-Record Full Year Sales Increased 24%
Reflecting Strong Growth in Each Key Product Group-
-Significant Gross Margin Expansion Driven
By Favorable Product Mix-
Fourth Quarter Highlights
- Total revenue increased 14.5% to $9.5
million
- Gross margin expanded 850 basis points
to 50.9%
- J-Plasma® revenues were
$970,000, up 178.7% year-on-year
- Signed global sales channel partnership
for Bovie’s PlazXactTM ablator effective March 2017
Full Year 2016 Highlights
- Total revenue increased 24.1%
year-over-year to $36.6 million
- Gross margin expanded 640 basis points
to 48.9%
- J-Plasma revenues increased 167.3% to
$3.5 million, up from $1.3 million in 2015
- Total operating expenses as a percent
of revenue declined 690 basis points to 59.3%
- Operating loss narrowed to $3.8 million
from $7.0 million in 2015
Company Expects 2017 to be Another Year of Double-Digit
Revenue Growth
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 fourth quarter and full year ended December 31,
2016.
Management Comments
“The fourth quarter represented a strong finish to an excellent
year for Bovie Medical,” said Robert L. Gershon, Chief Executive
Officer. “Fourth quarter core product revenues increased 0.3%
year-on-year; our OEM business was up 131.5%; and J-Plasma® sales
increased 179%. Importantly, our direct sales force was responsible
for virtually all of J-Plasma’s fourth quarter sales.
“Favorable product mix and operating efficiencies continued to
result in significant year-over-year gross margin expansion in the
fourth quarter. Operating expenses were higher compared to 2015,
but similar to third quarter 2016 levels. Year-over-year spending
increases were primarily linked to higher sales commissions and
compensation, increased R&D spending including for J-Plasma®
clinical studies, and the addition of customer-facing personnel to
support our future growth.
“Full year 2016 revenue performance exceeded our expectations
due to strong demand trends across our key product categories.
Specifically, sales of core products increased 6.6% significantly
ahead of the industry average, benefiting from Bovie brand
recognition. OEM executed effectively in responding to exceptional
in-bound demand from the industry’s largest manufacturers.
“J-Plasma® sales for 2016 were 167.3% higher than last year,
reflecting greater awareness and use of the product in gynecology,
gynecologic oncology, and plastic surgery. In 2016, the volume of
handpieces grew 127% year-over-year, a clear indication of
increased adoption of the product,” Mr. Gershon noted.
Fourth Quarter 2016
Results
Fourth quarter revenue increased 14.5% to $9.5 million from $8.3
million in the fourth quarter of 2015. Revenue benefited from sales
growth across all product categories. J-Plasma® revenue accounted
for 10.2% of total sales, up from 4.2% in the same period of the
prior year.
Gross margin increased 850 basis points to 50.9% compared with
42.4% in the fourth quarter of 2015, reflecting an increased
proportion of sales coming from the higher margin OEM and J-Plasma®
products.
Total operating expenses were $5.9 million in the fourth quarter
compared to $4.9 million in the fourth quarter of 2015. The
increase in both dollar terms and as a percentage of sales
primarily reflects the company’s increase in headcount to support a
growing and larger organization as well as higher commissions and
bonus accruals. Research & Development costs increased 8.0%
year-over-year, but declined as a percentage of sales as the
company continues to leverage its past investments.
Net loss from operations was $1.0 million compared with $1.4
million in the same period of the prior year. Net loss attributable
to common shareholders was $0.5 million or $0.04 per dilutive share
which includes the dilutive effect of a non-cash gain of $620,000
on the revaluation of derivative warrants, compared with a net loss
of $1.4 million or $0.05 per dilutive share.
Full Year 2016 Results
Full year 2016 revenue increased 24.1% to $36.6 million from
$29.5 million in 2015. Revenue benefited from sales growth across
all product categories. J-Plasma® revenue accounted for 9.5% of
total sales, up from 4.4% in the prior year.
Gross margin increased 640 basis points to 48.9% compared with
42.5% in the fourth quarter of 2015, reflecting an increased
proportion of sales coming from the higher margin OEM and J-Plasma®
products.
Total operating expenses were $21.7 million or 59.3% of revenue
in 2016 compared to $19.5 million or 66.2% in 2015, a decrease of
690 basis points. The decrease as a percentage of sales reflects
improved utilization of resources as we increase in dollar terms,
headcount to support a growing and larger organization as well as
higher commissions and bonus accruals. Research & Development
costs increased 21.2% year-over-year, but declined as a percentage
of sales as the company continues to leverage its past
investments.
Net loss from operations was $3.8 million compared with $7.0
million in 2015. Net loss attributable to common shareholders was
$3.95 million or $0.15 per diluted share, which included the
dilutive effect of a non-cash gain of $64,000 on the revaluation of
derivative warrants, compared with net income of $8.4 million, or
$0.24 per share, which included the benefit from a gain on the
conversion of warrants and preferred shares of $14.0 million and
the gain on the revaluation of derivative warrants of $1.8 million
or $0.64 per diluted share in 2015.
Balance Sheet and Cash
Flow
The Company had unrestricted cash and cash equivalents of $14.5
million at December 31, 2016, inclusive of the net proceeds of
its November 2016 equity offering. This compares to cash and cash
equivalents of $11.8 million at December 31, 2015. Cash
utilized in operations in 2016 was $2.8 million, down from $5.8
million in the same period of the prior year. Working capital was
$21.3 million, up from $17.9 million at year end 2015.
Subsequent
Developments/News
- In January 2017, the Company announced
that it has entered into a global sales channel partnership
agreement for its PlazXact™ Ablator with CONMED, which will be
marketed as the UltrAblator Bipolar® series commencing March 2017.
This partnership builds on one element of Bovie’s growth strategy,
namely to use economically viable sales channel partnerships to
scale its advanced energy products.
- Also in January, the Company announced
the appointment of Dr. Dennis S. Chi, a renowned gynecologic
oncology surgeon, to its Medical Advisory Board (MAB). As Deputy
Chief and Head of Ovarian Cancer Surgery at Memorial Sloan
Kettering Cancer Center, Dr. Chi specializes in using the most
advanced minimally invasive surgical techniques to treat cervical,
uterine and ovarian cancer and has received numerous accolades over
his 20-year career.
- Bovie also announced that Dr. Vipul
Patel, a world-renowned urologist and leader in robotic surgery, is
close to completing his clinical study of J-Plasma®, with over 90%
of the designated patient population already enrolled. Dr. Patel is
examining the benefits of using J-Plasma® for pelvic lymph node
dissection. Dr. Patel’s study will determine whether more precise
tools, such as J-Plasma®, could significantly reduce the formation
of lymphoceles, a common post-surgical side complication.
The addition of Dr. Chi brings Bovie’s Medical Advisory Board to
five members, representing specialties which include urology,
gynecology, cardiac surgery, thoracic surgery, and gynecologic
oncology.
Summary and Outlook
“We expect 2017 to be another year of double-digit revenue
growth for Bovie Medical, driven by a substantial increase in
J-Plasma® sales, and supported by mid-to high-single digit growth
in core products and a return to more normalized levels of OEM
revenues. These expectations are based on our current sales
channels, notably Bovie’s sales force, our sales channel
partnerships, and our distribution network.”
“In 2017, we intend to optimize the commercialization potential
of J-Plasma® through several initiatives. Specifically, we are
launching new product configurations for laparoscopic and robotic
surgical procedures. These new configurations will have the Bovie
Cool Coag™ technology. Cool Coag™ provides the flexibility to
deploy cold plasma, thermal plasma or monopolar in one device,
giving the surgeon ultimate control and precision along with
different coagulation tissue effects. Also, we will be proceeding
with additional clinical studies in oncology, gynecologic oncology
and plastic surgery, and pursuing a very targeted multi-specialty
strategy guided by our Medical Advisory Board members. We have the
manufacturing capacity, R&D capability and administrative
infrastructure to support a substantial rise in revenues without a
significant increase in expenses. By adopting a balanced
go-to-market strategy that utilizes both the Bovie sales force and
complementary sales channel partnerships, we believe we can
continue to leverage our cost structure as we broaden adoption of
J-Plasma®,” concluded Mr. Gershon.
Conference Call Details
The Company’s management will host a conference call on
Thursday, March 9, 2017 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 888-419-5570. International callers should call
617-896-9871. 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=175614
A replay of the call will be available approximately two hours
after the end of the call through April 9, 2017. 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 10230.
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
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®,
IDS™, ICON™ and DERMTM) 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 at 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 filings with the Securities and Exchange
Commission including the Company's Report on Form 10-K for the year
ended December 31, 2015 and subsequent Form 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 CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited) (In thousands, except per
share data)
Three Months EndedDecember
31,
Year EndedDecember 31,
2016 2015 2016 2015 Sales
$ 9,494 $ 8,295 $ 36,627 $ 29,520 Cost of sales 4,664 4,781
18,712 16,963
Gross profit
4,830 3,514 17,915 12,557 Other costs and expenses: Research and
development 676 626 2,618 2,160 Professional services 441 413 1,486
1,484 Salaries and related costs 2,546 1,733 9,038 7,482 Selling,
general and administrative 2,211 2,095 8,565
8,417
Total other costs and expenses 5,874
4,867 21,707 19,543
Loss from
operations (1,044 ) (1,353 ) (3,792 ) (6,986 ) Interest
expense, net (35 ) (40 ) (158 ) (158 ) Change in fair value of
derivative liabilities, net 620 — 64 1,799
Total other (expense) income, net 585 (40 )
(94 ) 1,641
Loss before income taxes (459 ) (1,393 )
(3,886 ) (5,345 ) Income tax expense 64 17 64
25
Net loss $ (523 ) $ (1,410 ) $ (3,950 ) $ (5,370 )
Accretion on convertible preferred stock — — — (222 ) Gain on
conversion of warrants and preferred shares, net — —
— 13,956
Net (loss) income attributable to common
shareholders $ (523 ) $ (1,410 ) $ (3,950 ) $ 8,364
(Loss) income per share attributable to common shareholders
Basic $ (0.02 ) $ (0.05 ) $ (0.14 ) $ 0.34 Diluted $ (0.04 ) $
(0.05 ) $ (0.15 ) $ 0.24 Weighted average number of shares
outstanding - basic 28,574 27,051 27,433 24,333 Weighted average
number of shares outstanding - dilutive 28,618 27,051 27,449 27,747
BOVIE MEDICAL CORPORATION
CONSOLIDATED BALANCE SHEETS
(Unaudited) (In thousands, except share
and per share data)
December 31,2016
December 31,2015
ASSETS Current assets: Cash and cash equivalents $
14,456 $ 11,805 Restricted cash 779 839 Trade accounts receivable,
net 4,733 2,925 Inventories, net 6,158 5,957 Prepaid expenses and
other current assets 413 516
Total current
assets 26,539 22,042 Property and equipment, net 6,449 6,810
Brand name and trademark 1,510 1,510 Purchased technology and
license rights, net 215 323 Goodwill 185 185 Deposits 109 123
Deferred tax asset — 25 Other assets 103 430
Total
assets $ 35,110 $ 31,448
LIABILITIES
AND STOCKHOLDERS' EQUITY Current liabilities: Accounts
payable $ 1,606 $ 1,214 Accrued payroll 419 321 Accrued vacation
404 228 Current portion of mortgage note payable 239 239 Accrued
and other liabilities 2,604 2,119
Total current
liabilities 5,272 4,121 Mortgage note payable, net of current
portion 2,694 2,934 Note payable 140 140 Deferred rents 14 18
Deferred tax liability 564 564 Derivative liabilities 203
267
Total liabilities 8,887 8,044
EQUITY
Series A 6% convertible preferred stock, par value $0.001;
3,500,000 shares authorized, zero issued and outstanding as of
December 31, 2016 and December 31, 2015 — —
STOCKHOLDERS'
EQUITY Series B convertible preferred stock, $0.001 par value;
3,588,139 authorized and 975,639 issued and outstanding as of
December 31, 2016 and 3,588,139 authorized and 1,975,639 issued and
outstanding as of December 31, 2015, respectively 1 2 Common stock,
$0.001 par value; 40,000,000 shares authorized; 31,002,832 issued
and 30,859,753 outstanding as of December 31, 2016 and 27,194,251
issued and 27,051,172 outstanding as of December 31, 2015,
respectively 31 27 Additional paid-in capital 49,625 42,859
Accumulated deficit (23,434 ) (19,484 )
Total stockholders'
equity 26,223 23,404
Total liabilities and
stockholders' equity $ 35,110 $ 31,448
BOVIE MEDICAL CORPORATION RECONCILIATION BETWEEN
GAAP AND NON-GAAP FINANCIAL MEASURES
(Unaudited) (In thousands, except per
share data)
Three Months EndedDecember
31,
Year EndedDecember 31,
2016 2015 2016 2015 Net
loss GAAP Basis $ (523 ) $ (1,410 ) $ (3,950 ) $ (5,370 ) Accretion
on convertible preferred stock — — — (222 ) Gain on conversion of
warrants and Series A convertible preferred to Series B convertible
preferred stock — — — 13,956 Net (loss)
income attributable to common shareholders $ (523 ) $ (1,410 ) $
(3,950 ) $ 8,364 Net (loss) income per share - basic (GAAP basis) $
(0.02 ) $ (0.05 ) $ (0.14 ) $ 0.34 Other non-GAAP
adjustments: (Gain) loss on change in fair value of derivative
liabilities $ (620 ) $ 1 $ (64 ) $ (1,799 ) Accretion on
convertible preferred shares — — — 222 Gain on conversion of
warrants and Series A convertible preferred to Series B convertible
preferred stock — — — (13,956 ) Adjusted
non-GAAP net loss $ (1,143 ) $ (1,409 ) $ (4,014 ) $ (7,169 )
Income/(loss) per share - basic on: $ (0.02 ) $ — $ —
$ (0.07 ) Other administrative expenses $ — $ — $ — $ 0.01 Gain on
conversion of warrants and Series A convertible preferred to Series
B convertible preferred stock $ — $ — $ — $
(0.57 ) Adjusted non-GAAP net (loss) per share -basic $ (0.04 ) $
(0.05 ) $ (0.14 ) $ (0.29 ) Adjusted non-GAAP net (loss) per share
-diluted $ (0.04 ) $ (0.05 ) $ (0.15 ) $ (0.26 ) Weighted
average number of shares outstanding - basic 28,574 27,051 27,433
24,333 Weighted average number of shares outstanding - diluted
28,618 27,051 27,449 27,747
View source
version on businesswire.com: http://www.businesswire.com/news/home/20170309006195/en/
Investor RelationsMBS Value PartnersLynn Morgen/Jane
Searle212-750-5800investor.relations@boviemed.com
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