Bovie Medical Corporation reported financial results for its fourth quarter and full year ended December 31, 2017.
Fourth Quarter 2017 Financial Summary:
- Total Q4 revenue of approximately $11.3 million, up 20% year-over-year.
- Advanced Energy revenue of $3.1 million, up 219% year-over-year, driven by strong J-Plasma® sales.
- Core revenue of approximately $7.7 million, up 2% year-over-year.
- OEM revenue of approximately $0.6 million, down 42% year-over-year.
- Total Q4 adjusted EBITDA loss of approximately $580,000 versus adjusted EBITDA loss of approximately $589,000 in the fourth quarter of 2016 and excluding the effect of severance and related expense, the Q4 2017 adjusted EBITDA income would have been $944,000.
Full Year 2017 Financial Summary:
- Total revenue of approximately $38.9 million, up 6% year-over-year.
- Advanced Energy revenue of $7.6 million, up 119% year-over-year, driven by strong J-Plasma® sales.
- Core revenue of approximately $28.6 million, up 3% year-over-year.
- OEM revenue of approximately $2.6 million, down 51% year-over-year.
- Total adjusted EBITDA loss of approximately $3.7 million versus adjusted EBITDA loss of approximately $2.2 million for 2016 and excluding the effect of severance and related expense, the 2017 adjusted EBITDA loss would have been $2.2 million.
Management Comments:
“Bovie Medical is pleased to report a strong close to 2017, with fourth quarter revenue growth of 20% year-over-year driven by impressive sales of our J-Plasma technology in the cosmetic surgery market,” said Charlie Goodwin, Chief Executive Officer. “Our sales performance within the cosmetic surgery market in 2017, combined with the positive feedback received from our new surgeon customers this past year, have demonstrated the opportunity that lies in store for our J-Plasma technology.”
Mr. Goodwin continued: “Looking forward, we are committed to capitalizing on this opportunity and driving growth by further enhancing the focus of our organization on the cosmetic surgery market. In 2018, we will work to increase surgeon adoption while pursuing additional clinical support to position our J-Plasma technology for sustainable long-term growth in this market. We expect this strategy to translate to strong returns for our shareholders over time and look forward to providing future updates on our progress.”
Fourth Quarter 2017 Results:
Total revenue for fourth quarter 2017 increased $1.9 million, or 19.5%, to $11.3 million, compared to $9.5 million in the fourth quarter of 2016. Advanced Energy segment sales, nearly all of which are from sales of J-Plasma products, increased approximately $2.1 million, or 218.6% year-over-year, to $3.1 million, compared to approximately $1.0 million last year. Core segment sales increased approximately $0.1 million, or 1.9% year-over-year, to $7.7 million, compared to approximately $7.5 million last year. OEM segment sales decreased $0.4 million, or 41.9% year-over-year, to $0.6 million, compared to $1.0 million last year.
By product line, sales of electrosurgical, cauteries, lighting and other products represented 70% 17%, 4% and 9% of total revenue, respectively, for the three months ended December 31, 2017. The largest product line contributor to total revenue growth in the fourth quarter of 2017 was a 35.8% increase in sales of electrosurgical products, driven primarily by Advanced Energy sales.
Gross profit for the fourth quarter of 2017 increased $1.1 million, or 22.1% year-over-year, to $5.9 million, compared to $4.8 million for fourth quarter of 2016. Gross margin increased approximately 110 basis points year-over-year to 52.0% for the fourth quarter of 2017, compared to 50.9% last year. The increase in gross margins was primarily due to higher margins in the Advanced Energy segment, driven by higher volume and pricing mix on generator sales.Revenue in the United States increased $0.5 million, or 5.8% year-over-year, to $9.5 million, and international revenue increased approximately $1.3 million, or 244.1% year-over-year, to $1.9 million. Our international sales growth in the fourth quarter was primarily driven by strong demand from distributors in our Core business, fueled in part by additional registrations in international countries that were obtained during the course of 2017. We also saw strong international sales during the quarter in our Advanced Energy business.
Operating expenses for the fourth quarter of 2017 increased approximately $1.1 million, or 18.9% year-over-year, to $7.0 million, compared to $5.9 million for the fourth quarter of 2016. The increase in operating expenses was driven by $1.5 million of non-recurring severance and related expense due to the departures of former members of our executive team and the related closure of the corporate office in Purchase, New York. Fourth quarter operating expenses increased $1.2 million driven by selling, general and administrative expenses, which were partially offset by a $1.4 million decrease in salaries and related costs.
Loss from operations for the fourth quarter of 2017 was $1.1 million, compared to a loss from operations of $1.0 million for the comparable period last year.
Net loss attributed to common shareholders for the fourth quarter of 2017 was $0.8 million, or $0.03 per diluted share, compared to a net loss of $0.5 million, or $0.02 per diluted share, for the fourth quarter of 2016.
As of December 31, 2017, the Company had cash and equivalents of $10.7 million as compared to $15.2 million as of December 31, 2016. The Company had working capital of $16.6 million as of December 31, 2017 as compared to $21.3 million as of December 31, 2016.
Full Year 2017 Results:
Total revenue for the full year 2017 increased $2.3 million, or 6.2%, to $38.9 million, compared to $36.6 million in 2016. Total revenue growth was driven by an 118.7% increase in Advance Energy sales and a 3.0% increase in Core sales, and was partially offset by a 51.2% decrease in OEM sales.
Gross profit for 2017 increased $1.8 million, or 10.3% year-over-year, to $19.8 million, compared to $17.9 million for 2016. Gross margin for 2017 increased approximately 190 basis points year-over-year to 50.8%, compared to 48.9% last year. The increase in gross margin was driven by higher margins in the Company’s Advanced Energy and Core segments. The overall increase in margins was partially offset by reduced revenue and orders of lower margin product in the Company’s OEM segment.
Operating expenses for 2017 increased $3.3 million, or 15.3% year-over-year, to $25.0 million, compared to $21.7 million for 2016. The increase in operating expenses was primarily driven by a $2.8 million increase in selling, general and administrative expenses over the prior year.
Loss from operations for 2017 was $5.3 million, compared to a loss from operations of $3.8 million for 2016.
Net loss attributed to common shareholders for 2017 was $5.1 million, or $0.17 per diluted share, compared to a loss of $4.0 million, or $0.15 per diluted share, for 2016.
2018 Outlook:
- The Company expects total revenue in the range of $41.0 million to $42.5 million, representing growth of 5% to 9% year-over-year. The Company expects total revenue growth to be driven by Advanced Energy sales growth in the range of approximately 40% to 45% year-over-year.
- The Company expects adjusted EBITDA in a range of $1.0 million to $1.5 million.
Conference Call Details:
Management will host a conference call at 4:30 p.m. Eastern Time on March 12, 2018 to discuss the results of the quarter and to 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 8981539. 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:
https://event.on24.com/wcc/r/1553553/E526C7643DE03B214A33F4DC804C2746
A telephonic replay will be available approximately two hours after the end of the call through March 26, 2018. 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: 8981539. The webcast will be archived on the Investor Relations section of the Company’s website.
