BVX Investor Presentation 041618nr3 - Bovie Medical · Certain matters discussed in this...

23
April 2018

Transcript of BVX Investor Presentation 041618nr3 - Bovie Medical · Certain matters discussed in this...

  • April2018

  • SafeHarborStatement

    CertainmattersdiscussedinthispresentationandoralstatementsmadefromtimetotimebyrepresentativesoftheCompanymayconstituteforward-lookingstatementswithinthemeaningofthePrivateSecuritiesLitigationReformActof1995andtheFederalsecuritieslaws. AlthoughtheCompanybelievesthattheexpectationsreflectedinsuchforward-lookingstatementsarebaseduponreasonableassumptions,itcangivenoassurancethatitsexpectationswillbeachieved.

    Forward-lookinginformationissubjecttocertainrisks,trendsanduncertaintiesthatcouldcauseactualresultstodiffermateriallyfromthoseprojected. ManyofthesefactorsarebeyondtheCompany’sabilitytocontrolorpredict. ImportantfactorsthatmaycauseactualresultstodiffermateriallyandthatcouldimpacttheCompanyandthestatementscontainedinthispresentationcanbefoundintheCompany’sfilingswiththeSecuritiesandExchangeCommissionincludingourmostrecentreportsonForm10-KandForm10-Q.CopiesofthesefilingsareavailableonlinefromtheSEC. Forforward-lookingstatementsinthispresentation,theCompanyclaimstheprotectionofthesafeharborforforward-lookingstatementscontainedinthePrivateSecuritiesLitigationReformActof1995. TheCompanyassumesnoobligationtoupdateorsupplementanyforward-lookingstatementsasaresultofnewinformation,futureevents,orotherwise.

  • InvestmentHighlights

    3

    “Core”and“OEM”operatingsegments:establishedcommercialbusinesseswithstrongprofitabilityandcashflow

    AdvancedEnergyoperatingsegment:BovieMedical’s‘growthengine’

    J-Plasma®:transformationaltechnology,supportedbystrongandgrowingIPportfolio

    AdvancedEnergysegmentgrowthfueledbycommercializationofJ-Plasma®technologyinthecosmeticsurgerymarket

    Experiencedmanagementteam;enhancedwithrecenthires

    Solidbalancesheetconditionsupportedbyimprovinggrowthandprofitabilityprofile

    Long-termAdvancedEnergygrowthprofileenhancedbyclinical,regulatory&marketinginitiatives

  • ExperiencedManagementTeamMgmt.TeamMember JoinedBovie RepresentativePreviousExperience

    CharlieGoodwinChiefExecutiveOfficer December2017

    JayEwersChiefFinancialOfficer June2014

    ToddHornsbyVicePresident&General

    ManagerofAdvancedEnergyAugust2014

    4

    RobSaronPresidentandDirector January1978

    MosheCitronowiczSeniorVicePresident October1993

    YearsofRelevantExperience

    25

    35

    18

    36

    31 KCRTechnologies SequentialInformationSystems

    Dr.TopazKirlewDirectorofRegulatoryAffairs March2018 30

    Experiencedmanagementteam;enhancedwithrecenthires

    ScottSandersDirectorofClinicalEducation

    &MarketDevelopmentMarch2018 37

  • 5

    CompanySnapshot

    Core

    Energy-based medical device company specializing in developing, manufacturingand marketing a range of electrosurgical products and technologies, as well asrelated medical products used in doctor’s offices, surgery centers and hospitalsworldwide.

    Founded: 1978

    Locations: • Clearwater,FL• Sofia,BulgariaFull-Time Employees: 211**

    CommercialProfile: >300 products soldin>150countries

    LTMSales(12/31/17): $38.9M

    OperatingSegments:• Core• OEM• AdvancedEnergy

    Yearof IPO: 1982

    NYSEMKT: BVX

    MarketCap: ~$104M*

    Avg.DailyVol(LTM): ~104,000

    *

    *Shareprice:$3.15asofmarketcloseon3/15/2018;Sharesoutstanding:33.0Masof3/9/2018**Asof12/31/2017LTM=“LastTwelveMonths”

  • 99.3% 95.6%90.4%

    80.4%

    FY'14 FY'15 FY'16 FY'17

    OEMCore

    OperatingSegments:“Core”&“OEM”• Legacybusinessesfocusedonthedesignand

    manufactureofelectrosurgicaltechnologiesandaccessories:

    - “Core”productsmarketedandsoldthroughdistributorsworldwideto>6,000hospitals

    - “OEM”productsmanufacturedinresponsetoinbounddemandfromlargemedicaldevicecompanies

    Core/OEMFinancialProfile:• Modestannualrevenuegrowthovermulti-yr.period

    - Core/OEM’14-’17CAGRof~4%;volatilityinannualgrowthratesdrivenbyfluctuationsinOEMdemand

    - Core/OEMshareoftotalcompanyrevenuedecreasingduetostrongrevenuegrowthfromAdvancedEnergysegmentinrecentyears

    • Strongprofitabilityandcashflowprofile

    6

    Establishedcommercialbusinesseswithstrongprofitabilityandcashflow

    $27.5M $28.2M$33.1M $31.2M

    FY'14 FY'15 FY'16 FY'17

    Core/OEM:AnnualRevenueOEMCore

    Core/OEM:PercentofAnnualCompanyRevenue

  • $0.2M$1.3M

    $3.5M

    $7.6M

    $10.9M

    FY'14 FY'15 FY'16 FY'17 FY'18GuidanceMidPt.

    • Advancedelectrosurgicalandplasmatechnology(generatorsandhandpieces)

    • PrimarydriverofBovie’slong-termrevenuegrowth

    • CommercializedproductsmarketedintheU.S.viahybridsellingorganizationandinternationallyviadistributors

    - U.S.hybriddistributionnetworkasof12/31/17:- 14directreps- 3regionalmanagers- 14independentreps

    OperatingSegment:“AdvancedEnergy”

    7

    Adv.Energy:20%

    PercentofFY’17Revenue

    BovieMedical’s‘growthengine’

    AdvancedEnergy:AnnualRevenue

  • AdvancedEnergy:J-Plasma®Technology

    • Revolutionarytechnologyionizesheliumtocreatestreamofplasmaforcutting,coagulatingandablatingsofttissue

    • Superiorprecision,withlimitedthermalspread

    - Stable,thin,focusedstreamofionizedheliumgas- Widerangeofcontrol

    • Allowsphysicianstosafelyperformproceduresonorarounddelicatestructures

    8

    UniqueRetractableBlade

    Transformationaltechnology

  • J-PlasmaTechnology:LimitedThermalDamagevs.Energy-basedSurgicalTools*

    • Prospectivestudycomparedlevelsofunintendedthermaldamagetoperitonealtissue(membraneliningtheabdominalcavity)amongotherenergy-basedsurgicaltoolsvs.J-Plasma

    • Redareasrepresentthedepthofthermalorenergydamageeachtoolleftbelowthetissuesurface;blueareasrepresentunaffectedtissue

    • J-Plasmademonstratedfarlowestamountofcollateralthermalinjurytohealthytissuesurroundingtheoperativesite

    *Reference:PedrosoJ,GutierrezM,VolkerW.J-Plasma,monopolarpencil,argonbeamandCO2laserelectrosurgery:comparativeevaluationofthermalspreadinaporcinetissuemodel(whitepaper).BovieMedicalCorporation.June2014 9

  • J-PlasmaTechnology:DemonstrationVideo

    10

    VideoURL:http://www.boviemedical.com/downloads/J-Plasma_Demonstration_Video.mp4

    Ifyouarehavingtroubleviewingvideo,chooseotheroption.

    TodownloadaWindowsMediaVideoversionclickhere.https://cloud.boviemedical.com/index.php/s/4E5Uwb0hcscxNPp

    FlashorQuickTimePlayerrequiredtoview.

    ToviewvideofromYouTubeclickhere.https://youtu.be/UsnKHLvrmnY

  • J-PlasmaTechnology:ClinicianFeedback

    11

    “J-PlasmadeliversthemostprecisionIhaveeverseeninanenergy-baseddevice.Thisallowsthephysiciantotreatsmallandlargeareaswithease.TheamountofenergycanbetailoredtogetoutcomesIhavenotyetseenwithanycompetitivelaserdevice.”

    -JasonEmer,M.D.,FAAD,FAACSDermatologicSurgeon

    “J-PlasmaisatrulyinnovativetechnologythatwillbeinvaluabletoFacialandPlasticSurgeonsandDermatologists.Thethermalcharacteristicsofthisenergy-baseddeviceareunlikeanydevicescurrentlyavailable.”

    -RichardGentile,M.D.,MBAPlasticSurgeon

    “Thereisanincredibleamountofcontrolintermsofdepth-of-penetration;becauseit’snotdeliveringaburningenergy”“It’sachancetobeartistic,becauseyouareusingadevicemorelikeapaintbrushthananatombomb.”

    -JosephB.DeLozier III,MD,FACSPlasticSurgeon

    “J-Plasmaisfast,easytouseandIamhappywiththeresults.ThisisoneofthefewdevicesIhavepurchasedthatwon'tspendanytimeinthecloset.”

    -DianeDuncan,M.D.PlasticSurgeon

    “J-Plasmaisaninnovativeenergy-baseddevicewithanimpactontissueunlikeanydevicecurrentlyavailable.J-PlasmawillcreateafundamentalshiftinthewayproceduresareperformedbyallPlasticSurgeons,CosmeticSurgeonsandDermatologists.”

    -JackZamora,M.D.OculoplasticSurgeon

  • AdvancedEnergy:CommercialFocus

    U.S.commercialfocus" cosmeticsurgerymarket:

    • U.S.cosmeticsurgerymarketcomprisedof~15,000*plasticsurgeons,cosmeticsurgeons&dermatologists

    • FavorableU.S.marketcharacteristics:Proceduresperformedinoutpatientfacilitiesandpaidforoutofpocket

    • StronginitialU.S.commercialtraction:hybridsalesforcefocusedonearlyadopters

    - Initialproceduralareafocus:subdermalcoagulationfollowingliposuction(~200Kannualliposuctionproceduresinplasticsurgeryalone**)

    Internationalcommercialfocus" soldtodistributors,whomarketandsellintothehospitalsurgicalsuite

    12

    AdvancedEnergysegmentgrowthfueledbycommercializationofJ-Plasmatechnologyinthecosmeticsurgerymarket

    *American Society of Plastic Surgeons (ASPS) database 2016**American Society for Aesthetic Plastic Surgery (ASAPS) database 2016

  • DevelopingExpertiseintheCosmeticSurgeryMarket

    1. Enhancingphysicianandpracticesupportforcosmeticsurgerycustomers

    - Currentfocus: launchofnewchannel-dedicatedbrand-- Recentmilestone: InitiatedRenuvion™brandlaunchonMarch29th

    2. ExpandingclinicalsupportforJ-Plasmaincosmeticsurgeryprocedures

    - Currentfocus: IDEprospective,multicenter,singlearmclinicalstudyevaluatingthe_____________useofJ-Plasma®fordermalskinresurfacing

    - Upcomingmilestone: expecttocompletestudyenrollmentbyendofQ2’18

    3. Pursuingnew,specificclinicalindicationsinthecosmeticsurgerymarket:

    - Currentfocus: FDA510(k)specificindicationforuseindermalskinresurfacingprocedures- Upcomingmilestone: expecttosubmitforregulatoryindicationbyendofFY‘18

    13

    Long-termAdvancedEnergygrowthprofileenhancedbyclinical,regulatory&marketinginitiativesincosmeticsurgery

    Focusedonbuildingsupporttofacilitatebroad-basedadoptionby:

  • IntroducingRenuvion™CosmeticTechnology

    • Anewbranddedicatedtothecosmeticsurgerymarket:

    - - BovieMedical’sJ-PlasmatechnologyisnowbeingmarketedandsoldinthecosmeticsurgerymarketundertheRenuvionbrandname

    • Createdforphysiciansinthecosmeticsurgerymarket

    - Physicianfeedbackfromearly-adoptersofJ-Plasmatechnologyinstrumentalincreatingabrand/campaignthatwillresonatewithcosmeticsurgerycustomers

    • Designedto:

    - Enhancephysicianpractice-basedmarketing- LeveragetheincreasingawarenessofRenuvioninthe

    cosmeticsurgerymarket

    14

    Renuvion:enhancingphysicianandpracticesupportforcosmeticsurgerycustomers

    WhatisRenuvion?

  • • EstablishedIPportfolio;pendingapprovalsfocusedonAdvancedEnergysegment:

    IP&NewProductDevelopment

    15

    GrowingIPportfolioandrecentprogressinnewproductdevelopment

    PatentsIssued PatentsPending

    UnitedStates 41 12

    International 23 9

    Total 64 21

    AdvancedEnergyproductscomprise:42%ofissuedpatentsand

    100%ofpendingpatents

    Progress(2010– 2013):

    - 4510(k)clearances- 2CEMarkapprovals- 4Productscommercialized

    ProgresssinceJanuary,2014:

    - 10510(k)clearances- 21CEMarkapprovals- 10Productscommercialized

    • Productdevelopmenteffortsreinvigoratedin2014:

  • 16

    ManufacturingFootprint

    Clearwater, FL Sofia, Bulgaria China

    Size: 60,000sq.ft. 16,000sq. ft. • 70,000sq.ft.

    Owned/Contracted:

    Owned Owned Contracted

    Capabilities:

    • Assembly• Integration• FinalTesting• Packaging• SterilizationManagement

    • Manufacturing• ComplexComponent

    Assembly• InitialTesting

    • ComponentManufacturing• Sub-Assemblies• Finished MedicalDevices

    (Electrodes)

    ImprovingmanufacturingcapacityandefficienciestoaccommodateanticipatedstrongdemandforJ-Plasma

  • 17

    HistoricalFinancialSummary

    ($in000's)2016 2017 2016 2017

    Revenue $9,494 $11,348 $36,627 $38,883RevenueGrowth(Y/Y) 14.5% 19.5% 24.1% 6.2%

    CostofGoodsSold 4,663 5,449 18,712 19,122

    GrossProfit $4,831 $5,899 $17,915 $19,761GrossMargin 50.9% 52.0% 48.9% 50.8%

    OperatingExpenses 5,875 6,987 21,707 25,026

    LossfromOperations ($1,044) ($1,088) ($3,792) ($5,265)

    AdjustedEBITDA ($589) ($580) ($2,249) ($3,698)

    AdjustedEBITDAEx.Non-recurringitems* ($589) $944 ($2,249) ($2,174)

    CashonhandasofDecember31,2017 $10,668

    Q4 FY

    *Fourth quarter and fiscal year 2017 periods include approximately $1.5 million of non-recurring severance andexpenses related to former members of the Company’s executive management team and related closure of thecorporate office in Purchase, New York.

  • 18

    FY’18GuidanceSummary

    • FormalFinancialGuidance:

    • TotalGAAPrevenueintherangeof$41.0millionto$42.5million,comparedto$38.9millioninfiscalyear2017.

    • AdjustedEBITDAinarangeof$1.0millionto$1.5million,comparedtoalossof$2.2millioninfiscalyear2017.

    • FY’18totalcompanyrevenueguidanceassumes:• TotalrevenuegrowthdrivenbyAdvancedEnergysegmentsales,which

    areexpectedtogrow40%- 45%y/yin2018

    Improvingprofitability;growthdrivenbystrongcommercialtractioninAdvancedEnergysegment

  • Appendix

  • BalanceSheet

    20

    (Unaudited)(Inthousands)

    December31,2017

    December31,2016

    ASSETSCurrentassets:Cashandcashequivalents 9,949$ 14,456$Restrictedcash 719 779Tradeaccountsreceivable,netofallowanceof$204and$118 4,857 4,733Inventories,net 6,526 6,158Prepaidexpensesandothercurrentassets 496 413Totalcurrentassets 22,547 26,539

    Propertyandequipment,net 6,408 6,449Brandnameandtrademark 1,510 1,510Purchasedtechnologyandlicenserights,net 179 215Goodwill 185 185Deposits 92 109Otherassets 67 103

    Totalassets 30,988$ 35,110$

  • BalanceSheet

    21

    (Unaudited)(Inthousands)December31,

    2017December31,

    2016LIABILITIESANDSTOCKHOLDERS'EQUITYCurrentliabilities:Accountspayable 1,583$ 1,606$Accruedseveranceandrelated 1,242 —Accruedpayroll 447 419Accruedvacation 74 404Currentportionofmortgagenotepayable 239 239Accruedandotherl iabil ities 2,388 2,604Totalcurrentliabilities 5,973 5,272

    Mortgagenotepayable,netofcurrentportion 2,455 2,694Notepayable 140 140Deferredrents — 14Deferredtaxl iabil ity 368 564Derivativel iabil ities 20 203Totalliabilities 8,956 8,887

    STOCKHOLDERS'EQUITY

    SeriesBconvertiblepreferredstock,$0.001parvalue;3,588,139authorizedandzeroissuedandoutstandingasofDecember31,2017and3,588,139authorizedand975,639issuedandoutstandingasofDecember31,2016,respectively — 1

    Commonstock,$0.001parvalue;75,000,000sharesauthorized;33,021,170issuedand32,878,091outstandingasofDecember31,2017and40,000,000sharesauthorized;31,002,832issuedand30,859,753outstandingasofDecember31,2016,respectively 33 31Additionalpaid-incapital 50,495 49,625Accumulateddeficit (28,496) (23,434)Totalstockholders'equity 22,032 26,223Totalliabilitiesandstockholders'equity 30,988$ 35,110$

  • IncomeStatement

    22

    (Unaudited)(Inthousands,exceptpersharedata)

    2017 2016 2017 2016Sales 11,348$ 9,494$ 38,883$ 36,627$Costofsales 5,449 4,664 19,122 18,712Grossprofit 5,899 4,830 19,761 17,915Othercostsandexpenses:Researchanddevelopment 440 676 2,455 2,618Professionalservices 480 441 1,771 1,486Salariesandrelatedcosts 1,123 2,546 7,906 9,038Selling,generalandadministrative 3,420 2,211 11,370 8,565Severanceandrelatedexpense 1,524 — 1,524 —Totalothercostsandexpenses 6,987 5,874 25,026 21,707Lossfromoperations (1,088) (1,044) (5,265) (3,792)Interestexpense,net (33) (35) (136) (158)Changeinfairvalueofderivativel iabil ities 126 620 183 64Totalotherincome(loss),net 93 585 47 (94)Lossbeforeincometaxes (995) (459) (5,218) (3,886)Incometax(benefit)expense (171) 64 (156) 64Netloss (824)$ (523)$ (5,062)$ (3,950)$

    LosspershareBasic (0.03)$ (0.02)$ (0.16)$ (0.14)$Diluted (0.03)$ (0.02)$ (0.17)$ (0.15)$

    Weightedaveragenumberofsharesoutstanding-basic 32,864 28,574 31,420 27,433Weightedaveragenumberofsharesoutstanding-dilutive 32,864 28,618 31,427 27,449

    ThreeMonthsEndedDecember31,

    TwelveMonthsEndedDecember31,

  • ReconciliationBetweenGAAPandNon-GAAP

    23

    (Unaudited)(Inthousands)

    *Fourth quarter and fiscal year 2017 periods include approximately $1.5 million of non-recurringseverance and expenses related to former members of the Company’s executive management teamand related closure of the corporate office in Purchase, New York.

    2017 2016 2017 2016NetlossGAAPBasis (824)$ (523)$ (5,062)$ (3,950)$Interestexpense,net 33 35 136 158Incometax(benefit)expense (171) 64 (156) 64Depreciationandamortization 169 178 696 734Stockbasedcompensation 339 277 871 809Changeinfairvalueofderivativeliabilities (126) (620) (183) (64)AdjustedEBITDA (580) (589) (3,698) (2,249)Severanceandrelatedexpense 1,524 — 1,524 —AdjustedEBITDA,excludingnon-recurringitems* 944 (589) (2,174) (2,249)

    ThreeMonthsEndedDecember31,

    TwelveMonthsEndedDecember31,