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RTI Biologics Announces 2010 Third Quarter Results

^{Published on 2010-11-05 03:44:13 - Market Wire}
 

ALACHUA, Fla.--([ BUSINESS WIRE ])--[ RTI Biologics Inc. ] (RTI) (Nasdaq: RTIX), a leading provider of orthopedic and other biologic implants, reported operating results for the third quarter ended Sept. 30, 2010 as follows:

"We remain confident that we will reach our financial goals for the rest of the year despite challenging conditions in some of our end markets."

Quarterly Highlights:

• Achieved quarterly revenues of $41.8 million, with gross margin of 48 percent.
• Achieved growth in the domestic sports medicine business of 20 percent over third quarter 2009.
• Signed an exclusive, 10-year distribution agreement with Zimmer Dental Inc. for biologic implants for the dental market worldwide.
• Signed an exclusive agreement with Athersys Inc. to provide RTI access to its Multipotent Adult Progenitor Cell (MAPC) technologies.
• Signed a distribution agreement with SeaSpine, a new distributor for spinal implants, and launched a new cervical construct.
• Launched a new spine implant with Medtronic.
• Net loss of $133.1 million, or $2.43 per fully diluted share, included a non-cash goodwill impairment charge.
• Adjusted net income, excluding the impairment charge, was $1.6 million, or $0.03 per fully diluted share.

aRevenues in the third quarter met expectations as our direct businesses, including sports medicine, demonstrated continued strength. In addition, we are pleased to have completed our revised distribution agreement with Zimmer and signed the licensing agreement with Athersys during the quarter,a said Brian K. Hutchison, chairman and CEO of RTI. aWe remain confident that we will reach our financial goals for the rest of the year despite challenging conditions in some of our end markets.a

Revenues of $41.8 million for the third quarter of 2010 decreased 2 percent compared to the third quarter of 2009. Domestic revenues of $37.6 million for the third quarter increased 1 percent on the strength of the direct sports medicine business. International revenues of $4.2 million decreased 23 percent primarily due to economic weakness in several international markets. During the third quarter, currency exchange fluctuations resulted in a decrease in revenues of $376,000.

For the third quarter of 2010, the company reported a net loss of $133.1 million and a net loss per fully diluted share of $2.43 based on 54.8 million fully diluted shares outstanding, compared to net income of $2.3 million and net income per fully diluted share of $0.04 for the third quarter 2009, based on 55.0 million fully diluted shares outstanding.

Third quarter results include a decrease in income of $134.7 million, or $2.46 per fully diluted share, due to a non-cash goodwill impairment charge. The impairment charge is a result of an analysis of recorded goodwill in accordance with the financial accounting and reporting requirements of the Financial Accounting Standards Board ASC 350, Goodwill and Other Intangible Assets, considering the decline in the market value of the companya™s equity during the third quarter.

2010 Outlook

The company reaffirmed previously issued 2010 fiscal guidance that full year revenues are estimated to be between $165 million and $168 million. Excluding the impact of the goodwill impairment charge taken in the third quarter, the full year earnings per fully diluted share are expected to be in the range of $0.10 to $0.12, based on 55.0 million fully diluted shares outstanding.

Conference Call

RTI will host a conference call and simultaneous audio webcast to discuss the third quarter results at 9:00 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 RTIa™s website at [ www.rtix.com ]. A telephone replay of the call will be available through Dec. 4, 2010 and can be accessed by calling (800) 642-1687, pass code 17891989; the replay will also be available at [ www.rtix.com ].

Use of Non-GAAP Financial Measures

A reconciliation of the companya™s non-GAAP financial measures to the corresponding GAAP measures, and an explanation of the companya™s use of the non-GAAP measures, is included in the exhibits to this press release.

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 ], precision shaping and using proprietary, validated processes. These allograft and xenograft implants are used in orthopedic, dental and other specialty surgeries.

RTIa™s innovations continuously raise the bar of science and safety for biologics a" 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 a" the [ BioCleanse® Tissue Sterilization Process ] and the [ Tutoplast® Tissue Sterilization Process ]a" 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.

RTIa™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.

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 managementa™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 ].

Use of Non-GAAP Financial Measures

To supplement RTI Biologicsa™ condensed consolidated financial statements presented on a GAAP basis, the company discloses certain non-GAAP financial measures that exclude certain amounts, including non-GAAP net income and nona"GAAP impact per fully diluted share. These non-GAAP financial measures are not in accordance with, or an alternative for, generally accepted accounting principles in the United States. Reconciliations of non-GAAP financial measures to the corresponding GAAP measures are included in the reconciliation above.

The following is an explanation of the adjustment that management excluded as part of the non-GAAP measures for the three and nine month periods ended September 30, 2010 as well as the reason for excluding the individual item.

Goodwill impairment charge a" This adjustment relates to evaluating the goodwill associated with the purchase of Tutogen Medical Inc. Management removes the impact of the goodwill impairment charge from the Companya™s operating results to assist in assessing its operating performance in the current period and to supplement a comparison to the Companya™s past operating performance.

Material Limitations Associated with the Use of Non-GAAP Financial Measures

Non-GAAP net income and non-GAAP impact per fully diluted share should not be considered in isolation, or as a replacement for GAAP measures.

Usefulness of Non-GAAP Financial Measures to Investors

The Company believes that presenting non-GAAP net income and non-GAAP impact per fully diluted share in addition to the related GAAP measures provide investors greater transparency to the information used by management in its financial decision-making which excludes the impairment charges. The Company further believes that providing this information better enables RTI Biologicsa™ investors to understand the Companya™s overall core performance and to evaluate the methodology used by management to assess and measure such performance.