Bovie Medical (BVX) is trading modestly lower despite raising guidance for its new core business this morning. It appears to be somewhat of a sell-the-news reaction after the stock broke out to an eight-year high yesterday in anticipation of the company's updated guidance.
Last week, the company completed the sale of its (previously) core Bovie electrosurgical and cauteries business for $97 million in gross proceeds. The company said it would update guidance this morning.
Now, the company has essentially become a pure-play on its J-Plasma/Renuvion technology that is ‘disrupting the cosmetic surgery market'.
This morning, Bovie raised its Advanced Energy (which is the J-Plasma/Renuvion business) growth outlook to 55-60% to $11.8-12.2 million, from 40-45%. The company also retained an OEM business which is expected to grow 31% to $3.4 million.
In total, the company guided for $15.2-15.6 million in sales, with a 56% gross margin and a $12.5 million net loss.
Management sees substantial long-term growth in the cosmetic surgery market as Renuvion Cosmetic Technology remains in the early stages of the adoption curve.
On the call, management laid out plans to enhance growth next year and implied margins would improve.
The company will grow its sales effort ~60% by year end. The company also plans to formalize a regulatory strategy, improve physician support and its manufacturing capabilities/efficiencies.
The company sees potential for 510(k) clearance by the FDA for use in dermal skin resurfacing procedures (e.g. face wrinkles) next year. Management sees opportunity in new indications and new market internationally.
Bovie has a market capitalization of just under $200 million, resulting in an enterprise value of roughly $130 million excluding the ~$70 million in net proceeds from the large divestment.
That means the stock is trading at just over 8x revenue guidance for 2018. The revenue multiple would fall considerably based on next year's sales estimates, which could be considered attractive for a small-cap growth company in the aesthetics space.
Bovie plans to change its name and presumably its ticker symbol by early next year.