Theragenics® Reports Revenue & Earnings for Q3 2009

Highest Nine-Month Revenue Ever

Continued Pro Forma Organic Growth in Surgical Products Business

BUFORD, Ga. -- Theragenics Corporation (NYSE: TGX), a medical device company serving the surgical products and prostate cancer treatment markets, today announced consolidated financial results for the third quarter ended October 4, 2009. Consolidated results include the results of NeedleTech Products, Inc. ("NeedleTech") subsequent to its acquisition by Theragenics on July 28, 2008. The terms "Company", "we", "us", or "our" mean Theragenics Corporation and all entities included in our consolidated financial statements.

Third Quarter 2009 Highlights

* We recorded consolidated revenue of $19.3 million in the third quarter and $59.6 million for the nine-month period.
* EPS for the quarter was $0.02, compared to $0.02 in 2008 and $0.08 for the nine-month period, compared to $0.12 in 2008.
* Pro forma organic revenue growth in our surgical products segment was 6% in the third quarter and 8% for the nine-month period.
* Consolidated Research and Development ("R&D") expenses increased $148,000 in the quarter and $1.0 million year-to-date, compared to 2008. This reflects investments to support future growth in the surgical products segment, a strategic initiative that was launched in late 2008.
* We continued our initiative to update and standardize our information technology ("IT") systems and infrastructure across all of our businesses.
* We purchased a larger facility for increased capacity in our specialty needle manufacturing. We expect to complete improvements and move to this new facility in mid-2010.
* Capital expenditures were $4.0 million in the first nine months of 2009, primarily a result of our IT improvements and the purchase of our new specialty needle manufacturing facility. We expect capital expenditures to be as high as $10.0 to $12.0 million over the next twelve to eighteen months, including the remodeling of the new facility and our corporate wide IT improvements.
* EBITDA was $3.4 million and cash flow generated from operations was $4.0 million in the third quarter. In the nine-month period, EBITDA was $10.5 million and cash flow from operations was $11.6 million. Cash flow from operations for the nine-month period of 2009 includes an income tax refund of $1.5 million.
* Cash and cash equivalents at the end of the quarter was $46.9 million and outstanding borrowings under our credit agreement were $30.9 million, resulting in a net positive cash position of $16.0 million.

Consolidated Results

Consolidated revenue for the third quarter of 2009 was $19.3 million, an increase of 7% over third quarter 2008. Year-to-date, consolidated revenue was $59.6 million, an increase of 21% over the 2008 period. The increase in revenue in the quarterly and year-to-date period is primarily the result of NeedleTech being included in our results for the entire 2009 periods, but only for approximately two months in the 2008 periods. NeedleTech was acquired during the third quarter of 2008.

Net income for the quarter was $799,000 or $0.02 per share compared to $641,000 or $0.02 per share in 2008. For the nine-month period, net income was $2.7 million or $0.08 per share compared to $3.9 million or $0.12 per share in 2008. We had a number of items affecting comparability between the periods, including the following:

* $590,000 of non-cash charges related to the NeedleTech acquisition in the 2008 periods did not recur in the 2009 periods.
* R&D expenses, related to our new R&D group implemented in late 2008, increased in the 2009 periods by $148,000 in the third quarter and $1.0 million in the nine month period.
* The 2008 year to date period included a $142,000 benefit from the gain on the sale of our former Oak Ridge facility.
* Net interest expense (interest expense minus interest income) in the 2009 periods increased $288,000 in the third quarter and $1.0 million in the year to date period, compared to the 2008 periods. This is primarily a result of the significant decline in returns on our investments in marketable securities and cash equivalents.
* Other income in 2008 was $207,000 higher in the third quarter and $144,000 higher in the year to date period, compared to the 2009 periods, because of non-operating items that did not recur in 2009.
* Write offs of deferred tax assets associated with certain expired and unexercised stock options resulted in a higher than normal income tax rate in the 2008 periods.

Segment Results

In 2009 we changed the manner in which we allocate the cost of corporate activities to our business segments. Operating expenses associated with corporate activities are now allocated based on the relative revenue of each business segment. With the continued integration of our acquired companies and the launch of the surgical products R&D program, we believe this method more accurately reflects the utilization of corporate resources. This is also the method we now use internally to review results and allocate resources. Previously, a large portion of expenses associated with corporate activities was charged to the brachytherapy segment. Segment results for the 2008 periods have been restated to reflect this change in the method of allocating corporate expenses. This change had no effect on the consolidated results of operations previously reported for the 2008 periods.

Surgical Products Segment

Revenue in our surgical products segment was $13.4 million in third quarter 2009 and $40.2 million in the nine-month period. On a pro forma basis, as if NeedleTech was included in the pre-acquisition periods in 2008, our surgical products revenue increased 6% in the quarter and increased 8% in the nine-month period, compared with the 2008 periods. Operating income in the surgical products segment for the third quarter of 2009 was $623,000, compared to $202,000 in the 2008 period. For the nine-month period, operating income was $1.5 million, compared to $1.7 million in 2008. Items that affected comparability of the periods included $590,000 of non-cash charges related to the NeedleTech acquisition recorded in the 2008 periods that did not recur in 2009. In addition, R&D expenses increased by $159,000 in the third quarter and $1.1 million in the year to date period, compared to the 2008 periods. This is primarily a result of the R&D program implemented in our surgical products business late in 2008. Our surgical products segment also absorbed a larger portion of our corporate overhead in the 2009 periods.

Brachytherapy Seed Segment

Revenue in our brachytherapy segment declined 10% in third quarter 2009 and 12% in the year-to-date period, as compared to the 2008 periods. Operating income in the brachytherapy segment was $972,000 in third quarter 2009 compared to $933,000 in 2008. The decline in revenue was offset by a decline in operating expenses. The decrease in operating expenses included the elimination of carrying costs of the Oak Ridge facility, which was sold in July 2008. For the nine-month period, operating income was $3.4 million compared to $4.2 million in 2008. The 2008 period included a $142,000 benefit from the sale of our Oak Ridge facility. Our brachytherapy segment also benefited from absorbing a smaller portion of our corporate overhead in the 2009 periods.

"We are on track for the highest revenue year in our history," stated M. Christine Jacobs, Chairman and CEO. "Our surgical products business has delivered pro forma organic growth. Our brachytherapy business is still suffering from an industry wide decline in procedures, but continues to be profitable and deliver positive cash flows. In many ways 2009 is shaping up to be our best year ever."

Ms. Jacobs concluded, "We have invested in our strategic initiatives during 2009, while continuing to deliver earnings and operating cash flow. The nature of our surgical products business, along with continued macroeconomic uncertainties, may cause short term variability in our results. We intend to continue to execute on our strategic plan and remain focused on organic growth in our surgical products business, leadership in our brachytherapy business, and building momentum towards 2010 and beyond."

Tables I and II to this press release contain condensed consolidated statements of earnings and balance sheets. Pro forma revenue by segment is summarized in Table III, and operating income by segment is summarized in Table IV. Table V includes a reconciliation of GAAP reported net earnings to earnings before interest, taxes, depreciation, amortization and share based compensation (EBITDA).

Theragenics will host a conference call today at 11:00 a.m. Eastern Time. To access the call, dial 800-538-9844 or 706-634-7274 and provide the conference ID 36213501. This call is also being broadcast live over the Internet, and a recording will be available for one month on our website. To access the webcast, log on to www.theragenics.com and select Investor Relations followed by selecting "Company Presentations." You also can access a phone replay of the call until Midnight, November 12, 2009 by dialing 800-642-1687 or 706-645-9291 and providing the conference ID code: 36213501.

Theragenics Corporation (NYSE: TGX) operates two business segments: its surgical products business and its brachytherapy seed business. The surgical products business (www.cpmedical.com, www.galtmedical.com, www.needletech.com) manufactures and distributes wound closure, vascular access, and specialty needle products. Wound closure products include sutures, needles and other surgical products. Vascular access includes introducers, guidewires and related products. Specialty needles include coaxial, biopsy, spinal and disposable veress needles, access trocars, and other needle-based products. The surgical products segment serves a number of markets and applications, including, among other areas, interventional cardiology, interventional radiology, vascular surgery, orthopedics, plastic surgery, dental surgery, urology, veterinary medicine, pain management, endoscopy, and spinal surgery. The brachytherapy business manufactures and markets its premier product, the palladium-103 TheraSeed® device (www.theraseed.com) and I-Seed, an iodine-125 based device, which are used primarily in the minimally invasive treatment of localized prostate cancer. For additional information, call our Investor Relations Department at 800-998-8479 or visit www.theragenics.com.