Orthovita Reports 2009 First Quarter Financial Results

Orthovita, Inc. (NASDAQ: VITA), an orthobiologics and biosurgery company, reported financial results for the quarter ended March 31, 2009. Product sales for the quarter ended March 31, 2009 increased 34% to $21.7 million, as compared to $16.2 million for the same period in 2008.

Sales growth for 2009 was primarily attributable to increased sales from our orthobiologics products in the United States, accounting for approximately 76% of sales during the first quarter of 2009, as compared to approximately 74% in the first quarter of 2008. Sales of our VITOSS^TM Bioactive FOAM products that were launched in 2008 contributed a substantial portion of overall orthobiologics product sales during the first quarter of 2009. Our biosurgery products contributed approximately 24% of product sales for the first quarter of 2009, as compared to approximately 26% of product sales during the corresponding period in 2008.

Gross profit for the quarters ended March 31, 2009 and 2008 was $14.7 million and $10.4 million, respectively. As a percentage of sales, gross profit for the first quarter of 2009 was 68%, up from 64% for the first quarter of 2008. Gross profit margin for the first quarter of 2009 increased over the prior year period primarily due to more favorable product sales mix.

Operating expenses for the quarter ended March 31, 2009 and 2008 were $15.1 million and $14.4 million, respectively, representing a 5% increase in operating expenses, as compared to a 34% increase in product sales and a 42% increase in gross profit for the quarter. The increase in operating expenses for the quarter ended March 31, 2009 was primarily due to higher selling and marketing expenses incurred in order to support the growth of U.S. product sales, and from higher research and development expenses for product development milestone payments.

The operating loss for the quarter ended March 31, 2009 decreased to $0.4 million from $4.0 million for the quarter ended March 31, 2008. The decrease in the operating loss in the 2009 period primarily resulted from increased sales and gross profit, partly offset by increased operating expenses.

The net loss for the quarter ended March 31, 2009 improved to $1.2 million from $4.2 million for the quarter ended March 31, 2008. The net loss per common share for the quarters ended March 31, 2009 and 2008 was $0.02 and $0.06, respectively. The improvement in the net loss for the quarter ended March 31, 2009 resulted from increased sales and gross profit, partly offset by increased operating expenses, increased interest expense and lower interest income.

"Orthovita achieved record sales in the first quarter of 2009, reflecting strong growth and further development of operating leverage ahead of a potential future launch in the U.S. of our CORTOSS^TM product candidate. We continue to be pleased with the sales growth from our specialized orthobiologics and biosurgery sales team,” said Antony Koblish, President and Chief Executive Officer of Orthovita. "We look forward to more detailed discussions during our first quarter 2009 financial results conference call.”

Cash, cash equivalents and short-term investments were $27.8 million at March 31, 2009, compared to $32.3 million at December 31, 2008. For the quarter ended March 31, 2009, the net cash used in operating activities was $2.9 million, compared to $7.1 million for the quarter ended March 31, 2008. Net cash and cash equivalents used in operating activities for the quarter ended March 31, 2009 decreased as compared with the quarter ended March 31, 2008, primarily due to a decrease in the operating loss.

Working capital was $49.1 million at March 31, 2009, compared to $52.2 million at December 31, 2008. For the quarter ended March 31, 2009, the decrease of $3.1 million in working capital was from cash used to fund operations and included $0.9 million to fund increases in inventories and $1.6 million to fund decreases in accounts payable and accrued expenses.

Conference Call

Antony Koblish, President and Chief Executive Officer, and Albert J. Pavucek, Jr., Chief Financial Officer of Orthovita, will host a conference call at 8:30 a.m. Eastern Time on Thursday, May 7, 2009 to review and discuss the first quarter 2009 financial results. The phone number to join the conference call from within the U.S. is (888) 815-2919, and from outside the U.S. is (706) 643-3675; the conference identification number is 94416118. Listeners are advised to dial in ten minutes prior to the scheduled start time for the conference call. A replay of the conference call will be available for one week beginning May 7, 2009 at 11:30 a.m. Eastern Time, and ending May 14, 2009, at 11:59 p.m. Eastern Time. You may listen to the replay by dialing within the U.S. (800) 642-1687 or by dialing from outside the U.S. (706) 645-9291. The replay identification number is 94416118.

About the Company

Orthovita is an orthobiologics and biosurgery company that develops and markets novel medical devices. Our orthobiologics platform offers products for the fusion, regeneration, and fixation of human bone. Our biosurgery platform offers products for controlling intra-operative bleeding, also known as hemostasis. Our current fusion and regeneration products are based on our proprietary VITOSS^TM Bone Graft Substitute technology and address the non-structural bone graft market with synthetic, bioactive alternatives to patient- and cadaver-derived bone tissue. CORTOSS^TM Bone Augmentation Material, an injectable, polymer composite that mimics the structural characteristics of human bone, provides the basis for our fixation portfolio. CORTOSS Bone Augmentation Material is approved in certain countries outside the U.S. and is under review for clearance in the U.S. for vertebral augmentation. Our hemostasis portfolio includes VITAGEL^TM Surgical Hemostat, a unique, collagen-based matrix that controls bleeding and facilitates healing, and VITASURE™ Absorbable Hemostat, a plant-based product that can be deployed quickly throughout surgery.

Disclosure Notice

This press release may contain forward-looking statements regarding Orthovita’s current expectations of future events that involve risks and uncertainties, including, without limitation, the development, regulatory clearance or approval, demand and market acceptance of our products, including CORTOSS, and other aspects of our business. Such statements are based on management’s current expectations and are subject to a number of substantial risks and uncertainties that could cause actual results or timeliness to differ materially from those addressed in the forward-looking statements. Factors that may cause such a difference are listed from time to time in reports filed by the Company with the U.S. Securities and Exchange Commission (SEC), including but not limited to risks described in our most recently filed Form 10-K under the caption "Risk Factors.” Further information about these and other relevant risks and uncertainties may be found in Orthovita’s filings with the SEC, all of which are available from the SEC as well as other sources. Orthovita undertakes no obligation to publicly update any forward-looking statements.