Bovie Medical Corporation Reports Fourth Quarter and Full Year 2015 Results

CLEARWATER, Fla.--(BUSINESS WIRE)--Bovie Medical Corporation (NYSEMKT:BVX), a maker of medical devices and supplies and the developer of J-Plasma®, a patented new surgical product, today announced results for the fourth quarter and full year ended December 31, 2015.

Management Comments

“2015 was a year of solid execution and has laid the foundation for growth in 2016,” said Robert L. Gershon, Chief Executive Officer. “Surgeon demand and use of our transformational J-Plasma® product reached record levels in 2015. We posted progressive increases in hand piece sales volumes throughout the year, with fourth quarter hand piece sales volumes increasing 28% sequentially over third quarter levels. J-Plasma® generator sales, however, continued to lag our expectations, reflecting industrywide trends of longer sales cycles for capital equipment purchases.

Key 2015 Accomplishments Included:

• Strong growth in J-Plasma® sales; even more impressive are the number of procedures that have been done using the J-Plasma® product, which we estimate reached over 1,300 in 2015; The rate of hospital VAC approvals for use of J-Plasma® exceeded 92% for the year, reflecting the safety, ease-of-use and cost effectiveness of the product.
• Consistent mid-single digit growth in our core business, leveraging Bovie’s unique brand reputation and demand from the industry’s leading medical technology companies for Bovie’s manufacturing expertise;
• The formation of a Medical Advisory Board for J-Plasma®, consisting of world-renowned experts in several different specialties; this marks the first step in J-Plasma® ’s rollout into fields beyond our initial target specialties of gynecology and plastic surgery; and
• The acquisition of Bovie Bulgaria, our long-standing R&D and manufacturing contractor, in order to strengthen our supply chain and achieve product development efficiencies.

“The leading indicators of future J-Plasma® sales trends progressively increased in 2015 and ended the year with substantial positive momentum. Specifically, those that most closely track surgeon adoption of J-Plasma®, generators-in-use and scrub POs, were up more than two-fold and three-fold, respectively, in the second half of 2015 compared to the first half of the year.”

Fourth Quarter 2015 Results

Fourth quarter sales were $8.3 million, an 11.1% increase from $7.5 million in the fourth quarter of 2014.

Gross profit was $3.5 million compared with $2.4 million in the fourth quarter of 2014. Gross margin was 42.4%, a significant improvement over the adjusted gross margin of 38.7% and reported gross margin of 32.7% of last year’s fourth quarter.

Operating loss for the quarter was $1.4 million, lower on both a sequential and a year-over-year basis. Higher gross profit more than offset increased operating expenses associated with J-Plasma®’s commercialization.

Net loss attributable to common shareholders for the period was $1.4 million, or $0.05 per diluted share, compared with a loss of $5.5 million, or $0.39 per diluted share, in the fourth quarter of 2014. Results for the fourth quarter of 2014 included a non-cash gain of $2.5 million related to the mark-to-market accounting for the fair value of issued common stock purchase warrants, as well as a non-cash charge of $6.0 million on the write down of a deferred tax asset.

Full Year 2015 Results

For full year 2015, total sales were up 6.6% over the prior year to $29.5 million.

Gross Profit rose 39.6% to $12.6 million from 2014. Gross margin reached 42.5%, a significant improvement from last year’s adjusted gross margin of 40.7% and the reported 32.5% gross margin.

Operating loss in 2015 was $7.0 million compared with $5.8 million in 2014, as a result of higher operating expenses related to the Company’s growth investments to commercialize J-Plasma® and expand its product and patent portfolios. In the aggregate, these initiatives accounted for more than 60% of the $4.7 million year-on-year increase in operating expenses.

The Company reported net income of $8.4 million, or $0.24 per diluted share compared to a net loss of $18.2 million or $1.03 per diluted share last year. 2015 net income benefited from a gain on conversion of warrants and preferred shares of $14.0 million and a change in fair value of derivative liabilities of $1.8 million; in 2014, the Company incurred a loss of $7.3 million from the change in fair value of derivative liabilities.

At the end of 2015, the Company had unrestricted cash and cash equivalents $11.8 million, compared to $5.7 million at the end of 2014.

Summary and Outlook

“Looking ahead, we intend to build upon the progress made in 2015 to achieve meaningful growth in 2016.

“We see continued low to mid-single digit growth in our core business coming from steady demand for Bovie’s signature core products, and from the addition of new products. Also, we remain one of the premier names in the OEM space, and we entered 2016 with an active pipeline of new orders and the ability to capture additional market share.

“J-Plasma® product sales should accelerate substantially in 2016. We have a pipeline of 128 hospitals where the product has been approved or under review; the expert surgeons who comprise our Medical Advisory Board are guiding us in expanding the size and scope of J-Plasma®’s addressable market ; and together with other top surgeons and leaders in robotic surgery, our Advisory Board members are currently investigating which procedures in their respective specialties support the use of J-Plasma and its potential adoption as a “standard of care” in their respective fields of urology, cardiovascular and cardiothoracic surgery. Based on this pipeline of activity and our leading indicators of adoption, we expect J-Plasma® hand piece volumes to increase by nearly 3x in 2016.

“The anticipated growth in core business sales and J-Plasma®, underpinned by the operating expense savings we expect from last year’s acquisition of Bovie Bulgaria and by our own financial discipline, should enable us to achieve breakeven cash flow by the end of the fourth quarter of this year,” Mr. Gershon concluded.

Conference Call Details

The Company’s management will host a conference call on Thursday, March 17, 2016 at 5:00pm 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 1-888-349-0106. International callers should call 1-412-902-0131. All parties should ask for the Bovie Medical Corporation call. The conference call will also be available through a live webcast at Bovie Medical Corporation’s website or at http://services.choruscall.com/links/bvx160317

A replay of the call will be available approximately one hour after the end of the call through March 31, 2016. The replay can be accessed via Bovie Medical Corporation’s website or by dialing 1-877-344-7529 for U.S. callers or 1-412-317-0088 for International callers and using the replay access code 10081682.

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 filings with the Securities and Exchange Commission including the Company’s Report on Forms 10-K and 10-Q for the year ended December 31, 2014 and the quarters ended March 31, 2015, June 30, 2015 and September 30, 2015, respectively. 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.