Bacterin International Holdings (AMEX:BONE), a developer of bone graft material and antimicrobial coatings for medical applications, reported late Thursday that losses narrowed in the second quarter and revenues soared.
For the three months ending June 30, the Belgrade, Montana-based company said net losses improved by $1.6 million, to $0.4 million, or a loss of one cent per share. This compares to a net loss of $2.1 million or 7 cents per share, in the second quarter of 2010.
Revenues jumped 135% year-over-year and 25% sequentially to a record $7.5 million, marking the seventh consecutive quarter of record revenues. The growth is primarily attributable to the broader use of the company's biological products, antimicrobial coatings and device implants in hospitals, as driven by the recent implementation of a direct and expanding sales force.
Bacterin uses its proprietary methods that optimize the growth factors in human allografts to create the ideal stem cell scaffold, promoting bone and other tissue growth. The company's medical division also develops antimicrobial coatings that inhibit contamination.
Further contributing to the revenue increase, the company inked a purchase order agreement with a U.S. based distributor for the sale of Bacterin's biologics products internationally.
Earnings before interest, taxes, depreciation and amortization swung to a positive $35,000 for the first time ever, as compared to a loss of near $1 million one year ago.
"These results reflect continued market penetration of our existing and latest medical devices and biologic products, as traction builds from our introduction to ROi's network of hospitals and medical practices," said chairman and CEO, Guy Cook.
"We anticipate further revenue growth and profitability by leveraging our new higher margin direct sales model with new product lines like hMatrix, our third human acellular biological scaffold, as well as our recently acquired orthopedic implant products."
Indeed, the company is in the process of filing an application with the FDA for enhancing these orthopedic implant products with its own sustained-release antimicrobial coating technology. It expects to be the only company in the space that can offer this combined technology, which it estimates represents a $600 million addressable market.
Its hMatrix scaffold line is a product the company plans to initially market for homologous use indications, including abdominal wall repair, breast reconstruction and wound covering - a market that Bacterin estimates exceeds $2.5 billion annually in the US alone.
To prepare for its growht, the company raised around $3 million during the quarter in a financing, and recently secured a $15 million credit facility to pay off its existing debt, providing liquidity, and allowing it to be "opportunisitic" in its mergers and acquisitions program.
During the quarter, gross profit margin, however, fell to 76.8%, down from 83.8% in the year-ago quarter, primarily due to larger discount pricing for stocking purchase orders with the U.S. based distributor who will sell the company's products internationally, Bacterin said.
Cash and investments at quarter-end totaled $1.4 million for the company.
"To prepare for the anticipated growth in the second half of 2011, in June we initiated reorganization and expansion of our team," added Cook.
"The process was completed in July, which also marked, as a result, the best production month in our company history.
"We are now well on track for increased operational capacity, expanding our product portfolio, market presence, and leveraging higher margin potential of our direct sales force."