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Osteotech Posts First Quarter Earnings Per Share of $.05 on Revenue Growth of 10%

Friday, May 2, 2008 General News J E 4
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EATONTOWN, N.J., May 1 Osteotech, Inc.(Nasdaq: OSTE), a leader in the emerging field of biological products forregenerative healing, announced today that revenue for the first quarter of2008 increased 10% to $27.6 million from $25.2 million for the first quarterof 2007. Revenue from the Company's primary product lines, included in theDBM and Hybrid/Synthetic segments, was $17.6 million for the three monthsended March 31, 2008, an increase of 12% over the prior year period. Revenuefrom our other product lines was $10.0 million and $9.5 million in the firstquarter of 2008 and 2007, respectively.

Diluted earnings per share for the quarter ended March 31, 2008 was $.05on net income of $.8 million compared to a net loss of $.6 million, or $.04diluted loss per share, for the first quarter of 2007. The net loss in thefirst quarter of 2007 included the costs associated with the settlement ofcertain litigation and related legal fees of $1.1 million.

Gross margin improved to 52% in the first quarter compared to 49% in thefirst quarter of the prior year. Operating expenses increased 5% for thethree months ended March 31, 2008 compared to the same period in 2007 dueprimarily to increased spending in research and development activities.

Sam Owusu-Akyaw, Osteotech's President and Chief Executive Officer,stated, "We continue to be pleased with the execution of our strategicinitiatives. During the first quarter, we have continued to expand ourproduct pipeline, penetrate the foot and ankle market with our Plexur P(TM)product and improve the effectiveness of our sales force. In the past twomonths, we have received FDA clearance for our Plexur P(TM) product for use inthe spine and the Plexur M(TM) for use in orthopedics; renewed our tissuerecovery agreement with the Euro Atlantic Transplant Alliance; entered into anagreement to distribute the Harvest(TM) Technologies BMAC(TM) System; andengaged BioHorizons to distribute our bone regeneration products in theinternational dental market. We are very excited about our future."

Mr. Owusu-Akyaw will host a conference call on May 1, 2008 at 9:00 a.m.Eastern Time to discuss first quarter results. You are invited to listen tothe conference call by dialing 706-643-1624. The conference will also besimultaneously webcast at http://www.osteotech.com. Automated playback willbe available two hours after completion of the live call, through midnight,Thursday, May 15th, by dialing 706-645-9291 and indicating access code43861543.

Osteotech, Inc., headquartered in Eatontown, New Jersey, is a globalleader in providing OsteoBiologic solutions for regenerative medicine tosupport surgeons and their patients in the repair of the musculoskeletalsystem through the development of innovative therapy-driven products thatalleviate pain, promote biologic healing and restore function. For furtherinformation regarding Osteotech, this press release or the conference call,please go to Osteotech's website at www.osteotech.com.

Certain statements made throughout this press release that are nothistorical facts contain forward-looking statements (as such are defined inthe Private Securities Litigation Reform Act of 1995) regarding the Company'sfuture plans, objectives and expected performance. Any such forward-lookingstatements 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 fromthose expressed or implied by such forward-looking statements. Factors thatcould cause actual results to differ materially include, but are not limitedto, the Company's ability to develop and introduce new products, differencesin anticipated and actual product and service introduction dates, the ultimatesuccess of those products in the marketplace, the continued acceptance andgr
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