Third Quarter Financial and Operating Highlights
- Total revenue increased 28.6% to $10.1
million, reflecting continued strong demand across Bovie’s three
major product categories
- J-Plasma® revenues were $1.4 million,
up 177% year-on-year and 83% sequentially
- Gross margin expanded to 50.3% from
41.3%
- Operating leverage drove substantial
improvement in operating results
Bovie Medical Corporation (NYSEMKT:BVX), a maker of
medical devices and supplies and the developer of J-Plasma®, a
patented new surgical product, today announced financial results
for the three and nine months ended September 30, 2016.
Management Comments
“This was another quarter of strong performance for Bovie
Medical, demonstrating our ability to scale the business, while
significantly improving margins and operating profitability,” said
Robert L. Gershon, Chief Executive Officer. “We continue to build
upon the strong foundation put in place last year, leveraging our
R&D, manufacturing and SG&A infrastructure as we drive
double-digit sales growth.
“In the third quarter, each of our key product categories posted
strong revenue increases. In Core and OEM, our business continues
to underscore the strength of the Bovie brand and the Company’s
reputation for high quality product development and manufacturing.
Sales of J-Plasma®, which is the leading product in our Growth
category, increased exponentially on both a year-on-year and
sequential basis. This growth reflected significant sales generated
by Bovie’s sales force, and the benefit of demo sales to our sales
channel partners. J-Plasma® hand piece volume increased 166% year
over year and 64% sequentially, an important indication of the
increasing adoption of the product. Also, in the third quarter, we
received FDA clearance for our PlazXact™ Ablator, which is the most
recent launch in our Growth category, and representative of our
strategy to continue to judiciously evaluate and unlock the value
of the Bovie product portfolio through our R&D efforts,” Mr.
Gershon noted.
Third Quarter 2016
Results
Third quarter revenue increased 28.6% to $10.1 million from $7.8
million in the third quarter of 2015. Revenue benefitted from
strong sales across all product categories. J-Plasma® revenue
accounted for 13.9% of total sales, up from 6.5% in the same period
of the prior year.
Gross margin increased 900 basis points to 50.3% compared with
41.3% in the third quarter of 2015, reflecting an increased
proportion of sales coming from the higher margin OEM and J-Plasma®
products.
Total operating expenses were $5.3 million in the third quarter,
representing 52.7% of sales compared to $5.0 million, or 64.5% of
sales in the third quarter of 2015 as the Company was able to
leverage expenses over a higher revenue base. Operating loss
narrowed to $0.2 million, down significantly when compared with an
operating loss of $1.8 million in the third quarter of 2015.
Net loss attributable to common shareholders was $1.0 million,
or $0.04 per diluted share, compared with a net loss of $1.6
million, or $0.06 per diluted share in the same period of the prior
year. On a non-GAAP basis, the third quarter results for 2016
included an expense of $683,000 related to the revaluation of
derivative warrants. Excluding the derivative revaluation expense,
the company would have reported a non-GAAP net loss per diluted
share of $0.01 in the third quarter of 2016, compared to a non-GAAP
net loss per diluted share of $0.07 for the third quarter of
2015.
Nine Month 2016
Highlights
Total revenue increased 27.8% year-over-year to $27.1
million
J-Plasma® revenues increased 163% to $2.5 million
Gross margin expanded 562 basis points to 48.2%
Total operating expenses as a percent of revenue declined 1080
basis points to 58.4%
Operating loss narrowed to $2.7 million from $5.6 million in the
same period of the prior year
Cash utilized in operations was $2.3 million, down from $4.8
million in the same period of the prior year. On a non-GAAP basis,
the nine months ended September 30, 2016 included an expense of
$555,000 related to the revaluation of derivative warrants.
Excluding the derivative revaluation expense, the company would
have reported a non-GAAP net loss per diluted share of $0.11 for
the nine months ended September 30, 2016, compared to a non-GAAP
net loss per diluted share of $0.25 for the same period of
2015.
Balance Sheet and Cash
Flow
The Company had unrestricted cash and cash equivalents of $9.3
million at the end of the third quarter, the same at the end of the
second quarter of 2016, achieving our goal of cash flow neutrality
one quarter earlier than expected.
Recent Developments/News
- For the third consecutive year a
J-Plasma® product has been cited for innovation. In August 2016,
the BOVIE J-Plasma® Precise 360™ Handpiece was named an ‘Innovation
of the Year’ by the Society of Laparoendoscopic Surgeons
(SLS).
- In August, the Company received Food
and Drug Administration 510(K) Clearance for the PlazXact™ Ablator.
PlazXact™ is an innovative tool that offers surgeons precision and
safety when performing arthroscopic procedures and has the
advantage of being compatible with standard electrosurgical
generators found in ambulatory surgical centers and hospital
operating rooms.
- J-Plasma® has been named an Innovative
Technology by Vizient, the largest member-owned health care company
in the country. Vizient works with member-led councils and task
forces to identify and review potentially innovative products. If a
product is designated “Innovative” a contract may be awarded
outside of Vizient’s competitive bid cycle.
Summary and Outlook
“Based on our year-to-date financial results and revenue
expectations heading into the fourth quarter, 2016 will be a record
revenue year for the Company. Also, we are pleased to have achieved
cash flow neutrality in this year’s third quarter, one quarter
earlier than expected. We expect year-on-year fourth quarter
operating result comparisons to benefit from an increased
proportion of sales from our higher margin OEM and J-Plasma®
products, similar to the trends that we have seen in the second and
third quarters of this year. The impact on operating results and
cash flow is likely to be less pronounced in the fourth quarter,
however, based on the timing of certain R&D and product
development spending.
“Looking ahead to 2017, we expect to achieve another year of
significant revenue growth, comprised of consistent performance in
our core and OEM product lines, accelerated growth in J-Plasma®
sales from our multi-specialty strategy and our sales channel
partnerships, and new product additions to our growth product
category. We continue to be in a strong position to leverage our
existing infrastructure and should see operating expenses,
including R&D, continue to progressively decline as a percent
of revenue as we move forward into 2017,” concluded Mr.
Gershon.
Conference Call Details
The Company’s management will host a conference call on
Wednesday October 26, 2016 at 4:30pm Eastern Time to discuss the
latest financial results and corporate developments. Following
management’s prepared remarks, there will be a question and answer
session.
To listen to the call by phone, interested parties within the
U.S. should call 800-862-9098. International callers should call
785-424-1051. Participants should ask for the Bovie Medical
Corporation Call. The conference call will also be available
through a live webcast at Bovie Medical Corporation’s website or at
http://www.investorcalendar.com/IC/CEPage.asp?ID=175324.
A replay of the call will be available approximately two hours
after the end of the call through November 26, 2016. The replay can
be accessed via Bovie Medical Corporation’s website or by dialing
877-481-4010 for U.S. callers or 919-882-2331 for International
callers and using the replay access code 10093.
About Bovie Medical Corporation
Bovie Medical Corporation is a leading maker of medical devices
and supplies as well as the developer of J-Plasma®, a patented new
plasma-based surgical product for cutting and coagulation.
J-Plasma® utilizes a helium ionization process to produce a stable,
focused beam of ionized gas that provides surgeons with greater
precision, minimal invasiveness and an absence of conductive
currents through the patient during surgery. Bovie Medical
Corporation is also a leader in the manufacture of a range of
electrosurgical products and technologies, marketed through both
private labels and the Company’s own well-respected brands (Bovie®,
Aaron®, IDS™ and ICON™) to distributors worldwide. The Company also
leverages its expertise through original equipment manufacturing
(OEM) agreements with other medical device manufacturers. For
further information about the Company’s current and new products,
please refer to the Investor Relations section of Bovie Medical
Corporation’s www.boviemed.com.
Use of Non-GAAP Financial Measures
In this press announcement, management has disclosed financial
measurements that present financial information not in accordance
with Generally Accepted Accounting Principles (GAAP). These
measurements are not a substitute for GAAP measurements, although
company management uses these measurements as aids in monitoring
the company’s ongoing financial performance from quarter to quarter
and year to year on a regular basis and for benchmarking against
other medical technology companies. Adjusted non-GAAP gross margin,
adjusted non-GAAP income from operations, adjusted non-GAAP net
income and adjusted non-GAAP income per diluted share measure the
gross margin, income from operations, net income and income per
diluted share of the company excluding unusual items. Management
uses and presents these measures because management believes that
such adjustments facilitate an understanding of the financial
impact of unusual items on the company’s short- and long-term
financial trends. Management also uses adjusted non-GAAP items to
forecast and to evaluate the operational performance of the
company, as well as to compare results of current periods to prior
periods on a consistent basis.
Non-GAAP financial measures used by the company may be
calculated differently from, and therefore may not be comparable
to, similarly-titled measures used by other companies. Investors
should consider non-GAAP measures in addition to, and not as a
substitute for, or superior to, financial performance measures
prepared in accordance with GAAP.
Please refer to the attached reconciliation between GAAP and
non-GAAP financial measures.
Cautionary Statement on Forward-Looking Statements
Certain matters discussed in this release and oral statements
made from time to time by representatives of the Company may
constitute forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995 and the Federal
securities laws. Although the Company believes that the
expectations reflected in such forward-looking statements are based
upon reasonable assumptions, it can give no assurance that its
expectations will be achieved.
Forward-looking information is subject to certain risks, trends
and uncertainties that could cause actual results to differ
materially from those projected. Many of these factors are beyond
the Company’s ability to control or predict. Important factors that
may cause actual results to differ materially and that could impact
the Company and the statements contained in this release can be
found in the Company’s filing with the Securities and Exchange
Commission including the Company’s Report on Form 10-K for the year
ended December 31, 2015 and subsequent 10-Q filings. For
forward-looking statements in this release, the Company claims the
protection of the safe harbor for forward-looking statements
contained in the Private Securities Litigation Reform Act of 1995.
The Company assumes no obligation to update or supplement any
forward-looking statements whether as a result of new information,
future events or otherwise.
BOVIE MEDICAL CORPORATIONCONSOLIDATED STATEMENTS
OF OPERATIONSFOR THE THREE AND NINE MONTHS ENDED SEPTEMBER
30, 2016 AND 2015(Unaudited) (in thousands except per share
data)
Three Months EndedSeptember
30,
Nine Months EndedSeptember
30,
2016 2015 2016 2015 Sales $ 10,063 $ 7,823 $
27,133 $ 21,226 Cost of sales 5,001 4,594 14,049
12,183 Gross profit 5,062 3,229
13,084 9,043 Other costs and expenses:
Research and development 682 583 1,941 1,534 Professional services
292 427 1,045 1,070 Salaries and related costs 2,192 1,929 6,492
5,749 Selling, general and administrative 2,141 2,103
6,354 6,325 Total other costs and expenses
5,307 5,042 15,832 14,678 Loss
from operations (245 ) (1,813 ) (2,748 ) (5,635 ) Interest
expense, net (36 ) (40 ) (125 ) (120 ) Change in fair value of
warrant liabilities, net (683 ) 266 (555 ) 1,800
Total other income (expense), net (719 ) 226 (680 ) 1,680
Loss before income taxes (964 ) (1,587 ) (3,428 ) (3,955 )
Income tax benefit, net -- -- -- (8 )
Net loss $ (964 ) $ (1,587 ) $ (3,428 ) $ (3,963 ) Accretion
on convertible preferred stock -- -- -- (222 ) Gain on conversion
of warrants and preferred shares, net -- -- --
13,956 Net income (loss) attributable to common shareholders
$ (964 ) $ (1,587 ) $ (3,428 ) $ 9,771 Income (loss)
per share Basic (0.04 ) (0.06 ) (0.13 ) 0.42 Diluted (0.04 )
(0.06 ) (0.13 ) 0.31 Weighted average number of
shares outstanding- basic 27,075 27,051 27,059 23,414 Weighted
average number of shares outstanding - dilutive 27,075 27,051
27,059 26,346
BOVIE MEDICAL
CORPORATIONCONSOLIDATED BALANCE SHEETS(in
thousands) September 30,2016 December
31,2015 (Unaudited) Current assets:
Cash and cash equivalents $ 9,329 $ 11,805 Restricted cash 779 839
Trade accounts receivable, net 3,869 2,925 Inventories, net 5,930
5,957 Prepaid expenses and other current assets 564 516
Total current assets 20,471 22,042 Property and equipment,
net 6,498 6,810 Brand name and trademark 1,510 1,510 Purchased
technology and license rights, net 242 323 Goodwill 185 185
Deposits 123 123 Deferred tax asset - 25 Other assets 119 430
Total assets $ 29,148 $ 31,448
BOVIE
MEDICAL CORPORATIONCONSOLIDATED BALANCE
SHEETS(CONTINUED)(in thousands)
September 30,2016
December 31,2015
(Unaudited) Current liabilities: Accounts payable $ 1,650 $
1,214 Accrued payroll 216 321 Accrued vacation 454 228 Current
portion of mortgage note payable 239 239 Accrued and other
liabilities 1,666 2,119 Total current
liabilities 4,225 4,121 Mortgage note payable, net of
current portion 2,754 2,934 Notes payable 140 140 Deferred rent 14
18 Deferred tax liability 564 564 Derivative liabilities 822
267 Total liabilities 8,519 8,044
Stockholders' equity: Series B convertible preferred
stock, par value $.001; 3,588,139 issued and 1,975,639 outstanding
as of September 30, 2016 and December 31, 2015. 2 2 Common stock,
par value $.001 par value; 40,000,000 shares authorized; 27,285,297
issued and 27,142,218 outstanding as of September 30, 2016 and
27,194,251 issued and 27,051,172 outstanding as of December 31,
2015 27 27 Additional paid-in capital 43,512 42,859 Accumulated
deficit (22,912 ) (19,484 ) Total stockholders' equity
20,629 23,404 Total liabilities and
stockholders' equity $ 29,148 $ 31,448
Three Months EndedSeptember 30, Nine
Months EndedSeptember 30, (Amounts in '000's except
earnings per share)
2016 2015 2016
2015 Net income/(loss) GAAP basis $ (964 ) $
(1,587 ) $ (3,428 ) $ (3,963 ) Accretion on convertible preferred
stock - - - (222 ) Deemed dividend on conversion of warrants and
Series A convertible preferred to
Series B convertible preferred stock
- - - 13,956
Net income/(loss) attributable to common shareholders $ (964
) $ (1,587 ) $ (3,428 ) $ 9,771 Net income/(loss) per share - basic
(GAAP basis) $ (0.04 ) $ (0.06 ) $ (0.13 ) $ 0.42 Other
non-GAAP adjustments: (Gain)/loss on change in fair value of
derivative liabilities $ 683 $ (266 ) $ 555 $ (1,800 ) Accretion on
convertible preferred stock - - - 222 Deemed dividend on conversion
of warrants and Series A convertible preferred to
Series B convertible preferred stock
- - - (13,956 )
Adjusted non-GAAP net income/(loss) $ (281 ) $ (1,853 ) $ (2,873 )
$ (5,763 ) Income/(loss) per share - basic on: (Note 1)
(Gain) on change in fair value of derivative liabilities - (0.01 )
- (0.08 ) Accretion on convertible preferred stock - - - 0.01 Gain
on conversion of warrants and Series A convertible preferred to
Series B convertible preferred stock
- - - (0.60 )
Adjusted non-GAAP net (loss) per share -basic $ (0.01 ) $ (0.07 ) $
(0.11 ) $ (0.25 ) Weighted average number of shares
outstanding - basic 27,075 27,051 27,059 23,414 Weighted average
number of shares outstanding - diluted 27,075 27,051 27,059 26,346
(Note 1) Amounts reflected in the presentation of EPS
calculations may be impacted by rounding
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version on businesswire.com: http://www.businesswire.com/news/home/20161026006052/en/
Investor RelationsMBS Value PartnersLynn Morgen/Jane
Searle, 212-750-5800investor.relations@boviemed.com
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