Great news today:
Osteotech Reports Record Second Quarter Revenues; Net Income Increases 595% in the Quarter
PR Newswire, Wednesday, July 16, 1997 at 07:54
EATONTOWN, N.J., July 16 /PRNewswire/ -- Osteotech, Inc. announced today
that revenues in the second quarter of 1997 increased 28% to $10,703,000 from
$8,375,000 in the second quarter of 1996. Revenues in the six months ended
June 30, 1997, increased 24% to $20,787,000 from $16,784,000 in the same
period of 1996. Domestic revenues increased 30% to $9,725,000 from $7,506,000
for the quarter and 28% to $19,129,000 from $14,988,000 in the six months
ended June 30, 1997. The growth in revenues continues to be driven by strong
demand for the Company's proprietary Grafton(R) Demineralized Bone Matrix
which increased 75% in the second quarter of 1997 and 65% in the six months
ended June 30, 1997, as compared to the same periods of 1996. Grafton sales
to hospitals and professional end-users by Osteotech's clients, the
Musculoskeletal Transplant Foundation and American Red Cross Tissue Services,
are tracking at a run rate to exceed $32,000,000 in 1997.
Non-allograft foreign revenues increased 13% in the second quarter of 1997
to $978,000 from $869,000 in the second quarter of 1996. These revenues
declined in the six months ended June 30, 1997 to $1,658,000 from $1,796,000
in the six months ended June 30, 1996. Second quarter and six month 1997
revenues included $257,000 resulting from the previously announced licensing
of the Company's PolyActive(TM) polymer material technology. The decline in
six months 1997 foreign revenue is primarily a result of currency exchange
rates which had unfavorable impacts on those revenues of 12% in both the
second quarter and six months ended June 30, 1997, but less than a 1%
unfavorable impact on consolidated revenues; and the loss of grant revenues
from the Dutch government, which were $156,000 and $318,000 in each period of
1996, respectively, due to the previously announced discontinuance of the
PolyActive research and development program.
Net income in the second quarter increased 595% to $1,403,000 or $.16 per
share and increased 499% to $2,235,000 or $.26 per share ($.25 assuming full
dilution) in the six months ended June 30, 1997 as compared to $202,000 or
$.02 per share in the second quarter of 1996 and $373,000 or $.04 per share in
the six months ended June 30, 1996. The per share impact of the license fee
for PolyActive on net income was $.03 per share in both the second quarter and
six months ended June 30, 1997. The improvements in net income are primarily
a result of the continued improvement in gross profit margins, 63% in the
second quarter of 1997 and 62% in the six months of 1997 compared with 57% for
the comparable periods of 1996, the slower rate of growth in operating
expenses when compared to the rate of growth in revenues and a significant
reduction in the Company's effective tax rate to 36% and 41%, respectively,
from 71% and 72% in the second quarter and six months ended June 30, 1996.
The Company now expects the effective tax rate to average about 40% for 1997.
Income before income taxes was $2,188,000, or 20% of revenues in the
second quarter of 1997 as compared to $703,000, or 8% of revenues in the
second quarter of 1996; and was $3,758,000, or 18% of revenues in the six
months ended June 30, 1997 as compared to $1,354,000, or 8% of revenues in the
same period of 1996.
"The Company continues to meet our revenue growth goals for 1997," said
Richard W. Bauer, President and Chief Executive Officer of Osteotech.
"Revenue growth continued in the second quarter of 1997, resulting in the
Company achieving its fourth consecutive quarter over quarter performance.
Grafton's strong revenue growth is a result of the increasing effectiveness of
our sales agency network, with over 200 representatives, and the rapid
acceptance of Grafton Putty which was introduced to the market in November,
1996 and now represents 30% of Grafton 1997 year-to-date revenues. We
continue to gain new Grafton users each day, however, as we continue to build
Grafton volume we expect the rate of growth to be more moderate in the second
half of the year versus the first six months." Mr. Bauer continued, "An
important contribution to our strong second quarter operating results was
achieved by our foreign operation which recorded its first quarterly operating
profit since having been acquired by Osteotech in May, 1992, and this is also
true excluding the licensing fee earned as a result of entering into the
PolyActive licensing arrangement with Matrix Medical BV. Foreign operating
profits were $340,000 in the second quarter, $83,000 excluding the licensing
fee of $257,000, as compared to a loss of $350,000 in the second quarter of
1996."
Mr. Bauer concluded by saying, "We're extremely pleased with the Company's
overall strong performance. As previously reported, the Company's net income
performance in 1996 had been negatively impacted by a restructuring charge and
a high effective corporate tax rate resulting from losses in our foreign
operations. With the foreign operating losses behind us, we believe the
Company's impressive revenue growth combined with careful expense controls
will continue to be favorably reflected in our net income growth."
Certain of the statements contained in the immediately preceding three
paragraphs of this press release are not historical facts and are
forward-looking statements (as such term is defined in the Private Securities
Litigation Reform Act of 1995). Because such statements include risks and
uncertainties, actual results may differ materially from those expressed or
implied by such forward-looking statements. Factors that could cause actual
results to differ materially include the continued acceptance and growth of
products, the impact of competitive products and other risks and uncertainties
detailed from time to time in the Company's periodic reports (including the
Annual Report on Form 10K for the year ended December 31, 1996 and Form 10Q
for the first quarter of 1997) filed with the Securities and Exchange
Commission. Osteotech, Inc., headquartered in Eatontown, New Jersey, is a
leading processor of human bone and bone connective tissue for transplantation
and an innovator in the development and marketing of biomaterial and implant
products for musculoskeletal surgery.
OSTEOTECH, INC. AND SUBSIDIARIES
Consolidated Summary Financial Information
(In thousands, except per share data)
Three Months Six Months
Ended June 30, Ended June 30,
1997 1996 1997 1996
(Unaudited) (Unaudited)
Revenues:
Service $9,887 $7,578 $19,365 $15,101
Product 559 641 1,165 1,365
Licensing fee 257 -- 257 --
Grant -- 156 -- 318
10,703 8,375 20,787 16,784
Costs and expenses:
Cost of services 3,526 3,063 6,946 6,127
Cost of products 410 552 862 1,085
Marketing, general
and administrative 3,831 2,984 7,629 6,140
Research and
development 890 1,122 1,826 2,183
8,657 7,721 17,263 15,535
Other Income (expense):
Interest income, net 107 44 190 80
Other 35 5 44 25
142 49 234 105
Income before
income taxes 2,188 703 3,758 1,354
Income tax provision 785 501 1,523 981
Net Income $1,403 $202 $2,235 $373
Net Income per share
Primary $.16 $.02 $.26 $.04
Assuming full dilution $.16 $.02 $.25 $.04
Shares used in computing
net income per share
Primary 8,681,882 8,319,023 8,622,475 8,354,163
Assuming full
dilution 8,852,476 8,349,699 8,847,644 8,354,163
SOURCE Osteotech, Inc.
-0- 07/16/97
/CONTACT: Michael J. Jeffries of Osteotech, 732-542-2800/ |
