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Osteotech Reports 2007 Full Year and Fourth Quarter Financial Results; Full Year Revenue of $104.3 Million Exceeds $100 Million Milestone; Diluted Earnings Per Share Was $.15 in 2007

EATONTOWN, N.J., Feb. 20 /PRNewswire-FirstCall/ -- Osteotech, Inc. (Nasdaq: OSTE), a leader in the emerging field of biologic solutions for regenerative medicine, announced today that total revenue for the year ending December 31, 2007 increased 5% to $104.3 million compared to $99.2 million for the year ended December 31, 2006. Revenue from "core" product lines, DBM and Hybrid/Synthetic products, was $67.6 million for full year 2007, an increase of 15% over core product revenue of $58.8 million in the prior year. Gross margin improved to 51.5% for the year ended December 31, 2007 compared to 48.2% in the same period in 2006.

Diluted earnings per share for the year ended December 31, 2007 was $.15 on net income of $2.6 million as compared to diluted earnings per share of $.11 for full year 2006 on net income of $1.9 million.

Sam Owusu-Akyaw, Osteotech's President and Chief Executive Officer, stated, "It was a tremendous achievement and an important milestone in Osteotech's history to exceed $100 million in revenue. The world-wide Osteotech family contributed to this success and each member of the Osteotech team is proud of this accomplishment."

Mr. Owusu-Akyaw continued, "Our key financial metrics continue to demonstrate disciplined execution of our business plan. Our core products continue to grow while gross margin and profitability continue to improve. Our cash flow is strong and will allow us to support future growth. Our new product pipeline is solid, which we expect will increase our product offerings and is expected to be the major contributor to our growth."

Mr. Owusu-Akyaw concluded, "Just as Osteotech's pioneering tissue processing technology advanced the industry in the 1990's, Osteotech is developing new and innovative technologies to further its growth in the emerging biologics and regenerative medicine industry."

Total revenue for the three months ended December 31, 2007 increased 6% to $26.9 million from $25.4 million for the fourth quarter of 2006. Core product revenue increased 17% to $17.7 million for the three months ended December 31, 2007 as compared to revenue of $15.1 million from core products in the fourth quarter of 2006. Gross margin improved to 53.5% in the fourth quarter of 2007 as compared to 47.6% in the fourth quarter of 2006.

Diluted earnings per share for the three months ended December 31, 2007 was $.04 on net income of $.8 million as compared to net income of $.1 million for the three months ended December 31, 2006.

Osteotech will host a conference call on Wednesday, February 20, 2008 at 9:00 a.m. Eastern Time during which management will discuss full year and fourth quarter financial results. You are invited to listen to the conference call by dialing 1-706-643-1624. The conference call will also be simultaneously webcast at Automated playback will be available two hours after completion of the live call, through midnight, Wednesday, March 5, 2008, by dialing 1-706-645-9291 and indicating access code 34462919.

Osteotech, Inc., headquartered in Eatontown, New Jersey, is a global leader in providing OsteoBiologic solutions for regenerative medicine to support surgeons and their patients in the repair of the musculoskeletal system through the development of innovative therapy-driven products that alleviate pain, promote biologic healing and restore function. For further information regarding Osteotech, this press release or the conference call, please go to Osteotech's website at

Certain statements made throughout 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, the Company's ability to develop and introduce new products, differences in anticipated and actual product and service introduction dates, the ultimate success of those products in the marketplace, the continued acceptance and growth of current products and services, the impact of competitive products and services, the availability of sufficient quantities of suitable donated tissue and the success of cost control and margin improvement efforts. Certain of these factors are detailed from time to time in the Company's periodic reports filed with the Securities and Exchange Commission. All information in this press release is as of February 20, 2008 and the Company does not intend to update this information.

OSTEOTECH, INC. and Subsidiaries


(dollars in thousands, except per share data)

Three Months Year Ended

Ended December 31, December 31,


2007 (restated) 2007 2006

Revenue $ 26,939 $ 25,431 $104,277 $ 99,241

Cost of revenue 12,532 13,322 50,555 51,439

Gross profit 14,407 12,109 53,722 47,802

Marketing, selling and

general and administrative 11,696 10,771 44,801 40,627

Research and development 1,965 1,321 5,658 4,828

13,661 12,092 50,459 45,455

Operating income 746 17 3,263 2,347

Interest expense, net (129) (176) (588) (914)

Other 185 57 (1) 416

Income (loss) before income

taxes 802 (102) 2,674 1,849

Income tax provision (benefit) (4) (163) 57 (58)

Net Income $ 806 $ 61 $ 2,617 $ 1,907

Earnings per share:

Basic $ .05 $ - $ .15 $ .11

Diluted $ .04 $ - $ .15 $ .11

Shares used in computing

earnings per share:

Basic 17,666,940 17,347,880 17,538,254 17,298,352

Diluted 18,093,058 17,542,228 17,926,384 17,399,719


(dollars in thousands)

Three Months Year Ended

Ended December 31, December 31,

2007 2006 2007 2006

DBM $ 17,107 $ 14,792 $ 65,794 $ 57,493

Hybrid/Synthetic 591 332 1,760 1,270

Core Revenue 17,698 15,124 67,554 58,763

Traditional Tissue 4,491 4,674 17,623 16,955

Spinal Allografts 2,438 3,027 10,739 13,795

Client Services 2,085 2,456 7,621 9,128

Other Product Lines 227 150 740 600

Non Core Revenue 9,241 10,307 36,723 40,478

Revenue $ 26,939 $ 25,431 $104,277 $ 99,241

OSTEOTECH, INC. and Subsidiaries


(dollars in thousands)

December 31,

2007 2006


Cash and cash equivalents $22,777 $17,946

Accounts receivable, net 19,353 18,507

Deferred processing costs 30,850 29,067

Inventories 1,171 1,005

Other current assets 3,957 2,795

Total current assets 78,108 69,320

Property, plant and equipment, net 34,508 36,340

Other assets 7,735 7,373

$120,351 $113,033

Liabilities and Stockholders' Equity

Accounts payable and accrued liabilities $19,364 $15,861

Current maturities of capital lease obligation 807 727

Total current liabilities 20,171 16,588

Capital lease obligation 14,070 14,876

Other liabilities 7,082 7,716

Total liabilities 41,323 39,180

Stockholders' equity 79,028 73,853

$120,351 $113,033

SOURCE Osteotech, Inc.
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