RTI Biologics Announces 2008 Second Quarter Results

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Jul 24 2008, 8:00 AM EST RTI Biologics Announces 2008 Second Quarter Results
News source: Business Wire
RTI Biologics Inc. (RTI) ( Nasdaq:RTIX ), a leading processor of orthopedic and other biologic implants,reported operating results for the quarter ended June 30, 2008 asfollows:

Second Quarter Highlights:

-- Achieved record revenues of $40.8 million

-- Increased gross margin to 48 percent for the quarter compared to38 percent in prior year and 46 percent in the first quarter 2008

-- Grew sports medicine revenues by 55 percent

-- Commenced shipments of fresh osteochondral grafts, which isexceeding expectations

-- Shipped launch quantities of two new spinal implants and onebone graft substitute implant

-- Received FDA clearance for bovine pericardium membrane fordental applications

-- Received FDA clearance for Tutomesh(R) xenograft implant andupdated claims for Tutopatch(R) implant for hernia repairapplications

-- Achieved net income of $1.5 million, or $0.03 per diluted share,and adjusted net income of $2.2 million, or $0.04 per diluted sharewhen excluding purchase accounting adjustments and restructuringcharges

"The second quarter was our first full quarter as a combinedcompany following the merger with Tutogen Medical," said Brian K.Hutchison, RTI Biologics' chairman and chief executive officer."The integration of our two companies is progressing very well, andwe continue to increase revenues and improve our profitability. Weare optimistic that we will see accelerated performance in thesecond half of the year as a result of increased tissueavailability and upcoming implant launches."

Net revenues were $40.8 million for the second quarter of 2008,representing a 78 percent increase compared to net revenues of$22.9 million for the second quarter of 2007. Net revenues were$70.7 million for the first half of 2008, representing a 57 percentincrease compared to net revenues of $44.9 million for the firsthalf of 2007. The increase in revenues reflects the inclusion ofrevenues of Tutogen Medical since the completion of the merger onFeb. 27, 2008.

For the second quarter and first half of 2008, the company's netincome was reduced by purchase accounting adjustments andrestructuring charges associated with the Tutogen merger of $1.1million and $1.7 million before income taxes, respectively,representing an after tax expense of $741,000 and $1.2 million anda decrease in income per diluted share of $0.01 and $0.02,respectively. The adjustments for the second quarter and first halfof 2008 relate to the amortization of inventory step-up adjustmentsof $704,000 and $939,000, respectively, included in the cost ofgoods sold; intangibles amortization expense of $276,000 and$336,000, respectively, included in marketing, general andadministrative expenses; and $82,000 and $450,000 related torestructuring charges, respectively.

During the second quarter and the first half of 2008, the companyrecorded pre-tax stock-based compensation expense totaling $407,000and $855,000, respectively, representing an after-tax expense of$249,000 and $522,000, resulting in no change in net income perdiluted share for the second quarter and $0.01 for the first halfof 2008, under the provisions of Statement of Financial AccountingStandards No. 123R, Share-Based Payment. This compares tostock-based compensation expense totaling $789,000 and $1.5 millionbefore income taxes for the second quarter and the first half of2007, representing an after-tax expense of $488,000 and $679,000,respectively, and a decrease in net income per diluted share of$0.02 and $0.02, respectively.

For the second quarter of 2008, the company reported net income of$1.5 million and a net income per diluted share of $0.03 based on55.8 million diluted shares outstanding, compared to net income of$195,000 for the second quarter of 2007 and a net income perdiluted share of $0.01 based on 30.3 million diluted sharesoutstanding for the second quarter of 2007. For the first half of2008, the company reported net income of $2.1 million and netincome per diluted share of $0.05 based on 47.2 million dilutedshares outstanding, compared to net income of $329,000 and netincome per diluted share of $0.01 based on 30.2 million dilutedshares outstanding for the same period last year.

Revenue Analysis

Domestic revenues were $34.5 million for the second quarter of 2008and $60.5 million for the first half of 2008, representingincreases of 60 percent and 44 percent respectively, reflecting themerger with Tutogen Medical, Inc. and strong performance in sportsmedicine and surgical specialties, which overcame modest decline inspine and bone graft substitutes.

International revenues, which include exports and distribution fromour German and French facilities, were $6.4 million for the secondquarter of 2008 and $10.2 million for the first half of 2008,representing increases of 343 percent and 238 percent respectively,reflecting the merger with Tutogen Medical, Inc. and higher volumelevels in all implant segments, except bone graft substitutes.

Conference Call

RTI will hold a live conference call and simultaneous audio webcast on Thursday, July 24, 2008 at 9:00 a.m. ET to discuss secondquarter results. The conference call can be accessed by dialing(877) 681-3371, passcode 3638544. The Web cast can be accessedthrough the investor section of RTI's Web site at www.rtix.com. Atelephone replay of the call will be available through August 31,2008 and can be accessed by calling (888) 203-1112, passcode3638544; the replay will also be available at www.rtix.com.

About RTI Biologics Inc.

RTI Biologics, Inc. is the leading provider of sterile biologicalimplants for surgeries around the world with a commitment toadvancing science, safety and innovation. RTI prepares humandonated tissue and bovine tissue for transplantation throughextensive testing and screening, precision shaping and proprietary,validated sterilization processes. These allograft and xenograftimplants are used in orthopedic, dental, hernia and other specialtysurgeries.

RTI's innovations continuously raise the bar of science and safetyfor biologics -- from being the first company to offerprecision-tooled bone implants and assembled technology to maximizeeach gift of donation, to inventing fully validated sterilizationprocesses that include viral inactivation steps. The company'sBioCleanse(R) Tissue Sterilization Process and the Tutoplast(R)process, sterilize tissue, are clinically successful and arescientifically proven to eliminate donor-to-recipient diseasetransmission risk while preserving tissue strength andbiocompatibility. These processes have a proven record of more thantwo million implants distributed with zero incidence of infection.In addition, RTI bone pastes are sterilized through thedemineralization process, a validated viral inactivation step.

The company is leading the evolution of biologics once again byoffering a bovine based biological matrix, providing surgeons anexpanded supply of safe, sterile tissue for their patients.

RTI's worldwide corporate headquarters are located in Alachua,Fla., with international facilities in Neunkirchen, Germany, andAix-en-Provence, France. The company is accredited by the AmericanAssociation of Tissue Banks.

Forward-Looking Statement

This communication contains "forward-looking statements" within themeaning of the Private Securities Litigation Reform Act of 1995.Such statements include but are not limited to statements about theexpected benefits of the business combination involving RTI andTutogen, including potential synergies and cost savings, futurefinancial and operating results, and the combined company's plansand objectives. In addition, except for historical information, anystatements made in this communication about anticipated financialresults, growth rates, new product introductions, futureoperational improvements and results, regulatory approvals orchanges to agreements with distributors also are forward-lookingstatements. Forward-looking statements are subject to risks anduncertainties, including the ability of RTI to integrate itsbusiness successfully and to realize the expected synergies andcost savings from the merger and the risks described in publicfilings on file with the Securities and Exchange Commission (SEC).Actual results may differ materially from anticipated resultsreflected in these forward-looking statements. Copies of thecompany's SEC filings may be obtained by contacting the company orthe SEC or by visiting RTI's Web site at www.rtix.com or the SEC'sWeb site at www.sec.gov.

RTI BIOLOGICS, INC. AND SUBSIDIARIES Condensed ConsolidatedStatements of Income (In thousands, except share and per sharedata) (Unaudited) Three months ended Six months ended June 30, June30, ------------------------- ------------------------- 2008 2007(1) 2008 2007 (1) ------------ ------------ ------------------------ Net revenues $ 40,828 $ 22,923 $ 70,738 $ 44,938 Costsof processing and distribution 21,416 14,100 37,526 28,013------------ ------------ ------------ ------------ Gross profit19,412 8,823 33,212 16,925 ------------ ------------ ------------------------ Total operating expenses 16,932 8,531 29,685 16,198------------ ------------ ------------ ------------ Operatingincome 2,480 292 3,527 727 ------------ ------------ ------------------------ Total other (expense) income - net (26) 21 (37) (1)------------ ------------ ------------ ------------ Income beforeincome tax expense 2,454 313 3,490 726 Income tax provision (950)(118) (1,341) (397) ------------ ------------ ------------------------ Net income $ 1,504 $ 195 $ 2,149 $ 329 ======================== ============ ============ Net income per common share- basic $ 0.03 $ 0.01 $ 0.05 $ 0.01 ============ ======================== ============ Net income per common share - diluted $0.03 $ 0.01 $ 0.05 $ 0.01 ============ ============ ======================== Weighted average shares outstanding - basic 53,771,32629,793,878 45,786,111 29,793,842 ============ ======================== ============ Weighted average shares outstanding -diluted 55,824,147 30,340,945 47,241,155 30,208,951 ======================== ============ ============ (1) RegenerationTechnologies, Inc. only results

RTI BIOLOGICS, INC. AND SUBSIDIARIES Condensed ConsolidatedRevenues (In thousands) (Unaudited) Three months ended Six monthsended June 30, June 30, ------------------ ----------------- 20082007 (1) 2008 2007 (1) -------- --------- ------- --------- Feesfrom tissue distribution: Sports medicine $ 9,987 $ 6,432 $19,202 $11,827 Spinal constructs 10,052 10,378 18,792 19,876 Bone graftsubstitutes 3,959 4,213 8,731 8,666 Dental 8,217 - 11,700 -Surgical specialties 4,947 - 6,505 - General orthopedic 1,699 2522,294 464 Cardiovascular - 598 13 1,537 Other revenues 1,967 1,0503,501 2,568 -------- --------- ------- --------- Total revenues$40,828 $ 22,923 $70,738 $ 44,938 ======== ========= ================ Domestic revenues 34,456 21,486 60,521 41,916International revenues 6,372 1,437 10,217 3,022 -------- ---------------- --------- Total revenues $40,828 $ 22,923 $70,738 $ 44,938======== ========= ======= ========= (1) Regeneration Technologies,Inc. only results

RTI BIOLOGICS, INC. AND SUBSIDIARIES Condensed Consolidated BalanceSheets (In thousands, except share data) (Unaudited) June 30,December 31, Assets 2008 2007 (1) -------- ------------ Cash andcash equivalents $ 21,328 $ 18,560 Accounts receivable 17,542 9,754Inventories - net 63,262 39,847 Prepaid and other assets 48,85732,105 Property, plant and equipment - net 49,577 35,549 Goodwill226,309 151 -------- ------------ Total assets $426,875 $ 135,966======== ============ Liabilities and Stockholders' Equity Accountspayable and accrued expenses $ 27,791 $ 15,821 Short termborrowings and long-term debt 7,037 3,375 Deferred revenue 7,5624,667 Other liabilities 1,684 460 Stockholders' equity 382,801111,643 -------- ------------ Total liabilities and stockholders'equity $426,875 $ 135,966 ======== ============ (1) Balances atDecember 31, 2007 are for Regeneration Technologies, Inc. only *T Email Print Back Share