What A Ride! Looking Back at Our Recommendation of Bovie Medical
We recommended Bovie Medical Corp (BVX), the manufacturer of medical devices and supplies, at $2.02 in February last year. Now one year down the line, the Company is trading at $3.30, meaning that its share price has gone up 63% in this period. What’s more, on October 31st last year, some 8 months after our recommendation, Bovie’s shares skyrocketed to $5.75, an impressive rise of 185% compared with our recommended price.
The past twelve months Bovie Medical has made significant progress, as it hired new key personnel, launched new products, entering into sales partnerships, and above all delivered solid quarterly results.
We will discuss a few of Bovie Medical’s significant achievements in more detail below.
Impressive Sales Growth
A few weeks after our recommendation, Bovie announced its full year 2015 financial results, wherein it revealed that its sales had increased 6.6% to $29.5 million. J-Plasma sales had reached $1.3 million, up from $209,000 in 2014. Gross margin expanded 180 basis points to 42.4%, from adjusted gross margin of 38.7% in 2014.
In May 2016, the Company announced financial results for its first quarter, ended March 31, 2016. It disclosed that revenue had increased by 26.9% to $7.8 million, and that its J-Plasma revenues had increased by 25.8% year on year.
“First quarter revenue represented a strong start to 2016. We achieved robust growth across nearly all product lines, with sales of certain products up more than 25%. This success builds upon the solid foundation in sales, manufacturing and R&D that we established in 2015,” commented Robert L. Gershon, Bovie’s Chief Executive Officer.
The positive trend continued in the second quarter, ended June 30, 2016, as Bovie reported that second quarter sales had increased by 27.8% year over year, driven by strong demand across the Company’s product categories. J-Plasma revenues had more than doubled sequentially and increased more than four-fold from second quarter 2015 levels. Gross margin had expanded to an outstanding 50.6%, benefitting from higher OEM and J-Plasma revenues. The Company also mentioned that it was on track to achieve and potentially exceed its full year 2016 target of 20% year-over-year revenue growth.
Finally, late October 2016, the Company announced that revenue for the three months ended September 30, 2016 had increased by 28.6% to $10.1 million, reflecting continued strong demand across Bovie’s three major product categories. J-Plasma revenues were $1.4 million, up by 177% year on year and 83% sequentially. Gross margin had expanded to 50.3% from 41.3% in the third quarter of 2015.
As for 2017, the Company confirmed its outlook about the current year being another period of significant revenue growth, marked by consistent performance in its core and OEM product lines, accelerated growth in J-Plasma sales from its multi-specialty strategy, and new product additions to its growth product category.
Mr Gershon said, “We continue to build upon the strong foundation put in place last year, leveraging our R&D, manufacturing and SG&A infrastructure as we drive double-digit sales growth.”
New Product Launches
To ensure its continued growth, Bovie launched several new products during the past year. In April 2016, Bovie first announced the launch of its J-Plasma product extension, branded the Precise 360. The new J-Plasma hand piece had an angled and rotating tip that enabled surgeons access to structures that were difficult to reach using a straight laparoscopic device.
Commenting on Precise 360, Dr. Vipul Patel, a world-renowned urologist and leader in robotic surgery and a member of Bovie’s Medical Advisory Board, said, “By inserting the new angle tip of the Precise 360 in the ancillary port of the DaVinci robot, the surgeon gains greater access, control and precision than the straight stick versions. With this level of precision, control and safety, J-Plasma has the potential to become a standard of care in a range of procedures.”
The Precise 360, was even named an “Innovation of the Year” by The Society of Laparoendoscopic Surgeons (SLS) later in 2016.
Moreover, in August last year, the Company announced that it had received 510(k) clearance from the Food and Drug Administration for its new bipolar ablator, branded ‘PlazXact, an innovative tool that offered surgeons precision and safety while performing arthroscopic procedures.
It has always been our endeavor to recommend good, solid, and undervalued small cap stocks to ensure that our readers benefit from our stock picks. We highlighted Bovie Medical on Smallcaps Investment Research in February last year as we felt that the Company had a solid business selling electrosurgical equipment and cauteries, while its J-Plasma device was a clear growth driver.
Bovie Medical has been another success story on Smallcaps Investment Research. We have several more in our portfolio today and a few up our sleeve, which we will introduce shortly.
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