EATONTOWN, N.J., Nov. 4, 2010 /PRNewswire-FirstCall/ -- Osteotech, Inc. , 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 company's 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 Osteotech's website at http://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 SEC's website at http://www.sec.gov/. In addition, investors and security holders may obtain free copies of the documents filed with the SEC by accessing Osteotech's website at http://www.osteotech.com/ or by writing to Osteotech's 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 Medtronic's 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 SEC's website at http://www.sec.gov/ or by accessing Medtronic's website at http://www.medtronic.com/ and clicking on the investors link. You can find information about Osteotech's 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 SEC's website at http://www.sec.gov/ or by accessing Osteotech's website at http://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 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 (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 Osteotech's 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 Company's 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 Company's 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 Ended September 30, 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 Ended September 30, 30, ---------------- ---------------- 2010 2009 2010 2009 (restated) (restated) ---------- ---------- DBM $13,241 $14,611 $40,502 $43,445 Hybrid/Synthetic 3,353 894 8,588 2,289 Traditional Tissue 4,972 5,101 14,975 15,821 Spinal Allografts 1,384 1,966 4,969 5,708 Other 154 389 594 3,100 Total $23,104 $22,961 $69,628 $70,363 ======= ======= ======= ======= OSTEOTECH, INC. and SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (dollars in thousands) (unaudited) September December 30, 31, 2010 2009 ---- ---- Assets Cash and cash equivalents $13,777 $10,708 Accounts receivable, net 15,815 16,165 Deferred processing costs 31,715 38,562 Inventories 1,602 1,819 Prepaid expenses and other current assets 2,998 3,247 ----- ----- Total current assets 65,907 70,501 Property, plant and equipment, net 25,637 29,575 Other assets 17,752 16,861 $109,296 $116,937 ======== ======== Liabilities and Stockholders' Equity Accounts payable and accrued liabilities $12,454 $16,206 Current maturities of capital lease obligation 1,074 994 ----- --- Total current liabilities 13,528 17,200 Capital lease obligation 11,365 12,181 Other liabilities 7,006 7,270 ----- ----- Total liabilities 31,899 36,651 Stockholders' equity 77,397 80,286 $109,296 $116,937 ======== ========
Osteotech, Inc.
CONTACT: Company, Mark H. Burroughs, +1-732-542-2800; Investors,
Jennifer Beugelmans, +1-646-596-7473; Media, Dan Budwick, +1-973-271-6085
Web Site: http://www.osteotech.com/
