September 2016 - Bovie Medical2016 2015 2016 2015 Sales $ 9,295 $ 7,274 $ 17,070 $ 13,402 Cost of...

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September 2016

Transcript of September 2016 - Bovie Medical2016 2015 2016 2015 Sales $ 9,295 $ 7,274 $ 17,070 $ 13,402 Cost of...

Page 1: September 2016 - Bovie Medical2016 2015 2016 2015 Sales $ 9,295 $ 7,274 $ 17,070 $ 13,402 Cost of sales 4,595 4,134 9,048 7,588 Gross profit 4,700 3,140 8,022 5,814 Other costs and

September2016

Page 2: September 2016 - Bovie Medical2016 2015 2016 2015 Sales $ 9,295 $ 7,274 $ 17,070 $ 13,402 Cost of sales 4,595 4,134 9,048 7,588 Gross profit 4,700 3,140 8,022 5,814 Other costs and

SafeHarborStatement

Certainma1ersdiscussedinthispresenta7onandoralstatementsmadefrom7meto7mebyrepresenta7vesoftheCompanymaycons7tuteforward-lookingstatementswithinthemeaningofthePrivateSecuri7esLi7ga7onReformActof1995andtheFederalsecuri7eslaws.AlthoughtheCompanybelievesthattheexpecta7onsreflectedinsuchforward-lookingstatementsarebaseduponreasonableassump7ons,itcangivenoassurancethatitsexpecta7onswillbeachieved.

Forward-lookinginforma7onissubjecttocertainrisks,trendsanduncertain7esthatcouldcauseactualresultstodiffermateriallyfromthoseprojected.ManyofthesefactorsarebeyondtheCompany’sabilitytocontrolorpredict.ImportantfactorsthatmaycauseactualresultstodiffermateriallyandthatcouldimpacttheCompanyandthestatementscontainedinthispresenta7oncanbefoundintheCompany’sfilingswiththeSecuri7esandExchangeCommissionincludingtheCompany’sReportsonForms10-QforthequarterendedJune30,2016,and10-KfortheyearendedDecember31,2015.Forforward-lookingstatementsinthispresenta7on,theCompanyclaimstheprotec7onofthesafeharborforforward-lookingstatementscontainedinthePrivateSecuri7esLi7ga7onReformActof1995.TheCompanyassumesnoobliga7ontoupdateorsupplementanyforward-lookingstatementsasaresultofnewinforma7on,futureevents,orotherwise.

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InvestmentHighlights

•  Growingcorebusinesswithrobustdemand

•  Transforma7onalJ-Plasma®surgicalproducttarge7nglargeandgrowingmarkets

•  RobustR&Dpipeline–significantproductlaunchesplanned•  State-of-the-artmanufacturingfacili7esinUSandEurope;

manufacturingsuppliersinChina

•  Highlyexperiencedmanagementteam

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ExperiencedManagementTeam

Execu1ve JoinedBovie Experience

RobGershonChiefExecu+veOfficer December2013

Over25yearsofexperienceinhealthcare

JackMcCarthyChiefCommercializa+on

OfficerMarch2014

Over25yearsofsalesandmarke7ngexperience

JayEwersChiefFinancialOfficer June2014

Over30yearsoffinancialmanagementexperience

ToddHornsbyVicePresidentofSales August2014

Over14yearsofmedicaldevicesales

ShawnRomanVicePresidentofResearch

&DevelopmentOctober2014

Over15yearsofR&Dexperience

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Representa7veCoreProducts:GlobalBrandEquity “Bovie®”isreferencedinallsurgicalprocedures;itisaproprietaryeponym

Electrosurgical~55% Cauteries~21%

Ligh1ng~8%

•  Designanddevelopspecstoaddresspartners’innova7ons

*Allfiguresarerevenueforthe6monthsendedJune30,2016.Totalexceeds100%asOEMisreportedwithinElectrosurgical 5

J-Plasma~6.6%

OEM~15%*

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State-of-the-ArtManufacturingFootprint

•  Threeworld-classmanufacturing

facili7es-  Clearwater,Fl.(owned)–Assembly,

integra7on,finaltes7ng,packagingand

managementofsteriliza7on

-  Bulgaria(owned)–Manufacturingandassemblyofcomplexcomponents;ini7al

tes7ng

-  China(contracted)–Component

manufacturing

•  Capacitytoincreaseoutputfrom

exis7ngfacili7es

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StrongMomentuminCoreBusiness

•  Boviehasuniquebrandposi7onwithglobalnamerecogni7on

•  Long-standingrela7onshipswith“Big7”distributors•  Newproductlauncheshelpingtodriveinterest•  InboundOEMrequestsfromindustry’stopnames

•  Ac7velytarge7ngnewmarkets

•  Corebusinesscontributestorobustfinancials

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J-Plasma®:Transforma1onalProduct

•  Revolu7onarytechnologythationizesheliumtocreatestreamofplasmaforcuongandabla7on

•  Precisecuongandcoagula7onwithlimitedthermalspread-  Stable,thin,focusedstreamofionizedheliumgas-  Widerangeofcontrolwithindependentcontrolofplasma

powerandgasflowrate-  Noconduc7vecurrentsthroughthepa7entduringsurgery

•  Allowssurgeonstosafelyperformproceduresondelicatestructuressuchas:

-FallopianTubes -Ureters -Bowel

-Esophagus -Ovaries-LymphNodes

•  Protectedby38patents:

-  13USand3foreignissued

-  15USand7foreignpending

RecognizedasanInnova7onoftheYear

byTheSocietyofLaparoendoscopic

Surgeons(SLS)3YearsinaRow

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J-Plasma®EnergyStreamforLimitedThermalDamage*

•  Clinicalstudycomparedlevelsofunintendedthermaldamagetoperitoneal7ssue(membraneliningtheabdominalcavity)amongotherenergy-basedsurgicaltoolsvsJ-Plasma®

•  Redareasrepresentthe

depthofthermalorenergydamageeachtoollesbelowthe7ssuesurface;blueareasrepresentunaffected7ssue

•  J-Plasma®demonstratedfar

lowestamountofcollateralthermalinjurytohealthy7ssuesurroundingtheopera7vesite

*Reference:PedrosoJ,Gu7errezM,VolkerW.J-Plasma,monopolarpencil,argonbeamandCO2laserelectrosurgery:compara7veevalua7onofthermalspreadinaporcine7ssuemodel(whitepaper).BovieMedicalCorpora7on.June2014 9

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J-Plasma®Comparison

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J-Plasma®Demonstra1onVideo

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J-Plasma®:Compe11veAdvantages

Compara7veCaseStudy:J-Plasma®inEndometriosis600,000proceduresperyearinUS

KeyDifferences CO2Laser J-Plasma®Trea1ngpoten1allesions Treatsvisiblelesionsonly

Treatsvisibleandpoten7allesions

Tac1lefeedback Notac7lecuongfeedbackormaneuverability

Directtac7lecuongfeedbackandmaneuverability

Controlofenergy Requireslasersafetybackstop

Controlledenergy:streamdistancelimitedtosurgicalsite

ORrequirements Mul7plespecializedORrequirements(privileges,goggles,

techs,wetdrapes,etc.)

Noaddi7onalORresourcesrequired

Price Es7matedCapitalASP:$100,000+

Es7mateddisposablehandpieceASP:$425+

Es7matedCapitalASP:$20,000

Es7mateddisposablehandpieceASP:$375

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J-Plasma®:Poten1alAnnualProceduresinIni1alTargetedSpecial1es

2,038,000

1,947,038

695,171GYNProcedures

SurgicalPlas7csProceduresAesthe7cPlas7csProcedures

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

Sources:CDC,NIH,APGO,ASPS,ASAPS,AHA,ASPS*Assumes$375ASPfordisposablehandpiece,and$25,000ASPperJ-Plasmagenerator 13

•  GYNONC•  Oncology•  ENT•  Vascular

Ini1alTargetedSpecial1es>$2BillionTAM*--U.S.Only TotalProceduralOpportunity

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Targe1ngNewSpecial1es:MedicalAdvisoryBoard

•  Comprisedofsurgeonthought-leaderstoadviseonJ-Plasma®applica7onforspecialtyprocedures

•  Ini7altargetspecial7esincluding:urology,cardiothoracicandcardiovascular

•  Expecttohave6-9surgeonmembers

•  Immediateprogressonrobo7cs

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Dr.HusamBalkhy,Director,MinimallyInvasive&RobotCardiacSurgery,DuhossoisCenterforAdvancedMedicine

Dr.RobertJ.Cerfolio,Sec7onChief,ThoracicSurgeryUniversityofAlabamaHospital

FoundingmemberofMAB:Dr.VipulPatel,worldrenownedrobo7csurgeon,MedicalDirectorofGlobalRobo7csIns7tute,Florida

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

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ChannelPartners:Accelera1ngJ-Plasma®Sales

•  Complementtoexis7ngsalesnetwork

•  ExpandsthereachofJ-Plasma®intonewspecial7es

•  CombinesJ-Plasma®withcomplementaryproducts

•  AgreementssignedwithArteriocyteMedicalSystemsandHologic

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Arteriocyte:Targe1ngPlas1cSurgeons

•  Privatelyheldmedicaldevicecompanywithdeepexperience,exper7seandrela7onshipsintheplas7csurgery/aesthe7csspaceamongothers.

•  Non-exclusivemul7-yearAgreementsignedJune30,2016.

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Hologic:Targe1ngGYNandGYNOncology

•  Nasdaq-listedHOLX.Marketcap:$10.2BRevenues:$2.7B(FYSept‘15)Founded1986.•  Globalhealthcareanddiagnos7cscompany,focusedonBreast

&SkeletalHealth,Diagnos7candGYNSurgicalSolu7ons•  HologicwilladdJ-Plasma®productlinetoporyolioinGYNand

GYN/oncologicalsurgeryinthreeU.S.regionsandoneOUSmarket

•  Ini7alsix-monthagreementincludesop7ontoextendintoaglobaldistribu7onpactthatwouldinvolveHologic’sen7reworld-widesurgicalsalesforce

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World-ClassR&DCapabilityasGrowthCatalyst

•  WorldClassR&DCapability

•  DevelopingnewproductstocomplementJ-Plasma®andboostgrowthincorebusiness

•  Notableproductlaunches:

•  Valueinpatentandproductporyoliocanberealizedwithminimalexpenditures

J-PlasmaPrecise360™

BovieUl7mate®

IDS-310™DERM101™DERM102™

Freezpoint™

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PlazXact™Ablator

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SolidBalanceSheettoFundGrowth

•  InMarch2015raisedaddi7onalequityof$11.5million

•  Unrestrictedcashandcashequivalentswere$9.5millionatMarch31,2016

•  Fundsprimarilyearmarkedforcommercializa7onofJ-Plasma®andgrowthofcorebusiness

•  Projectedcashflowneutralexi7ng2016

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GrowthStrategies

•  Growcorebusinessatasustainablepace-  Addnewproductsthatfitcorecompetencies

-  LeverageOEMrela7onshipstogrowcurrentandnewproducts

-  Con7nuetopenetratenewmarketsandexpandinterna7onally

•  ScaleJ-Plasma®saleswithexis7ngcustomerbaseandnewtargetspecial7es

•  CommittoongoingR&Dinvestmentstomaintainmarketleadershipandunlockporyoliovalue

•  Ongoingfinancialdisciplinetoimprovemarginperformance

•  Maintainasolidbalancesheettofundfuturegrowthini7a7ves

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FinancialAppendix

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FinancialPosi1on:Assets

*All figures in thousands

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June 30, December 31,2016 2015

(Unaudited)Current assets: Cash and cash equivalents $ 9,324 $ 11,805 Restricted cash 779 839 Trade accounts receivable, net 3,506 2,925 Inventories, net 6,415 5,957 Prepaid expenses and other current assets 536 516 Total current assets 20,560 22,042 Property and equipment, net 6,536 6,810 Brand name and trademark 1,510 1,510 Purchased technology and license rights, net 269 323 Goodwill 185 185 Deposits 123 123 Deferred tax asset 21 25 Other assets 386 430 Total assets $ 29,590 $ 31,448

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FinancialPosi1on:Liabili1esandStockholders’Equity

23

June 30, December 31,2016 2015

(Unaudited)Current liabilities:Accounts payable $ 1,774 $ 1,214 Accrued payroll 378 321 Accrued vacation 380 228 Current portion of mortgage note payable 239 239 Accrued and other liabilities 1,844 2,119 Total current liabilities 4,615 4,121 Mortgage note payable, net of current portion 2,814 2,934 Notes payable 140 140 Deferred rents 17 18 Deferred tax liability 564 564 Derivative liabilities 139 267 Total liabilities 8,289 8,044 Commitments and Contingencies (see Notes 9 and 10) Stockholders' equity:Series B convertible preferred stock, par value $.001; 3,588,139 issued and 1,975,639 outstanding as of June 30, 2016 and December 31, 2015, respectively

2 2

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

27 27

Additional paid-in capital 43,219 42,859 Accumulated deficit (21,947) (19,484) Total stockholders' equity 21,301 23,404 Total liabilities and stockholders' equity $ 29,590 $ 31,448

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IncomeStatement

24

2016 2015 2016 2015

Sales $ 9,295 $ 7,274 $ 17,070 $ 13,402

Cost of sales 4,595 4,134 9,048 7,588

Gross profit 4,700 3,140 8,022 5,814

Other costs and expenses:

Research and development 592 505 1,259 951

Professional services 396 313 753 644

Salaries and related costs 2,200 1,868 4,300 3,821

Selling, general and administrative 2,022 2,002 4,213 4,219

Total other costs and expenses 5,210 4,688 10,525 9,635

Loss from operations (510) (1,548) (2,503) (3,821)

Interest expense, net (50) (39) (88) (80)

Change in fair value of liabilities, net 41 90 128 1,534

Total other income (expense), net (9) 51 40 1,454

Loss before income taxes (519) (1,497) (2,463) (2,367)

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

Net loss $ (519) $ (1,497) $ (2,463) $ (2,375)

Accretion on convertible preferred stock -- -- -- (222)

Gain on conversion of warrants and preferred shares, net -- -- -- 13,956

Net income (loss) attributable to common shareholders $ (519) $ (1,497) $ (2,463) $ 11,359

Income (loss) per share

Basic (0.02) (0.06) (0.09) 0.53

Diluted (0.02) (0.06) (0.09) 0.41

Weighted average number of shares outstanding- basic 27,051 24,435 27,051 21,555

Weighted average number of shares outstanding - dilutive 27,051 24,435 27,051 24,251

June 30, June 30,

Three Months Ended Six Months Ended

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Reconcilia1onBetweenGAAPandNon-GAAP

25

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

Net income/(loss) GAAP basis (519)$ (1,497)$ (2,463)$ (2,375)$ 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 (519)$ (1,497)$ (2,463)$ 11,359$ Net income/(loss) per share - basic (GAAP basis) (0.02)$ (0.06)$ (0.09)$ 0.53$

Other non-GAAP adjustments: (Gain) on change in fair value of derivative liabilities (41)$ (90)$ (128)$ (1,534)$ 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) (560)$ (1,587)$ (2,591)$ (3,909)$

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

(Gain) on change in fair value of derivative liabilities - - (0.01) (0.07) Accretion on convertible preferred stock - - - 0.01 Gain on conversion of warrants and Series A convertible preferred to Series B convertible preferred stock - - - (0.65) Adjusted non-GAAP net (loss) per share -basic (0.02)$ (0.06)$ (0.10)$ (0.18)$

Weighted average number of shares outstanding - basic 27,051 24,435 27,051 21,555Weighted average number of shares outstanding - diluted 27,051 24,435 27,051 24,251

Six Months EndedJune 30,

Three Months EndedJune 30,

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

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J-Plasma®US-OnlyMarketpage1of2

Sources:CDC,NIH,APGO,ASPS,ASAPS,AHA*(5,000hospitals)26

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

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J-Plasma®US-OnlyMarketpage2of2

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

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