bvx investor presentation draft 1 6-4-18 nr · • adjusted ebitda in a range of $1.0 million to...
TRANSCRIPT
June2018
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
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“Core”and“OEM”operatingsegments:establishedcommercialbusinesseswithstrongprofitabilityandcashflow
AdvancedEnergyoperatingsegment:BovieMedical’s‘growthengine’
J-Plasma®:transformationaltechnology,supportedbystrongandgrowingIPportfolio
AdvancedEnergysegmentgrowthfueledbycommercializationofJ-Plasma®technologyinthecosmeticsurgerymarketundertheRenuvionTM CosmeticTechnologybrand
Experiencedmanagementteam;enhancedwithrecenthires
Solidbalancesheetconditionsupportedbyimprovinggrowthandprofitabilityprofile
Long-termAdvancedEnergygrowthprofileenhancedbyclinical,regulatory&marketinginitiatives
ExperiencedManagementTeamMgmt.TeamMember JoinedBovie RepresentativePreviousExperience
CharlieGoodwinChiefExecutiveOfficer December2017
JayEwersChiefFinancialOfficer June2014
ToddHornsbyVicePresident&General
ManagerofAdvancedEnergyAugust2014
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RobSaronPresidentandDirector January1978
MosheCitronowiczSeniorVicePresident October1993
YearsofRelevantExperience
25
35
18
36
31 KCRTechnologies SequentialInformationSystems
Dr.TopazKirlewDirectorofRegulatoryAffairs February2018 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,Bulgaria
Full-Time Employees: 211**
CommercialProfile: >300 products soldin>150countries
LTMSales(3/31/18): $40.4M
OperatingSegments:• Core• OEM• AdvancedEnergy
Yearof IPO: 1982
NYSEMKT: BVX
MarketCap: ~$129M*
Avg.DailyVol(LTM): ~107,000*
*Shareprice:$3.91asofmarketcloseon5/29/2018;Sharesoutstanding:32.9Masof5/9/2018**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
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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.hybriddistributionnetworkasof3/31/18:- 19directreps- 14independentagents
OperatingSegment:“AdvancedEnergy”
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Adv.Energy:20%
PercentofFY’17Revenue
BovieMedical’s‘growthengine’
AdvancedEnergy:AnnualRevenue
AdvancedEnergy:J-Plasma®Technology
• Revolutionarytechnologyionizesheliumtocreatestreamofplasmaforcutting,coagulatingandablatingsofttissue
• Superiorprecision,withlimitedthermalspread
- Stable,thin,focusedstreamofionizedheliumgas
- Widerangeofcontrol
• Allowsphysicianstosafelyperformproceduresonorarounddelicatestructures
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UniqueRetractableBlade
Transformationaltechnology
Precise,Tissue-SparingEnergy
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
Ifyouarehavingtroubleviewingthevideoabove,chooseanotheroption.ToviewthevideofromYouTube,visit:https://youtu.be/UsnKHLvrmnY.AFlashorQuickTimePlayerisrequiredtoview:http://www.boviemedical.com/wp-content/uploads/2018/06/j-plasma_demonstration_video_nr2.mp4.TodownloadaWindowsMediaVideoversion,visit:https://cloud.boviemedical.com/index.php/s/4E5Uwb0hcscxNPp.
J-PlasmaTechnology:ClinicianFeedback
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“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
- Initialproceduralareaoffocus:subdermalcoagulationfollowingliposuction(~200Kannualliposuctionproceduresinplasticsurgeryalone**)
Internationalcommercialfocus" soldtodistributors,whomarketandsellintothehospitalsurgicalsuite
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AdvancedEnergysegmentgrowthfueledbycommercializationofJ-Plasmatechnologyinthecosmeticsurgerymarket
*American Society of Plastic Surgeons (ASPS) database 2016**American Society for Aesthetic Plastic Surgery (ASAPS) database 2016
DevelopingExpertiseintheCosmeticSurgeryMarket
1. Enhancingphysicianandpracticesupportforcosmeticsurgerycustomers
- Currentfocus: newchannel-dedicatedbrand-
- Recentmilestone: InitiatedRenuvion™CosmeticTechnologybrandlaunchonMarch29th
2. ExpandingclinicalsupportforJ-Plasma/Renuvionincosmeticsurgeryprocedures
- Currentfocus: IDEprospective,multicenter,singlearmclinicalstudyevaluatingthe_____________useofJ-Plasma/Renuvionfordermalskinresurfacing
- Recentmilestone: completedstudyenrollmentonMay14th
3. Pursuingnew,specificclinicalindicationsinthecosmeticsurgerymarket:
- Currentfocus: FDA510(k)clearancewithanindicationforuseindermalskinresurfacingprocedures
- Upcomingmilestone: expecttosubmitforFDA510(k)clearancebyendofFY‘18
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Long-termAdvancedEnergygrowthprofileenhancedbyclinical,regulatory&marketinginitiativesincosmeticsurgery
Focusedonbuildingsupporttofacilitatebroad-basedadoptionby:
IntroducingRenuvion™CosmeticTechnology
• Anewbranddedicatedtothecosmeticsurgerymarket:
- - BovieMedical’sJ-PlasmatechnologyisnowbeingmarketedandsoldinthecosmeticsurgerymarketundertheRenuvionbrandname
• Createdforphysiciansinthecosmeticsurgerymarket
- Physicianfeedbackfromearly-adoptersofJ-Plasmatechnologyinstrumentalincreatingabrand/campaignthatwillresonatewithcosmeticsurgerycustomers
• Designedto:
- Enhancephysicianpractice-basedmarketing- LeveragetheincreasingawarenessofRenuvioninthe
cosmeticsurgerymarket
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Renuvion:enhancingphysicianandpracticesupportforcosmeticsurgerycustomers
WhatisRenuvionCosmeticTechnology?
• EstablishedIPportfolio;pendingapprovalsfocusedonAdvancedEnergysegment:
IP&NewProductDevelopment
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GrowingIPportfolioandrecentprogressinnewproductdevelopment
PatentsIssued PatentsPending
UnitedStates 41 13
International 23 9
Total 64 22
AdvancedEnergyproductscomprise:51%ofissuedpatentsand
100%ofpendingpatents
Progress(2010– 2013):
- 4510(k)clearances- 2CEMarkapprovals- 4Productscommercialized
ProgresssinceJanuary,2014:
- 10510(k)clearances- 22CEMarkapprovals- 10Productscommercialized
• Productdevelopmenteffortsreinvigoratedin2014:
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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/Renuvion
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HistoricalFinancialSummary($in000's)
2017 2018 2016 2017
Revenue $8,389 $9,916 $36,627 $38,883RevenueGrowth(Y/Y) 7.9% 18.2% 24.1% 6.2%
CostofGoodsSold 4,163 4,926 18,712 19,122
GrossProfit $4,226 $4,990 $17,915 $19,761GrossMargin 50.4% 50.3% 48.9% 50.8%
OperatingExpenses 5,963 5,854 21,707 25,026
LossfromOperations ($1,737) ($864) ($3,792) ($5,265)
AdjustedEBITDA ($1,400) ($293) ($2,249) ($3,698)
AdjustedEBITDAEx.Non-recurringitems* ($1,400) ($293) ($2,249) ($2,174)
CashonhandasofMarch31,2018 $9,361
Q1 FY
*Fiscal year 2017 period included approximately $1.5 million of non-recurring severance and expenses related toformer members of the Company’s executive management team and related closure of the corporate office inPurchase, New York.
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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)
March31,2018
December31,2017
ASSETS Currentassets: Cashandcashequivalents $ 8,701 $ 9,949
Restrictedcash 660 719
Tradeaccountsreceivable,netofallowanceof$147and$204 5,143 4,857Inventories,net 6,709 6,526
Prepaidexpensesandothercurrentassets 522 496
Totalcurrentassets 21,735 22,547Propertyandequipment,net 6,338 6,408
Brandnameandtrademark 1,510 1,510
Purchasedtechnologyandlicenserights,net 189 179Goodwill 185 185
Deposits 91 92
Otherassets 64 67
Totalassets $ 30,112 $ 30,988
BalanceSheet
21
(Unaudited)(Inthousands)
March31,2018
December31,2017
LIABILITIESANDSTOCKHOLDERS'EQUITY Currentliabilities: Accountspayable $ 2,097 $ 1,583
Accruedseveranceandrelated 948 1,242
Accruedpayroll 198 447Currentportionofmortgagenotepayable 239 239
Accruedandotherliabilities 2,212 2,462
Totalcurrentliabilities 5,694 5,973Mortgagenotepayable,netofcurrentportion 2,395 2,455
Notepayable 140 140
Deferredtaxliability 368 368Derivativeliabilities 46 20
Totalliabilities 8,643 8,956STOCKHOLDERS'EQUITY Commonstock,$0.001parvalue;75,000,000sharesauthorized;33,021,170issuedand32,878,091outstandingasofMarch31,2018andDecember31,2017 33
33
Additionalpaid-incapital 50,867 50,495Accumulateddeficit (29,431) (28,496)Totalstockholders'equity 21,469 22,032
Totalliabilitiesandstockholders'equity $ 30,112 $ 30,988
IncomeStatement
22
(Unaudited)(Inthousands,exceptpersharedata)
ThreeMonthsEndedMarch31,
2018 2017Sales $ 9,916 $ 8,389
Costofsales 4,926 4,163
Grossprofit 4,990 4,226
Othercostsandexpenses: Researchanddevelopment 562 709
Professionalservices 506 390
Salariesandrelatedcosts 2,116 2,460
Selling,generalandadministrative 2,670 2,404
Totalothercostsandexpenses 5,854 5,963
Lossfromoperations (864) (1,737)Interestexpense,net (34) (31)Changeinfairvalueofderivativeliabilities (26) 88
Totalother(loss)income,net (60) 57
Lossbeforeincometaxes (924) (1,680)Incometaxexpense 11 5
Netloss $ (935) $ (1,685) Losspershare Basic $ (0.03) $ (0.05)Diluted $ (0.03) $ (0.06)
Weightedaveragenumberofsharesoutstanding-basic 32,878 30,860
Weightedaveragenumberofsharesoutstanding-dilutive 32,878 30,887
ReconciliationBetweenGAAPandNon-GAAP
23
(Unaudited)(Inthousands)
ThreeMonthsEnded
March31, 2018 2017NetlossGAAPBasis $ (935) $ (1,685)Interestexpense,net 34 31
Incometaxexpense 11 5
Depreciationandamortization 199 178
Stockbasedcompensation 372 159
Changeinfairvalueofderivativeliabilities 26 (88)AdjustedEBITDA (293) (1,400)