Bovie Medical Corporation (NYSEMKT:BVX) (the "Company"),
a maker of medical devices and supplies and the developer of
J-Plasma®, a patented new surgical product, today reported
financial results for its first fiscal quarter ended March 31,
2017.
First Quarter 2017 Financial
Summary:
- Total Q1 revenue of $8.4 million, up
7.9% year-over-year.
- Domestic Q1 revenue of $7.0 million, up
5.7% year-over-year.
- International Q1 revenue of $1.4
million, up 20.4% year-over-year.
- Net loss of $1.7 million for the three
months ended March 31, 2017, compared to a net loss of $1.9
million in the comparable period last year.
- Adjusted EBITDA loss of $1.4 million
for the three months ended March 31, 2017, compared to
Adjusted EBITDA loss of $1.6 million in the comparable period last
year.
First Quarter
Highlights:
- On January 19, 2017, the Company
announced that it had 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.
- On January 24, 2017, the Company
announced the appointment of Dr. Dennis S. Chi, a renowned
gynecologic oncology surgeon, to its Medical Advisory Board. Dr.
Chi is the Deputy Chief and Head of Ovarian Cancer Surgery at
Memorial Sloan Kettering Cancer Center. Dr. Chi has been the
principal investigator of several institutional and multi-center
trials, and has published more than 100 papers on ovarian cancer
surgery. The addition of Dr. Chi brings Bovie Medical’s MAB board
to five members, representing specialties which include urology,
obstetrics/gynecology, cardiac surgery, thoracic surgery, and
gynecologic oncology.
- On March 27, 2017, the Company
announced that it had received 510K clearances from the FDA for
both a new J-Plasma® generator and a new open handpiece that
incorporates Cool-Coag™ technology. Cool-Coag™ is a new technology
that combines the unique benefits of J-Plasma®, namely increased
precision with minimal thermal spread, with standard monopolar
coagulation and helium spray coagulation capabilities, all in one
handpiece.
Highlights Subsequent to
Quarter-End:
- On May 8, 2017, the Company announced
it had received 510K clearance from the FDA for a new J-Plasma®
Precise Flex handpiece. The J-Plasma® Precise Flex handpiece is
designed to be used in robotic-assisted procedures including those
with Intuitive Surgical’s da Vinci Surgical System. The J-Plasma®
Precise Flex includes Bovie Medical’s Cool-Coag™ technology that
combines the unique benefits of J-Plasma®, namely increased
precision with minimal thermal spread, with standard monopolar
coagulation and helium spray coagulation capabilities, all in one
handpiece.
Management
Comments:
“Our first quarter results reflect solid performance in many
areas of our business, as well as areas where we look forward to
improving results over the balance of 2017,” said Robert L.
Gershon, Chief Executive Officer. “We posted growth in each of our
three business segments in Q1, with the strongest contributors to
total Company revenue growth coming from 5% growth in our Core
business and 71% growth in our Advanced Energy business compared to
last year.”
“We continue to make progress towards our goal of expanding the
utilization of our J-Plasma generator and handpiece technologies in
the U.S. and abroad. The feedback on our J-Plasma technologies from
surgeons in the GYN and plastic surgery markets remains positive,
although the pace of commercialization in the first quarter was
slower than expected. Importantly, we continue to expand our
J-Plasma product offering based on the valuable feedback and strong
demand we are receiving from surgeons and we have announced three
important 510k clearances thus far in 2017. The foundation of
growth in our Advanced Energy business was also enhanced with the
announcement of a global sales channel partnership with CONMED for
Bovie’s PlazXact™ Ablator.”
Mr. Gershon continued: “We believe 2017 is an important year for
Bovie Medical and we expect to drive strong performance in both our
Core and our Advanced Energy businesses this year. Growth in our
OEM business will be challenged this year given the notable revenue
growth we reported in our OEM business in 2016 which benefitted
from unique generator demand from a customer that we do not expect
in 2017. Notably, absent this large order demand last year, our OEM
business is expected to post solid growth in 2017 and, similarly,
our total Company revenue growth profile is considerably
stronger.”
First Quarter 2017 Results:
Three Months EndedMarch
31,
Increase/Decrease
(In thousands)
2017 2016 $ Change
% Change Sales by Domestic and International
Domestic $ 6,992 $ 6,615 $ 377 5.7 % International 1,397
1,160 237 20.4 % Total $ 8,389 $ 7,775
$ 614 7.9 %
Total revenue for first quarter 2017 increased $0.6 million, or
7.9%, to $8.4 million, compared to $7.8 million in the first
quarter of 2016. Revenue in the United States increased $0.4
million, or 5.7% year-over-year, to $7.0 million, and international
revenue increased $0.2 million, or 20.4% year-over-year, to $1.4
million.
The following tables represent revenue by reportable segment and
by product line:
Three Months EndedMarch
31,
Increase/Decrease
(In thousands)
2017 2016 $ Change
% Change Sales by Reportable Segment Core $
6,775 $ 6,478 $ 297 4.6 % OEM 1,007 941 66 7.0 % Advanced Energy
607 356 251 70.5 %
Total
$ 8,389 $ 7,775 $ 614 7.9 %
Three Months EndedMarch
31,
Increase/Decrease
(In thousands)
2017 2016 $ Change %
Change Sales by Product Line Electrosurgical $ 5,330 $
4,252 $ 1,078 25.4 % Cauteries 1,655 1,834 (179 ) (9.8 )% Lighting
445 506 (61 ) (12.1 )% Other 959 1,183 (224 ) (18.9
)% Total $ 8,389 $ 7,775 $ 614 7.9 %
Total revenue growth was driven by a 4.6% increase in Core
sales, a 70.5% increase in Advance Energy sales and, to a lesser
extent, a 7.0% increase in OEM sales. The largest product line
contributor to total revenue growth in the first quarter of 2017
was a 25.4% increase in sales of electrosurgical products, driven
primarily by a $0.9 million increase in sales of generators in the
period. Advanced Energy sales, primarily J-Plasma products, in
first quarter 2017 were $607,000, compared to approximately
$356,000 last year. By product line, sales of electrosurgical,
cauteries, lighting and other products represented 64%, 20%, 5% and
11% of total revenue, respectively, for the three months ended
March 31, 2017.
Gross profit for the first quarter of 2017 increased $0.9
million, or 27.2% year-over-year, to $4.2 million, compared to $3.3
million for first quarter 2016. Gross margin increased 770 basis
points year-over-year to 50.4% for the first quarter of 2017,
compared to 42.7% last year. Gross margins in first quarter 2016
were negatively impacted by a write down of approximately $484,000
for obsolete inventory. Excluding this impact, gross margins
increased 140 basis points year-over-year in the first quarter of
2017, driven by product and pricing mix benefits in the Company’s
Core segment.
Operating expenses for first quarter 2017 increased $0.7
million, or 12.2%, to $6.0 million, compared to $5.3 million for
first quarter 2016. The increase in operating expenses was driven
primarily by a $0.4 million increase in salaries and related costs
and by a $0.2 million increase in selling, general and
administrative expenses compared to the comparable period last
year.
Loss from operations for the first quarter of 2017 was $1.7
million, compared to a loss from operations of $2.0 million for the
comparable period last year.
Net loss for the first quarter of 2017 was $1.7 million, or
$0.06 per diluted share, compared to a loss of $1.9 million, or
$0.07 per diluted share, for the first quarter of 2016.
As of March 31, 2017, the Company had cash of $12.3 million
as compared to $15.2 million as of December 31, 2016. The
Company had working capital of $19.7 million as of March 31,
2017 as compared to $21.3 million as of December 31, 2016.
2017 Outlook:
The Company is introducing fiscal year 2017 guidance
expectations. The Company expects:
- Total revenue in the range of $38.3
million to $40.3 million, representing growth of 5% to 10%
year-over-year, compared to total revenue of $36.6 million in
fiscal year 2016.
- The Company expects total revenue
growth to be driven by:
- Core sales growth in the range of
approximately 4% to 8% year-over-year,
- Advanced Energy sales growth in the
range of approximately 60% to 80% year-over-year,
- OEM sales decline in the range of
approximately 25% to 35% year-over-year.
- Excluding sales of $2.3 million in
fiscal year 2016 related to unique generator demand from a large
OEM customer, the Company’s OEM segment sales in fiscal year 2017
are expected to increase in the range of 16% to 32%
year-over-year.
- Similarly, excluding sales of $2.3
million in fiscal year 2016 related to unique generator demand from
a large OEM customer, total Company sales in fiscal year 2017 are
expected to increase in the range of 12% to 17%
year-over-year.
- Adjusted EBITDA loss in a range of $1.2
million to $1.4 million, compared to Adjusted EBITDA loss of $2.2
million in fiscal year 2016.
Conference Call
Details:
Management will host a conference call at 4:30 p.m. Eastern Time
on May 15, 2017 to discuss the results of the quarter and host
a question and answer session. To listen to the call by phone,
interested parties within the U.S. may dial 866-682-6100.
International callers may dial 862-255-5401. Participants should
ask for the Bovie Medical Corporation Call. A live webcast of the
call will be accessible via the Investor Relations section of the
Company’s website and
at: http://www.investorcalendar.com/IC/CEPage.asp?ID=175894.
A telephonic replay will be available approximately two hours
after the end of the call through June 15, 2017. The replay can be
accessed by dialing 877-481-4010 for U.S. callers or 919-882-2331
for International callers and using the replay access code: 10357.
The webcast will be archived on the Investor Relations section of
the Company's website.
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.
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, 2016 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 EndedMarch
31,
2017 2016 Sales $ 8,389 $ 7,775 Cost of sales
4,163 4,452
Gross profit 4,226 3,323 Other
costs and expenses: Research and development 709 668 Professional
services 390 357 Salaries and related costs 2,460 2,100 Selling,
general and administrative 2,404 2,191
Total other
costs and expenses 5,963 5,316
Loss from
operations (1,737 ) (1,993 ) Interest expense, net (31 ) (38 )
Change in fair value of derivative liabilities, net 88 87
Total other income, net 57 49
Loss
before income taxes (1,680 ) (1,944 ) Income tax expense 5
—
Net loss $ (1,685 ) $ (1,944 ) Loss
per share Basic $ (0.05 ) $ (0.07 ) Diluted $ (0.06 ) $ (0.07 )
Weighted average number of shares outstanding - basic 30,860
27,051 Weighted average number of shares outstanding - dilutive
30,887 27,051
BOVIE MEDICAL CORPORATION
CONSOLIDATED BALANCE SHEETS
(Unaudited) (In thousands, except share and per share data)
March 31,2017
December 31,2016
ASSETS Current assets: Cash and cash equivalents $
11,508 $ 14,456 Restricted cash 779 779 Trade accounts receivable,
net 4,279 4,733 Inventories, net 7,422 6,158 Prepaid expenses and
other current assets 639 413
Total current
assets 24,627 26,539 Property and equipment, net 6,368 6,449
Brand name and trademark 1,510 1,510 Purchased technology and
license rights, net 188 215 Goodwill 185 185 Deposits 71 109 Other
assets 143 103
Total assets $ 33,092 $
35,110
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities: Accounts payable $ 2,176 $ 1,606
Accrued payroll 229 419 Accrued vacation 431 404 Current portion of
mortgage note payable 239 239 Accrued and other liabilities 1,853
2,604
Total current liabilities 4,928 5,272
Mortgage note payable, net of current portion 2,635 2,694 Note
payable 140 140 Deferred rents 13 14 Deferred tax liability 564 564
Derivative liabilities 115 203
Total
liabilities 8,395 8,887
STOCKHOLDERS' EQUITY Series B
convertible preferred stock, $0.001 par value; 3,588,139 authorized
and 975,639 issued and outstanding as of March 31, 2017 and
December 31, 2016 1 1 Common stock, $0.001 par value; 40,000,000
shares authorized; 31,002,832 issued and 30,859,753 outstanding as
of March 31, 2017 and December 31, 2016 31 31 Additional paid-in
capital 49,784 49,625 Accumulated deficit (25,119 ) (23,434 )
Total stockholders' equity 24,697 26,223
Total liabilities and stockholders' equity $ 33,092 $
35,110
BOVIE MEDICAL CORPORATION
RECONCILIATION OF GAAP NET INCOME/(LOSS) RESULTS TO NON-GAAP
ADJUSTED EBITDA/(LOSS)
(Unaudited) (In thousands)
Use of Non-GAAP Financial
Measures
We present these non-GAAP measures because
we believe these measures are useful indicators of our operating
performance. Our management uses these non-GAAP measures
principally as a measure of our operating performance and believes
that these measures are useful to investors because they are
frequently used by analysts, investors and other interested parties
to evaluate companies in our industry. We also believe that these
measures are useful to our management and investors as a measure of
comparative operating performance from period to period.
The Company has presented the following
non-GAAP financial measures in this press release: adjusted EBITDA.
The Company defines adjusted EBITDA as its reported net
income/(loss) (GAAP) plus income tax expense, interest expense,
net, depreciation and amortization, stock-compensation expense, and
changes in value of derivative liabilities.
Three Months EndedMarch
31,
2017 2016 Net loss GAAP Basis $ (1,685 ) $
(1,944 ) Interest expense, net 31 38 Income tax expense 5 —
Depreciation and amortization 178 182 Stock based compensation 159
176 Change in fair value of derivative liabilities, net (88 ) (87 )
Adjusted EBITDA (1,400 ) (1,635 )
The following unaudited table presents a reconciliation of net
loss to Adjusted EBITDA for our 2017 guidance:
Year Ended 2017 Net loss GAAP Basis $ (2,900 )
Interest expense, net 145 Income tax expense — Depreciation and
amortization 720 Stock based compensation 720 Change in fair value
of derivative liabilities, net — Adjusted EBITDA (1,315 )
The reconciliation assumes the mid-point of the Adjusted EBITDA
loss range and the midpoint of each component of the
reconciliation, corresponding to guidance of $1.2 million to $1.4
million for 2017.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20170515006370/en/
Investor Relations
Contact:Westwicke Partners on behalf of Bovie
Medical CorporationMike Piccinino, CFA,
443-213-0500investor.relations@boviemed.com
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