Exhibit 99.1
| | |
FOR RELEASE AT 8:00 AM ET | | For more information, contact: |
FEBRUARY 9, 2006 | | |
| | | Thomas F. Rose, |
| | | Chief Financial Officer |
| |
| | | Wendy Crites Wacker, APR |
| | | Corporate Communications |
| | | Phone (386) 418-8888 |
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| | | Susan A. Noonan |
| | | The SAN Group |
| | | Phone (212) 966-3650 |
REGENERATION TECHNOLOGIES ANNOUNCES 2005 YEAR END, FOURTH
QUARTER RESULTS
Company Will Hold Conference Call at 9:00 a.m. ET
ALACHUA, Fla. (Feb. 9, 2006) – Regeneration Technologies, Inc. (RTI) (Nasdaq: RTIX), a leading processor of orthopedic, cardiovascular and other biologic implants, announced today that the company’s net revenues were $20.1 million for the fourth quarter of 2005 compared to $23.2 million for the fourth quarter of 2004. Net revenues were $75.2 million for the full year 2005 compared to net revenues of $92.7 million for the full year 2004.
For the fourth quarter ended December 31, 2005, the company reported net loss of $1.7 million, compared to net income of $1.6 million for fourth quarter 2004. Net loss per diluted share for the fourth quarter was $0.06, compared to net income per diluted share of $0.06 for fourth quarter 2004.
For the full year 2005, the company reported net loss of $5.6 million, compared to a net income of $6.2 million for the year 2004. Net loss per diluted share for 2005 was $0.20 compared to net income per diluted share of $0.23 for the year 2004.
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2005 Net Revenue Analysis and 2006 Outlook
Spinal:Net revenues from distribution of spinal implants were $12.6 million for the fourth quarter and $44.9 million for the year ended December 31, 2005, representing a decrease of 15 percent and 26 percent, respectively. In the first half of the year revenues were impacted by reduced orders for these implants and in the later part of the year they were impacted by an inability to fulfill orders due to a lack of appropriate tissue as a result of the product recall.
Spinal implant orders began normalizing in the second half of 2005 as demand for cervical products remains strong. In December 2005, the company’s exclusive distributor of spinal products received expanded distribution rights for bone paste implants, which we believe will result in higher revenues in 2006. In addition, a new lumbar implant is expected to be launched in the second half of 2006, which should result in higher revenues.
Sports Medicine:Net revenues from distribution of sports medicine implants were $3.0 million for the fourth quarter and $10.5 million for the year ended December 31, 2005 representing an increase of 45 percent and 17 percent, respectively. Revenues in the fourth quarter and year were favorably impacted by the change to a direct distribution model. Amounts of tissue available for distribution were similar between 2004 and 2005.
Net revenues in sports medicine should increase in 2006 as all product distributed in the U.S. will be through RTI’s direct distribution group. In addition, the introduction of the assembled bone tendon bone implant for knee surgeries will increase the number of implants available for distribution. Lastly, we expect net revenues in this area to be positively impacted by distribution of the Sterling® soft and hard tissue interference screws.
Cardiovascular: Net revenues from distribution of cardiovascular implants were $1.7 million for the fourth quarter and $7.7 million for the year ended December 31, 2005 representing a decrease for the quarter of 21 percent and an increase for the year of 8 percent. The results in this area were favorably impacted by fee increases however tissue distribution volumes were
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down for the quarter and year. In the fourth quarter, certain processed tissues were held in inventory until completion of the final validation of our new cardiovascular facility.
Cardiovascular net revenues are expected to grow in 2006 as planned yield improvements are recognized from processing at our new state-of-the-art facility in Birmingham, Ala. We continue to work with our exclusive distributor, ATS Medical, on developing additional tissue recovery opportunities at their major hospital relationships.
General Orthopedic: Net revenues from general orthopedic implants were $2.3 million for the fourth quarter and $9.3 million for the year ended December 31, 2005 representing a decrease of 26 percent and 28 percent, respectively. The majority of the decrease related to lower orders of bone paste products for orthopedics applications by our exclusive distributor for these products.
We expect general orthopedic revenues to grow in 2006 as a result of RTI commencing direct distribution of our BioSet™ allograft bone paste products. In addition, this area should be favorably impacted by the distribution of Sterling cancellous chips and cubes, which were introduced in December 2005.
“Although 2005 was a very challenging year for RTI due to the review of strategic alternatives in the first half of the year and the product recall in the fourth quarter, the outlook for 2006 continues to be optimistic regarding underlying growth rates in the company’s product offerings and strong demand in each of its markets,” said Brian K. Hutchison, RTI chairman, president and CEO.
Conference Call
RTI will hold a live conference call and simultaneous audio web cast today, Feb. 9, 2006 at 9 a.m. ET to discuss the fourth quarter and year end 2005 results. The conference call can be accessed by dialing 888-390-0675, passcode RTIX Q4. 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
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available through March 7, 2006 and can be accessed by calling 866-424-4008; 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 650,000 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, growth rates, new product introductions, future operational improvements and 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 atwww.rtix.com or the SEC’s web site atwww.sec.gov.
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8
REGENERATION TECHNOLOGIES, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Income
(In thousands, except per share data)
| | | | | | | | | | | | | | | | |
| | | Three months ended
December 31,
| | | Twelve months ended
December 31,
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| | | 2005
| | | 2004
| | | 2005
| | | 2004
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Net revenues: | | | | | | | | | | | | | | | | |
Fees from tissue distribution | | $ | 19,460 | | | $ | 22,015 | | | $ | 72,337 | | | $ | 89,603 | |
Other revenues from core operations | | | 666 | | | | 1,192 | | | | 2,862 | | | | 3,100 | |
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Total net revenues | | | 20,126 | | | | 23,207 | | | | 75,199 | | | | 92,703 | |
Costs of processing and distribution | | | 14,570 | | | | 13,851 | | | | 55,457 | | | | 55,526 | |
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Gross profit | | | 5,556 | | | | 9,356 | | | | 19,742 | | | | 37,177 | |
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Expenses: | | | | | | | | | | | | | | | | |
Marketing, general and administrative | | | 6,621 | | | | 6,073 | | | | 23,350 | | | | 23,224 | |
Research and development | | | 1,381 | | | | 873 | | | | 5,003 | | | | 3,838 | |
Asset abandonments | | | 336 | | | | 136 | | | | 336 | | | | 136 | |
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Total expenses | | | 8,338 | | | | 7,082 | | | | 28,689 | | | | 27,198 | |
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Operating (loss) income | | | (2,782 | ) | | | 2,274 | | | | (8,947 | ) | | | 9,979 | |
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Other (expense) income: | | | | | | | | | | | | | | | | |
Interest expense | | | (230 | ) | | | (241 | ) | | | (862 | ) | | | (967 | ) |
Interest income | | | 221 | | | | 30 | | | | 361 | | | | 96 | |
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Total other expense - net | | | (9 | ) | | | (211 | ) | | | (501 | ) | | | (871 | ) |
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(Loss) income before income tax benefit (expense) | | | (2,791 | ) | | | 2,063 | | | | (9,448 | ) | | | 9,108 | |
Income tax benefit (expense) | | | 1,084 | | | | (449 | ) | | | 3,897 | | | | (2,953 | ) |
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Net (loss) income | | $ | (1,707 | ) | | $ | 1,614 | | | $ | (5,551 | ) | | $ | 6,155 | |
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Net (loss) income per common share - basic | | $ | (0.06 | ) | | $ | 0.06 | | | $ | (0.20 | ) | | $ | 0.23 | |
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Net (loss) income per common share - diluted | | $ | (0.06 | ) | | $ | 0.06 | | | $ | (0.20 | ) | | $ | 0.23 | |
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Weighted average shares outstanding - basic | | | 29,681,563 | | | | 26,640,438 | | | | 27,754,003 | | | | 26,593,030 | |
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Weighted average shares outstanding - diluted | | | 29,681,563 | | | | 27,049,488 | | | | 27,754,003 | | | | 27,063,283 | |
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9
REGENERATION TECHNOLOGIES, INC. AND SUBSIDIARIES
Net Revenues
(In thousands)
| | | | | | | | | | | | |
| | | Three months ended
December 31,
| | Twelve months ended
December 31,
|
| | | 2005
| | 2004
| | 2005
| | 2004
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Fees from tissue distribution | | | | | | | | | | | | |
Spinal | | $ | 12,565 | | $ | 14,795 | | $ | 44,887 | | $ | 60,611 |
Sports Medicine | | | 2,954 | | | 2,035 | | | 10,545 | | | 9,002 |
Cardiovascular | | | 1,669 | | | 2,113 | | | 7,653 | | | 7,108 |
General orthopedic | | | 2,272 | | | 3,072 | | | 9,252 | | | 12,882 |
Other non-tissue revenues | | | 666 | | | 1,192 | | | 2,862 | | | 3,100 |
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Total | | $ | 20,126 | | $ | 23,207 | | $ | 75,199 | | $ | 92,703 |
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REGENERATION TECHNOLOGIES, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(In thousands)
| | | | | | |
| | | December 31,
2005
| | December 31,
2004
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| Assets | | | | | | |
Current Assets: | | | | | | |
Cash and cash equivalents | | $ | 25,559 | | $ | 11,484 |
Accounts receivable - net | | | 9,021 | | | 9,544 |
Inventories | | | 38,534 | | | 40,431 |
Other current assets | | | 12,229 | | | 7,655 |
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Total current assets | | | 85,343 | | | 69,114 |
Property, plant and equipment - net | | | 44,527 | | | 44,424 |
Other assets | | | 12,440 | | | 11,192 |
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| | | $ | 142,310 | | $ | 124,730 |
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| Liabilities and Stockholders’ Equity | | | | | | |
Current Liabilities: | | | | | | |
Accounts payable | | $ | 7,184 | | $ | 7,797 |
Other current liabilities | | | 8,623 | | | 7,125 |
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Total current liabilities | | | 15,807 | | | 14,922 |
Other liabilities | | | 8,690 | | | 10,206 |
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Total liabilities | | | 24,497 | | | 25,128 |
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Total stockholders’ equity | | | 117,813 | | | 99,602 |
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| | | $ | 142,310 | | $ | 124,730 |
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REGENERATION TECHNOLOGIES, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(In thousands)
| | | | | | | | | | | | | | | | |
| | | Three Months Ended
December 31,
| | | Twelve Months Ended
December 31,
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| | | 2005
| | | 2004
| | | 2005
| | | 2004
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Cash flows from operating activities: | | | | | | | | | | | | | | | | |
Net (loss) income | | $ | (1,707 | ) | | $ | 1,614 | | | $ | (5,551 | ) | | $ | 6,155 | |
Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities: | | | | | | | | | | | | | | | | |
Depreciation and amortization expense | | | 1,246 | | | | 1,090 | | | | 4,591 | | | | 4,422 | |
Amortization of deferred financing costs | | | 42 | | | | — | | | | 173 | | | | — | |
Change in working capital | | | 4,971 | | | | (890 | ) | | | 3,567 | | | | (16,091 | ) |
Other | | | (1,123 | ) | | | 544 | | | | (4,461 | ) | | | 2,645 | |
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Net cash provided by (used in) operating activities | | | 3,429 | | | | 2,358 | | | | (1,681 | ) | | | (2,869 | ) |
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Cash flows from investing activities: | | | | | | | | | | | | | | | | |
Purchases of property, plant and equipment | | | (640 | ) | | | (529 | ) | | | (3,999 | ) | | | (2,821 | ) |
Purchase of intellectual property | | | — | | | | — | | | | (1,600 | ) | | | — | |
Decrease in restricted deposits | | | — | | | | — | | | | — | | | | 14,757 | |
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Net cash (used in) provided by investing activities | | | (640 | ) | | | (529 | ) | | | (5,599 | ) | | | 11,936 | |
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Cash flows from financing activities: | | | | | | | | | | | | | | | | |
Proceeds from stock offering | | | — | | | | — | | | | 23,940 | | | | — | |
Stock issuance costs | | | — | | | | — | | | | (1,565 | ) | | | — | |
Proceeds from issuance of term loan | | | — | | | | — | | | | — | | | | 9,000 | |
Payments on term loan and capital lease obligations | | | (569 | ) | | | (859 | ) | | | (2,316 | ) | | | (2,653 | ) |
Payment on note payable | | | — | | | | — | | | | — | | | | (12,068 | ) |
Other | | | 141 | | | | 55 | | | | 1,296 | | | | (1,913 | ) |
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Net cash (used in) provided by financing activities | | | (428 | ) | | | (804 | ) | | | 21,355 | | | | (7,634 | ) |
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Net increase in cash and cash equivalents | | | 2,361 | | | | 1,025 | | | | 14,075 | | | | 1,433 | |
Cash and cash equivalents, beginning of period | | | 23,198 | | | | 10,459 | | | | 11,484 | | | | 10,051 | |
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Cash and cash equivalents, end of period | | $ | 25,559 | | | $ | 11,484 | | | $ | 25,559 | | | $ | 11,484 | |
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