Published: 02 August 2016
Written by Editor
Bovie Medical Corporation Reports Second Quarter and First Half 2016 Results
CLEARWATER, Fla. -- Bovie Medical Corporation (BVX), a maker of medical devices and supplies and the developer of J-Plasma®, a patented new surgical product, today announced results for the second quarter ended June 30, 2016.
“We continued to execute well in the second quarter, achieving double-digit revenue growth that reflected strong demand across our three product categories,” said Robert L. Gershon, Chief Executive Officer. “This broad-based growth benefited from Bovie’s brand recognition for quality product development and the solid foundation we established in 2015 across our sales, manufacturing and R&D platforms. Our core products business continued to grow at a steady pace; as anticipated, OEM operations benefited from new contracts signed late last year; and the strong performance of J-Plasma® was driven by a more favorable balance between generator and hand piece sales and increased product usage.”
“In the second quarter, J-Plasma® sales more than doubled from first quarter 2016 levels and were more than four times greater than we reported in last year’s second quarter. These results point to the early success of several of the initiatives we have implemented to accelerate J-Plasma® generator sales, including the ramp-up of our multi-specialty strategy, prioritizing plastic surgery. In the second quarter, handpiece volume increased 140% year-over-year and 33.3% sequentially, and we saw significant positive momentum in the other key operating metrics that are indicators of future J-Plasma® sales.
“As we scale the business, we are demonstrating the operating leverage inherent in our business model. Gross margin expanded to 50.6%, while operating expenses as a percentage of sales declined to 56% from 64% in the similar period last year, contributing a greater portion of the resources necessary to fund J- Plasma® commercialization costs. Cash management remained a priority, and we ended the quarter with a cash balance of $9.3 million, less than $0.2 million lower than at the end of the first quarter,” Mr. Gershon said.
Second Quarter 2016 Results
Second quarter sales were $9.3 million, up 27.8% from $7.3 million in the second quarter of 2015 on higher sales across all product categories. Gross margin was 50.6% compared with gross margin of 43.2% in the second quarter of 2015, as a result of an increased proportion of sales coming from the OEM business and J- Plasma®.
Operating expenses totaled $5.2 million in the second quarter, representing 56.0% of sales compared to $4.7 million, or 64.4% of sales in the second quarter of 2015. Operating loss was $0.5 million, compared with an operating loss of $1.5 million in the second quarter of 2015.
Net loss attributable to common shareholders was $0.5 million, or $0.02 per diluted share, compared with a net loss of $1.5 million, or $0.06 per diluted share in the second quarter of 2015.
The Company had unrestricted cash and cash and equivalents of $9.3 million at the end of the second quarter, compared with $9.5 million at the end of the first quarter of 2016.
On June 20, Bovie received 510(k) clearance from the Food and Drug Administration (FDA) for the Bantam/PRO, Derm 942 and Derm 941 generators, a new line of products targeting the removal of skin lesions and the coagulation of tissue.
On June 30, Bovie announced it had entered into a sales channel partnership agreement with Arteriocyte Medical Systems to sell J-Plasma® to its network of plastic surgeons. The agreement will put J-Plasma® into the hands of Arteriocyte’s U.S. sales network, which has a portfolio of novel products that are complementary to J-Plasma®, significantly expanding its potential for use in office-based practices.
On July 21, Bovie announced an initial sales channel partnership agreement with global healthcare and diagnostics company, Hologic. Under the terms of the agreement, Hologic will add the J-Plasma® product line to its world class portfolio of healthcare solutions in gynecological and gynecological / oncological surgery in three U.S. regions.
Subsequent to the July 21 announcement, Hologic and Bovie Medical expanded the initial sales channel partnership agreement to cover two European markets, with the goal of testing the global demand that exists for J-Plasma® among gynecological and gynecological / oncological surgeons.
Dr. Craig McCoy of the Women’s Wellness Center in Columbia, MO, has joined Bovie’s Medical Advisory Board (MAB). Dr. McCoy is board certified in Obstetrics and Gynecology, as well as Female Pelvic Medicine and Reconstructive Surgery. In addition, he achieved status as a Physician Proctor for the DaVinci Surgical System, meaning he is qualified to teach other surgeons how to use the technology.
“We are pleased to welcome Dr. McCoy to the Medical Advisory Board. Dr. McCoy has been an early adopter of our J-Plasma technology and his experience with the product, along with his expertise in both gynecological surgery and robotics will be an important resource as we continue the commercialization of J-Plasma®,” Mr. Gershon noted.
“I am pleased to be joining the Advisory Board to further advance the use of this innovative, precise surgical tool among leading gynecological surgeons,” said Dr. McCoy. “As an early user, I have experienced J-Plasma’s superior technology in the field of minimally invasive surgery, and the benefits its advanced degree of precision brings to patients. I look forward to working with the Company and other Advisory Board members to further expand J-Plasma®’ s applications in the field of gynecology, with particular focus on advanced surgical procedures.”
Summary and Outlook
“First half 2016 results support our conviction that this will be a year of substantial growth for the Company. We expect to meet or exceed our target of 20% revenue growth driven by marked year-over-year increases in OEM and J-Plasma® sales and supported by a steady increase in our core products business. This expected growth should enable us to be cash flow neutral in this year’s fourth quarter.”
“We will continue to execute on our strategy to accelerate J-Plasma sales both through our direct sales force and sales channel partnerships. Our announced partnerships with Arteriocyte and Hologic have greatly expanded our nationwide reach, given us a new entry into high-potential international markets, and have placed J-Plasma® alongside complementary products in plastic surgery and gynecology, two key target specialties. We are also working with our Medical Advisory Board to develop a roadmap to address additional specialties. All of these factors give us confidence in our ability to greatly expand J-Plasma® adoption, and to establish the technology as the standard of care in multiple specialties,” Mr. Gershon concluded.
Conference Call Details
The Company’s management will host a conference call on Monday August 1, 2016 at 4:30pm Eastern Time to discuss the latest corporate developments. Following management’s formal remarks, there will be a question and answer session.
To listen to the call by phone, interested parties within the U.S. should call 866-932-0173. International callers should call 785-424-1630. Participants should ask for the Bovie Medical 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=175164
A replay of the call will be available approximately two hours after the end of the call through September 1, 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 10025.
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.
(Note 1) Amounts reflected in the presentation of EPS calculations may be impacted by rounding