RTI Biologics Announces 2009 Third Quarter Results

Quarterly Highlights:

-- Record revenues of $42.8 million

-- Net income of $2.3 million, or $0.04 per fully diluted share, compared to $388,000, or $0.01 per fully diluted share, as a result of continued increased revenues and margins

-- Amended agreement for exclusive worldwide distribution rights for dermal allografts for use in hernia repair with Davol Inc., a subsidiary of C.R.Bard Inc., to include dermal allografts for breast reconstruction

-- Record revenues in domestic hernia repair, an increase of more than 150 percent over the previous year's period

-- Increased breast reconstruction revenues by 66 percent over the prior year's period, reflecting launch quantity shipments to Davol Inc.

-- Launched four new orthopedic implants

-- Received FDA clearance to market bovine pericardium for use in ENT procedures

Revenues were $42.8 million for the third quarter of 2009, representing an 11 percent increase compared to revenues of $38.5 million for the third quarter of 2008. Revenues were $122.6 million for the first nine months of 2009, representing a 12 percent increase compared to revenues of $109.3 million for the first nine months of 2008. The increase in year-over-year revenues for the first nine months reflects the inclusion of Tutogen Medical for the full nine months of 2009 compared to the period of Feb. 28 to Sept. 30, 2008 in the prior year. Tutogen revenues for the period Jan. 1, 2008 to Feb. 27, 2008 were $8.5 million, including international revenues of $3.0 million.

For the third quarter of 2009, the company reported net income of $2.3 million and net income per fully diluted share of $0.04 based on 55 million fully diluted shares outstanding, compared to net income of $388,000 and net income per fully diluted share of $0.01 for the third quarter of 2008, based on 55.7 million fully diluted shares outstanding. For the first nine months of 2009, the company reported net income of $4.4 million and net income per fully diluted share of $0.08 based on 54.7 million fully diluted shares outstanding, compared to net income of $2.5 million and net income per fully diluted share of $0.05 based on 50.4 million fully diluted shares outstanding for the same period last year.

"Our third quarter results were in line with our expectations," said Brian K. Hutchison, RTI chairman and chief executive officer. "As we enter the last quarter of the year, we are mindful of the continued weakness in the global economy and its impact on procedure volumes and the orthopedic markets in general. Accordingly, we are working diligently to ensure we meet our goals for our distributors and our shareholders."

Revenue Analysis

Domestic revenues were $37.4 million for the third quarter and $105.4 million for the first nine months of 2009, both representing increases of 12 percent over prior year results for each period. The increase in revenues for the first nine months reflects the inclusion of Tutogen revenues for nine months in 2009 versus the period of Feb. 28 to Sept. 30, 2008 in the prior year. For the third quarter and first nine months of 2009, the strongest domestic performance was in surgical specialties, with sequential and year-over-year growth rates that exceeded market growth rates as we continue to increase sourcing of membrane tissue to support these markets. Growth in surgical specialties offset a decline in dental revenues, which have been significantly impacted by the global economic slowdown. The sports medicine business continues to grow; however, the third quarter revenues were negatively impacted by both a seasonal slowdown in procedures and deferral of procedures due to global economic conditions.

International revenues, which include exports and distribution from our German and French operations, were $5.4 million for the third quarter of 2009 and $17.2 million for the first nine months of 2009, representing increases of 8 percent and 13 percent respectively compared to the prior year period. During the third quarter and first nine months of 2009, currency exchange fluctuations resulted in a decrease in revenues of $229,000 and $1.5 million respectively compared to prior year periods. In addition, first nine month revenues reflect the inclusion of Tutogen revenues for the full nine months in 2009 versus the period of Feb. 28 to Sept. 30, 2008 in the prior year.

2009 Outlook

The company's 2009 financial guidance includes revenues estimated to be $166 to $168 million, with fully diluted earnings per share of $0.11 to $0.13. There are no changes to this guidance at this time.

Conference Call

RTI will hold a live conference call and simultaneous audio Web cast on Wednesday, Oct. 28, 2009 at 9:00 a.m. ET to discuss third quarter results. The conference call can be accessed by dialing 888-452-4004. The Web cast can be accessed through the investor section of RTI's Web site at www.rtix.com. A telephone replay of the call will be available through Nov. 18, 2009 and can be accessed by calling 888-203-1112, passcode 7047465; the replay will also be available at www.rtix.com.

About RTI Biologics Inc.

RTI Biologics Inc. was formed when Regeneration Technologies Inc. and Tutogen Medical Inc. merged on Feb. 27, 2008. The company is a leading provider of sterile biological implants for surgeries around the world with a commitment to advancing science, safety and innovation. RTI prepares human donated tissue and bovine tissue for transplantation through extensive testing and screening, precision shaping and when possible, using proprietary, validated sterilization processes. These allograft and xenograft implants are used in orthopedic, dental, hernia and other specialty surgeries.

RTI's innovations continuously raise the bar of science and safety for biologics -- from being the first company to offer precision-tooled bone implants and assembled technology to maximize each gift of donation, to inventing validated sterilization processes that include viral inactivation steps. Two such processes -- the BioCleanse(R) Tissue Sterilization Process and the Tutoplast(R) Tissue Sterilization Process -- have a combined record of more than two million implants distributed with zero incidence of allograft-associated infection. These processes have been validated by tissue type to inactivate or remove viruses, bacteria, fungi and spores from the tissue while maintaining biocompatibility and functionality.

RTI's worldwide corporate headquarters are located in Alachua, Fla., with international locations in Neunkirchen, Germany, and Aix-en-Provence, France. The company is accredited by the American Association of Tissue Banks in the United States.

Forward Looking Statement

This communication contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on management's current expectations, estimates and projections about our industry, our management's beliefs and certain assumptions made by our management. Words such as "anticipates", "expects," "intends," "plans," "believes," "seeks," "estimates," variations of such words and similar expressions are intended to identify such forward-looking statements. In addition, except for historical information, any statements made in this communication about anticipated financial results, growth rates, new product introductions, future operational improvements and results or regulatory approvals or changes to agreements with distributors also are forward-looking statements. These statements are not guarantees of future performance and are subject to risks and uncertainties, including the risks described in public filings with the U.S. Securities and Exchange Commission (SEC). Our actual results may differ materially from the anticipated results reflected in these forward-looking statements. Copies of the company's SEC filings may be obtained by contacting the company or the SEC or by visiting RTI's website at www.rtix.com or the SEC's website at www.sec.gov.

RTI BIOLOGICS, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(In thousands, except share and per share data)
(Unaudited)
                                               Three Months Ended                      Nine Months Ended
                                               September 30,                           September 30,
                                               2009                2008                2009                2008 (1)
Total revenues                                 $   42,813          $   38,534          $   122,567         $   109,272
Costs of processing and distribution               22,199              20,587              65,003              58,113
Gross profit                                       20,614              17,947              57,564              51,159
Expenses:
Marketing, general and administrative              14,812              15,255              44,876              40,388
Research and development                           2,187               2,059               5,843               6,161
Restructuring charges                              -                   -                   42                  450
Asset abandonments                                 125                 -                   208                 -
Total expenses                                     17,124              17,314              50,969              46,999
Operating income                                   3,490               633                 6,595               4,160
Total other expense - net                          (339       )        (8         )        (431       )        (46        )
Income before income tax provision                 3,151               625                 6,164               4,114
Income tax provision                               (838       )        (237       )        (1,798     )        (1,577     )
Net income                                     $   2,313           $   388             $   4,366           $   2,537
Net income per common share - basic            $   0.04            $   0.01            $   0.08            $   0.05
Net income per common share - diluted          $   0.04            $   0.01            $   0.08            $   0.05
Weighted average shares outstanding - basic        54,386,604          53,970,491          54,287,007          48,514,294
Weighted average shares outstanding - diluted      54,954,665          55,741,321          54,729,147          50,384,655
(1) Includes results of operations for the former Tutogen Medical,
Inc. from February 28, 2008 to September 30, 2008.

RTI BIOLOGICS, INC. AND SUBSIDIARIES
Condensed Consolidated Revenues
(In thousands)
(Unaudited)
                                Three Months Ended      Nine Months Ended          TMI
                                September 30,           September 30,              Jan 1 - Feb 27
                                2009        2008        2009         2008 (1)      2008 (2)
Fees from tissue distribution:
Spine                           $   10,857  $   10,926  $   31,527   $   29,714    $    210
Sports medicine                     9,493       8,780       29,211       27,981         53
Dental                              6,969       7,789       21,584       19,488         4,957
Surgical specialties                8,422       5,241       19,638       11,753         2,148
Bone graft substitutes              3,913       3,044       11,532       11,775         -
General orthopedic                  1,902       1,894       5,469        4,206          1,156
Other revenues                      1,257       860         3,606        4,355          (31   )
Total revenues                  $   42,813  $   38,534  $   122,567  $   109,272   $    8,493
Domestic revenues                   37,384      33,518      105,385      94,036         5,452
International revenues              5,429       5,016       17,182       15,236         3,041
Total revenues                  $   42,813  $   38,534  $   122,567  $   109,272   $    8,493
(1) Includes revenues of the former Tutogen Medical, Inc. (TMI) from
February 28, 2008 to September 30, 2008.
(2) Revenues for TMI for the period January 1, 2008 to February 27,
2008.

RTI BIOLOGICS, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(In thousands)
(Unaudited)
                                                                     September 30,       December 31,
                                                                     2009                2008
Assets
Cash and cash equivalents                                            $    20,443         $    20,076
Accounts receivable - net                                                 16,039              14,668
Inventories - net                                                         92,334              75,182
Prepaid and other current assets                                          18,961              21,784
Total current assets                                                      147,777             131,710
Property, plant and equipment - net                                       47,462              47,622
Goodwill                                                                  134,688             134,432
Other assets - net                                                        22,738              20,316
Total assets                                                         $    352,665        $    334,080
Liabilities and Stockholders' Equity
Accounts payable                                                     $    21,871         $    16,915
Accrued expenses and other current liabilities                            16,178              18,803
Short-term obligations and current portion of long-term obligations       4,021               5,803
Total current liabilities                                                 42,070              41,521
Long-term liabilities                                                     22,578              11,509
Total liabilities                                                         64,648              53,030
Stockholders' equity:
Stock and additional paid-in capital                                      405,747             403,787
Accumulated other comprehensive loss                                      (124     )          (765     )
Accumulated deficit                                                       (117,606 )          (121,972 )
Total stockholders' equity                                                288,017             281,050
Total liabilities and stockholders' equity                           $    352,665        $    334,080

RTI BIOLOGICS, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
                                                              Three Months Ended          Nine Months Ended
                                                              September 30,               September 30,
                                                              2009          2008          2009           2008
Cash flows from operating activities:
Net income                                                    $  2,313      $  388        $  4,366       $  2,537
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation and amortization expense                            1,734         2,438         5,415          6,017
Stock-based compensation                                         423           381           1,259          1,236
Deferred revenue                                                 8,000         -             8,000          -
Change in working capital                                        (8,423 )      (4,429 )      (19,127 )      (12,268 )
Other                                                            1,490         1,550         1,462          1,957
Net cash provided by (used in) operating activities              5,537         328           1,375          (521    )
Cash flows from investing activities:
Purchases of property, plant and equipment                       (1,138 )      (1,838 )      (3,046  )      (3,929  )
Cash acquired in merger, net of transaction costs                -             (389   )      -              879
Proceeds from sale of marketable securities                      -             -             -              5,192
Proceeds from sale of property, plant and equipment              -             -             18             63
Patent costs                                                     (99    )      (75    )      (323    )      (215    )
Net cash (used in) provided by investing activities              (1,237 )      (2,302 )      (3,351  )      1,990
Cash flows from financing activities:
Proceeds from exercise of common stock options                   416           729           515            2,208
Excess tax benefit from exercise of common stock options         176           2             186            231
Net proceeds from short-term obligations                         445           2,025         -              1,785
Net payments on short-term obligations                           -             -             (2,437  )      -
Proceeds from long-term obligations                              3,029         -             8,578          -
Payments on long-term obligations                                (2,162 )      (541   )      (4,590  )      (2,693  )
Net cash provided by financing activities                        1,904         2,215         2,252          1,531
Effect of exchange rate changes on cash and cash equivalents     72            (11    )      91             (2      )
Net increase in cash and cash equivalents                        6,276         230           367            2,998
Cash and cash equivalents, beginning of period                   14,167        21,328        20,076         18,560
Cash and cash equivalents, end of period                      $  20,443     $  21,558     $  20,443      $  21,558

SOURCE: RTI Biologics Inc.

RTI Biologics Inc. 
Thomas F. Rose, Chief Financial Officer 
or 
Wendy Crites Wacker, APR, Corporate Communications, 386-418-8888 
or 
The Sharadin Group, LLC 
Kate Sharadin, 425-869-9778