Third Quarter 2013 Results

Third Quarter 2013 Results

Total revenue, excluding stocking orders,

increased 12.9% over the prior year period

BELGRADE, Mont.-(BUSINESS WIRE)- NOVEMBER

7, 2013, 2013- Bacterin International Holdings, Inc. (NYSE MKT: BONE), a leader in the development of revolutionary bone

graft material and coatings for medical applications, today reported its financial results for the third quarter ended September

30, 2013. The Company reported revenues of approximately $7.9 million and a net loss for the third quarter of approximately $4.4

million, or ($0.08) per common share, compared to a net loss of approximately $2.5 million, or ($0.06) per common share, reported

during the same period in 2012.

Third quarter revenue was approximately $7.9 million, down approximately

10.7% compared to approximately $8.9 million for the same period during 2012. Total revenues, excluding stocking orders, have increased

12.9% year over year to $7.9 million from $7.0 million reported in the third quarter of 2012. The lower total revenues for the

period compared to the prior year reflect management's decision to move away from low margin stocking orders. The Company's

Biologics revenues from core accounts, which includes allograft products sold to hospital accounts, increased 13.7%

over the prior year.

For the third quarter of 2013, gross profit was approximately

$4.6 million, compared to $6.3 million in the third quarter of 2012. Gross margin for the period was 58%, which compares to a gross

margin of 71% reported for the same period last year. The lower gross margin was primarily due to lower average selling prices

resulting from changes in product mix and payer mix and the expensing of certain discarded products associated with an improved

manufacturing process. Excluding these discarded products, gross margin was approximately 61.4%.

"While our results for the period are disappointing, our

management team is fully committed to profitable revenue growth," said Dan Goldberger, President and CEO of Bacterin International.

"Our sales function is focused on clients within the Biologics business and I take some comfort from the growth that we generated

in that business during the period. Since my arrival in August, I have been visiting key accounts and surgeons in the field confirm

that our products are best-in-class and competitive. This is a foundation from which we can build a great company. In addition,

we are taking a hard look at Cost of Goods and Operating Expense to ensure the Company's entire operations are as efficient

as possible as we enter 2014"

Sales and Marketing Expenses

Sales and marketing expenses for the third quarter increased

to $4.1 million as compared to $3.4 million for the same period during 2012. As a percentage of revenues, selling and marketing

expenses increased to 51%, which compares to 38% reported for the third quarter of 2012. The increase was due to a shift towards

distributor sales at higher commission rates, rather than direct sales representatives, and an incentive program to promote the

sales of slower moving inventory items.

General and Administrative Expenses

In the third quarter, general and administrative expenses increased

to $2.8 million for the period as compared to $2.4 million reported for the same period last year. The Company increased its allowance

for doubtful accounts on a prior year stocking order due to the continuing uncertainty of collectability. Excluding this one time

reserve of $642,000, G&A expenses declined from $2.4 million in the third quarter of 2012 to $2.1 million in third quarter

of 2013 reflecting the previously announced cost reduction measures the Company implemented in March and April of this year. As

a percentage of revenues, general and administrative expenses were 35% during the period as compared to 27% for the same 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 third quarter of 2013 was a loss of $1.8 million, compared to a gain of $820,000 reported for the

third quarter of 2012. Excluding the increase in the accounts receivable reserve referred to above, the Company's EBITDA

loss was approximately $1.1 million in the third quarter of 2013. See "GAAP to non-GAAP Reconciliation" below for further

information on this non-GAAP measure.

Cash and cash equivalents and net accounts receivable, were

$8.1 million on September 30, 2013, compared to $12.1 million on December 31, 2012.

Conference Call Details

The company will hold a conference hosted by Dan Goldberger,

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

November 8, 2013. 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,"

"strategy," "will," "goal," "target," "prospects," "potential," "optimistic,"

"confident," "likely," "probable" or similar expressions or the negative thereof. Statements of historical

fact also may be deemed to be forward-looking statements. We caution that these statements by their nature involve risks and uncertainties,

and actual results may differ materially depending on a variety of important factors, including, among others: the Company's ability

to meet its existing and anticipated contractual obligations, including financial covenant and other obligations contained in the

Company's secured lending facility; the Company's ability to manage cash flow and achieve profitability; the Company's

ability to develop, market, sell and distribute desirable applications, products and services and to protect its intellectual property;

the ability of the Company's sales force to achieve expected results; the ability of the Company's customers to pay and the timeliness

of such payments; the Company's ability to obtain financing as and when needed; changes in consumer demands and preferences; the

Company's ability to attract and retain management and employees with appropriate skills and expertise; the Company's ability

to successfully conclude government investigations; the impact of changes in market, legal and regulatory conditions and in the

applicable business environment, including actions of competitors; and other factors. Additional risk factors are listed in the

Company's Annual Report on Form 10-K and Quarterly Reports on Form 10-Q under the heading "Risk Factors." The Company

undertakes no obligation to release publicly any revisions to any forward-looking statements to reflect events or circumstances

after the date hereof or to reflect the occurrence of unanticipated events, except as required by law.

BACTERIN INTERNATIONAL HOLDINGS, INC.

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