Bacterin Announces Full Year 2013 Results BELGRADE, Mont .--(BUSINESS WIRE)

Full Year 2013 Results

BELGRADE, Mont.--(BUSINESS WIRE)- March 19, 2014

-- Bacterin International Holdings, Inc. (NYSE MKT: BONE), a leader in the development of revolutionary bone graft material and

coatings for medical applications, today reported financial results for the fourth quarter and full year ended December 31, 2013.

The Company reported annual revenues of approximately $33.1 million and a net loss for the year of approximately $12.7 million,

or ($.27) per common share.

Fourth quarter 2013 revenue was approximately $8.3 million,

an increase of 1.7% compared to approximately $8.1 million for the same period during 2012. Fourth quarter 2013 core recurring

biologics revenues, which excludes stocking order transactions, were approximately $8.1 million, an increase of approximately 4.8%

compared to the fourth quarter of 2012 and a sequential increase of approximately 5.4% compared to the third quarter of 2013.

"Since joining the Company, one of my top priorities has

been to strengthen our sales force." said Dan Goldberger, President and CEO of Bacterin International. "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."

Revenues for the full year 2013 were approximately $33.1 million,

compared to approximately $33.0 million reported for 2012. Core recurring biologics revenues for the full year 2013 were approximately

$30.9 million, an increase of 2.5% over the prior year figure of approximately $30.1 million.

Gross profit for the fourth quarter 2013 was $4.1 million or

49.5% of revenues, compared to $4.6 million or 56.3% of revenues for the fourth quarter 2012. The fourth quarter 2013 figure includes

a one-time charge of approximately $1.1 million related to an increase in the Company's inventory reserve on slow moving

inventory that was manufactured in 2008 and 2009 and approaching the end of its shelf life. Although the Company implemented several

partially successful marketing initiatives to sell these products over the last twelve months, we decided to provide a reserve

against these products at the end of the year due to the short remaining shelf life. Excluding the one time charge, gross margin

in the fourth quarter of 2013 was approximately 62.8%.

For the year, gross profit was approximately $18.9 million,

compared to $22.6 million in 2012. Gross margin for the year was 57.1%, which compares to a gross margin of 68.7% reported for

2012. Excluding the one time charge noted above, gross margin for 2013 was approximately 60.4%. The lower gross margin was primarily

due to lower average selling prices resulting from changes in product mix and payor mix and the expensing of certain discarded

products associated with an improved manufacturing process for the Company's hMatrix product line.

Sales and Marketing Expenses

The fourth quarter 2013 saw sales and marketing expenses decrease

to $4.0 million, as compared to $4.3 million during the same period in 2012. For the quarter, sales and marketing as a percentage

of revenues decreased to 48.0%, compared to 52.7% in 2012. Sales and marketing expenses for the year increased to $16.0 million,

as compared to $15.6 million for 2012. As a percentage of revenues, selling and marketing expenses increased slightly to 48.4%,

which compares to 47.4% reported for the full year 2012. The Company is in the process of reorganizing the sales function with

the goal of increasing efficiency and productivity.

General and Administrative Expenses

In the fourth quarter, general and administrative expenses decreased

to $2.9 million as compared to $3.8 million reported for the same period last year. As a percentage of revenues, general and administrative

expenses were 35.1% during the period as compared to 46.6 % for the same period 2012. In 2013, general and administrative expenses

decreased to $10.8 million for the year as compared to $11.1 million reported for the same period last year. As a percentage of

revenues, general and administrative expenses were 32.6% as compared to 33.8% for 2012.

Loss from Operations

The fourth quarter 2013 loss from operations was approximately

$3.6 million compared to approximately $3.5 million in the fourth quarter of 2012. In the fourth quarter of 2013, the company performed

an impairment analysis of the goodwill related to an acquisition completed in 2011 and determined that the entire goodwill amount

of approximately $729,000 should be written off. Excluding the goodwill impairment charge and the one time increase in inventory

reserve recorded in the fourth quarter of 2013, the Company's loss from operations for the fourth quarter of 2013 was approximately

In 2013, the Company reported a loss from operations of approximately

$9.0 million compared to $4.9 million for the prior year. In 2013, the Company reported a net loss of approximately $12.7 million,

or $(0.27) per common share, compared to $7.7 million, or $(0.18) per common share, for the prior period.

The Company defines earnings before interest, taxes, depreciation

and amortization ("EBITDA") as net income/loss from operations before depreciation, amortization and non-cash stock-based

compensation. EBITDA for the fourth quarter was a loss of $2.3 million compared to a loss of $2.9 million for the same period 2012.

Excluding the one time increase in the inventory reserve of $1.1 million, fourth quarter 2013 EBITDA was a loss of $1.2 million.

Cash, cash equivalents and net accounts receivable were $7.8

million on December 31, 2013. In addition, as announced last week, the Company borrowed an additional $4.0 million from Orbimed

under the existing terms of the Company's credit facility.

Dan Goldberger continued, "While I am pleased with the

results of the improvements we have implemented across the organization, there is still work to be done. The transition of Bacterin

into a growth-oriented company is underway. I remain confident that the steps we are taking to enhance productivity will yield

improving results in 2014 and beyond."

Conference Call Details

The company will hold a conference call hosted by Dan Goldberger,

Chief Executive Officer, and John Gandolfo, Chief Financial Officer, to discuss financial results at 10:00 a.m. ET, on Thursday,

March 20, 2014. Please refer to the information below for conference call dial-in information and webcast registration.

Please call the conference telephone number 5-10 minutes prior

to the start time. An operator will register your name and organization. If you have any difficulty connecting with the conference

call, please contact the Cockrell Group at 1-877-889-1972.

Following the live call, a replay will be available on the Company's

website, www.bacterin.com, under "Investor Info".

About the Presentation of EBITDA

EBITDA is not a financial measure calculated and presented in

accordance with U.S. generally accepted accounting principles (GAAP) and should not be considered as an alternative to net income,

operating income or any other financial measures so calculated and presented, nor as an alternative to cash flow from operating

activities as a measure of liquidity. The company defines EBITDA as net income/(loss) from operations before depreciation, amortization

and non-cash stock-based compensation. Other companies (including competitors) may define EBITDA differently. The company presents

EBITDA because management believes it to be an important supplemental measure of performance that is commonly used by securities

analysts, investors and other interested parties in the evaluation of companies in our industry. Management also uses this information

internally for forecasting and budgeting. It may not be indicative of the historical operating results of Bacterin nor is it intended

to be predictive of potential future results. Investors should not consider EBITDA in isolation or as a substitute for analysis

of the company's results as reported under GAAP.

About Bacterin International Holdings

Bacterin International Holdings, Inc. (NYSE MKT: BONE) develops,

manufactures and markets biologics products to domestic and international markets. Bacterin's proprietary methods optimize the

growth factors in human allografts to promote bone growth, subchondral repair and dermal growth. These products are used in a variety

of applications including enhancing fusion in spine surgery, relief of back pain, promotion of bone growth in foot and ankle surgery,

promotion of cranial healing following neurosurgery and subchondral repair in knee and other joint surgeries.

Bacterin's Medical Device division develops and licenses coatings

for various medical device applications. For further information, please visit www.bacterin.com.

Important Cautions Regarding Forward-looking Statements

This news release contains certain disclosures that may be deemed

forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that are subject to significant

risks and uncertainties. Forward-looking statements include statements that are predictive in nature, that depend upon or refer

to future events or conditions, or that include words such as "continue," "efforts," "expects," "anticipates,"

"intends," "plans," "believes," "estimates," "projects," "forecasts,"