Bacterin Announces First Quarter 2013 Revenue of $8.6 Million

Bacterin Announces First Quarter 2013 Revenue of $8.6 Million

First Quarter 2013 Highlights:

  • Revenue increased 11% year over year, to approximately $8.6 million, and increased 6% over reported revenues for the fourth quarter of 2012

  • Loss from operations decreased 3% compared to the first quarter of 2012, to approximately $(1.2) million, and decreased 65% compared to the loss from operations in the fourth quarter of 2012


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 first quarter ended March 31, 2013. The Company reported revenues of $8.6 million and a net loss for the first quarter of approximately $1.7 million, or ($0.04) per common share, compared to a net loss of approximately $1.0 million, or ($0.03) per common share, reported during the same period in 2012.

Revenue

Revenue for the first quarter was 8.6 million, up 11% compared to approximately $7.8 million for the same period during 2012. The increase was primarily attributed to a new sales agreement with a large U.S. distributor that contributed $1.3 million during the first quarter of 2013.

"This was a solid quarter for the business despite the challenges we faced," said John Gandolfo, Interim Co-Chief Executive Officer and Chief Financial Officer of Bacterin International. "After increased competition in the marketplace at the end of 2012, we were able to continue our revenue growth by implementing certain strategic sales initiatives during the first quarter. This has allowed us to adjust our sales approach and adapt to this evolving environment. As a result, we have been making progress in overcoming factors that have been impeding our sales growth. We will continue to focus on large corporate accounts that understand our product's value proposition as well as continuing to penetrate our core hospital accounts."

Gross Profit

For the first quarter of 2013, gross profit was $5.5 million, a decrease of 7% from $5.9 million in the first quarter of 2012. Gross margins for the period were 64%, which compares to gross margins of 76% reported for the same period last year. Gross margins for the period improved sequentially from 56%, which was reported for the fourth quarter of 2012. Excluding the $1.3 million sale attributed to the Company's new sales agreement to a large U.S. distributor, gross margins would have been 67% for the first quarter of 2013.

Sales and Marketing Expenses

Sales and marketing expenses decreased to $3.8 million as compared to $4.1 million for the same period during 2012. As a percentage of revenues, selling and marketing expenses decreased to 44%, which compares to 53% reported for the first quarter of 2012. The decrease was primarily the result of more variable compensation paid to the direct sales force in 2013 compared to fixed salaries earned in the comparable period of 2012, as well as a lower corporate sales commission structure for direct sales representatives and independent distributors.

General and Administrative Expenses

In the first quarter, general and administrative expenses increased to $2.9 million for the period as compared to $2.6 million reported for the same period last year. As a percentage of revenues, general and administrative expenses were 33%, and were unchanged when compared with the first quarter 2012.

EBITDA

EBITDA for the first quarter of 2013 was a loss of $1.1 million, compared to a loss of $0.5 million in the first quarter of 2012. Mr. Gandolfo further commented, "If we are successful in achieving the 2013 revenue guidance of $38 to $40 million and the expense reductions we announced on our 2012 year end earnings call, 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, were $9.3 million on March 31, 2013, compared to $12.1 million on December 31, 2012.

Kent Swanson, Chairman of Bacterin International added, "With the recent departure of Guy Cook as CEO and Chairman, the board and senior management team remain committed to hiring a proven and commercially sophisticated CEO who will continue to drive our revenue growth and the Company toward profitability. Morale throughout the company is high and our products continue to be viewed positively by our customer base, which gives us confidence in achieving our goals."

Conference Call Details

The company will hold a conference hosted by Kent Swanson, Chairman, John Gandolfo, Interim co-CEO and Chief Financial Officer, Darrel Holmes, Interim co-CEO and Chief Operating Officer and Molly Mason, VP of Marketing to discuss its financial results at 10:00 a.m. ET, on Friday, May 10, 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 First Quarter 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. 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 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 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 attract and retain a well qualified Chief Executive Officer; 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 Report 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.

BACTERIN INTERNATIONAL HOLDINGS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

As of

As of

March 31,

December 31,

2013

2012

ASSETS

Current Assets:

Cash and cash equivalents

$

2,119,079

$

4,926,066

Trade accounts receivable, net of allowance for doubtful accounts of $1,673,631 and $1,576,955, respectively

7,164,269

7,154,065

Inventories, net

13,608,482

13,141,421

Prepaid and other current assets

742,780

353,271

Total current assets

23,634,610

25,574,823

Non-current inventories

1,238,225

1,238,225

Property and equipment, net

5,526,887

5,234,867

Intangible assets, net

577,817

592,378

Goodwill

728,618

728,618

Other assets

1,039,942

1,126,643

Total Assets

$

32,746,099

$

34,495,554

LIABILITIES & STOCKHOLDERS' EQUITY

Current Liabilities:

Accounts payable

$

3,981,696

$

3,997,789

Accounts payable - related party

290,001

418,922

Accrued liabilities

2,831,236

2,400,090

Warrant derivative liability

349,001

984,356

Current portion of capital lease obligations

154,898

149,729

Current portion of royalty liability

788,000

698,408

Current portion of long-term debt

45,632

45,135

Total current liabilities

8,440,464

8,694,429

Long-term Liabilities:

Capital lease obligation, less current portion

205,014

245,703

Long term royalty liability, less current portion

6,723,584

6,839,935

Long-term debt, less current portion

14,719,782

14,483,102

Total Liabilities

30,088,844

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; 42,957,770 shares issued and outstanding as of March 31, 2013 and 42,877,770 shares issued and outstanding as of December 31, 2012

43

43

Additional paid-in capital

51,992,018

51,897,890

Accumulated deficit

(49,334,806

)

(47,665,548

)

Total Stockholders' Equity

2,657,255

4,232,385

Total Liabilities & Stockholders' Equity

$

32,746,099

$

34,495,554

BACTERIN INTERNATIONAL HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

Three Months Ended March 31,

2013

2012

Revenue

Tissue sales

$

8,523,348

$

7,670,949

Royalties and other

95,459

99,052

Total Revenue

8,618,807

7,770,001

Cost of tissue and medical devices sales

3,120,686

1,858,722

Gross Profit

5,498,121

5,911,279

Operating Expenses

General and administrative

2,857,082

2,590,772

Sales and marketing

3,798,377

4,146,343

Depreciation and amortization

106,378

119,074

Non-cash consulting expense

(30,297

)

328,253

Total Operating Expenses

6,731,540

7,184,442

Loss from Operations

(1,233,419

)

(1,273,163

)

Other Income (Expense)

Interest expense

(1,063,988

)

(170,781

)

Change in warrant derivative liability

635,355

217,551

Other income (expense)

(7,206

)

179,598

Total Other Income (Expense)

(435,839

)

226,368

Net Loss Before (Provision) Benefit for Income Taxes

(1,669,258

)

(1,046,795

)

(Provision) Benefit for Income Taxes

Current

-

-

Deferred

-

-

Net Loss

$

(1,669,258

)

$

(1,046,795

)

Net loss per share:

Basic

$

(0.04

)

$

(0.03

)

Dilutive

$

(0.04

)

$

(0.03

)

Shares used in the computation:

Basic

42,926,564

41,548,087

Dilutive

42,926,564

41,548,087

See notes to unaudited condensed consolidated financial statements.

BACTERIN INTERNATIONAL HOLDINGS, INC.

RECONCILIATION OF EBITDA

Three Months Ended March 31,

2013

2012

EBITDA

Net Loss from ops

(1,233,419

)

(1,273,163

)

Depreciation

106,378

119,074

Allocated depreciation

94,000

94,000

Stock option comp

(1,397

)

190,055

Non-cash stock comp

(30,297

)

328,253

(1,064,735

)

(541,781

)

BACTERIN INTERNATIONAL HOLDINGS, INC.