11.12.13
The numbers are a bit deceiving.
At first glance, RTISurgical Inc.'s third-quarter earnings report seems exemplary:Revenue jumped 23 percent (thanks to its acquisition of Pioneer Surgical Technology) and spinal proceeds skyrocketed 72.7 percent compared with Q3 2012. But a closer examination of the data shows the combined company underperformed considerably, experiencing a net loss in income and 6.3 percent slide in gross profit.
At first glance, RTISurgical Inc.'s third-quarter earnings report seems exemplary:Revenue jumped 23 percent (thanks to its acquisition of Pioneer Surgical Technology) and spinal proceeds skyrocketed 72.7 percent compared with Q3 2012. But a closer examination of the data shows the combined company underperformed considerably, experiencing a net loss in income and 6.3 percent slide in gross profit.
The Alachua, Fla.-based surgical implant firm reported $54.7 million in revenue, including $16.1 million from Pioneer between the sale’s close on July 16 and Sept. 30. However, revenue would have been down 12 percent if Pioneer’s entire third-quarter proceeds for both years had been included.
RTI reported a net loss of $9.1 million for the quarter, or $0.16 per fully diluted share, compared with net income of $2.8 million, or $0.05, a year ago. Spinal revenue increased by $7,413, but that gain virtually was erased by sales deficits in sports medicine products (down 19.3 percent), surgical specialty devices (down 14.5 percent), dental implants (down 5.3 percent) and bone graft substitutes/general orthopedic wares (down 2.8 percent).
President/CEO Brian Hutchison attributed the lower-than-anticipated revenues to weak spine implant sales, uncertainties surrounding an October 2012 warning letter from the U.S. Food and Drug Administration (FDA), surgeons’ subsequent shift to alternative products, slower new direct surgical specialities sales and lower international sales revenue due to tissue shortages.
The FDA letter regarded concerns uncovered during an inspection of the company's Alachua facility. The building has since passed inspection.
"While third quarter results were below expectations, we are working diligently to rebuild business that was lost in the year and gain new customers," Hutchison said. "We have made progress on integrating the Pioneer business and are in the early stages of realizing cross distribution opportunities. We are confident we are headed in the right direction for long-term success."
RTI's third-quarter performance prompted executives to lower their full-year revenue guidance to $196-$197 million from $211-$215 million. Full year net lossper fully diluted common share is expected to be $0.28 based on 56.4 million outstanding shares, up significantly from the previous estimate of $0.11 to $0.13 per diluted share.
The company expects fourth quarter revenue to total rough $60 million and net loss per fully diluted common share to be $0.09.
RTI trades on the Nasdaq stock exchange under the symbol RTIX. The former RTI Biologics took the name RTI Surgical after acquiring Pioneer Surgical and adding metal and synthetic implants to its line of implants manufactured from human donor and animal tissue.
President/CEO Brian Hutchison attributed the lower-than-anticipated revenues to weak spine implant sales, uncertainties surrounding an October 2012 warning letter from the U.S. Food and Drug Administration (FDA), surgeons’ subsequent shift to alternative products, slower new direct surgical specialities sales and lower international sales revenue due to tissue shortages.
The FDA letter regarded concerns uncovered during an inspection of the company's Alachua facility. The building has since passed inspection.
"While third quarter results were below expectations, we are working diligently to rebuild business that was lost in the year and gain new customers," Hutchison said. "We have made progress on integrating the Pioneer business and are in the early stages of realizing cross distribution opportunities. We are confident we are headed in the right direction for long-term success."
RTI's third-quarter performance prompted executives to lower their full-year revenue guidance to $196-$197 million from $211-$215 million. Full year net lossper fully diluted common share is expected to be $0.28 based on 56.4 million outstanding shares, up significantly from the previous estimate of $0.11 to $0.13 per diluted share.
The company expects fourth quarter revenue to total rough $60 million and net loss per fully diluted common share to be $0.09.
RTI trades on the Nasdaq stock exchange under the symbol RTIX. The former RTI Biologics took the name RTI Surgical after acquiring Pioneer Surgical and adding metal and synthetic implants to its line of implants manufactured from human donor and animal tissue.