EXHIBIT 99.1
On October 24, 2000, Osteotech, Inc. announced that third quarter 2000
consolidated revenues were $17,916,000 as compared to $17,469,000 in the third
quarter of 1999. Net income in the quarter was $231,000 or $.02 diluted earnings
per share as compared to $3,248,000 or $.22 diluted earnings per share in the
same period of last year. Net income in 1999's third quarter included
approximately $1,050,000 or approximately $.07 diluted earnings per share from
the settlement with DePuy AcroMed in connection with the on-going GenSci patent
litigation. The Company had previously announced that consolidated revenues for
the third quarter of 2000 were expected to be in a range of $16.8 million to
$17.5 million and that diluted earnings per share were expected to be in a range
of $.01 to $.03.
Consolidated revenues for the nine months ended September 30, 2000 were
$57,181,000 as compared to consolidated revenues of $55,877,000 in the nine
months ended September 30, 1999. Net income in the nine months ended September
30, 2000 was $4,724,000 or $.33 diluted earnings per share, as compared to net
income of $9,750,000 or $.67 diluted earnings per share which includes
approximately $1,050,000 or $.07 diluted earnings per share from the settlement
with DePuy AcroMed in connection with the on-going GenSci patent litigation.
In the third quarter of 2000, Grafton(R) Demineralized Bone Matrix Segment
("Grafton(R) DBM Segment") revenues increased 12% to $11,139,000 from $9,905,000
in the third quarter of 1999. Grafton(R) DBM Segment revenues were $33,433,000
in the nine months ended September 30, 2000 as compared to $32,346,000 in the
same period of 1999. Domestic clients' shipments of Grafton(R) DBM to
hospital/end-users in the third quarter and nine months ended September 30, 2000
increased 6.6% and 6.7% to $14,490,000 and $44,398,000, respectively, from
$13,597,000 and $41,625,000 in the third quarter and nine months ended September
30, 1999, respectively. Revenue growth in the third quarter was negatively
affected by the traditional slow down of surgical procedures during the summer
months and by continued competitive pressures, which were partially offset by
European sales.
Grafton(R) DBM Segment operating income decreased 51% to $2,158,000 and
decreased 35% to $8,110,000 in the third quarter and nine months ended September
30, 2000, respectively, as compared to $4,429,000 and $12,509,000 in the third
quarter and nine months ended September 30, 1999, respectively. These declines
are primarily attributable to increased litigation costs associated with the
GenSci patent lawsuit. Additionally, 1999 operating income included $1,750,000,
before income taxes, from the settlement with DePuy AcroMed in connection with
the on-going GenSci patent litigation. Excluding this settlement, third quarter
2000 operating income would have decreased 29% from 1999's third quarter.
Base Allograft Tissue Segment ("Base Tissue Segment") revenues decreased 10% to
$5,872,000 in the third quarter of 2000 from $6,525,000 in the same period of
1999 and were $20,471,000 in the nine months ended September 30, 2000 as
compared to $20,043,000 in the nine months ended September 30, 1999. The decline
in third quarter revenues is related to a 31% decline in the number of donors
processed for our clients as the tissue market shifts demand toward more
technically advanced tissue products. This decline was partially offset by the
growth in bio-implant systems which grew in Company revenue 112% and end-user
revenue 114% for the quarter. As we move into national launch of our four new
bio-implant products, we expect
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revenues from bio-implant products to begin to overcome the decline being
experienced in base tissue donor processing.
The Base Tissue Segment experienced an operating loss in the third quarter of
$415,000 as compared to operating income of $1,884,000 in the third quarter
ended September 30, 1999, and had operating income of $2,547,000 in the nine
months ended September 30, 2000 as compared to $5,969,000 in the same period of
1999. The operating loss in the third quarter and the decrease in operating
income in the nine months ended September 30, 2000 resulted from a significant
decrease in gross profit margins due to the decline in donors processed,
increased legal expenses associated with two patent lawsuits and increased costs
related to the development and launch of new bio-implant products.
Certain statements made in this press release that are not historical facts,
contain forward-looking statements (as such are defined in the Private
Securities Litigation Reform Act of 1995) regarding the Company's future plans,
objectives and expected performance. Any such forward-looking statements are
based on assumptions that the Company believes are reasonable, but are subject
to a wide-range of risks and uncertainties and, therefore, there can be no
assurance that actual results may not differ materially from those expressed or
implied by such forward-looking statements. Factors that could cause actual
results to differ materially include, but are not limited to, differences in
anticipated and actual product and service introduction dates, the ultimate
success of those products in the market place, the continued acceptance and
growth of current products and services, the impact of competitive products and
services and the success of cost control and margin improvement efforts which
factors are detailed from time to time in the Company's periodic reports
(including the Annual Report on Form 10-K for the year ended December 31, 1999
and the Form 10-Q for each of the first two quarters of 2000) filed with the
Securities and Exchange Commission.
