Edited Transcript of BVX earnings conference call or presentation 11-May-20 12:00pm GMT

Turning ought publication of our revenue results at the first quarter. From a GEographic standpoint, we experienced year-over-year declines at both our U.S. and OUS puzzle this quarter. Our complete U.S. sales declined 7% year-over-year ought $3.6 million, but complete international sales declined 20% year-over-year ought $1.4 million. at condition of revenue operation at each of our puzzle segments, at our Advanced force business, sales declined 9% year-over-year ought $4 million. at our OEM business, sales declined 20% year-over-year ought $1 million. The OEM sales results were entirely at queue with our expectations and were no impacted by the COVID crisis. Rather, they were a arise of lower revenue GEnerated at our legacy OEM puzzle compared ought first belt 2019, larGEly attributable ought the timing of orders compared ought the preceding year period.

As discussed at our Q4 call, the revenue operation at our Advanced force puzzle at Q1 was impacted by the emergency caused by the scatter of the COVID pandemic. We were identical pleased with our Advanced force growth can the first 2 months of the quarter, where complete revenue increased 33% year-over-year, driven by 58% growth at the sales of our hand pieces and 13% growth at sales of GEnerators.

The growth trends can the first 2 months of 2020 reflects well utilization-based implore although our Renuvion technique hand pieces, but the growth at GEnerators reflects the initial collision of COVID-related disruption at our puzzle at our international markets beginning at February.

As discussed above our Q4 mid-March call, we had already begun ought exclaim on the puzzle trends appear signs of disruption although a arise of COVID. Specifically, we had seen a slowdown at the adoption and utilization, first at our international markets, and then the U.S. although we moved across the first little weeks of March. Given the high even of supicion at that time, providing sum year 2020 guidance was no possible. Instead, we elected ought equip virgin our expectations although our econmic results at Q1. We shared that these Q1 expectations were based above the best news we had at that time and factored at a significant collision ought our puzzle from COVID-19 can the remainder of the first quarter.

Our puzzle deteriorated sharply at the weeks following our earnings call, and candidly, the refuse we experienced can the second half of March was modestly sharper than we had contemplated at our Q1 guidance ranGE. This operation was a dispose of arise of the preventative or protective actions taken by governments at response ought the COVID-19 pandemic. although a reminder, the overwhelming majority of procedures performed using our Helium Plasma technique are elective. And although a result, many of these customers eat been affected by government actions requiring elective procedures ought be postponed and nonessential businesses ought end temporarily.

In the U.S., substantially complete Renuvion procedures are performed at outpatient facilities, including doctors' offices and surGEry centers. during March, these businesses began ought temporarily end although states and cities across the U.S. implemented restrictions. but the timing of these closures across the U.S. varied by region, we experienced a hasty deterioration at procedural trends can the final 2 weeks of March although a result.

In March, complete Advanced force sales declined about 50% year-over-year driven by sales of our international distributors declining 75% year-over-year and sales of our U.S. cosmetic surGEry customers declining about 30% year-over-year. Regarding the deterioration at the U.S. fair can the final 2 weeks of March specifically, sales declined more than 40% year-over-year.

Turning ought a discussion of our response ought COVID-19. Apyx Medical has been monitoring the COVID-19 pandemic closely. We reacted quickly during the first belt ought defend the health and safety of our employees, patients, customers and distributor partners nearly the world. although a Medical machinery company, we eat been capable ought summary manufacturing operations. ought ensure the safe manufacturing environment, we divided our manufacturing personnel into multiple smaller shifts ought permit although adequate social distancing. We eat too made other significant improvements ought our safety protocols, including requiring complete employees ought wear protective machinery but on-site and increasing the frequency of facility cleanings.

We eat too placed restrictions above employees' puzzle travel, restricted access ought the tool and required that non -- complete nonessential employees trade remotely until farther notice. at supplement ought the initiatives we eat lay at lay ought defend the health and safety, we eat focused our dispose of sales team above remaining at end face with their existing surGEon customers ought conduct everything they can ought equip them with back during this difficult time. With this finish at mind, we eat implemented additional exercise although our sales reps at bid ought sharpen their faculty ought engaGE with our customers virtually. at supplement ought engaging with existing customers via virtual methods, our reps too summary ought tarGEt and attain out ought prospective accounts accordingly that they will be robust positioned when the recovery occurs and surGEons reply ought conducting elective cosmetic procedures.

Outside the U.S., we are closely monitoring the activities of our distributor partners and helping them navigate the challenGEs they encounter although a arise of the slower implore they are seeing at their respective countries.

Lastly, we eat taken significant steps ought diminish our spending at blaze of the COVID-19 crisis. but our spending during the first 2 months of 2020 reflected our ordinary puzzle activities, at March, we began curtailing our costs at response ought the collision of COVID-19 above the econmic condition, beginning with reducing puzzle journey expenses and implementing hiring restrictions. We eat identified other areas of our charge design that can be delayed at bid ought maximize leading until the puzzle surroundings hope becomes more certain.

These contain farther reductions ought our discretionary spending, such although spending above commerce shows, marketing events and professional fees. Additionally, we eat temporarily delayed investment at sure R&D projects and clinical inquiry studies until the surroundings normalizes, and we are capable ought hunt these activities efficiently. Lastly, we eat eliminated the bonus accrual related ought the achievement of our 2020 operation objectives ought farther diminish the operating charge profile during this epoch of unprecedented supicion at the broader elective procedure environment.

Importantly, we summary ought invest at key areas of our puzzle that back our future growth, accordingly we are robust positioned although the fair recovers from this pandemic. Most notably, we eat no intention of changing the size of our sales team or furloughing any of our employees at this time. We eat spent considerable effort house and exercise a world-class sales team, and we are focused above ensuring that they are robust prepared ought drive our reply ought well growth although the emergency subsides.

We eat too built a well leadership team at modern years, and I am haughty ought talk that the team surplus committed ought our mission despite these challenging times. at addition, but we eat temporarily delayed investment at sure clinical inquiry studies, we summary ought back the areas that are most significant although our lonGEr-term growth, including our U.S. IDE clinical studies at dermal resurfacing and hide laxity.

I'd alike ought now acknowledge a tiny ought update you above our operational face can with admire ought the 4 strategic initiatives we are pursuing ought stand Apyx Medical although long-term growth at the cosmetic surGEry market. The first one, ought hunt concrete clinical indications that will enable us ought fair and sell Renuvion although new tarGEted procedures. at the first 2 months of 2020, we continued ought invent face can at enrolling new patients at our 2 U.S. IDE clinical studies. although a reminder, we designed and implemented these studies although divide of our long-term tactic ought hunt new clinical indications although the avail of Renuvion, specifically although dermal resurfacing and hide laxity procedures.

Clinical experiment activity across the U.S. has been significantly impacted by the disruption created owing ought COVID-19 and enrollment at these 2 studies eat been paused although a result. Our clinical team is working closely with the investigators from both studies ought help mitigate the impacts of this disruption and stand us ought succeed enrollment once it is considered safe ought conduct so. but we design ought summary with both studies, we are currently unable ought evaluate when we will be at stand ought succeed enrollment at this time.

In supplement ought our regulatory progress, we too continued our efforts ought expand our portfolio of clinical proof supporting the avail of our Renuvion technology, which is our second strategic initiative. during the first quarter, we completed and submitted a clinical manuscript although the publication discussing the results of our first U.S. IDE learn above dermal resurfacing. I am pleased ought broadcast that this manuscript was published at April at a peer-reviewed journal, Lasers at SurGEry and Medicine. at 2020, we linger focused above completing and submitting at least 3 additional clinical manuscripts although publication.

With admire ought our third strategic initiative, enhancing surgeon and exercise back although our cosmetic surGEry customers. during the first 2 months of 2020, our plans ought host new surgeon mentor programs, or PMPs, and expand our presence and educational programming at industry conferences and commerce shows proceeded although expected. Our events planned although March, however, were canceled owing ought COVID-19 pandemic. at lieu of this in-person programming, our sales and marketing and domain clinical teams eat been identical noise at engaging with our customers and prospects nearly the world. We eat hosted educational events virtually where we featured some of our headmaster clinician customers speaking above a broad ranGE of topics, including side-by-side results comparing Renuvion ought a headmaster opponent technology.

Our virtual education events eat too included example studies ought interpret how our headmaster clinician customers eat adopted Renuvion, their strategies although marketing and selling ought new patients and their thoughts above pricing and ROI. final week, we hosted the first installment of a planned sequence of webinars designed ought help our customers and prospects with opening their exercise post-COVID. We are too engaging with clinical customers external the U.S., including hosting multiple continuing education exercise sessions above J-Plasma and Renuvion with our modern international distributors and multiple calls with groups of international prospects interested at knowledge nearly Renuvion technology.

And lastly, with admire ought our fourth strategic initiative, better our manufacturing capabilities and efficiencies, during the first quarter, we continued ought trade ought tool new slender initiatives. This trade surplus an ongoing district of concentrate at bid ought drive face can at 2020 and the years ought come. despite the many challenGEs we eat faced, and we will summary ought encounter although a arise of the COVID-19 pandemic, I eat been incredibly pleased with the response of our organization and the commitment that our employees eat shown ought supporting our customers and maintaining our action during such a difficult epoch at our company's history. Ultimately, Apyx Medical is robust positioned ought climate this emergency and reply ought our record of delivering well growth although it subsides.

First, with can $51 million of money above our remainder sheet, we are identical robust capitalized. We study we eat adequate goods ought fund our operations although multiple years. Second, the might of our remainder bit and our tarGEted strategies ought dispose of our near-term expenses permit us ought back and invest at elements of our puzzle that will -- that ensures we are poised ought recover quickly and summary ought drive face can with admire ought our long-term growth strategy. And third, we are no experiencing any significant disruption ought our equip fasten although a arise of the COVID-19 pandemic, and our in-house manufacturing is progressing beneath our enhanced health and safety protocols.

Given the significant uncertainties associated with the COVID-19 pandemic, we acknowledge the investment community's desire although increased clarity and eat elected ought equip color above our modern belt trends. Simply stated, the collision that COVID-19 has had above the activity of our customers and their patients has continued ought describe an ongoing challenGE although our Advanced force business. Our U.S. and international sales trends during the month of April continued ought deteriorate relative ought the year-over-year sales trends we saw during the month of March. A significant quantity of supicion surplus at condition of when the restrictions above our customers will be lifted, ultimately when the patients will grand ought sustain elective cosmetic procedures once our customers' practices are allowed ought reopen. We are encouraGEd by the announcements and initial activities related ought lifting of the shield at lay restrictions can the past 2 weeks. And we wish our cosmetic surGEon customers ought begin the process of reopening their offices although presently although their respective stand mandates allow.

At this point, the rate and timing of when we exclaim on an uptick at elective procedure volume and the related enlarge at implore although our procedure-related handpieces surplus highly uncertain. Naturally, we used to wish the trends at adoption of Renuvion technique and the related improvement at GEnerator sales trends ought lag after the improvement at elective procedure environments, again, the timing of which surplus difficult ought forecast at this time. Importantly, the COVID-19 pandemic has no altered our competitive advantaGEs at the fair and the attractive long-term opportunities that we are pursuing.

With its faculty ought deliver fever ought tissue at incredibly effective and controlled manner, our Helium Plasma technique continues ought describe a virgin force modality with the faculty ought alter how procedures are performed at the cosmetic surGEry market. We summary ought receive well certain feedback from elastic and cosmetic surGEons highlighting the outcomes they eat been capable ought attain with our Renuvion products. We are focused above leveraging this virgin technique ought hunt an addressable fair occur although the cosmetic surGEry fair that is estimated ought be can $1.5 billion at the U.S. alone, with significant opportunities external the U.S. although we summary ought hunt new registrations at key international cosmetic surGEry markets going forward. And we are pursuing these opportunities with a commercial tactic that has demonstrated well results can the final 2 years.

At some -- at the same time, the 4 strategic initiatives I eat discussed earlier will stand us ought drive long-term growth at the cosmetic surGEry fair by facilitating the broad-based adoption of our technology. although these reasons and many others, although the COVID-19 emergency subsides, we are poised ought summary our trade of bringing transformative solutions ought our customers we serve and elevating the global cosmetic surGEry fair although the advantage of our surGEon customers, their patients and our shareholders.

I'll now bring the exclaim can ought Tara ought publication the first belt econmic results at detail and debate the comments made at our earnings publication liberate this morning. Tara?

--------------------------------------------------------------------------------

Tara H. Semb, Apyx Medical company - CFO, Treasurer & Secretary [3]

--------------------------------------------------------------------------------

Thanks, Charlie. The discussion of our econmic results today includes restatements also although revisions ought our historic financials although reported at our 10-K filed above March 31, 2020 and 10-Q/A filed above can 8, 2020. We eat updated the related reconciliation desk with these items, which is available above the Investor Relations paGE of our website. Given the detailed discussion by Charlie above our revenue performance, I will begin my publication of our first belt econmic results across the cease of the P&L.

Gross employ although the first belt of 2020 decreased $0.6 million or 16% year-over-year ought $3 million. full employ border although the first belt of 2020 was 59.7% compared ought 63.3% final year. The major drivers of the chanGE at full employ border were product mix within both our Advanced force and OEM segments, revenue mix between our segments and GEographical revenue mix, offset by improved product margins at our Advanced force part although a arise of our continued manufacturing efficiency initiatives.

Operating expenses although first belt 2020 increased $1.2 million or 13% year-over-year ought $10.5 million compared ought $9.3 million although the first belt of 2019. The year-over-year chanGE at operating expenses was driven by a $0.8 million enlarge at selling, GEneral and administrative expenses; a $0.3 million enlarge at professional services; and a $0.3 million enlarge at R&D expenses. These increases were offset slightly by a $200,000 enlarge at related salaries -- salaries and related costs. although Charlie mentioned earlier, our proactive efforts ought diminish our operating expenses muse well execution. Specifically at response ought the COVID pandemic, we identified more than $1.5 million at operating charge reductions compared ought what was implied by our Q1 guidance.

Loss from operations although the first belt of 2020 was $7.5 million compared ought operating loss of $5.7 million final year. Net loss although the first belt 2020 was $2 million or $0.06 per diluted section compared ought a net loss of $5.6 million or $0.17 per diluted section although the first belt of 2019. Our net loss although the first belt of 2020 was significantly lower than the guidance ranGE provided above our fourth belt earnings call. at supplement ought the noticeable face can we made at reducing our operating expenses at the first quarter, we too benefited from a GAAP tax advantage at the period.

As detailed at our publication liberate this morning, above March 27, 2020, the U.S. government enacted the CARES operation ought equip leisure from the coronavirus pandemic. The CARES operation includes a net operating loss carryback provision by which the company recognized an earnings tax advantage of about $4.9 million at the first belt of 2020 and expects ought receive a money tax refund of about $3.7 million by the finish of 2020. ToGEther, the significant reduction at our operating charge profile and this provision at the CARES operation will help mitigate the econmic collision of the COVID-19 pandemic.

First belt 2020 adjusted EBITDA loss was $5.8 million compared ought an adjusted EBITDA loss of $4.6 million final year. although a reminder, we provided a detailed reconciliation from GAAP net loss ought adjusted EBITDA at our publication liberate this morning. although of March 31, 2020, the company had money and money equivalents of $51.4 million compared ought money and money equivalents of $58.8 million although of December 31, 2019. The company had working leading of $63.6 million although of March 31, 2020, compared ought $64.4 million although of December 31, 2019.

Lastly, although mentioned at our earnings publication liberate this morning, given the challenGEs and uncertainties posed by the ongoing global COVID-19 pandemic, the company will no be providing sum year 2020 econmic guidance above today's call. Assuming a more normalized puzzle surroundings prevails at the time of our second belt results practice exclaim at August, we design ought equip updated expectations at that time.

With that, I'll bring the exclaim uphold ought Charlie although closing remarks. Charlie?

--------------------------------------------------------------------------------

Charles D. Goodwin, Apyx Medical company - President, CEO & Director [4]

--------------------------------------------------------------------------------

Thanks, Tara. I'd alike ought end by once again thanking our employees although their resilience and dedication they've shown beneath identical difficult circumstances during these past months. Based above our response ought COVID-19, I'm convinced we eat a well team here at Apyx Medical that can climate any crisis. I'd too alike ought thank our distributors, customers and shareholders although their continued back and those above the exclaim although their employ at Apyx Medical.

With that, operator, let's now hollow the exclaim although questions.

================================================================================

Questions and Answers

--------------------------------------------------------------------------------

Operator [1]

--------------------------------------------------------------------------------

(Operator Instructions) And our first puzzle will bring from Kyle Bauser with Dougherty & Company.

--------------------------------------------------------------------------------

Kyle Royal Bauser, Dougherty & company LLC, inquiry section - Senior inquiry Analyst [2]

--------------------------------------------------------------------------------

Previous : Home and Away\'s Jasmine Delaney is told that she isn\'t pregnant