months to leverage our operational strengths and make steady improvements in our profitability while meeting the needs of our surgeons and distributors. These improvements should help us with our goals of delivering significant gains in profitability in 2010.”

Revenue Analysis

Domestic revenues were $35.9 million for the fourth quarter and $141.3 million for the full year 2009, representing increases of 9 percent and 11 percent respectively over prior year results for each period. The increase in revenues for the full year reflects the inclusion of Tutogen revenues for 12 months in 2009 versus the period of Feb. 28 to Dec. 31, 2008 in the prior year. For the fourth quarter and full year 2009, the strongest domestic performance was in surgical specialties, with year over year growth rates that exceeded market growth rates due to increased sourcing of membrane tissue to support these markets. Sports medicine revenues also grew year over year and reached record levels in the fourth quarter. Growth in sports medicine and surgical specialties offset a decline in dental revenues for the year, which have been significantly impacted by the global economic slowdown.

International revenues, which include exports and distribution from the company’s German and French operations, were $6.1 million for the fourth quarter of 2009 and $23.3 million for the full year 2009, representing increases of 37 percent and 18 percent respectively, compared to the prior year periods. Export revenues increased by $640,000 in the fourth quarter and $1.0 million for the year compared to the prior year periods. Foreign currency translation adjustments resulted in an increase in fourth quarter revenues of $542,000 and a decrease in full year 2009 revenues of $917,000 compared to prior year periods. In addition, full year revenues reflect the inclusion of Tutogen Medical revenues for the full 12 months in 2009 versus the period of Feb. 28 to Dec. 31, 2008 in the prior year.

2010 Outlook

The company expects full year revenues for 2010 to increase between 5 percent and 7 percent on a constant currency basis. Assuming foreign currency exchange rates remain near year-end 2009 levels, the company estimates that foreign currency translation adjustments will increase revenues by approximately 1 percent for the full year 2010, resulting in reported revenue growth between 6 percent and 8 percent, or 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.

“Our management team feels that through double digit growth in sports medicine and surgical specialties, combined with new product launches in all areas of our business through the year, we will be able to meet the outlook we have set for 2010,” Hutchison said. “With unknowns surrounding health care reform and the global economy, our management team understands that growth will be challenging, but we are committed to achieving our goals, growing our revenues and earnings over the long term while focusing on improving profitability and cash flow.”

Conference Call

RTI will hold a live conference call and simultaneous audio Web cast on Tuesday, Feb. 9, 2010 at 9:00 a.m. ET to discuss the 2009 fourth quarter and year end results, as well as guidance for 2010. The conference call can be accessed by dialing (888) 500-6974. The Web cast can be accessed through the investor section of RTI’s Web site at www.rtix.com. A telephone replay of the call will be available through March 1, 2010 and can be accessed by calling (888) 203-1112, passcode 6416137; 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® 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 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.