Exhibit 991
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| | | | | For more information, contact: |
| | | | | Thomas F. Rose |
| | | | | Chief Financial Officer |
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| | | | | Wendy Crites Wacker, APR |
| | | | | Corporate Communications |
| | | | | Phone (386) 418-8888 |
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| | | | | Susan A. Noonan |
| | | | | The SAN Group, LLC |
| | | | | Phone (212) 966-3650 |
REGENERATION TECHNOLOGIES ANNOUNCES 2005 THIRD QUARTER RESULTS
Company Will Hold Conference Call at 9:00 a.m. ET
ALACHUA, Fla. (October 24, 2005) – Regeneration Technologies, Inc. (RTI) (Nasdaq: RTIX), the Florida-based processor of orthopedic, cardiovascular and other biologic implants, announced today that the company’s net revenue was $22.5 million for the third quarter of 2005 and $55.1 million for the nine months ended September 30, 2005, compared to $22.8 million for the third quarter 2004 and $69.5 million for the nine months ended September 30, 2004.
For the third quarter ended September 30, 2005, the company reported net loss of $1.6 million and net loss per diluted share of $0.06, compared to net income of $1.7 million and net income per diluted share of $0.06 for the third quarter of 2004. For the nine months ended September 30, 2005 RTI reported net loss of $3.8 million and net loss per diluted share of $0.14, compared to net income of $4.5 million and net income per diluted share of $0.17 for the nine months ended September 30, 2004.
On October 14, 2005, RTI issued a press release announcing a voluntary recall of certain tissues from the marketplace. Reflected in the numbers above, the company has recorded a charge to operating income in the third quarter of approximately $3.5 million, or $0.08 per diluted share, to recognize expenses related to the recall.
On August 29, 2005, RTI sold 2.8 million shares of common stock to accredited investors for an aggregate purchase price of approximately $23.9 million, with net proceeds to the company of $22.4 million. The proceeds from the financing were used to pay off $3 million outstanding under the company’s line of credit and the remainder will be used for general working capital purposes.
“Third quarter revenues of $22.5 million show recovery, as expected, from first quarter revenues of $15.0 million and second quarter revenues of $17.6 million. In addition, we made significant progress during the quarter on improving our liquidity position and establishing our direct distribution force,” said Brian K. Hutchison, chairman, president and CEO of RTI. “Had it not been for the October product recall, we would have returned to profitability in the third quarter as expected.”
Conference Call
RTI will hold a live conference call and simultaneous audio web cast on Monday, October 24, 2005 at 9:00 a.m. ET to discuss third quarter results. The conference call can be accessed by dialing 888-390-0675, passcode RTIX Q3. 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 November 20, 2005 and can be accessed by calling 866-403-8767; the replay will also be available at www.rtix.com.
About Regeneration Technologies, Inc.
RTI processes allograft and xenograft tissue into shaped implants for use in orthopedic, cardiovascular and other surgeries with a commitment to science, safety and innovation.
RTI also holds the patents on BioCleanse®, the only proven tissue sterilization process validated to eliminate viruses, bacteria, fungi and spores from tissue without impacting the structural or biomechanical integrity of the tissue. The company has distributed more than 600,000 allograft implants sterilized with the BioCleanse process with zero incidence of infection. RTI is accredited by the American Association of Tissue Banks and was named a 2004 Technology Pioneer by the World Economic Forum.
Except for historical information, any statements made in this press release about the company’s anticipated financial results, future operational results, regulatory approvals or changes to the company’s agreements with its distributors are forward-looking statements subject to risks and uncertainties, such as those described in the company’s public filings on file with the Securities and Exchange Commission. Actual results may differ materially from 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.
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REGENERATION TECHNOLOGIES, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(Unaudited)
(In thousands, except share and per share data)
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| | | Three Months Ended
September 30,
| | | Nine Months Ended
September 30,
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| | | 2005
| | | 2004
| | | 2005
| | | 2004
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Net Revenues: | | | | | | | | | | | | | | | | |
Fees from tissue distribution | | $ | 22,089 | | | $ | 22,289 | | | $ | 53,116 | | | $ | 67,771 | |
Other revenues | | | 460 | | | | 479 | | | | 1,957 | | | | 1,725 | |
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Total net revenues | | | 22,549 | | | | 22,768 | | | | 55,073 | | | | 69,496 | |
Costs of processing and distribution | | | 17,955 | | | | 13,347 | | | | 40,887 | | | | 41,675 | |
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Gross profit | | | 4,594 | | | | 9,421 | | | | 14,186 | | | | 27,821 | |
Operating Expenses | | | 7,207 | | | | 6,527 | | | | 20,351 | | | | 20,116 | |
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Operating (loss) income | | | (2,613 | ) | | | 2,894 | | | | (6,165 | ) | | | 7,705 | |
Net interest expense | | | (136 | ) | | | (198 | ) | | | (492 | ) | | | (660 | ) |
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(Loss) income before income tax (expense) benefit | | | (2,749 | ) | | | 2,696 | | | | (6,657 | ) | | | 7,045 | |
Income tax benefit (expense) | | | 1,152 | | | | (1,043 | ) | | | 2,813 | | | | (2,504 | ) |
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Net (loss) income | | $ | (1,597 | ) | | $ | 1,653 | | | $ | (3,844 | ) | | $ | 4,541 | |
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Net (loss) income per common share - basic | | $ | (0.06 | ) | | $ | 0.06 | | | $ | (0.14 | ) | | $ | 0.17 | |
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Net (loss) income per common share - diluted | | $ | (0.06 | ) | | $ | 0.06 | | | $ | (0.14 | ) | | $ | 0.17 | |
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Weighted average shares outstanding - basic | | | 27,834,975 | | | | 26,625,999 | | | | 27,132,660 | | | | 26,575,956 | |
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Weighted average shares outstanding - diluted | | | 27,834,975 | | | | 27,053,585 | | | | 27,132,660 | | | | 27,070,782 | |
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REGENERATION TECHNOLOGIES, INC. AND SUBSIDIARIES
Net Revenues
(Unaudited)
(In thousands)
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| | | Three Months Ended
September 30,
| | Nine Months Ended
September 30,
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| | | 2005
| | 2004
| | 2005
| | 2004
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Fees from tissue distribution: | | | | | | | | | | | | |
Spinal | | $ | 13,216 | | $ | 14,969 | | $ | 32,322 | | $ | 45,816 |
Sports medicine | | | 3,352 | | | 1,911 | | | 7,591 | | | 6,967 |
Cardiovascular | | | 2,182 | | | 2,047 | | | 6,223 | | | 5,178 |
General orthopedic | | | 3,339 | | | 3,362 | | | 6,980 | | | 9,810 |
Other non-tissue | | | 460 | | | 479 | | | 1,957 | | | 1,725 |
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Total | | $ | 22,549 | | $ | 22,768 | | $ | 55,073 | | $ | 69,496 |
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REGENERATION TECHNOLOGIES, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(Unaudited)
(In thousands)
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| | | September 30,
2005
| | December 31,
2004
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| Assets | | | | | | |
Current Assets: | | | | | | |
Cash and cash equivalents | | $ | 23,198 | | $ | 11,484 |
Accounts receivable - net | | | 10,214 | | | 9,544 |
Inventories | | | 39,806 | | | 40,431 |
Other current assets | | | 9,068 | | | 7,655 |
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Total current assets | | | 82,286 | | | 69,114 |
Property, plant and equipment - net | | | 44,991 | | | 44,424 |
Other assets | | | 13,577 | | | 11,192 |
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| | | $ | 140,854 | | $ | 124,730 |
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| Liabilities and Stockholders’ Equity | | | | | | |
Current Liabilities: | | | | | | |
Accounts payable | | $ | 6,975 | | $ | 7,797 |
Other current liabilities | | | 7,142 | | | 7,125 |
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Total current liabilities | | | 14,117 | | | 14,922 |
Other liabilities | | | 7,094 | | | 10,206 |
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Total liabilities | | | 21,211 | | | 25,128 |
Total stockholders’ equity | | | 119,643 | | | 99,602 |
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| | | $ | 140,854 | | $ | 124,730 |
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REGENERATION TECHNOLOGIES, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(In thousands)
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| | | Three Months Ended
September 30,
| | | Nine Months Ended
September 30,
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| | | 2005
| | | 2004
| | | 2005
| | | 2004
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Cash flows from operating activities: | | | | | | | | | | | | | | | | |
Net (loss) income | | $ | (1,597 | ) | | $ | 1,653 | | | $ | (3,844 | ) | | $ | 4,541 | |
Adjustments to reconcile net (loss) income to net cash used in operating activities: | | | | | | | | | | | | | | | | |
Depreciation and amortization expense | | | 1,121 | | | | 1,135 | | | | 3,345 | | | | 3,333 | |
Amortization of deferred financing costs | | | 43 | | | | 41 | | | | 131 | | | | 92 | |
Change in working capital | | | 1,470 | | | | (2,397 | ) | | | (1,402 | ) | | | (15,211 | ) |
Other | | | (1,381 | ) | | | 840 | | | | (3,339 | ) | | | 2,040 | |
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Net cash (used in) provided by operating activities | | | (344 | ) | | | 1,272 | | | | (5,109 | ) | | | (5,205 | ) |
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Cash flows from investing activities: | | | | | | | | | | | | | | | | |
Purchases of property, plant and equipment | | | (638 | ) | | | (1,126 | ) | | | (3,359 | ) | | | (2,188 | ) |
Purchase of intellectual property | | | — | | | | — | | | | (1,600 | ) | | | — | |
Decrease in restricted deposits | | | — | | | | — | | | | — | | | | 14,757 | |
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Net cash (used in) provided by investing activities | | | (638 | ) | | | (1,126 | ) | | | (4,959 | ) | | | 12,569 | |
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Cash flows from financing activities: | | | | | | | | | | | | | | | | |
Proceeds from stock offering | | | 23,940 | | | | — | | | | 23,940 | | | | — | |
Stock issuance costs | | | (1,565 | ) | | | — | | | | (1,565 | ) | | | — | |
Payment made to terminate swap agreement | | | — | | | | — | | | | — | | | | (1,613 | ) |
Payments on capital lease and note obligations | | | (564 | ) | | | (787 | ) | | | (1,749 | ) | | | (1,898 | ) |
Payments on note payable | | | — | | | | — | | | | — | | | | (12,068 | ) |
Proceeds from issuance of term loan | | | — | | | | — | | | | — | | | | 9,000 | |
Proceeds from revolving line of credit | | | — | | | | — | | | | 3,000 | | | | — | |
Payment on revolving line of credit | | | (3,000 | ) | | | — | | | | (3,000 | ) | | | — | |
Other | | | 687 | | | | 317 | | | | 1,156 | | | | (377 | ) |
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Net cash provided by (used in) financing activities | | | 19,498 | | | | (470 | ) | | | 21,782 | | | | (6,956 | ) |
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Net increase (decrease) in cash and cash equivalents | | | 18,516 | | | | (324 | ) | | | 11,714 | | | | 408 | |
Cash and cash equivalents, beginning of period | | | 4,682 | | | | 10,783 | | | | 11,484 | | | | 10,051 | |
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Cash and cash equivalents, end of period | | $ | 23,198 | | | $ | 10,459 | | | $ | 23,198 | | | $ | 10,459 | |
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