Bacterin Announces
Full Year 2013 Results
BELGRADE, Mont.--(BUSINESS WIRE)— March 19, 2014 -- Bacterin International Holdings, Inc. (NYSE MKT: BONE), a leader in the development of revolutionary bone graft material and coatings for medical applications, today reported financial results for the fourth quarter and full year ended December 31, 2013. The Company reported annual revenues of approximately $33.1 million and a net loss for the year of approximately $12.7 million, or ($.27) per common share.
Revenue
Fourth quarter 2013 revenue was approximately $8.3 million, an increase of 1.7% compared to approximately $8.1 million for the same period during 2012. Fourth quarter 2013 core recurring biologics revenues, which excludes stocking order transactions, were approximately $8.1 million, an increase of approximately 4.8% compared to the fourth quarter of 2012 and a sequential increase of approximately 5.4% compared to the third quarter of 2013.
“Since joining the Company, one of my top priorities has been to strengthen our sales force.” said Dan Goldberger, President and CEO of Bacterin International. “We have worked diligently to recognize and reward success and learn from failure. We had 65 employees in our sales function in Q4 2012 responsible for about $8 million in sales. Only 25 of those employees are still with the Company, but they were responsible for $8.1 million in sales. In other words, we have dramatically improved the productivity of our sales function by attrition and focus. We have also identified strategies that work and we will continue to build our sales function with that in mind. We remain committed to our hybrid sales structure and many of our successful employees are involved in managing and training our distributor partners.”
Revenues for the full year 2013 were approximately $33.1 million, compared to approximately $33.0 million reported for 2012. Core recurring biologics revenues for the full year 2013 were approximately $30.9 million, an increase of 2.5% over the prior year figure of approximately $30.1 million.
Gross Profit
Gross profit for the fourth quarter 2013 was $4.1 million or 49.5% of revenues, compared to $4.6 million or 56.3% of revenues for the fourth quarter 2012. The fourth quarter 2013 figure includes a one-time charge of approximately $1.1 million related to an increase in the Company’s inventory reserve on slow moving inventory that was manufactured in 2008 and 2009 and approaching the end of its shelf life. Although the Company implemented several partially successful marketing initiatives to sell these products over the last twelve months, we decided to provide a reserve against these products at the end of the year due to the short remaining shelf life. Excluding the one time charge, gross margin in the fourth quarter of 2013 was approximately 62.8%.
For the year, gross profit was approximately $18.9 million, compared to $22.6 million in 2012. Gross margin for the year was 57.1%, which compares to a gross margin of 68.7% reported for 2012. Excluding the one time charge noted above, gross margin for 2013 was approximately 60.4%. The lower gross margin was primarily due to lower average selling prices resulting from changes in product mix and payor mix and the expensing of certain discarded products associated with an improved manufacturing process for the Company’s hMatrix product line.
Sales and Marketing Expenses
The fourth quarter 2013 saw sales and marketing expenses decrease to $4.0 million, as compared to $4.3 million during the same period in 2012. For the quarter, sales and marketing as a percentage of revenues decreased to 48.0%, compared to 52.7% in 2012. Sales and marketing expenses for the year increased to $16.0 million, as compared to $15.6 million for 2012. As a percentage of revenues, selling and marketing expenses increased slightly to 48.4%, which compares to 47.4% reported for the full year 2012. The Company is in the process of reorganizing the sales function with the goal of increasing efficiency and productivity.
General and Administrative Expenses
In the fourth quarter, general and administrative expenses decreased to $2.9 million as compared to $3.8 million reported for the same period last year. As a percentage of revenues, general and administrative expenses were 35.1% during the period as compared to 46.6 % for the same period 2012. In 2013, general and administrative expenses decreased to $10.8 million for the year as compared to $11.1 million reported for the same period last year. As a percentage of revenues, general and administrative expenses were 32.6% as compared to 33.8% for 2012.
Loss from Operations
The fourth quarter 2013 loss from operations was approximately $3.6 million compared to approximately $3.5 million in the fourth quarter of 2012. In the fourth quarter of 2013, the company performed an impairment analysis of the goodwill related to an acquisition completed in 2011 and determined that the entire goodwill amount of approximately $729,000 should be written off. Excluding the goodwill impairment charge and the one time increase in inventory reserve recorded in the fourth quarter of 2013, the Company’s loss from operations for the fourth quarter of 2013 was approximately $1.7 million.
In 2013, the Company reported a loss from operations of approximately $9.0 million compared to $4.9 million for the prior year. In 2013, the Company reported a net loss of approximately $12.7 million, or $(0.27) per common share, compared to $7.7 million, or $(0.18) per common share, for the prior period.
EBITDA
The Company defines earnings before interest, taxes, depreciation and amortization (“EBITDA”) as net income/loss from operations before depreciation, amortization and non-cash stock-based compensation. EBITDA for the fourth quarter was a loss of $2.3 million compared to a loss of $2.9 million for the same period 2012. Excluding the one time increase in the inventory reserve of $1.1 million, fourth quarter 2013 EBITDA was a loss of $1.2 million.
Financial Liquidity
Cash, cash equivalents and net accounts receivable were $7.8 million on December 31, 2013. In addition, as announced last week, the Company borrowed an additional $4.0 million from Orbimed under the existing terms of the Company’s credit facility.
Dan Goldberger continued, “While I am pleased with the results of the improvements we have implemented across the organization, there is still work to be done. The transition of Bacterin into a growth-oriented company is underway. I remain confident that the steps we are taking to enhance productivity will yield improving results in 2014 and beyond.”
Conference Call Details
The company will hold a conference call hosted by Dan Goldberger, Chief Executive Officer, and John Gandolfo, Chief Financial Officer, to discuss financial results at 10:00 a.m. ET, on Thursday, March 20, 2014. Please refer to the information below for conference call dial-in information and webcast registration.
Please call the conference telephone number 5-10 minutes prior to the start time. An operator will register your name and organization. If you have any difficulty connecting with the conference call, please contact the Cockrell Group at 1-877-889-1972.
| Conference Dial-in: | 877-269-7756 |
| International Dial-in: | 201-689-7817 |
| Conference Name: | Bacterin’s Fourth Quarter and Full Year 2013 Results Call |
| Webcast Registration: | Click Here |
Following the live call, a replay will be available on the Company's website, www.bacterin.com, under “Investor Info".
About the Presentation of EBITDA
EBITDA is not a financial measure calculated and presented in accordance with U.S. generally accepted accounting principles (GAAP) and should not be considered as an alternative to net income, operating income or any other financial measures so calculated and presented, nor as an alternative to cash flow from operating activities as a measure of liquidity. The company defines EBITDA as net income/(loss) from operations before depreciation, amortization and non-cash stock-based compensation. Other companies (including competitors) may define EBITDA differently. The company presents EBITDA because management believes it to be an important supplemental measure of performance that is commonly used by securities analysts, investors and other interested parties in the evaluation of companies in our industry. Management also uses this information internally for forecasting and budgeting. It may not be indicative of the historical operating results of Bacterin nor is it intended to be predictive of potential future results. Investors should not consider EBITDA in isolation or as a substitute for analysis of the company's results as reported under GAAP.
About Bacterin International Holdings
Bacterin International Holdings, Inc. (NYSE MKT: BONE) develops, manufactures and markets biologics products to domestic and international markets. Bacterin's proprietary methods optimize the growth factors in human allografts to promote bone growth, subchondral repair and dermal growth. These products are used in a variety of applications including enhancing fusion in spine surgery, relief of back pain, promotion of bone growth in foot and ankle surgery, promotion of cranial healing following neurosurgery and subchondral repair in knee and other joint surgeries.
Bacterin's Medical Device division develops and licenses coatings for various medical device applications. For further information, please visitwww.bacterin.com.
Important Cautions Regarding Forward-looking Statements
This news release contains certain disclosures that may be deemed forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that are subject to significant risks and uncertainties. Forward-looking statements include statements that are predictive in nature, that depend upon or refer to future events or conditions, or that include words such as "continue," "efforts," "expects," "anticipates," "intends," "plans," "believes," "estimates," "projects," "forecasts," "strategy," "will," "goal," "target," "prospects," "potential," "optimistic," "confident," "likely," "probable" or similar expressions or the negative thereof. Statements of historical fact also may be deemed to be forward-looking statements. We caution that these statements by their nature involve risks and uncertainties, and actual results may differ materially depending on a variety of important factors, including, among others: the Company's ability to meet its existing and anticipated contractual obligations, including financial covenant and other obligations contained in the Company’s secured lending facility; the Company’s ability to manage cash flow and achieve profitability; the Company's ability to develop, market, sell and distribute desirable applications, products and services and to protect its intellectual property; the ability of the Company's sales force to achieve expected results; the ability of the Company's customers to pay and the timeliness of such payments; the Company's ability to obtain financing as and when needed; changes in consumer demands and preferences; the Company's ability to attract and retain management and employees with appropriate skills and expertise; the Company’s ability to remain listed on the NYSE MKT exchange; the Company’s ability to successfully conclude government investigations; the impact of changes in market, legal and regulatory conditions and in the applicable business environment, including actions of competitors; and other factors. Additional risk factors are listed in the Company's Annual Report on Form 10-K and Quarterly Reports on Form 10-Q under the heading "Risk Factors." The Company undertakes no obligation to release publicly any revisions to any forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events, except as required by law.
Investor Contact:
COCKRELL GROUP
Rich Cockrell
877-889-1972
investorrelations@thecockrellgroup.com
cockrellgroup.com
BACTERIN INTERNATIONAL HOLDINGS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
| | | As of | |
| | | December 31, | |
| | | 2013 | | | 2012 | |
| | | | | | | |
| ASSETS | | | | | | | | |
| Current Assets: | | | | | | | | |
| Cash and cash equivalents | | $ | 3,046,340 | | | $ | 4,926,066 | |
| Trade accounts receivable, net of allowance for doubtful accounts of $1,309,859 and $1,576,955, respectively | | | 4,793,834 | | | | 7,154,065 | |
| Inventories, net | | | 10,753,600 | | | | 13,141,421 | |
| Prepaid and other current assets | | | 574,910 | | | | 353,271 | |
| Total current assets | | | 19,168,684 | | | | 25,574,823 | |
| | | | | | | | | |
| Non-current inventories | | | 2,119,952 | | | | 1,238,225 | |
| Property and equipment, net | | | 5,180,556 | | | | 5,234,867 | |
| Intangible assets, net | | | 586,965 | | | | 592,378 | |
| Goodwill | | | - | | | | 728,618 | |
| Other assets | | | 1,821,471 | | | | 1,126,643 | |
| | | | | | | | | |
| Total Assets | | $ | 28,877,628 | | | $ | 34,495,554 | |
| | | | | | | | | |
| LIABILITIES & STOCKHOLDERS' EQUITY | | | | | | | | |
| Current Liabilities: | | | | | | | | |
| Accounts payable | | $ | 2,767,639 | | | $ | 3,997,789 | |
| Accounts payable - related party | | | 647,844 | | | | 418,922 | |
| Accrued liabilities | | | 3,585,037 | | | | 2,400,090 | |
| Warrant derivative liability | | | 1,594,628 | | | | 984,356 | |
| Current portion of capital lease obligations | | | 171,926 | | | | 149,729 | |
| Current portion of royalty liability | | | 836,750 | | | | 698,408 | |
| Current portion of long-term debt | | | 47,727 | | | | 45,135 | |
| Total current liabilities | | | 9,651,551 | | | | 8,694,429 | |
| Long-term Liabilities: | | | | | | | | |
| Capital lease obligation, less current portion | | | 73,777 | | | | 245,703 | |
| Long term royalty liability, less current portion | | | 6,609,232 | | | | 6,839,935 | |
| Long-term debt, less current portion | | | 16,385,245 | | | | 14,483,102 | |
| Total Liabilities | | | 32,719,805 | | | | 30,263,169 | |
| | | | | | | | | |
| Commitments and Contingencies | | | | | | | | |
| Stockholders' Equity | | | | | | | | |
| Preferred stock, $.000001 par value; 5,000,000 shares authorized; no shares issued and outstanding | | | - | | | | - | |
| Common stock, $.000001 par value; 95,000,000 shares authorized; 53,432,820 shares issued and outstanding as of December 31, 2013 and 42,877,770 shares issued and outstanding as of December 31, 2012 | | | 53 | | | | 43 | |
| Additional paid-in capital | | | 56,516,443 | | | | 51,897,890 | |
| Accumulated deficit | | | (60,358,673 | ) | | | (47,665,548 | ) |
| Total Stockholders’ Equity | | | (3,842,177 | ) | | | 4,232,385 | |
| | | | | | | | | |
| Total Liabilities & Stockholders’ Equity | | $ | 28,877,628 | | | $ | 34,495,554 | |
| BACTERIN INTERNATIONAL HOLDINGS, INC. |
| CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS |
| | | Twelve Months Ended December 31, | | | Quarter ended December 31, | |
| | | 2013 | | | 2012 | | | 2013 | | | 2012 | |
| Revenue | | | | | | | | | | | | |
| Tissue sales | | $ | 32,563,933 | | | $ | 32,414,026 | | | $ | 8,133,775 | | | $ | 7,986,173 | |
| Royalties and other | | | 509,481 | | | | 565,873 | | | | 124,001 | | | | 135,688 | |
| Total Revenue | | | 33,073,414 | | | | 32,979,899 | | | | 8,257,776 | | | | 8,121,861 | |
| | | | | | | | | | | | | | | | | |
| Cost of tissue and medical devices sales | | | 14,185,719 | | | | 10,337,303 | | | | 4,174,032 | | | | 3,548,697 | |
| | | | | | | | | | | | | | | | | |
| Gross Profit | | | 18,887,695 | | | | 22,642,596 | | | | 4,083,744 | | | | 4,573,164 | |
| | | | 57.1 | % | | | 68.7 | % | | | 49.5 | % | | | 56.3 | % |
| Operating Expenses | | | | | | | | | | | | | | | | |
| General and administrative | | | 10,777,020 | | | | 11,135,058 | | | | 2,899,323 | | | | 3,785,206 | |
| Sales and marketing | | | 16,017,229 | | | | 15,617,416 | | | | 3,959,840 | | | | 4,283,470 | |
| Depreciation and amortization | | | 377,524 | | | | 406,888 | | | | 72,753 | | | | 104,496 | |
| Impairment of goodwill | | | 728,618 | | | | | | | | 728,618 | | | | - | |
| Non-cash consulting expense | | | (5,117 | ) | | | 427,787 | | | | (17,041 | ) | | | (63,264 | ) |
| Total Operating Expenses | | | 27,895,274 | | | | 27,587,149 | | | | 7,643,493 | | | | 8,109,908 | |
| | | | | | | | | | | | | | | | | |
| Loss from Operations | | | (9,007,579 | ) | | | (4,944,553 | ) | | | (3,559,749 | ) | | | (3,536,744 | ) |
| | | | | | | | | | | | | | | | | |
| Other Income (Expense) | | | | | | | | | | | | | | | | |
| Interest expense | | | (4,653,232 | ) | | | (1,864,901 | ) | | | (1,217,226 | ) | | | (587,955 | ) |
| Change in warrant derivative liability | | | 875,041 | | | | 1,360,160 | | | | 628,704 | | | | (32,995 | ) |
| Write-off of debt related costs | | | | | | | (705,885 | ) | | | | | | | | |
| Other income (expense) | | | 92,645 | | | | (1,558,643 | ) | | | (15,971 | ) | | | (14,608 | ) |
| | | | | | | | | | | | | | | | | |
| Total Other Income (Expense) | | | (3,685,546 | ) | | | (2,769,269 | ) | | | (604,493 | ) | | | (1,341,443 | ) |
| | | | | | | | | | | | | | | | | |
| Net Loss Before (Provision) Benefit for Income Taxes | | | (12,693,125 | ) | | | (7,713,822 | ) | | | (4,164,242 | ) | | | (4,878,187 | ) |
| | | | | | | | | | | | | | | | | |
| (Provision) Benefit for Income Taxes | | | | | | | | | | | | | | | | |
| Current | | | - | | | | - | | | | - | | | | - | |
| Deferred | | | - | | | | - | | | | - | | | | - | |
| | | | | | | | | | | | | | | | | |
| Net Loss | | $ | (12,693,125 | ) | | $ | (7,713,822 | ) | | $ | (4,164,242 | ) | | $ | (4,878,187 | ) |
| | | | | | | | | | | | | | | | | |
| Net loss per share: | | | | | | | | | | | | | | | | |
| Basic | | $ | (0.27 | ) | | $ | (0.18 | ) | | $ | (0.08 | ) | | $ | (0.11 | ) |
| Dilutive | | $ | (0.27 | ) | | $ | (0.18 | ) | | $ | (0.08 | ) | | $ | (0.11 | ) |
| | | | | | | | | | | | | | | | | |
| Shares used in the computation: | | | | | | | | | | | | | | | | |
| Basic | | | 47,530,072 | | | | 42,445,386 | | | | 50,163,807 | | | | 42,872,635 | |
| Dilutive | | | 47,530,072 | | | | 42,445,386 | | | | 50,163,807 | | | | 42,872,635 | |
BACTERIN INTERNATIONAL HOLDINGS, INC.
Reconciliation of EBITDA
For the Years Ended December 31, 2013 and 2012
| | | Twelve Months Ended | |
| | | December 31, | |
| | | 2013 | | | 2012 | |
| | | | | | | |
| | | | | | | |
| Net Loss from ops | | $ | (9,007,579 | ) | | $ | (4,944,553 | ) |
| Depreciation | | | 377,524 | | | | 406,888 | |
| Allocated depreciation | | | 376,000 | | | | 376,000 | |
| Impairment of goodwill | | | 728,618 | | | | - | |
| Stock option comp | | | 981,022 | | | | 1,126,870 | |
| Non-cash stock comp | | | (5,117 | ) | | | 427,787 | |
| EBITDA | | $ | (6,549,532 | ) | | $ | (2,607,008 | ) |
