January 2017 · • GYN ONC • Oncology • ENT • Vascular Inial Targeted Speciales > $2 Billion...

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Transcript of January 2017 · • GYN ONC • Oncology • ENT • Vascular Inial Targeted Speciales > $2 Billion...

January2017

SafeHarborStatement

Certainma1ersdiscussedinthispresenta7onandoralstatementsmadefrom7meto7mebyrepresenta7vesoftheCompanymaycons7tuteforward-lookingstatementswithinthemeaningofthePrivateSecuri7esLi7ga7onReformActof1995andtheFederalsecuri7eslaws.AlthoughtheCompanybelievesthattheexpecta7onsreflectedinsuchforward-lookingstatementsarebaseduponreasonableassump7ons,itcangivenoassurancethatitsexpecta7onswillbeachieved.

Forward-lookinginforma7onissubjecttocertainrisks,trendsanduncertain7esthatcouldcauseactualresultstodiffermateriallyfromthoseprojected.ManyofthesefactorsarebeyondtheCompany’sabilitytocontrolorpredict.ImportantfactorsthatmaycauseactualresultstodiffermateriallyandthatcouldimpacttheCompanyandthestatementscontainedinthispresenta7oncanbefoundintheCompany’sfilingswiththeSecuri7esandExchangeCommissionincludingtheCompany’sReportonForm10-QforthequarterendedSeptember30,2016,and10-KfortheyearendedDecember31,2015.Forforward-lookingstatementsinthispresenta7on,theCompanyclaimstheprotec7onofthesafeharborforforward-lookingstatementscontainedinthePrivateSecuri7esLi7ga7onReformActof1995.TheCompanyassumesnoobliga7ontoupdateorsupplementanyforward-lookingstatementsasaresultofnewinforma7on,futureevents,orotherwise.

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CompanySnapshot

Core OEM

Growth

•  Privatelabelelectrosurgicalmanufacturing

•  Customers:Largemedical

technologycompanies

•  J-Plasma

•  PlazXact•  Futurenewproducts•  Directandchannelpartners

•  Electrosurgical•  Cauteries•  Ligh7ngSolu7ons•  Soldthroughdistribu7on

YTDRevenue:$2.5M

YTDRevenue:$20.3M YTDRevenue:$4.4M

CoreProductExamples OEMProductExamples

GrowthProductExamples

•  Advancedenergy-basedmedicaldevicecompany•  Specializesindeveloping,manufacturingandmarke7ngofelectrosurgicalproducts

ExperiencedManagementTeam

Execu<ve JoinedBovie Representa<vePreviousExperience

RobGershonChiefExecu+veOfficer December2013

JayEwersChiefFinancialOfficer June2014

ToddHornsbyVicePresidentofSales August2014

ShawnRomanVicePresidentofResearch&

DevelopmentOctober2014

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RobSaronPresidentandDirector January1978

MosheCitronowiczSeniorVicePresident October1993

YearsofRelevantExperience

28Yrs.

34Yrs.

15+Yrs.

15Yrs.

35Yrs.

30Yrs. KCRTechnologies Sequen<alInforma<onSystems

JackMcCarthyChiefCommercializa+onOfficer March2014 28Yrs.

InvestmentHighlights

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GrowingCoreandOEMBusinessesinElectrosurgerywithGlobalFootprint

Transforma7onalJ-Plasma®SurgicalProductTarge7ngLargeandGrowingMarkets

RobustR&DPipeline

StrongDirectSalesforceandHighProfileChannelPartnersforGrowthSegment

HighlyExperiencedManagementTeam

HighGrowth(+28%YTD2016)andExpandingGrossMargin

StrongMomentuminCoreBusiness

•  Boviehasuniquebrandposi7onwithglobalnamerecogni7on

•  Long-standingrela7onshipswith“Big7”distributors•  Newproduct&privatelabellaunchesdriveincrementalgrowth

•  Ac7velytarge7ngnewmarketopportuni7es(e.g.,animalhealth)

•  Predictablerevenuegenerator

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AdvancingOEMBusiness

•  InboundOEMrequestsfromindustry’stopmanufacturers

•  Staggeredcustomercontractstosmoothrevenueinflows

•  Benefitsfromjointdevelopmentac7vi7es

•  Designanddevelopspecstoaddresspartners’innova7ons

•  Producefinishedproducts

2,038,000

1,947,038

695,171

GYNProcedures

SurgicalPlas7csProcedures

Aesthe7cPlas7csProcedures

Poten7alspecial7estotargetintheshort/mediumterm:•  Cardiac•  Thoracic•  Urology•  Generalsurgery

Sources:CDC,NIH,APGO,ASPS,ASAPS,AHA,ASPS*Assumes$375ASPfordisposablehandpiece,and$25,000ASPperJ-Plasmagenerator 8

•  GYNONC•  Oncology•  ENT•  Vascular

Ini<alTargetedSpecial<es>$2BillionTAM*--U.S.Only

SignificantMarketGrowthOpportuni7es

J-Plasma PlazXact

1,414,900

190,600

27,60022,700

1,257,600

Knee Shoulder Elbow Ankle

FuturePoten<alMarketApplica<on

Arthroplas<cProceduresfor:

U.S.andEUOrthopedicArthroplastyProcedureVolumes

Sources:MeddevicetrackerreportdatedAugust2016Note:2016Eprocedurevolumes

•  Revolu7onarytechnologyionizesheliumtocreatestreamofplasma•  Precisecusng,coagula7onandabla7onwithlimitedthermalspread

-  Stable,thin,focusedstreamofionizedheliumgas-  Widerangeofcontrol-  Noconduc7vecurrentsthroughthepa7entduringsurgery

•  Allowssurgeonstosafelyperformproceduresondelicatestructuressuchas:

-FallopianTubes -Ureters -Bowel

-Esophagus -Ovaries-LymphNodes

•  Protectedby38patents:

-  13USand3foreignissued

-  15USand7foreignpending

RecognizedasanInnova7onoftheYearby

TheSocietyofLaparoendoscopic

Surgeons(SLS)3YearsinaRow

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J-Plasma®:Transforma7onalProduct

J-Plasma®EnergyStreamforLimitedThermalDamage*

•  Clinicalstudycomparedlevelsofunintendedthermaldamagetoperitoneal7ssue(membraneliningtheabdominalcavity)amongotherenergy-basedsurgicaltoolsvsJ-Plasma®

•  Redareasrepresentthe

depthofthermalorenergydamageeachtoolleubelowthe7ssuesurface;blueareasrepresentunaffected7ssue

•  J-Plasma®demonstratedfar

lowestamountofcollateralthermalinjurytohealthy7ssuesurroundingtheopera7vesite

*Reference:PedrosoJ,Gu7errezM,VolkerW.J-Plasma,monopolarpencil,argonbeamandCO2laserelectrosurgery:compara7veevalua7onofthermalspreadinaporcine7ssuemodel(whitepaper).BovieMedicalCorpora7on.June2014 10

J-Plasma®Demonstra<onVideo

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J-Plasma®:Compe<<veAdvantages

Compara7veCaseStudy:J-Plasma®inEndometriosis600,000proceduresperyearinUS

KeyDifferences CO2Laser J-Plasma®Trea<ngpoten<allesions Treatsvisiblelesionsonly

Treatsvisibleandpoten7allesions

Tac<lefeedback Notac7lecusngfeedbackormaneuverability

Directtac7lecusngfeedbackandmaneuverability

Controlofenergy Requireslasersafetybackstop

Controlledenergy:streamdistancelimitedtosurgicalsite

ORrequirements Mul7plespecializedORrequirements(privileges,goggles,

techs,wetdrapes,etc.)

Noaddi7onalORresourcesrequired

Price Es7matedCapitalASP:$100,000+

Es7mateddisposablehandpieceASP:$425+

Es7matedCapitalASP:$25,000

Es7mateddisposablehandpieceASP:$375

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CurrentJ-PlasmaChannelPartners

•  Privatelyheldmedicaldevicecompanywithdeepexperience,exper7seandrela7onshipsintheplas7csurgery/aesthe7csspace

•  Non-exclusive4yearAgreementsignedJune30,2016

•  Trainingandlaunchplansunderway

Plas<cSurgery/Aesthe<cs

GYNandGYNOncology

•  Leadingwomen’shealthcompany(NASDAQ:HOLX)

•  Pilotunderway;op7ontoexpandintoglobaldistribu7onagreement

•  HologicwilladdJ-Plasma®productlinetoporwolioinGYNandGYN/oncologicalsurgeryinallU.S.andOUSmarketsitserves

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ClinicalResearchPipelineforJ-Plasma

LymphoceleReduc7on

PediatricHeartSurgery

DermalResurfacing

GYNOncology

VulvarDysplasia

ChronicWoundReduc7on

GeneralSurgeryOncology

Studies in Progress Planned Studies Es<matedTimingCategory

2017

2017

2017–2018

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ArthroscopicAblator

•  Sterile,single-usedeviceforcusng,coagula7ngandabla7onofsou7ssue•  Orthopedicsportsmedicinefocus•  Efficient7pdesigntranslatesintothefollowingadvantages:

–  Lowpowerrequirementtoini7ateabla7on–  Lowerpower=lowerheat=saferforthepa7ent–  Compa7blewithanygenerator

•  FDAclearanceAugust2016

PlazXact™

Targe7ngNewSpecial7es:MedicalAdvisoryBoard

•  Comprisedofsurgeonthought-leaderstoadviseongrowthproductlaunchesincludingJ-Plasma®applica7onforspecialtyprocedures

•  Ini7altargetspecial7esincluding:urology,cardiothoracicandcardiovascular.

•  Progressinrobo7cs

•  Expecttohave6-9surgeonmembers

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Dr.HusamBalkhy,Director,MinimallyInvasive&RobotCardiacSurgery,DuhossoisCenterforAdvancedMedicine

Dr.RobertJ.Cerfolio,Sec7onChief,ThoracicSurgeryUniversityofAlabamaHospital

Foundingmember:Dr.VipulPatel,worldrenownedrobo7csurgeon,MedicalDirectorofGlobalRobo7csIns7tute,Florida

Dr.CraigMcCoy,Women’sWellnessCenter,ColumbiaMO.Obstetrics&GynecologySpecialist

•  DevelopingnewgrowthproductstocomplementJ-Plasma®andboostgrowthincorebusiness

•  Cadenceofproductlaunches

J-PlasmaPrecise360™

BovieUl<mate®

IDS-310™

DERM101™DERM102™

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PlazXact™Ablator

World-ClassR&DCapabilityasGrowthCatalyst

J-PlasmaPrecise

•  NewGrowthproducts•  SelectnewCoreproducts•  FDAclearancesfornewindica7ons

•  J-Plasmalineextensions

2014 2015 2016 2017

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State-of-the-ArtManufacturingFootprint

Clearwater,FL Sofia,Bulgaria China

Size 60,000sq.u. 16,000sq.u. •  70,000sq.u.

Owned/Contracted

Owned Owned Contracted

Capabili7es

•  Assembly•  Integra7on•  FinalTes7ng•  Packaging•  Steriliza7onManagement

•  Manufacturing•  ComplexComponent

Assembly•  Ini7alTes7ng

•  ComponentManufacturing•  Sub-Assemblies•  FinishedMedicalDevices

(Electrodes)

Thecompanyalsorentsofficespaceof3,650sq.G.inPurchase,NY

Capacitytoincreaseoutputfromexis2ngfacili2es

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StrongFinancialPerformance

$7.8$10.1

$21.2

$27.1

41.3%

50.3%

42.6%

48.2%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

$0.0

$5.0

$10.0

$15.0

$20.0

$25.0

$30.0

Q32015 Q32016 YTD2015 YTD2016

GrossM

argin

Revenu

e($inmillions)

Core&OEM J-Plasma GrossMargin

•  Over20%growth–drivenbyJ-Plasma•  900basispointgrossmarginimprovementinQ3•  CashflowneutralinQ3

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HistoricalFinancials

($in000's) PY Q3 YTD9/302015 2015 2016 2015 2016

Revenue $29,520 $7,823 $10,063 $21,226 $27,133RevenueGrowth 6.6% 15.2% 28.6% 5.0% 27.8%

CostofGoodsSold 16,963 4,594 5,001 12,183 14,049

GrossProfit $12,557 $3,229 $5,062 $9,043 $13,084GrossMargin 42.5% 41.3% 50.3% 42.6% 48.2%

OperatingExpenses 19,543 5,042 5,307 14,678 15,832

LossfromOperations ($6,986) ($1,813) ($245) ($5,635) ($2,748)

CashonhandasofSeptember30,2016 $9,329

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ExpectedShiuinBusinessMix

88.4%74.7% 68.6%

<40%

7.2%

16.0%17.5%

8%- 12%

4.4% 9.3% 13.9%

>50%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

90.0%

100.0%

2015 2016YTD Q32016 Target

%ofTotalRevenue

Core OEM Growth

FinancialAppendix

FinancialPosi<on:Assets

*All figures in thousands

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September 30, December 31,2016 2015

(Unaudited)

Current assets: Cash and cash equivalents $ 9,329 $ 11,805 Restricted cash 779 839 Trade accounts receivable, net 3,869 2,925 Inventories, net 5,930 5,957 Prepaid expenses and other current assets 564 516 Total current assets 20,471 22,042 Property and equipment, net 6,498 6,810 Brand name and trademark 1,510 1,510 Purchased technology and license rights, net 242 323 Goodwill 185 185 Deposits 123 123 Deferred tax asset - 25 Other assets 119 430 Total assets $ 29,148 $ 31,448

FinancialPosi<on:Liabili<esandStockholders’Equity

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September 30, December 31,2016 2015

(Unaudited)

Current liabilities:Accounts payable $ 1,650 $ 1,214 Accrued payroll 216 321 Accrued vacation 454 228 Current portion of mortgage note payable 239 239 Accrued and other liabilities 1,666 2,119 Total current liabilities 4,225 4,121 Mortgage note payable, net of current portion 2,754 2,934 Notes payable 140 140 Deferred rent 14 18 Deferred tax liability 564 564 Derivative liabilities 822 267 Total liabilities 8,519 8,044 Stockholders' equity:Series B convertible preferred stock, par value $.001; 3,588,139 issued and 1,975,639 outstanding as of September 30, 2016 and December 31, 2015.

2 2

Common stock, par value $.001 par value; 40,000,000 shares authorized; 27,285,297 issued and 27,142,218 outstanding as of September 30, 2016 and 27,194,251 issued and 27,051,172 outstanding as of December 31, 2015

27 27

Additional paid-in capital 43,512 42,859 Accumulated deficit (22,912) (19,484) Total stockholders' equity 20,629 23,404 Total liabilities and stockholders' equity $ 29,148 $ 31,448

IncomeStatement

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2016 2015 2016 2015

Sales $ 10,063 $ 7,823 $ 27,133 $ 21,226 Cost of sales 5,001 4,594 14,049 12,183

Gross profit 5,062 3,229 13,084 9,043

Other costs and expenses:Research and development 682 583 1,941 1,534 Professional services 292 427 1,045 1,070 Salaries and related costs 2,192 1,929 6,492 5,749 Selling, general and administrative 2,141 2,103 6,354 6,325

Total other costs and expenses 5,307 5,042 15,832 14,678

Loss from operations (245) (1,813) (2,748) (5,635)

Interest expense, net (36) (40) (125) (120)Change in fair value of warrant liabilities, net (683) 266 (555) 1,800 Total other income (expense), net (719) 226 (680) 1,680

Loss before income taxes (964) (1,587) (3,428) (3,955)

Income tax benefit, net -- -- -- (8)

Net loss $ (964) $ (1,587) $ (3,428) $ (3,963)

Accretion on convertible preferred stock -- -- -- (222)Gain on conversion of warrants and preferred shares, net -- -- -- 13,956

Net income (loss) attributable to common shareholders $ (964) $ (1,587) $ (3,428) $ 9,771

Income (loss) per shareBasic (0.04) (0.06) (0.13) 0.42 Diluted (0.04) (0.06) (0.13) 0.31

Weighted average number of shares outstanding- basic

27,075 27,051 27,059 23,414

Weighted average number of shares outstanding - dilutive

27,075 27,051 27,059 26,346

September 30, September 30,Three Months Ended Nine Months Ended

Reconcilia<onBetweenGAAPandNon-GAAP

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(Amounts in '000's except earnings per share) 2016 2015 2016 2015

Net income/(loss) GAAP basis (964)$ (1,587)$ (3,428)$ (3,963)$ Accretion on convertible preferred stock - - - (222) Deemed dividend on conversion of warrants and Series A convertible preferred toSeries B convertible preferred stock - - - 13,956 Net income/(loss) attributable to common shareholders (964)$ (1,587)$ (3,428)$ 9,771$ Net income/(loss) per share - basic (GAAP basis) (0.04)$ (0.06)$ (0.13)$ 0.42$

Other non-GAAP adjustments: (Gain)/loss on change in fair value of derivative liabilities 683$ (266)$ 555$ (1,800)$ Accretion on convertible preferred stock - - - 222 Deemed dividend on conversion of warrants and Series A convertible preferred to Series B convertible preferred stock - - - (13,956) Adjusted non-GAAP net income/(loss) (281)$ (1,853)$ (2,873)$ (5,763)$

Income/(loss) per share - basic on: (Note 1)

(Gain) on change in fair value of derivative liabilities - (0.01) - (0.08) Accretion on convertible preferred stock - - - 0.01 Gain on conversion of warrants and Series A convertible preferred to Series B convertible preferred stock - - - (0.60) Adjusted non-GAAP net (loss) per share -basic (0.01)$ (0.07)$ (0.11)$ (0.25)$

Weighted average number of shares outstanding - basic 27,075 27,051 27,059 23,414Weighted average number of shares outstanding - diluted 27,075 27,051 27,059 26,346

(Note 1) Amounts reflected in the presentation of EPS calculations may be impacted by rounding

Three Months Ended Nine Months Ended

September 30, September 30,

J-Plasma®US-OnlyMarket

Sources:CDC,NIH,APGO,ASPS,ASAPS,AHA*(5,000hospitals)27

GYNMarketProcedures #ofAnnualProcedures ASP

Endometriosis 600,000 $375 $225,000,000

Adhesiolysis 300,000 $375 $112,500,000

Myomectomy 65,000 $375 $24,375,000

Condylomas 360,000 $375 $135,000,000

Cesarean(Repeat) 280,000 $375 $105,000,000

Hysterectomy 433,000 $375 $162,000,000TotalGYNProcedures 2,038,000 $375 $764,250,000

Capital* 5,000 $25,000 $125,000,000TotalGYNAvailableMarket $889,250,000

J-Plasma®US-OnlyMarket

Sources:CDC,NIH,APGO,ASPS,ASAPS,AHA*(5,000hospitals) 28

Plas7cMarket

TotalAvailableMarket

ProcedureType #ofAnnualProcedures ASP

SurgicalPlas7csProcedures 1,947,038 $375 $730,139,250Aesthe7csPlas7csProcedures 695,171 $375 $260,689,125

TotalPlas7csProcedures 2,642,209 $375 $990,828,375

Capital* 5,000 $25,000 125,000,000TotalPlas7cAvailableMarket $1,115,828,375

GYN:TargetedProcedures 2,038,000 $375 $764,250,000Capital 5,000 $25,000 $125,000,000

Plas7c:TargetedProcedures 2,642,209 $375 $990,828,375Capital 5,000 $25,000 $125,000,000

TotalAvailableMarket 4,685,209 $2,005,078,375