Osteotech second-quarter revenue increases 2% to $24.0 million

Osteotech, Inc. (Nasdaq: OSTE), a leader in the emerging field of biologic products for regenerative healing, today reported financial results for the second quarter ended June 30, 2010.  

"We are very proud of our organization's efforts this quarter that resulted in strong sales growth and a return to profitability," said Sam Owusu-Akyaw, President and Chief Executive Officer of Osteotech.  "Our results this quarter are indicative of the market's increasing interest in our leading-edge portfolio of procedure-specific biologics and the superior clinical benefits they collectively deliver.  We are committed to increasing the value that our franchise brands, including Grafton® DBM, MagniFuse™ Bone Graft and Plexur M® Innovative Grafting, can offer the physician and patient communities."

Recent and Upcoming Corporate Developments

• During the second quarter of 2010, MagniFuse was used by 43 new customers increasing the MagniFuse customer base to a total of 127 accounts.  Re-order rates of 60% were realized in the quarter as MagniFuse revenue increased 21% sequentially to $1.3 million in the second quarter of 2010.
• 99 new accounts were added to the Plexur M customer base, bringing the total number of accounts to 210 at the end of the second quarter of 2010.  Plexur M revenue grew 73% sequentially to $1.1 million in the second quarter of 2010.
• Sales of new products, including MagniFuse, Plexur M and FacetLinx™ Fusion Technology, were $2.5 million during the second quarter of 2010, up 39% compared with the first quarter of 2010.
• In the second quarter of 2010, revenue generated from Osteotech's legacy product lines, which include Grafton DBM, Xpanse® Bone Inserts, traditional tissues and spinal allografts, grew 3% domestically and 12% internationally on a sequential basis, including a 10% increase in worldwide Grafton DBM revenue.
• The Company is on target to respond by August 31, 2010 to the questions received from the United States Food & Drug Administration about the Company's BioGenesis™ Dural Regeneration Matrix (formerly named the Duratech™ BioRegeneration Matrix).

Financial Results

Revenue for the three months ended June 30, 2010 was $24.0 million, including $2.5 million from the Company's new products (MagniFuse, Plexur M and FacetLinx), representing an overall increase of 2% compared with $23.5 million for the three months ended June 30, 2009 and a 7% increase compared with the first quarter of 2010.  Revenue from client services and private label DBM declined, as expected, by $318,000 year-over-year during the second quarter of 2010.  Excluding client services and private label revenue, second quarter 2010 revenue was $23.2 million compared with $22.4 million in the second quarter of 2009.

Revenue for the six-month period ended June 30, 2010 was $46.5 million, representing a 2% decline compared with the six-month period ended June 30, 2009.  Excluding client services and private label revenue, revenue for the first half of 2010 was $44.8 million compared with $43.5 million in the first half of 2009.  Revenue from client services and private label DBM declined, as expected, by $2.1 million year-over-year during the first half of 2010.  

Net income for the second quarter ended June 30, 2010 was $115,000, or $0.01 per diluted share, compared with a net loss of $1.2 million, or $0.07 per share, for the second quarter of 2009.  Net loss for the six months ended June 30, 2010 was $1.5 million or $0.08 per share compared with $3.0 million or $0.17 per share for the six months ended June 30, 2009.