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
second quarter ended June 30, 2013. The Company reported revenues of
approximately $8.3 million and a net loss for the second quarter of
approximately $2.5 million, or ($0.05) per common share, compared to a
net income of approximately $730,000, or $0.02 per common share,
reported during the same period in 2012.
The Company also reported revenues of approximately $16.9 million and a
net loss of approximately $4.2 million, or ($0.09) per common share,
over the first six months of 2013. This compares to revenues of
approximately $16.0 million and a net loss of approximately $316,000, or
($0.01) per common share, over the same period in 2012.
Revenue
Revenue for the second quarter was approximately $8.3 million, compared
to approximately $8.2 million for the same period during 2012. The
increase was primarily attributed to higher volume sales, which were
partially offset by lower sales prices resulting from discounting
associated with higher volume distributors and preferred vendors. For
the first six months of 2013, revenues were approximately $16.9 million
compared to approximately $16.0 million for the same period of 2012.
“Despite the challenges we incurred during the second quarter of 2013
associated with the resignation of our prior CEO, this was a satisfying
quarter,” said John Gandolfo, co-interim CEO and Chief Financial Officer
of Bacterin International Holdings. “We were able to keep our senior
management team intact, which has resulted in winning back previous
accounts and stabilizing our core hospital business. As a result of our
efforts, we realized a sequential increase in our core hospital business
during the period over the first quarter of 2013. We are currently
assessing sales strategies which will enhance the sustained growth of
our core business during the second half of the year. There is a
continuing opportunity to leverage new sales channels and we are well
positioned to increase our market presence.
Gross Profit
For the second quarter of 2013, gross profit was approximately $4.7
million, a decrease of 20% from $5.9 million in the second quarter of
2012. Gross margin for the period was 57%, which compares to a gross
margin of 72% reported for the same period last year. During the
quarter, the Company took a charge of approximately $500,000 associated
with the write off of expired products primarily related to an
improvement being made to our hMatrix manufacturing process which we
expect to result in an improved product in the future. Excluding this
charge, gross margins in the quarter would have been 63%.The first six
months of 2013 saw gross profit of $10.2 million, compared to $11.8
million for the same period of 2012. Gross margins for the first six
months were 60% in 2013 compared to 74% in 2012.
Sales and Marketing Expenses
Sales and marketing expenses for the second quarter increased to $4.2
million as compared to $3.8 million for the same period during 2012. As
a percentage of revenues, selling and marketing expenses increased to
51%, which compares to 47% reported for the second quarter of 2012. The
increase was primarily the result of higher personnel costs incurred
prior to the recent reduction of headcount and increased administrative
fees for GPO Contracts initiated during the third quarter of 2012. In
addition, we incurred $103,000 of severance costs associated with
headcount reductions announced during the second quarter of 2013.
The first six months of 2013, sales and marketing expenses remained flat
at $8.0 million compared to the prior year.
General and Administrative Expenses
In the second quarter, general and administrative expenses (G&A)
remained unchanged at $2.3 million for the period as compared to the
same period last year. The second quarter 2013 figure included $164,000
of severance costs associated with the previously announced headcount
reduction program as well as $124,000 of non-recurring expenses
associated with a legal settlement. As a percentage of revenues, general
and administrative expenses were 27% in 2013 as compared to 28% for the
second of quarter 2012.
The first six months experienced a slight increase of general and
administrative expenses to $5.1 million, which compares with $4.9
million reported during the second quarter of 2012. As a percentage of
revenues, G&A was 30% in the first half of 2013 compared to 31% in 2012.
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 second quarter of 2013 was a loss of $1.4 million, compared to
breakeven EBITDA for the second quarter of 2012. Excluding the write-off
of expired inventory of approximately $500,000 and severance expenses
associated with the headcount reduction of $267,000, the second quarter
2013 EBITDA loss was $637,000. See "GAAP to non-GAAP Reconciliation"
below for further information on this non-GAAP measure.
Financial Liquidity
Cash and cash equivalents were $5.1 million and net accounts receivable
were $6.2 million on June 30, 2013, compared to cash and cash
equivalents of $4.9 million and net accounts receivable of $7.2 million
on December 31, 2012.
Kent Swanson, Chairman of Bacterin International Holdings added, “The
sequential growth of our recurring revenues is a clear indication of the
success we are having with our base hospital business. Now with our
recent clearance from the FDA to market the OsteoSelect DBM Putty for
spinal fusion procedures, we are well positioned to leverage our
products and execute on our sales strategies to further penetrate the
marketplace and grow this business.”
Conference Call Details
Management will hold a conference call to discuss its financial results
at 10:00 a.m. ET, on Wednesday, August 7, 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 Second Quarter and Six Month 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 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
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
|
|
|
|
|
|
|
|
|
|
June 30,
|
|
|
|
|
As of
|
|
|
|
|
2013
|
|
|
|
|
December 31,
|
|
|
|
|
(Unaudited)
|
|
|
|
2012
|
|
|
|
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
Current Assets:
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
$
|
5,135,974
|
|
|
|
$
|
4,926,066
|
Trade accounts receivable, net of allowance for doubtful accounts of
$518,419 and $1,576,955, respectively
|
|
|
|
6,226,619
|
|
|
|
|
7,154,065
|
Inventories, net
|
|
|
|
13,803,063
|
|
|
|
|
13,141,421
|
Prepaid and other current assets
|
|
|
|
667,871
|
|
|
|
|
353,271
|
Total current assets
|
|
|
|
25,833,527
|
|
|
|
|
25,574,823
|
|
|
|
|
|
|
|
|
|
|
Non-current inventories
|
|
|
|
1,238,225
|
|
|
|
|
1,238,225
|
Property and equipment, net
|
|
|
|
5,458,272
|
|
|
|
|
5,234,867
|
Intangible assets, net
|
|
|
|
564,693
|
|
|
|
|
592,378
|
Goodwill
|
|
|
|
728,618
|
|
|
|
|
728,618
|
Other assets
|
|
|
|
1,295,718
|
|
|
|
|
1,126,643
|
|
|
|
|
|
|
|
|
|
|
Total Assets
|
|
|
$
|
35,119,053
|
|
|
|
$
|
34,495,554
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES & STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
|
Current Liabilities:
|
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
|
$
|
4,245,745
|
|
|
|
$
|
3,997,789
|
Accounts payable - related party
|
|
|
|
478,762
|
|
|
|
|
418,922
|
Accrued liabilities
|
|
|
|
2,391,313
|
|
|
|
|
2,400,090
|
Warrant derivative liability
|
|
|
|
1,374,044
|
|
|
|
|
984,356
|
Current portion of capital lease obligations
|
|
|
|
160,267
|
|
|
|
|
149,729
|
Current portion of royalty liability
|
|
|
|
804,250
|
|
|
|
|
698,408
|
Current portion of long-term debt
|
|
|
|
46,320
|
|
|
|
|
45,135
|
Total current liabilities
|
|
|
|
9,500,701
|
|
|
|
|
8,694,429
|
Long-term Liabilities:
|
|
|
|
|
|
|
|
|
|
Capital lease obligation, less current portion
|
|
|
|
162,880
|
|
|
|
|
245,703
|
Long term royalty liability, less current portion
|
|
|
|
6,677,474
|
|
|
|
|
6,839,935
|
Long-term debt, less current portion
|
|
|
|
15,342,246
|
|
|
|
|
14,483,102
|
Total Liabilities
|
|
|
|
31,683,301
|
|
|
|
|
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;
51,528,544 shares issued and outstanding as of June 30, 2013 and
42,877,770 shares issued and outstanding as of December 31, 2012
|
|
|
|
52
|
|
|
|
|
43
|
Additional paid-in capital
|
|
|
|
55,253,597
|
|
|
|
|
51,897,890
|
Accumulated deficit
|
|
|
|
(51,817,897)
|
|
|
|
|
(47,665,548)
|
Total Stockholders’ Equity
|
|
|
|
3,435,752
|
|
|
|
|
4,232,385
|
|
|
|
|
|
|
|
|
|
|
Total Liabilities & Stockholders’ Equity
|
|
|
$
|
35,119,053
|
|
|
|
$
|
34,495,554
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BACTERIN INTERNATIONAL HOLDINGS, INC.
|
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended June 30,
|
|
|
|
Six months ended June 30,
|
|
|
|
|
2013
|
|
|
|
2012
|
|
|
|
2013
|
|
|
|
2012
|
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tissue sales
|
|
|
$
|
8,196,554
|
|
|
$
|
8,113,605
|
|
|
$
|
16,719,902
|
|
|
$
|
15,784,554
|
Royalties and other
|
|
|
|
70,294
|
|
|
|
94,667
|
|
|
|
165,753
|
|
|
|
193,719
|
Total Revenue
|
|
|
|
8,266,848
|
|
|
|
8,208,272
|
|
|
|
16,885,655
|
|
|
|
15,978,273
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of tissue and medical devices sales
|
|
|
|
3,572,674
|
|
|
|
2,329,432
|
|
|
|
6,693,360
|
|
|
|
4,188,154
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross Profit
|
|
|
|
4,694,174
|
|
|
|
5,878,840
|
|
|
|
10,192,295
|
|
|
|
11,790,119
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General and administrative
|
|
|
|
2,256,287
|
|
|
|
2,319,851
|
|
|
|
5,113,369
|
|
|
|
4,910,623
|
Sales and marketing
|
|
|
|
4,205,333
|
|
|
|
3,835,209
|
|
|
|
8,003,710
|
|
|
|
7,981,552
|
Depreciation and amortization
|
|
|
|
100,470
|
|
|
|
95,206
|
|
|
|
206,848
|
|
|
|
214,280
|
Non-cash consulting expense
|
|
|
|
(932)
|
|
|
|
(24,069)
|
|
|
|
(31,229)
|
|
|
|
304,184
|
Total Operating Expenses
|
|
|
|
6,561,158
|
|
|
|
6,226,197
|
|
|
|
13,292,698
|
|
|
|
13,410,639
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from Operations
|
|
|
|
(1,866,984)
|
|
|
|
(347,357)
|
|
|
|
(3,100,403)
|
|
|
|
(1,620,520)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Income (Expense)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense
|
|
|
|
(1,174,648)
|
|
|
|
(266,200)
|
|
|
|
(2,238,636)
|
|
|
|
(409,052)
|
Change in warrant derivative liability
|
|
|
|
460,270
|
|
|
|
1,301,576
|
|
|
|
1,095,625
|
|
|
|
1,519,127
|
Other income
|
|
|
|
98,271
|
|
|
|
42,498
|
|
|
|
91,065
|
|
|
|
194,167
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Other Income (Expense)
|
|
|
|
(616,107)
|
|
|
|
1,077,874
|
|
|
|
(1,051,946)
|
|
|
|
1,304,242
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Loss Before (Provision) Benefit for Income Taxes
|
|
|
|
(2,483,091)
|
|
|
|
730,517
|
|
|
|
(4,152,349)
|
|
|
|
(316,278)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Provision) Benefit for Income Taxes
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
Deferred
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (Loss) Income
|
|
|
$
|
(2,483,091)
|
|
|
|
730,517
|
|
|
$
|
(4,152,349)
|
|
|
|
(316,278)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
$
|
(0.05)
|
|
|
|
0.02
|
|
|
$
|
(0.09)
|
|
|
|
(0.01)
|
Dilutive
|
|
|
$
|
(0.05)
|
|
|
|
0.02
|
|
|
$
|
(0.09)
|
|
|
|
(0.01)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares used in the computation:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
|
45,250,699
|
|
|
|
42,695,350
|
|
|
|
44,095,052
|
|
|
|
42,121,718
|
Dilutive
|
|
|
|
45,250,699
|
|
|
|
44,683,663
|
|
|
|
44,095,052
|
|
|
|
42,121,718
|
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|
|
|
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|
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|
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|
BACTERIN INTERNATIONAL HOLDINGS, INC.
|
RECONCILIATION OF EBITDA
|
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Three Months
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Three Months
|
|
|
|
Six months
|
|
|
|
Six months
|
|
|
|
|
2013
|
|
|
|
2012
|
|
|
|
2013
|
|
|
|
2012
|
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|
|
|
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|
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|
EBITDA
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|
|
|
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|
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|
|
Net Loss from ops
|
|
|
|
(1,866,984)
|
|
|
|
(347,357)
|
|
|
|
(3,100,403)
|
|
|
|
(1,620,520)
|
Depreciation
|
|
|
|
100,470
|
|
|
|
95,206
|
|
|
|
206,848
|
|
|
|
214,280
|
Allocated depreciation
|
|
|
|
94,000
|
|
|
|
94,486
|
|
|
|
188,000
|
|
|
|
188,972
|
Stock based compensation
|
|
|
|
269,483
|
|
|
|
190,055
|
|
|
|
268,109
|
|
|
|
385,587
|
Non-cash consulting expense
|
|
|
|
(932)
|
|
|
|
(24,069)
|
|
|
|
(31,229)
|
|
|
|
304,184
|
|
|
|
|
(1,403,963)
|
|
|
|
8,321
|
|
|
|
(2,468,675)
|
|
|
|
(527,497)
|
|
|
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|
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|
BACTERIN INTERNATIONAL HOLDINGS, INC.
|
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
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|
Six Months Ended June 30,
|
|
|
|
2013
|
|
|
|
2012
|
Operating activities:
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
(4,152,349)
|
|
|
$
|
(316,278)
|
Noncash adjustments:
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
394,849
|
|
|
|
403,252
|
Amortization of debt discount
|
|
|
583,181
|
|
|
|
53,707
|
Non-cash consulting expense/stock option expense
|
|
|
236,880
|
|
|
|
1,038,780
|
Provision for losses on accounts receivable and inventory
|
|
|
258,367
|
|
|
|
(23,733)
|
(Gain) loss on disposal of assets
|
|
|
(500)
|
|
|
|
7,902
|
Change in derivative warrant liability
|
|
|
(1,095,625)
|
|
|
|
(1,519,127)
|
Reduction of contingent liability
|
|
|
(91,740)
|
|
|
|
(358,426)
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
Accounts receivable
|
|
|
156,335
|
|
|
|
524,232
|
Inventories
|
|
|
(148,898)
|
|
|
|
(3,944,422)
|
Prepaid and other assets
|
|
|
(183,675)
|
|
|
|
(740,338)
|
Accounts payable
|
|
|
307,796
|
|
|
|
1,006,175
|
Accrued liabilities
|
|
|
180,491
|
|
|
|
(993,897)
|
Net cash used in operating activities
|
|
|
(3,554,888)
|
|
|
|
(4,862,173)
|
|
|
|
|
|
|
|
|
Investing activities:
|
|
|
|
|
|
|
|
Purchases of property and equipment
|
|
|
(579,920)
|
|
|
|
(870,569)
|
Intangible asset additions
|
|
|
(10,149)
|
|
|
|
-
|
Net cash used in investing activities
|
|
|
(590,069)
|
|
|
|
(870,569)
|
|
|
|
|
|
|
|
|
Financing activities:
|
|
|
|
|
|
|
|
Proceeds from the issuance of long-term debt
|
|
|
-
|
|
|
|
2,741,720
|
Payments on long-term debt
|
|
|
(22,852)
|
|
|
|
(445,534)
|
Payments on capital leases
|
|
|
(72,285)
|
|
|
|
(21,085)
|
Net proceeds from issuance of stock
|
|
|
4,450,002
|
|
|
|
3,899,996
|
Proceeds from exercise of options
|
|
|
-
|
|
|
|
20,099
|
Net cash provided by financing activities
|
|
|
4,354,865
|
|
|
|
6,195,196
|
|
|
|
|
|
|
|
|
Net change in cash and cash equivalents
|
|
|
209,908
|
|
|
|
462,454
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at beginning of period
|
|
|
4,926,066
|
|
|
|
751,111
|
Cash and cash equivalents at end of period
|
|
$
|
5,135,974
|
|
|
$
|
1,213,565
|
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