Micro-cap medical device company Bacterin International Holdings (BONE) reported earnings after the closing bell on Mar. 19 that showed a widening loss despite slightly higher revenues. However, if the markets had a bone to pick with these results, they sure showed a funny way of showing it as shares were up nearly 35 percent in early trading on Mar. 20.
Driving the gains was the news that results from trials using Bacterin’s OsteoSponge bone graft for foot and ankle arthrodeses were being published in Orthopedics, a peer-reviewed journal. Any concern over the earnings report was clearly brushed aside by the report as shares crashed made big gains.
Shares gapped up 26.1 percent to $1.03 apiece at the opening bell and then took off, reaching as high as $1.41 in the first half-hour of trading before retreating back to levels between $1.10 and $1.15 a share. The peak at $1.41 a share represents a new 52-week high for Bacterin.
The stock also laid waste to a resistance level of $0.80 a share that had seemed to cap performance for the stock since late July 2012. The stock had cleared the level yesterday, spiking past and managing to close at $0.84 a share, but today’s leap made it clear that resistance was ancient history. The solid news about OsteoSponge combined with the breaking of resistance and a lack of any serious red flags in the earnings report probably worked in tandem to fuel this rise.
The Orthopedics report showed that in a trial of 25 patients receiving 45 total joints, 96 percent of the patients (all but one) showed radiographic fusion within 6 to 12 months and the joints had an overall fusion rate of 97.4 percent (all but one joint).
"This is the first product Bacterin has launched since I joined the company, and I have been very pleased with the process and the results," said President and CEO Dan Goldberger. "We introduced this product to key opinion leaders at the NASS Evidence and Technology Spine Summit (Park City, UT) and the feedback was astounding. I am looking forward to seeing how distribution of this new product will help support our growth goals, and complement our existing product portfolio."
The earnings report showed a Q4 loss of $3.6 million, slightly wider than Q4 2012’s loss of $3.5 million. Full-year losses for 2013 reached $12.7 million, or $0.27 a share, a significant improvement over 2012 losses of $7.7 million or $0.18 a share.
Revenues, though, climbed year over year from $8.1 million for Q4 2012 to $8.3 million in the recently concluded quarter. However, the company’s sales remained strong despite managing to slash sales expenses as a percentage of revenue.
"Since joining the Company, one of my top priorities has been to strengthen our sales force," said Goldberger. "We have worked diligently to recognize and reward success and learn from failure. We had 65 employees in our sales function in Q4 2012 responsible for about $8 million in sales. Only 25 of those employees are still with the Company, but they were responsible for $8.1 million in sales. In other words, we have dramatically improved the productivity of our sales function by attrition and focus. We have also identified strategies that work and we will continue to build our sales function with that in mind. We remain committed to our hybrid sales structure and many of our successful employees are involved in managing and training our distributor partners."
DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer