Bacterin Announces Record 2012 Revenue of $33 Million

Bacterin Announces Record 2012 Revenue of $33 Million

Full Year 2012 Highlights:

  • Revenue increased 9% to approximately $33.0 million in 2012, compared to approximately $30.1 million for fiscal year 2011

  • Loss from operations improved by 23% to approximately $(4.9) million, compared to approximately $(6.5) in fiscal year 2011

Fourth Quarter 2012 Highlights:

  • Revenue for the period was approximately $8.1 million, compared to the approximately $9.1 million for the fourth quarter of 2011. Excluding a $1.4 million corporate stocking order sale in the fourth quarter of 2011, revenue increased [5%] for the fourth quarter of 2012.

  • Loss from operations increased to approximately $(3.5) million, compared to a loss of approximately $(2.7) million in the fourth quarter of 2011


BELGRADE, Mont.--(BUSINESS WIRE)-- Bacterin International Holdings, Inc. (NYSE MKT: BONE), a leader in the development of revolutionary bone graft material and coatings for medical applications, today reported its financial results for the fourth quarter and full year ended December 31, 2012. The Company reported 2012 revenues of $33.0 million, an increase of 9% from reported 2011 revenues of $30.1 million. In addition, the Company reported a net loss for 2012 of approximately $7.7 million, or ($0.18) per common share, compared to a net loss of approximately $3.0 million, or ($0.08) per common share, reported during the same period in 2011.

Revenue

Revenue for the year was a record $33.0 million, up 9% compared to approximately $30.1 million for 2011. The increase during the period was primarily attributed to the higher sales from the Company's sales force combined with improved penetration into its existing accounts.

Revenue softened during the fourth quarter to $8.1 million, compared to $9.1 million reported for the fourth quarter of 2011. The lower results reflect not closing anticipated, larger sales to corporate entities as well as increased pricing pressure. Excluding a $1.4 million corporate stocking order sale in the fourth quarter of 2011, revenue increased 5% for the fourth quarter of 2012.

"Despite competitive challenges in the marketplace during the fourth quarter, we were able to deliver an improved topline for the year," said Guy Cook, Chairman, Chief Executive Officer and President of Bacterin International. "Our sales approach and model has adapted to this evolving sales environment and we have made solid progress in mitigating the factors that impeded our sales growth during the fourth quarter."

Mr. Cook continued, "We will continue to develop our core-business, while focusing on channel development to enhance our distribution capabilities domestically and internationally, and we believe these efforts are now beginning to gain traction."

Gross Profit

For 2012, gross profit was $22.6 million, an increase of 7.6% over $21.0 million in 2011. Gross margins for the period were 69%, a 1% decrease from gross margins reported in 2011.

Gross profit for the fourth quarter was $4.6 million, or 56% of sales, and includes the impacts associated with an increase in inventory reserves and a write-down of expired inventory of approximately $671,000. In addition, fourth quarter gross margins were negatively impacted by increased sales price discounts for hospital accounts and higher sales of lower gross margin products compared to the prior quarter. Excluding the increase in reserves and write off of expired products, gross margins would have been 65% for the quarter.

Sales and Marketing Expenses

Sales and marketing expenses decreased to $15.6 million as compared to $18.5 million for 2011. As a percentage of revenues, selling and marketing expenses decreased to 47% in 2012 from 61% in the prior year.

Fourth quarter 2012 sales and marketing expenses decreased $813,000 to $4.3 million from $5.1 million reported in the fourth quarter of 2011.

The decrease was primarily the result of more variable compensation paid to the direct sales force in 2012 compared to fixed salaries earned in the comparable period of 2011, and a lower corporate sales commission structure for direct sales representatives and independent distributors.

General and Administrative Expenses

In 2012, general and administrative expenses increased to $11.1 million for the period as compared to $6.9 million reported for the same period last year. As a percentage of revenues, general and administrative expenses increased to 34% for 2012 compared to 23% in 2011.

Fourth quarter 2012, general and administrative expenses increased to $3.8 million compared to $908,000 in 2011. Sequentially, compared to the third quarter of 2012, higher expenses are due, in large part, to a decrease in overhead applied to cost of goods sold, the recording of royalty expense, an increase in allowance for doubtful accounts, an increase in non-cash stock option expense, and increases in salaries, wages and benefits.

"We've initiated a Company wide cost reduction program to align our expense levels with our revenue expectations for 2013. This will reduce our current spending by approximately $1.7 million per year as well as an additional $1.3 million of previously planned expenditures which will not be made," said John Gandolfo, Chief Financial Officer.

EBITDA

EBITDA for 2012 improved to a loss of $2.6 million, compared to a loss of $3.0 million in 2011.

Mr. Gandolfo further commented, "If we are successful in achieving the previously given 2013 revenue guidance of $38 to $40 million, as well as the expense reductions referred to above, we believe we would generate positive operating income as well as positive EBITDA for the year."

Financial Liquidity

Cash and cash equivalents and net accounts receivable, was $12.1 million at December 31, 2012, compared to $7.8 million at December 31, 2011.

On August 24, 2012, the Company entered into a Credit Agreement with an entity managed by OrbiMed, whereby OrbiMed agreed to provide an initial $20 million term loan and Bacterin may also borrow an additional approximately $5 million upon achievement of certain revenue objectives prior to December 31, 2013. Approximately half of the proceeds of this credit facility were used to repay existing debt and expenses related to the transaction.

Conference Call Details

The company also announced that it will hold a conference hosted by Guy Cook, Chief Executive Officer, and John Gandolfo, Chief Financial Officer, to discuss its financial results at 10:00 a.m. ET, on Wednesday, March 27, 2013. 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 2012 Fourth Quarter & Year End Results Conference 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. See "GAAP to non-GAAP Reconciliation" below for further information on this non-GAAP measure.

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 create the ideal stem cell scaffold to promote bone, 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, employs, and licenses coatings for various medical device applications. For further information, please visit www.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 launch beta and full product releases; the Company's ability to meet its obligations under existing and anticipated contractual obligations; 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, particularly during recessionary periods; 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 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 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.

BACTERIN INTERNATIONAL HOLDINGS, INC.

Consolidated Balance Sheets

as of December 31, 2012 and 2011

As of

December 31,

2012

2011

ASSETS

Current Assets:

Cash and cash equivalents

$

4,926,066

$

751,111

Trade accounts receivable, net of allowance for doubtful accounts of $1,576,955 and $1,232,806, respectively

7,154,065

7,083,354

Inventories, net

13,141,421

8,479,710

Prepaid and other current assets

353,271

289,326

Total current assets

25,574,823

16,603,501

Non-current inventories

1,238,225

920,542

Property and equipment, net

5,234,867

3,774,140

Intangible assets, net

592,378

656,133

Goodwill

728,618

728,618

Other assets

1,126,643

486,914

Total Assets

$

34,495,554

$

23,169,848

LIABILITIES & STOCKHOLDERS' EQUITY

Current Liabilities:

Accounts payable

$

3,997,789

$

2,654,263

Accounts payable - related party

418,922

513,193

Accrued liabilities

2,400,090

3,762,211

Warrant derivative liability

984,356

2,344,516

Current portion of capital lease obligations

149,729

33,791

Current portion of royalty liability

698,408

-

Current portion of long-term debt

45,135

1,632,978

Total current liabilities

8,694,429

10,940,952

Long-term Liabilities:

Capital lease obligation, less current portion

245,703

89,580

Long term royalty liability, less current portion

6,839,935

-

Long-term debt, less current portion

14,483,102

6,638,270

Total Liabilities

30,263,169

17,668,802

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; 42,877,770 shares issued and outstanding as of December 31, 2012 and 40,841,218 shares issued and outstanding as of December 31, 2011

43

40

Additional paid-in capital

51,897,890

45,452,732

Retained deficit

(47,665,548

)

(39,951,726

)

Total Stockholders' Equity

4,232,385

5,501,046

Total Liabilities & Stockholders' Equity

$

34,495,554

$

23,169,848

See notes to audited consolidated financial statements.

BACTERIN INTERNATIONAL HOLDINGS, INC.

Consolidated Statements of Operations

For the Years Ended December 31, 2012 and 2011

Twelve Months Ended December 31,

2012

2011

Revenue

Tissue sales

$

32,414,026

$

29,657,423

Royalties and other

565,873

492,059

Total Revenue

32,979,899

30,149,482

Cost of tissue and medical devices sales

10,337,303

9,109,250

Gross Profit

22,642,596

21,040,232

Operating Expenses

General and administrative

11,135,058

6,935,101

Sales and marketing

15,617,416

18,501,204

Depreciation and amortization

406,888

379,387

Non-cash consulting expense

427,787

1,675,008

Total Operating Expenses

27,587,149

27,490,700

Loss from Operations

(4,944,553

)

(6,450,468

)

Other Income (Expense)

Interest expense

(1,864,901

)

(1,162,597

)

Change in warrant derivative liability

1,360,160

6,377,671

Write-off of debt related costs

(705,885

)

(1,300,000

)

Other income (expense)

(1,558,643

)

(471,075

)

Total Other Income (Expense)

(2,769,269

)

3,443,999

Net Loss Before (Provision) Benefit for Income Taxes

(7,713,822

)

(3,006,469

)

(Provision) Benefit for Income Taxes

Current

-

-

Deferred

-

-

Net Loss

$

(7,713,822

)

$

(3,006,469

)

Net loss per share:

Basic

$

(0.18

)

$

(0.08

)

Dilutive

$

(0.18

)

$

(0.08

)

Shares used in the computation:

Basic

42,445,386

38,944,256

Dilutive

42,445,386

38,944,256

See notes to audited consolidated financial statements.

BACTERIN INTERNATIONAL HOLDINGS, INC.

Reconciliation of EBITDA

For