Trading Under the Symbol: ISDR
Transcript of
Bovie Medical Corporation
First Quarter 2017 Earnings Call
May 15, 2017
Participants
Rob Gershon - CEO
Jay Ewers - CFO
Analysts
David Turkaly - JMP Securities
Matt O’Brien - Piper Jaffray
Charles Haff - Craig-Hallum
Russell Cleveland - RENN Capital
Presentation
Operator
Good afternoon, ladies and gentlemen, and welcome to the First Quarter of 2017 Earnings Conference Call for
Bovie Medical Corporation. At this time, all participants have been placed in a listen-only mode. At the end of the
company’s prepared remarks, we will conduct a question-and-answer session. Please note that this conference
call is being recorded and the recording will be available on the company’s website for replay shortly.
Before we begin, I would like to remind everyone that our remarks and responses to your questions today may
contain forward-looking statements that are based on the current expectations of management and involve
inherent risks and uncertainties that could cause actual results to differ materially from those indicated, including
those identified in the Risk Factors section of our most recent annual report on Form 10-K filed with the Securities
and Exchange Commission, as well as our most recent 10-Q filing. Such factors may be updated from time to
time in our filings with the SEC, which are available on our website. We undertake no obligation to publicly
update or revise our forward-looking statements as a result of new information, future events or otherwise.
This call will also include references to certain financial measures that are not calculated in accordance with
Generally Accepted Accounting Principles, or GAAP. We generally refer to these as non-GAAP financial
measures. Reconciliations of those non-GAAP financial measures to the most comparable measures calculated
and presented in accordance with GAAP are available in the earnings press release on the Investor Relations
portion of our website.
I would now like to turn the call over to Mr. Rob Gershon, Bovie Medical’s Chief Executive Officer. Please go
ahead, sir.
Rob Gershon - CEO
Thanks, Dagmar. Good evening, everyone, and welcome to our first quarter 2017 earnings call. I am joined on
the call this evening by our Chief Financial Offer, Jay Ewers, and our Chief Commercialization Officer, Jack
McCarthy.
Let me begin with a brief agenda for this evening’s call. I’ll begin my prepared remarks with a high level summary
of our results for the first quarter of 2017, along with a review of the multiple factors that contributed to our
Transcript:
BovieMedicalCorporation
FirstQuarter2017EarningsCall
May15,2017
Trading Under the Symbol: ISDR
performance during the quarter. I will then provide you with an update on our operational progress in the first
quarter. Then, I’ll turn the call over to Jay, who will discuss our quarterly financial results in detail and review our
financial guidance for 2017, which we just introduced in this afternoon’s earnings release. Following Jay’s review
of our 2017 guidance, I will share some closing remarks before we open the call up for your questions.
Now let’s get started with an overview of our financial performance. During the first quarter, we achieved total
revenue of $8.4 million, which represented an 8% growth year-over-year. Our revenue results were driven
primarily by 5% growth in our largest business segment, which we call Core, and 71% growth in our Advanced
Energy segment. Q1 revenue growth also benefited from 7% growth in sales from our OEM segment. Overall,
our revenue performance in IQ was in line to slightly better than expected in our Core and OEM segments, while
our Advanced Energy segment experienced slower than expected sales growth in the first quarter driven primarily
by lower generator sales to new customers.
I will now spend a few moments elaborating on the dynamics we experienced in our Advanced Energy segment in
Q1. Revenue in our Advanced Energy segment increased 71% year-over-year in the quarter, driven by a solid
revenue performance in the surgical oncology market, offset by weaker revenue performance in the plastic
surgery market.
As we have discussed on earnings conference calls throughout 2016, we have experienced strong demand for
our J-Plasma technology from plastic surgeons. We identified the plastic surgery market as a potential growth
area, given the strong procedure tailwinds, office-based procedure setting, and shorter time-to-close dynamics.
Plastic surgeons have identified J-Plasma for use in a variety of procedures, including breast reconstruction and
wound debridement. In fact, surgeons have commented in white papers on the benefits of using J-Plasma in both
of these areas. In breast reconstruction for example, J-Plasma allows for breast capsule scoring with controlled
precision and reduced concern for injury to surrounding structures. Likewise, in wound care, J-Plasma can be
used with controlled precision when ablating diseased tissue with similarly reduced concern for injury to
surrounding healthy structures.
In addition to these procedures, we also began to see J-Plasma being used in various plastic procedures that we
would characterize as emerging areas. At our National Sales Meeting at the beginning of 2017, we dedicated
significant time to understanding the potential opportunities from these emerging procedure areas and refining our
selling strategy in the plastic surgery market overall. Trends in both new plastic surgeon adoption and in
handpiece utilization slowed in the weeks that followed our National Sales Meeting as we refocused our efforts
and reprioritized our procedural targets.
As discussed on prior calls and consistent with what we are now seeing in plastic surgery market, we are
expanding our clinical development program for J-Plasma in emerging areas, including dermal and sub-dermal
procedures. Importantly, we continue to believe there is a significant market opportunity for our J-Plasma
technology. We are very encouraged by the surgeon feedback on J-Plasma’s performance in the different
procedures, with surgeons highlighting J-Plasma’s unique properties.
I’ll share additional color on the potential opportunity for J-Plasma as part of my commentary on our 2017 growth
expectations, but for now, the takeaway here is that while our J-Plasma sales in Q1 were impacted by slower new
surgeon adoption as our sales force refocused selling efforts in emerging areas, we are very encouraged by the
early feedback from plastic surgeons who have incorporated our innovative J-Plasma technology into their
procedures in recent months. Our confidence in the growth outlook for J-Plasma is further supported by the
continued positive traction we are seeing in the surgical oncology market.
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BovieMedicalCorporation
FirstQuarter2017EarningsCall
May15,2017
Trading Under the Symbol: ISDR
Before I turn the call over to Jay for a financial review, I will share an update on our operating progress,
specifically in the areas of new products, new sales partnerships and enhancing our Medical Advisory Board.
First, with respect to new product innovation, we have made notable progress so far in 2017 with three significant
510(k) clearances. In March, we announced 510(k) clearances for a new J-Plasma generator and a new open
handpiece, both of which incorporate our Cool-Coag technology. Cool-Coag is a new feature that combines the
unique benefits of J-Plasma, namely increased precision with minimal thermal spread, with standard monopolar
coagulation and helium spray coagulation capabilities. This functionality is available to surgeon users in one
handpiece and allows the surgeon to benefit from using a single device that offers the greater control of tissue
effect that J-Plasma delivers, while being able to switch to a monopolar or helium spray coagulation mode with
just the push of a button. We expect this new open handpiece to enhance our growth in the surgical oncology
market, once fully commercialized later this year.
Just last week, we announced a 510(k) clearance for our new J-Plasma Precise Flex handpiece. This is an
important clearance for Bovie as it introduces innovative technology and allows us to continue to build our
presence in an important area of the surgical market, robotic-assisted procedures. The J-Plasma Precise Flex
handpiece has a flexible shaft that can be controlled with graspers, forceps and grasping instruments and was
designed to be used through an accessory port of a robot, such as Intuitive’s da Vinci Surgical System. When
used in robotic-assisted procedures, the J-Plasma Precise Flex can be controlled entirely from a surgeon’s
console using a robotic grasper which allows a surgeon the ability to access and visualize a wide variety of
surgical planes.
The early feedback on the Precise Flex is encouraging. One of the preeminent surgeons in the area of roboticassisted procedures, Dr. Vip Patel, believes that the Precise Flex will enable surgeons to access areas of the
anatomy that are not possible with a laparoscopic version, and that this flexibility, combined with the Cool-Coag
technology, may also allow surgeons to complete all aspects of cutting, coagulating and ablating tissue with one
instrument, potentially reducing the need to use other instruments. We are currently targeting a full commercial
launch of Precise Flex in the second half of 2017.
Second, in January we announced an exciting sales channel partnership as part of our strategy to identify
opportunities to drive growth in our Advanced Energy segment. The partnership is with CONMED, a global
medical device company with a strong sales presence and brand recognition in the areas of minimally invasive
and orthopedic surgery around the world.
CONMED will market our PlazXact Ablator as part of their UltrAblator Bipolar series for use in a variety of
arthroscopic procedures. We look forward to contributions from this partnership to drive growth in our Advanced
Energy business as the product enters full commercialization later in 2017 and expect it to be a material driver of
growth in our Advanced Energy segment beginning in 2018.
Finally, we announced the fifth member to our Medical Advisory Board in Q1. In January, we announced the
addition of Dr. Dennis Chi, the Head of Ovarian Cancer Surgery at Memorial Sloan Kettering Cancer Center. The
addition of Dr. Chi represents the continuation of our efforts to build a group of thought leaders across surgical
specialties to increase awareness of the many advantages of our innovative J-Plasma technology in specific
clinical applications.
Dr. Chi is a world-renowned surgeon, specifically as it relates to using advanced surgical techniques to treat
cervical, uterine and ovarian cancers. Dr. Chi has been the principal investigator of several institutional and multicenter trials and has published more than 100 papers on ovarian cancer surgery. Dr. Chi’s expertise in
gynecologic oncology expands the surgical specialties covered by the five members of our Medical Advisory
Board, which now includes urology, gynecology, cardiac surgery, thoracic surgery and GYN oncology.
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BovieMedicalCorporation
FirstQuarter2017EarningsCall
May15,2017
Trading Under the Symbol: ISDR
With that, let me turn the call over to Jay for a detailed review of our financial results and a summary of our 2017
financial outlook which we introduced in this afternoon’s press release. Jay?
Jay Ewers - CFO
Thank you, Rob. Before I begin, I would like to highlight a change in our financial disclosure this quarter that we
believe will help the investment community better understand the underlying growth and profitability performance
in each of Bovie’s primary business areas.
Specifically, beginning in the first quarter of 2017, we have adopted reportable segments to align with changes in
how we manage our business, review operating performance, and allocate resources, as a result of the growth in
Advanced Energy and the different behavior of the Core and OEM product lines. In addition to our historical
practice of disclosing revenue performance by these business lines, our new segment reporting will include the
underlying operating profitability of each of these segments. To assist in the evaluation of the historical trends
under this new reporting methodology, we will provide 2016 quarterly information in the supplemental document
available on our Investor Relations website.
Turning to our first quarter financial results, total revenue for first quarter 2017 increased $600,000 or 7.9% to
$8.4 million, compared to $7.8 million in the first quarter of 2016. Revenue in the United States increased
$400,000 or 5.7% year-over-year to $7 million, and international revenue increased $200,000 or 20.4% year-overyear to $1.4 million. International sales represented approximately 17% of sales this year compared to
approximately 15% of sales last year, driven by initial orders from distribution partners in new geographies. Total
revenue growth was driven by a 4.6% increase in sales from our Core segment, a 70.5% increase in sales from
our Advanced Energy segment, and to a lesser extent a 7% increase in sales from our OEM segment.
First quarter sales by product line was driven by a 25.4% increase in sales of electrosurgical products, partially
offset by year-over-year declines in sales of cauteries, lighting and other products of 9.8%, 12.1% and 18.9%
respectively in the period. By product line, sales of electrosurgical, cauteries, lighting and other products
represented 64%, 20%, 5% and 11% of total revenue.
Gross profit increased $900,000 or 27.2% year-over-year to $4.2 million, compared to $3.3 million for first quarter
2016. Gross margin increased 770 basis points year-over-year to 50.4% for the first quarter of 2017, compared to
42.7% last year. Gross margins in first quarter 2016 were negatively impacted by a write-down of approximately
$484,000 for obsolete inventory. Excluding this impact, gross margins increased 140 basis points year-over-year
in the first quarter of 2017, driven by product and pricing mix benefits in the company’s Core segment.
Operating expenses for first quarter 2017 increased $700,000 or 12.2% to $6 million, compared to $5.3 million for
first quarter 2016. The increase in operating expenses was driven primarily by a $400,000 increase in salaries
and related costs and by a $200,000 increase in selling, general and administrative expenses compared to the
comparable period last year.
Loss from operations for the first quarter of 2017 was $1.7 million, compared to a loss from operations of $2
million for the comparable period last year. The net loss attributable to common shareholders for the first quarter
of 2017 was $1.7 million or $0.06 per diluted share, compared to a loss of $1.9 million or $0.07 per diluted share
for the first quarter of 2016.
The company had working capital of $19.7 million as of March 31, 2017 as compared to $21.3 million as of
December 31, 2016. Our days of inventory outstanding declined by 26 days to 186 days in the first quarter,
compared to 212 days in the first quarter of 2016.
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BovieMedicalCorporation
FirstQuarter2017EarningsCall
May15,2017
Trading Under the Symbol: ISDR
Total cash flow used in operations was $2.8 million, compared to cash used in operations of $2.3 million last year.
The change in cash flow used in operations was driven primarily by our net loss of $1.7 million and by changes in
working capital accounts, including inventory investments, which increased $1.2 million in the period. As of March
31, 2017, the company had cash and cash equivalents of $12.3 million, as compared to $15.2 million as of
December 31, 2016.
Turning now to a review of our 2017 financial guidance, which we introduced in this afternoon’s press release, for
the 12 months ended December 31, 2017, we expect total revenue in the range of $38.3 million to $40.3 million,
representing growth of 5% to 10% year-over-year, compared to total revenue of $36.6 million in fiscal year 2016.
We expect total revenue growth in fiscal year 2017 to be driven by Core sales growth in the range of
approximately 4% to 8% year-over-year, Advanced Energy sales growth in the range of approximately 60% to
80% year-over-year, and an OEM sales decline in the range of approximately 25% to 35% year-over-year.
For consideration, when evaluating our reported growth expectations this year, we have provided additional color
on nonrecurring contributions to our OEM sales results in 2016 that we believe are masking the underlying growth
profiles of both our OEM segment and our total company growth expectations this year. Excluding sales of $2.3
million in fiscal year 2016 related to unique generator demand from a large OEM customer, the company’s OEM
segment sales in fiscal year 2017 are expected to increase in the range of 16% to 32% year-over-year. Similarly,
excluding sales of $2.3 million in fiscal year 2016 related to unique generator demand from a large OEM
customer, total company sales in fiscal year 2017 are expected to increase in the range of 12% to 17% year-overyear.
Importantly, we remain focused on improving our profitability performance over time and as such we have
introduced expectations for adjusted EBITDA this year. We expect adjusted EBITDA loss in a range of $1.2
million to $1.4 million, compared to adjusted EBITDA loss of $2.2 million in fiscal year 2016. We have included a
full reconciliation from GAAP to non-GAAP adjusted EBITDA in our earnings press release this afternoon.
Finally, for modeling purposes for the full year 2017 period, we expect gross margins in the low 50s this year
compared to 49% last year, stock-based compensation expense of approximately $700,000, depreciation and
amortization of approximately $700,000, and weighted average diluted shares outstanding of approximately 31
million shares.
With that, I’ll turn the call back to Rob for closing remarks. Rob?
Rob Gershon - CEO
Thanks, Jay. Before we open the call for your questions, I will share a few thoughts on our outlook for 2017 and
why we are confident in our expectations for growth this year.
Let me start with a little background on our decision to introduce formal financial guidance as part of our first
quarter earnings report this evening. Simply stated, this was a direct result of the valuable feedback we received
from analysts and investors following our Q4 2016 earnings conference call. These conversations highlighted the
fact that our expectations for growth in 2017 could have been more clearly communicated.
Our financial guidance philosophy is to help the investment community understand not only the range of total
company revenue growth we expect this year, but also the underlying segment growth rates we expect to drive
our total company results. Importantly, we remain committed to improving our profitability over time and our
formal financial guidance includes the expectations for improving profitability, as defined by our adjusted EBITDA
in 2017.
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BovieMedicalCorporation
FirstQuarter2017EarningsCall
May15,2017
Trading Under the Symbol: ISDR
We have also enhanced our disclosure practices beginning in Q1 2017 by moving to segment reporting practices,
which will build on the historical reporting of our revenue by major business line by adding the operating
profitability of our primary business segments. This is part of our commitment to improve transparency with a
goal of helping the investment community better understand the underlying trends in our business.
In management’s view, we have multiple tailwinds to the Bovie Medical story in 2017 and beyond. We expect
total revenue growth on a normalized basis to increase in the range of approximately 12% to 17% year-over-year
in 2017. We believe this growth rate, which excludes the one-time benefits from OEM demand in 2016, better
reflects the underlying growth profile of our business as compared to the GAAP reporting growth rate of 5% to
10% implied by our 2017 financial guidance.
This normalized growth profile is driven by improving trends in our largest business segment, Core, where we
expect sales growth in the mid to high single-digits this year and our strong growth in our Advanced Energy
segment in the range of 60% to 80% year-over-year. Growth in our OEM segment will be impacted by the difficult
comparison related to the nonrecurring orders from a major medical device company. Although, excluding these
sales in 2016, we expect our OEM business to increase at least 16% year-over-year in 2017.
While the pace of J-Plasma adoption slowed in the first quarter, we are confident that this is not a competitive
issue. Rather, we made the decision to refocus the direct sales force on surgical oncology and plastic surgery to
enhance the company’s foundation of growth in the future. We remain confident in the J-Plasma growth
opportunity this year as we continue to see strong adoption and utilization trends in the surgical oncology market
and we continue to evaluate new opportunities for J-Plasma in the plastic surgery market.
The longer-term outlook for growth in our Advanced Energy business has been enhanced by our progress with
the sales channel partnerships, like our PlazXact CONMED agreement, and by our planned commercial launches
of our new generator and our open handpiece and our Precise Flex handpiece for use in robotic-assisted
procedures.
We are focused on driving further operating progress and improving financial results over the balance of 2017 and
we appreciate the continued support from our Bovie Medical shareholders.
That concludes our prepared remarks for this evening. Dagmar, we will now open the call for questions.
Operator
Thank you. [Operator instructions]. Our first question will come from Dave Turkaly. Please state your question.
Q: Good afternoon. Rob, I just want to be clear on this. So I think you highlighted some reasons why plastics
were weak. I just want to make sure you don’t think there was any sort of lingering impact from Hologic, and what
gives you comfort sort of that the oncology side, any color you can give us that would help us understand how
that was still pretty good in the quarter.
Rob Gershon - CEO
Sure, happy to elaborate, yes. There is no relation at all to Hologic with respect to our performance. So, as
we’ve indicated in previous calls, Hologic relationship didn’t contribute to sales outside of the demo order. So,
there was no hangover so to speak from Hologic.
With respect to surgical oncology, this is an area of focus that we spent during our National Sales Meeting early in
the year, at the beginning of the year, and we have seen growth in surgical oncology since the training and since
we moved the focus to just surgical oncology and plastic surgery. So, as we monitor, we’ve seen quite significant
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BovieMedicalCorporation
FirstQuarter2017EarningsCall
May15,2017
Trading Under the Symbol: ISDR
growth actually in surgical oncology. And as I indicated in the prepared remarks, it was that growth that kind of
offset the decline in generator sales.
Q: Thanks for that, and I realize it was just demo sales. I was actually wondering just like from a perception
standpoint, but that color is helpful in terms of what’s going on, on the oncology side. I guess as you look at your
reps and then sort of their productivity, any update there you can give us, any of their numbers or where you think
that’s going over I guess the remainder of this year and beyond, if you can sort of refresh our memory on what
you’re expecting there, from these direct reps?
Rob Gershon - CEO
We are expecting a real uptick in their productivity, and here’s why. At the National Sales Meeting, which
occurred at the beginning of the year, we refocused the reps on two areas, so surgical oncology and plastic
surgery. We specifically really focused on the attractiveness of plastic surgery in a non-acute care setting with its
shorter sales cycle. Now as I indicated in the prepared remarks, it is now with that focus, we expect to see an
uptick in productivity across the board in our entire sales organization as we are all executing against that very
same strategy.
Q: Okay, thanks.
Operator
Our next question comes from Matt O’Brien. Please state your question.
Q: Thank you. Rob, I think it would be helpful just to go through a little bit more on the J-Plasma outlook for the
business, because I know that was an area that you were expecting some pretty big things for and that’s going to
be a focus among investors. So, by my math, I think it’s about—I was thinking it was going to be more of a
doubling this year of revenue, and now you know that 60% to 80% is still good but roughly 1.3 million below what I
was kind of expecting and I think the Street was expecting.
So if you can just kind of walk through some of the components for that shortfall and then how we think about that
business as we exit the year with all these new products and new areas, I think that would be helpful as well.
Rob Gershon - CEO
So, let me just start by walking through guidance for a moment. So, our expectation is that we will grow 12% to
17%. Remember our formal guidance is 5% to 10%, but we are suggesting that formal guidance has in it the $2.3
million of OEM revenue that we referenced in our prepared remarks. So omitting that, we see it as 12% to 17%.
Of that, yes, we do expect the Advanced Energy to grow 60% to 80%.
We’re confident in that growth expectation, really driven by three things: the focused approach of our direct sales
force as I mentioned before with surgical oncology and plastic surgery; the new product launches that we
referenced earlier; as well as the CONMED partnership for the ablator product. Those are the big revenue
drivers.
I’m not sure, Matt, if I fully answered your question. So if you don’t mind, if you would just repeat any portion that
I didn’t answer, I’m going to get to it right now.
Q: Sure. So I mean, that all makes sense, and I think as I’m thinking about what you’re saying here in exiting the
year, it all makes sense that there is probably going to be an acceleration. But I think there’s going to be a little
consternation about the near-term shortfall as far as the revenues this quarter and then the outlook for J-Plasma
specifically for the year, and that’s coming up I think a little bit short of what some people had been expecting.
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BovieMedicalCorporation
FirstQuarter2017EarningsCall
May15,2017
Trading Under the Symbol: ISDR
So, the components for that shortfall and then how do we think about the business as we exit the year, given all
these new products and applications.
Rob Gershon - CEO
Yes, the way we think about it is, as we think about it strategically, we think it was critically important to take a
step back and reflect on the learnings from the market with J-Plasma and really narrow our focus on the biggest
growth opportunities for us. So in a sense, we took a step back to take two steps forward. And where we believe
that leads us to is growth throughout the year, and we certainly expect it to be—the back-end growth is certainly
going to begin to accelerate and set us to a good trajectory for 2018. So, that refocus on the growth areas is what
we expect to really fuel the growth of J-Plasma.
And just as a reminder, this is literally the first time in the company’s history where we have introduced formal
financial guidance. We’re certainly supremely confident in the guidance, and the tailwinds that we expect from
the new product launches and other activities certainly will give us the ability to have that level of confidence.
Q: Okay. And then as my follow-up, just it sounds like there’s a level of conservatism you’re building into
guidance, which is great to hear, and obviously the smart thing to do, but it might be helpful just to hear a little bit
more, as you took those steps back or took that step back and thinking about the markets where you’re focused,
what type of market opportunities are you seeing now? Maybe you can just give some general color, maybe
market sizes, these procedure opportunities, 200,000 or 300,000 cases whereas before we were focused on
80,000 case opportunities, anything along those lines might be helpful.
Rob Gershon - CEO
Yes, very fair question, Matt. So really, where we see the growth opportunities, certainly in surgical oncology and
the new open handpiece will further help in that regard. But a real big opportunity we see is in plastic surgery. So
as you know, we have been in plastic surgery for quite some time and we made reference in our prepared
remarks to emerging areas of growth, and those emerging areas include dermal and sub-dermal coagulation
procedures. So, as you know, we are pursuing a specific indication for the dermal procedures and we are also
focusing on new applications in the sub-dermal space where coagulation is being used.
And we mentioned that we are expanding our clinical programs accordingly. So, we’re working with the FDA on
that as well and we see sub-dermal coagulation following various plastic surgery procedures to be a real, real
growth area. We are hesitant for competitive reasons at this point in time to further elaborate on the specific
procedures, but those are high-volume procedures where surgeons are realizing the positive benefits of J-Plasma
and we really need to put a program around it, and that’s why we’re expanding our clinical programs and working
with the FDA accordingly.
Q: Fair enough. Thank you.
Operator
Our next question comes from Charles Haff. Please state your question.
Q: Thanks. I had a question regarding your guidance for Advanced Energy. What kind of assumption do you
have in your 2017 Advanced Energy guidance for Precise Flex or PlazXact?
Rob Gershon - CEO
Okay, sure. So certainly, embedded in the guidance is our new product launches. You asked about the Precise,
the new open handpiece in Flex, that was the question? Yes, so it’s embedded in the guidance with respect to
the timing of the launch. So, it’s in there but we’re not getting overly granular, but it’s certainly a part of that.
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BovieMedicalCorporation
FirstQuarter2017EarningsCall
May15,2017
Trading Under the Symbol: ISDR
Q: Okay. And is there some PlazXact revenue in that guidance as well?
Rob Gershon - CEO
Yes, there is. As I indicated in the prepared remarks, PlazXact will have a much more material impact in 2018,
but it will have an impact in 2017. So, it does include some growth in 2017 in PlazXact.
Q: Okay. And then staying on PlazXact, I think that CONMED has been selling it now, correct me if I’m wrong
there. How is it going, what kind of feedback have you heard, and were there any PlazXact sales in the first
quarter?
Rob Gershon - CEO
Right. So, there were some modest PlazXact sales that were reported in the first quarter. And this partnership is
in the very, very early innings. So we just really launched it in March, so it’s really too early to comment
specifically on how it’s going because it’s so early in the process, but certainly there have been some sales that
are reported in PlazXact.
Q: Okay. And I know one of the kind of the key factors that you guys were thinking about was where CONMED
was going to price it at. Would you mind sharing where that pricing ended up now that it’s being sold and is that
better or less than your expectations that you had previously?
Rob Gershon - CEO
Yes, we cannot comment on their pricing strategies at this time. So we have not been kind of given the green
light to do that.
Q: Okay, fair enough. And then my last question is on Advanced Energy, just so we’re all level-set in terms of the
60% to 80% growth that you’re talking about there, can you share with us, Jay, the Advanced Energy revenues
for 2016 please?
Jay Ewers - CFO
Sure, I’d be happy to, Charles. Advanced Energy revenue for 2016, do you want it by quarter?
Q: Just an annual number would be fine.
Jay Ewers - CFO
$3,491,000.
Q: Perfect. Thanks for taking my questions, guys.
Operator
Our next question comes from Russell Cleveland. Please state your question.
Q: Some months ago, when our agreement with Hologic ended, you had mentioned that we were going to have a
replacement company fairly shortly, and all of that talk seems to have disappeared. Can you comment on what
we’re doing in that regard and any enhancement in OB/GYN and other areas?
Rob Gershon - CEO
Absolutely, I’m happy to, Russell. So just to be clear, those conversations have not disappeared. In fact, they are
certainly ongoing. So let me take a step back for a moment and describe what our strategy is with respect to a
potential sales channel partnership for GYN.
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BovieMedicalCorporation
FirstQuarter2017EarningsCall
May15,2017
Trading Under the Symbol: ISDR
As I indicated in the prepared remarks and commented a little bit in this Q&A, we have made the focus of the
direct sales force, surgical oncology and plastic surgery, and we are not ignoring the GYN space. So, our plan is
to enter into a sales channel partnership with a GYN partner to focus on that GYN specialty. You can think of it
as outsourcing that specialty to a sales channel partnership.
Now, since the partnership with Hologic did not move forward, we have been in active discussions with multiple
sales channel partners, and those partnership discussions continue. Right now, it’s a little difficult for us to say
the exact timing when one is going to come to fruition, because the timing is not entirely in our control because
we’re dealing now with multiple interested parties and we’re going down the path of exploration. So, as soon as
we have an update, we will absolutely notify the investment community accordingly. But that strategy has not
disappeared.
And it is by the way—I’m sorry, just one more quick comment, Russell, before your follow-up question. It’s
important to note that our 2017 guidance does not assume that a sales channel partnership is in place. So that
would certainly, if one is announced, we would comment further on our guidance accordingly, but right now it is
not assumed in our guidance.
Q: I know it’s difficult, but are we talking a quarter or what? I mean, I think some—a little more enhancement here
about when we think we can get this done would be helpful.
Rob Gershon - CEO
Yes, so there is certainly urgency to get this done as quickly as practical. The reality is we’re dealing with multiple
organizations and we don’t completely control the timing on our own. That’s about as much as we can comment.
But as soon as we have news to share, we will share it right away.
Q: Great, okay. One simple question, on the dermatology, which seems to be very, very good for us, we were
talking about submitting to the FDA our results so that we could start advertising on the plastic surgery, face-lifting
and so forth. What’s the timing on that now?
Rob Gershon - CEO
Yes, sure. We’ve commented in several of the most recent earnings calls that the dermal resurfacing is off-label,
so of course we cannot promote it or support it, and we are in the process of filing for a very specific 510(k)
indication on that. It does take time, we are still moving forward, we have done a ton of work in this regard, and
the process is ongoing.
So, it’s happening, and once it occurs, we’ll certainly make an announcement because it would be significant, but
it’s a very important part of the overall story.
Q: Right, okay, thank you so much.
Operator
Okay, that is all the time we have for questions. This does conclude our conference for today. Thank you for
your participation.
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