Full Press Release Details
Bovie Medical Corporation Reports Second Quarter 2017 Financial Results and
Reaffirms Fiscal Year 2017 Financial Outlook
Advanced Energy Sales increased 137% year-over-year in Second Quarter 2017,
driven by strong J-Plasma sales.
CLEARWATER, FL - AUGUST 2, 2017 - 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 second fiscal quarter ended June 30, 2017.
Second Quarter 2017 Financial Summary:
Second Quarter Operating Highlights:
Management Comments:
"We are excited by our commercial performance during the second quarter, which was marked by growth in our key business segments," said Robert L. Gershon, Chief Executive Officer. "We reported strong sales growth in both our Advanced Energy and Core business segments, which increased 137% and 9% respectively during the quarter, which was partially offset by a decrease in sales within our OEM business segment."
"Following a slower start to the year, we were pleased to see strong growth in sales of our J-Plasma products during the second quarter, which was primarily driven by sales of generators to new plastic surgeon customers and increased hand piece sales in surgical oncology. While we remain in the early stages of driving J-Plasma sales into our target markets of plastic surgery and surgical oncology, we are encouraged by the consistently positive feedback that we have received from our new customers and continue to believe that the features and benefits of this innovative technology are resonating well within these two areas of the surgeon community. In addition to our commercial progress, we were also pleased to continue delivering upon our commitment to new product innovation in our advanced energy business by obtaining FDA 510(k) clearance for our new J-Plasma Precise Flex handpiece, which is designed for use in robotic-assisted surgery."
Mr. Gershon continued: "In light of our recent performance, we are reaffirming our 2017 total revenue guidance."
Second Quarter 2017 Results:
The following tables represent revenue by reportable segment and by product line:
| Three Months Ended June 30, | Increase/Decrease | Six Months Ended June 30, | Increase/Decrease | ||||||||||||||||||||||||||
| (In thousands) | 2017 | 2016 | $ Change | % Change | 2017 | 2016 | $ Change | % Change | |||||||||||||||||||||
| Core | $ | 7,488 | $ | 6,881 | $ | 607 | 8.8 | % | $ | 14,263 | $ | 13,359 | $ | 904 | 6.8 | % | |||||||||||||
| OEM | 498 | 1,648 | (1,150 | ) | (69.8 | )% | 1,505 | 2,589 | (1,084 | ) | (41.9 | )% | |||||||||||||||||
| Advanced Energy | 1,813 | 766 | 1,047 | 136.7 | % | 2,420 | 1,122 | 1,298 | 115.7 | % | |||||||||||||||||||
| Total | $ | 9,799 | $ | 9,295 | $ | 504 | 5.4 | % | $ | 18,188 | $ | 17,070 | $ | 1,118 | 6.5 | % |
| Three Months Ended June 30, | Increase/Decrease | Six Months Ended June 30, | Increase/Decrease | ||||||||||||||||||||||||||
| (In thousands) | 2017 | 2016 | $ Change | % Change | 2017 | 2016 | $ Change | % Change | |||||||||||||||||||||
| Electrosurgical | $ | 6,206 | $ | 5,078 | $ | 1,128 | 22.2 | % | $ | 11,536 | $ | 9,330 | $ | 2,206 | 23.6 | % | |||||||||||||
| Cauteries | 1,873 | 1,720 | 153 | 8.9 | % | 3,528 | 3,554 | (26 | ) | (0.7 | )% | ||||||||||||||||||
| Lighting | 948 | 800 | 148 | 18.5 | % | 1,393 | 1,306 | 87 | 6.7 | % | |||||||||||||||||||
| Other | 772 | 1,697 | (925 | ) | (54.5 | )% | 1,731 | 2,880 | (1,149 | ) | (39.9 | )% | |||||||||||||||||
| Total | $ | 9,799 | $ | 9,295 | $ | 504 | 5.4 | % | $ | 18,188 | $ | 17,070 | $ | 1,118 | 6.5 | % |
Total revenue growth in the second quarter of 2017 was driven by a 136.7% increase in Advanced Energy sales and an 8.8% increase in Core sales, offset partially by a 69.8% decrease in OEM sales. The largest product line contributor to total revenue growth in the second quarter of 2017 was a 22.2% increase in sales of electrosurgical products, driven primarily by Advanced Energy generator sales. Advanced Energy segment sales, nearly all of which are from sales of J-Plasma products, increased approximately $1.0 million to $1.8 million, or 136.7% year-over-year, compared to approximately $0.8 million last year. By product line, sales of electrosurgical, cauteries, lighting and other products represented 63%, 19%, 10% and 8% of total revenue, respectively, for the three months ended June 30, 2017. The OEM sales year-over-year was a result of revised production demand from customers and timing of initial production based on product clearance delays.
| Three Months Ended June 30, | Increase/Decrease | Six Months Ended June 30, | Increase/Decrease | ||||||||||||||||||||||||||
| (In thousands) | 2017 | 2016 | $ Change | % Change | 2017 | 2016 | $ Change | % Change | |||||||||||||||||||||
| Domestic | $ | 8,708 | $ | 7,757 | $ | 951 | 12.3 | % | $ | 15,700 | $ | 14,372 | $ | 1,328 | 9.2 | % | |||||||||||||
| International | 1,091 | 1,538 | (447 | ) | (29.1 | )% | 2,488 | 2,698 | (210 | ) | (7.8 | )% | |||||||||||||||||
| Total | $ | 9,799 | $ | 9,295 | $ | 504 | 5.4 | % | $ | 18,188 | $ | 17,070 | $ | 1,118 | 6.5 | % |
Total revenue for second quarter 2017 increased $0.5 million, or 5.4%, to $9.8 million, compared to $9.3 million in the second quarter of 2016. Revenue in the United States increased $1.0 million, or 12.3% year-over-year, to $8.7 million, and international revenue decreased $0.4 million, or 29.1% year-over-year, to $1.1 million. The change in international revenue in the second quarter of 2017 was driven by a significant tender in the Core segment which benefitted international revenue results last year and did not recur in the second quarter of 2017.
Gross profit for the second quarter of 2017 increased $0.3 million, or 7.3% year-over-year, to $5.0 million, compared to $4.7 million for second quarter 2016. Gross margin increased approximately 90 basis points year-over-year to 51.5% for the second quarter of 2017, compared to 50.6% last year. The increase in gross margins was attributed to higher margins in the Advanced Energy segment, driven by higher volume and pricing mix on generator sales, as well as higher margins in the Company's Core segment, due to an improved product and pricing mix. The overall increase in margins was partially offset by lower margins in the Company's OEM business segment, due to a one time order that occurred during the comparable period last year.
Operating expenses for second quarter 2017 increased $1.1 million, or 21.8% year-over-year, to $6.3 million, compared to $5.2 million for second quarter 2016. The increase in operating expenses was primarily driven by a $0.9 million increase in selling, general and administrative expenses over the comparable period last year.
Loss from operations for the second quarter of 2017 was $1.3 million, compared to a loss from operations of $0.5 million for the comparable period last year.
Net loss attributed to common shareholders for the second quarter of 2017 was $1.3 million, or $0.04 per diluted share, compared to a loss of $0.5 million, or $0.02 per diluted share, for the second quarter of 2016.
As of June 30, 2017, the Company had cash of $11.1 million as compared to $15.2 million as of December 31, 2016. The Company had working capital of $18.5 million as of June 30, 2017 as compared to $21.3 million as of December 31, 2016.
Six Months 2017 Results:
Total revenue for the six months ended June 30, 2017 increased $1.1 million, or 6.5%, to $18.2 million, compared to $17.1 million in the six months ended June 30, 2016. Total revenue growth was driven by a 115.7% increase in Advance Energy sales and a 6.8% increase in Core sales, and was partially offset by a 41.9% decrease in OEM sales.
Net loss attributed to common shareholders for the six months ended June 30, 2017 was $3.0 million, or $0.10 per diluted share, compared to a loss of $2.5 million, or $0.09 per diluted share, for six months ended June 30, 2016.
For the fiscal year 2017, the Company expects:
Conference Call Details:
Management will host a conference call at 4:30 p.m. Eastern Time on August 2, 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 844-507-6493 (or 647-253-8641 for international callers) and provide access code 51614469. 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:
A telephonic replay will be available approximately two hours after the end of the call through August 16, 2017. The replay can be accessed by dialing 800-585-8367 for U.S. callers or 416-621-4642 for International callers and using the replay access code: 51614469. The webcast will be archived on the Investor Relations section of the Company's website.
Investor Relations Contact:
Westwicke Partners on behalf of Bovie Medical Corporation
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, coagulation and ablation of soft tissue. J-Plasma utilizes a helium ionization process to produce a stable, focused beam of plasma that provides surgeons with greater precision, minimal invasiveness and an absence of conductive currents through the patient during surgery. The new J-Plasma handpieces with Cool-Coag technology deliver the precision of helium plasma energy, the power of traditional monopolar coagulation and the efficiency of plasma beam coagulation - enabling thin-layer ablation and dissection and fast coagulation with a single instrument, minimizing instrument exchange and allowing a surgeon to focus on their patient and their procedures. With Cool-Coag technology, the new J-Plasma handpieces can deliver three distinctly different energy modalities - further increasing the utility and versatility of the J-Plasma system. 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 and DERM ) 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.
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
| 2017 | 2016 | 2017 | 2016 | ||||||||||||
| Sales | $ | 9,799 | $ | 9,295 | $ | 18,188 | $ | 17,070 | |||||||
| Cost of sales | 4,757 | 4,595 | 8,920 | 9,048 | |||||||||||
| Gross profit | 5,042 | 4,700 | 9,268 | 8,022 | |||||||||||
| Other costs and expenses: | |||||||||||||||
| Research and development | 696 | 592 | 1,405 | 1,259 | |||||||||||
| Professional services | 480 | 396 | 870 | 753 | |||||||||||
| Salaries and related costs | 2,243 | 2,200 | 4,703 | 4,300 | |||||||||||
| Selling, general and administrative | 2,929 | 2,022 | 5,333 | 4,213 | |||||||||||
| Total other costs and expenses | 6,348 | 5,210 | 12,311 | 10,525 | |||||||||||
| Loss from operations | (1,306 | ) | (510 | ) | (3,043 | ) | (2,503 | ) | |||||||
| Interest expense, net | (36 | ) | (50 | ) | (67 | ) | (88 | ) | |||||||
| Change in fair value of derivative liabilities | 38 | 41 | 126 | 128 | |||||||||||
| Total other income (loss), net | 2 | (9 | ) | 59 | 40 | ||||||||||
| Loss before income taxes | (1,304 | ) | (519 | ) | (2,984 | ) | (2,463 | ) | |||||||
| Income tax expense | 4 | - | 9 | - | |||||||||||
| Net loss | $ | (1,308 | ) | $ | (519 | ) | $ | (2,993 | ) | $ | (2,463 | ) | |||
| Loss per share | |||||||||||||||
| Basic | $ | (0.04 | ) | $ | (0.02 | ) | $ | (0.10 | ) | $ | (0.09 | ) | |||
| Diluted | $ | (0.04 | ) | $ | (0.02 | ) | $ | (0.10 | ) | $ | (0.09 | ) | |||
| Weighted average number of shares outstanding - basic | 30,860 | 27,051 | 30,860 | 27,051 | |||||||||||
| Weighted average number of shares outstanding - dilutive | 30,860 | 27,051 | 30,860 | 27,051 |
| June 30, 2017 | December 31, 2016 | ||||||
| ASSETS | |||||||
| Current assets: | |||||||
| Cash and cash equivalents | $ | 10,292 | $ | 14,456 | |||
| Restricted cash | 779 | 779 | |||||
| Trade accounts receivable, net of allowance of $186 and $118 | 4,929 | 4,733 | |||||
| Inventories, net | 7,582 | 6,158 | |||||
| Prepaid expenses and other current assets | 538 | 413 | |||||
| Total current assets | 24,120 | 26,539 | |||||
| Property and equipment, net | 6,240 | 6,449 | |||||
| Brand name and trademark | 1,510 | 1,510 | |||||
| Purchased technology and license rights, net | 217 | 215 | |||||
| Goodwill | 185 | 185 | |||||
| Deposits | 66 | 109 | |||||
| Other assets | 218 | 103 | |||||
| Total assets | $ | 32,556 | $ | 35,110 | |||
| LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||
| Current liabilities: | |||||||
| Accounts payable | $ | 2,077 | $ | 1,606 | |||
| Accrued payroll | 416 | 419 | |||||
| Accrued vacation | 375 | 404 | |||||
| Current portion of mortgage note payable | 239 | 239 | |||||
| Accrued and other liabilities | 2,511 | 2,604 | |||||
| Total current liabilities | 5,618 | 5,272 | |||||
| Mortgage note payable, net of current portion | 2,575 | 2,694 | |||||
| Note payable | 140 | 140 | |||||
| Deferred rents | 11 | 14 | |||||
| Deferred tax liability | 564 | 564 | |||||
| Derivative liabilities | 77 | 203 | |||||
| Total liabilities | 8,985 | 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 June 30, 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 June 30, 2017 and December 31, 2016 | 31 | 31 | |||||
| Additional paid-in capital | 49,966 | 49,625 | |||||
| Accumulated deficit | (26,427 | ) | (23,434 | ) | |||
| Total stockholders' equity | 23,571 | 26,223 | |||||
| Total liabilities and stockholders' equity | $ | 32,556 | $ | 35,110 |
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 Ended June 30, | Six Months Ended June 30, | ||||||||||||||
| 2017 | 2016 | 2017 | 2016 | ||||||||||||
| Net loss GAAP Basis | $ | (1,308 | ) | $ | (519 | ) | $ | (2,993 | ) | $ | (1,944 | ) | |||
| Interest expense, net | 36 | 50 | 67 | 88 | |||||||||||
| Income tax expense | 4 | - | 9 | - | |||||||||||
| Depreciation and amortization | 178 | 173 | 356 | 355 | |||||||||||
| Stock based compensation | 182 | 184 | 341 | 360 | |||||||||||
| Change in fair value of derivative liabilities | (38 | ) | (41 | ) | (126 | ) | (128 | ) | |||||||
| Adjusted EBITDA | (946 | ) | (153 | ) | (2,346 | ) | (1,269 | ) |
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 | - | ||
| 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.