Charlie Goodwin – Chief Executive Officer Jay Ewers – Chief Financial Officer.

Matthew O'Brien – Piper Jaffrey Matt Hewitt – Craig-Hallum Capital David Turkaly – JMP Securities Russell Cleveland – RENN Capital.

Good afternoon ladies and gentlemen and welcome to the First Quarter of Fiscal Year 2018 Earnings Conference Call for Bovie Medical Corporation. At this time, all participants have been placed in a listen-only mode. At the end of the Company's prepared remarks, we will conduct a question-and-answer session.

Please note that this conference call is being recorded and that the recording will be available on the Company's website for replay shortly.

Before we begin, I would like to remind everyone that our remarks and responses to your questions today may contain forward-looking statements that are based on the current expectations of management, and involve inherent risks and uncertainties that could cause actual results to differ materially from those indicated, including those identified in the Risk Factors section of our most recent annual report on Form 10-K filed with the Securities and Exchange Commission, as well as our most recent 10-Q filing.

Such factors may be updated from time to time in our filings with the SEC, which are available on our website. We undertake no obligation to publicly update or revise our forward-looking statements as a result of new information, future events or otherwise.

This call will also include references to certain financial measures that are not calculated in accordance with Generally Accepted Accounting Principles or GAAP. We generally refer to these as non-GAAP financial measures.

Reconciliations of those non-GAAP financial measures to the most comparable measures calculated and presented in accordance with GAAP are available in the earnings press release on the Investor Relations portion of our website. I would now like to turn the call over to Mr. Charlie Goodwin, Bovie Medical's Chief Executive Officer. Please go ahead sir..

number one, securing new clinical evidence that demonstrates the safety and efficacy of our Renuvion technology when applied to our target procedures in the cosmetic surgery market. Number two, formulizing our regulatory strategy to pursue specific clinic.

Number two, formulizing our regulatory strategy to pursue specific clinical indications enabling us to fully market and sell Renuvion for our target procedures. Number three, enhancing our physician and practice support for our cosmetic surgery customers and lastly, improving our manufacturing capabilities inefficiencies.

We believe that by pursuing these four initiatives we will position Bovie Medical for sustainable long-term growth in the cosmetic surgery market. Importantly, we have already begun to make some exciting initial progress in 2018 with respect to these initiatives which I will now discuss in detail.

Beginning with our first initiative, expanding clinical support for our Renuvion cosmetic technology, we are focused on pursing our IDE clinical study evaluating use of Renuvion and dermal resurfacing procedures, which represents a new target procedure for Bovie Medical and cosmetic surgery.

Recall, this is a multi-center, single arm, evaluator-blind prospective study designed to evaluate the safety and efficacy of Renuvion for the reduction of facial wrinkles and rhytides. On January 23, we announced that our first study subject had been enrolled by Dr. J. David Holcomb, of the Institute for Integrated Aesthetics in Sarasota, Florida.

Over the remaining months of the first quarter we made steady progress in enrolling subjects to the study’s three clinical sites with the expectation of enrolling all 55 patients required for the study in the first half of 2018.

We are please announce in a separate press release this afternoon that we enrolled the last patient in our dermal resurfacing study. The study represents an exciting first step in our efforts to establish strong clinical support demonstrating a positive outcome that can be achieved by using Renuvion technology.

In addition to this exciting progress, we have also recently announced the addition of two important members of the Bovie Medical team, Scott Sanders and Dr. Diane Duncan, who will help us build our portfolio of clinical support for Renuvion strategically and efficiently. On March 27, we announced the appointment of Mr.

Sanders, as Director of Clinical Education and Market Development for Bovie Medical. He joins our team with 37 years of clinical and sales and marketing experience in the healthcare industry, the majority of which has been dedicated to working with energy-based surgical devices.

Scott will be an important contributor to our clinical activities in the field while also providing support and training for our salesforce and physician customers. On May 1, we announced the appointment of Dr. Diane Duncan to Medical Advisory Board. A Board certified plastic surgeon with over 30 years of experience in private practice.

With the addition of Dr. Duncan, along with Dr. Jack Zamora, who we appointed late last year, we have expanded our Medical Advisory Board to include experts in the field of cosmetic surgery who’s advice will inform our clinical and commercial strategy. This brings me to the second strategic initiative formalizing our regulatory strategy.

On March 26, we added Dr. Topaz Kirlew to our leadership team, as Director of Regulatory Affairs, a newly created position for Bovie Medical. Under her direction, we are focused on developing an effective regulatory strategy to secure specific clinical indications for our target procedures in the cosmetic surgery market.

In tandem, we remain focused on pursuing 510(k) submission to the FDA, for the indication to market [indiscernible] for the use of dermal resurfacing procedures. We expect our dermal resurfacing IDE Study will play an essential role in this aspect of our regulatory strategy by providing important clinical evidence to support our 510(k) submission.

Moving to our third strategic initiative, enhancing physician and practice support for our cosmetic surgery customers. On March 29, we launched Renuvion Cosmetic Technology, the new dedicated brand for our J-Plasma generators and handpieces in the cosmetic surgery market.

As a reminder, Renuvion cosmetic technology was created to establish our commitment to our physical customers in the cosmetic surgery market by providing them with a brand that was specifically designed to resonate with their patients.

The Renuvion brand and its associated tag lines and promotional materials were created with feedback from our physician customers and their patients and tested in the market in advance of our launch.

In connection with the launch of the Renuvion brand we debuted a dedicated Renuvion website which futures a portal with promotional materials to be used by our physician customers, as well as a physician finder designed to connect interested patients with the physician in their area.

In the initial weeks following the launch, our salesforce has engaged our existing base of physician customers in person via WebEx presentations to educate them on the Renuvion brand and help them to integrate into their practice space marketing.

The initial feedback we have received from the market has been very promising and we look forward to building support for the Renuvion brand and enhancing its visibility in the marketplace for the benefit of our physician customers.

And lastly, with respect to our fourth strategic initiative improving our manufacturing capabilities and efficiencies as the global awareness and adoption of our Advanced Energy Products continue to grow, we are focused on identifying new ways to improve our manufacturing capabilities and ensure that we are able to meet the strong demand we anticipate for our generators and handpieces for the years to come.

As part of this process we will be leveraging the strategic guidance of our newest board member Craig Swandal, whose appointment became effective on March 8.

Craig Swandal specializes in helping companies to identify and implement new manufacturing initiatives and he will be an important advisor to our team as we evaluate potential opportunities to enhance our productivity and efficiency. With that, let me turn the call over to Jay for the review of our first quarter financials in greater detail.

Jay?.

Thanks Charlie. Total revenue for first quarter 2018 increased $1.5 million or 18.2% year-over-year to $9.9 million, compared to $8.4 million last year. By business segment, total revenue growth in the first quarter was primarily driven by Advanced Energy segment sales which increased $2 million or 333.2% year-over-year to $2.6 million.

Our impressive Advanced Energy growth in the first quarter was driven by strong sales of our generators and hand pieces into the U.S. cosmetic surgery market, the contributions from sales to O-U.S. distributors as well.

The strong performance in our Advanced Energy segment was partially offset by decrease sales in our Core and OEM segments, during the first quarter 2018 period. Our Core segment revenue decreased $256,000 dollars or 3.8% year-over-year and our OEM segment revenue decreased $239,000 or 23.7% year-over-year.

By business segment our Core, Advanced Energy and OEM segments represented 66%, 27% and 8% of total revenue respectively in the first quarter. Revenue in the United States increased approximately $1 million or 14% year-over-year to $8 million and international revenue increased approximately $546,000 or 39.1% year-over-year to $1.9 million.

International revenue represented approximately 20% of sales in the first quarter of 2018, compared to 17% of total sales in the first quarter of 2017. Our international sales growth was largely driven by sales to our Advanced Energy international distributors.

Moving down the P&L, gross profit increased $764,000 or 18.1% year-over-year to $5 million, compared to $4.2 million for the first quarter of 2017. The increase in first quarter 2018 gross profit was driven by strong sales in the Company's Advanced Energy segment. Gross margins for the first quarter of 2018 was 50.3%, compared to 50.4% last year.

The change in gross margin was primarily due to strong Advanced Energy sales offset by softer core segment sales and lower margins in the company’s OEM and core segments. Operating expenses for first quarter 2018 decreased $109,000 or 1.8% year-over-year to $5.9 million, compared to $6 million for the first quarter of 2017.

The change in operating expenses was driven by a $266,000 increase in selling, general and administrative expenses and $116,000 increase in professional services expenses which were offset by a $344,000 decrease in salaries and related expenses and $147,000 decrease in research and development expenses.

Loss from operations for the first quarter of 2018 was $864,000, compared to a loss from operations of $1.7 million for the prior year period, reflecting solid operating leverage with an $873,000 improvement in operating profit and a $1.5 million improvement in sales year-over-year.

Net loss attributable to common shareholders for the first quarter of 2018 was $935 million, or $0.03 per diluted share compared to a loss of $1.7 million or $0.06 per diluted share for the first quarter of 2017. The change in net loss in the first quarter was primarily driven by the year-over-year improvement in both sales and loss from operations.

First quarter 2018 adjusted EBITDA loss was $293,000, compared to an adjusted EBITDA loss of $1.4 million last year, an improvement of more than $1.1 million year-over-year. We have provided a detailed reconciliation from GAAP net loss to adjusted EBITDA in our press release this afternoon.

Turning to a review of our 2018 financial guidance, which we reaffirmed in our earnings press release afternoon, for the 12 months ended December 31, 2018, we continue to expect total revenue in the range of $41 million to $42.5 million, representing growth of 5% to 9% year-over-year, compared to total revenue of $38.9 million in fiscal year 2017.

We also expect total revenue growth in fiscal year 2018 to be driven by Advanced Energy sales growth in the range of approximately 40% to 45% year-over-year and we expect adjusted EBITDA in the range of $1 million to $1.5 million, compared to an adjusted EBITDA loss of $3.7 million in fiscal year 2017.

As a reminder, we have included a full reconciliation from GAAP net loss to non-GAAP adjusted EBITDA in our earnings press release this afternoon. Lastly, for modeling purposes, for the full year 2018, we expect gross margins in the low 50s this year, compared to 50.8% last year, stock-based compensation expense of approximately $1.5 million.

Please note that this compares to our prior expectation of approximately $700,000 for fiscal year 2018. Depreciation and amortization of approximately $700,000 and weighted average diluted shares outstanding of approximately 33 million shares.

Finally, the Company filed an S-3 May 4, 2018 to register up to $25 million of common preferred warrants or debt securities. Investors should understand that this reflects nothing more than an updating of our prior self-authorization shelf authorization which had expired.

We are very comfortable with our current capital position and have no immediate capital needs. The shelf filing is just good corporate governance. With that will turn the call back to Charlie for closing remarks.

Charlie?.

Thanks Jay. In conclusion, both our financial and operating performance in first quarter marked an exciting start to 20118.

We achieved strong sales growth by leveraging our internal resources to drive adoption of Renuvion in the United States cosmetic surgery market and we continue to execute on the four initiatives of our longer term growth strategy.

In addition to our strong financial and operating performance during the first quarter, we also continued to receive positive feedback on our technology with evidence of peer-to-peer selling. In light of these encouraging signs and our recent progress we are reaffirming our financial guidance for 2018.

More broadly, we remain convinced that Renuvion represents a game changing technology with the potential to achieve attractive outcomes for physicians and their patients in the cosmetic surgery market.

Our sales force will continue to focus exclusively on this large, growing and under penetrated market, which we believe has favorable characteristics that position us well to drive adoption.

And lastly, we will continue to develop our expertise in our organization in cosmetic surgery, while expanding our longer-term strategy to encourage broad based adoptions, ultimately achieve strong, sustained and profitable growth for the benefit of our shareholders.

Thanks everyone for your participation on today's call and your interest in Bovie Medical. And of course I would like to thank all of Bovie Medical’s employees and customers. Operator, we will now open the call for questions..

Thank you. [Operator Instructions] And our first question comes from Matthew O'Brien with Piper Jaffrey. Your line is open..

Good afternoon. Thanks for taking the question and congrats again on the study done about a month and a half early..

Thank you..

Thank you..

I know it's a lot of work. So just a few for me, on Advanced Energy not surprisingly the focus there the performance in the quarter was quite strong.

Can you talk a little bit about what you saw in the quarter from an interest level from clinicians? And then as your sales funnel builds, how that's trending? Because what I'm really trying to get at, is I looked at the rest of the year given some of the sequential growth that you saw last year.

You pretty much have to assume very little sequential growth out of the Advanced Energy business for the rest of the year to stay within your guidance range.

So why out that?.

Well first let me talk about the Advanced Energy business. It’s up $2 million year-over-year. More than 80% of that came from the U.S. cosmetic market. Generators were the primary driver of growth year-over-year, but we were very pleased with the handpiece demand.

And we're executing both on new customer adoption, as well as seeing the utilization grow, as well. And so we remain very bullish and very positive on that for the rest of the year..

Okay. So can you talk specifically little bit more about the funnel as far as you mentioned some of the peer-to-peer selling that's going on? There's a certain number of docs which you're talking to every quarter, I'm sure that's growing in the conversion rate, I’m not sure where that is.

But as the funnel increased meaningfully, Q4 to Q1 and now kind of trending up a lot as well and Q2, just anything you can provide there would be helpful..

Well number one, we're very happy with the progress that our group is making. But I want to come back and just remind you that we are still in the early innings of this.

And we are still focused on the early adopters that are driving this technology because as you remember we're building out all the clinical work that needs to go into this year to be able to really go after all the clinicians that are in this marketplace.

And so right now we are relying on a lot of our doctors for that peer-to-peer selling because they're having to adopt the technology in absence of a large body of clinical data. We are very encouraged by that, but at the same time this is just Q1 and we remain incredibly excited and positive on the future..

Got it. And then last one from me just on the handpiece side, Charlie you mentioned that one. I know there's been above other growth last couple quarters coming from the generators, so I guess from an investor perspective how do we get comfortable that that doesn't at some point slow down a little bit? I know you're very early days.

But you get comfortable with the handpiece side can really drive a lot of growth going forward. Are there any metrics you can provide as far as what's going on from a man handpiece perspective if you have some existing accounts that you've been using this for awhile? Just anything you could provide there will be helpful. Thank you. .

Yes on the Q4 call we had told you that as far as being in the cosmetic market that typically is seasonal from Q4 to Q1 and that was down about 30%. Actually we were down about 15% in the in Q1 from Q4. And that's roughly about $500,000 better than we had suspected. The majority of that came from better handpiece demand in the United States.

There was a little bit in there that was also part of generators O-U.S., but the vast majority of that $500,000 beat was for better than expected handpiece demand. And we're confident and hope that that trend will continue. But I want to remind you that it is just one quarter..

Fair enough, thank you..

Your next question comes from Matt Hewitt with Craig-Hallum Capital. Your line is open..

Good afternoon and congratulations on the excellent start to the year..

Thank you..

The first question did you add any sales reps during the quarter? Is it still your intention to add two or three yet this year?.

Yes we actually added two in the quarter and we have still the 14 independent agents, we have a total of 33 and we do have plans to add one more direct. That is correct..

Okay, great.

And then secondly last quarter you were still looking to finalize a new regulatory strategy, have you completed that process? What indications are you may be going after with Renuvion any color along those lines?.

Yes obviously it was key for us to get the IDE Study finished. And we were very fortunate today to get to announce that we got our last of our 55 patients. And obviously with bringing Dr. Kirlew in here and also with Dr.

Diane Duncan and Scott Sanders that we will be working on other things within the cosmetic surgery space, but we have not given or announced any guidance for that. It remains a key strategic focus area for us. And it has focus of everybody in the building..

Okay. Maybe one last one for me, you touched on this little bit in your prepared remarks it sounds like you had done some pre-launch activities from a rebranding standpoint with the Renuvion change.

What has been the feedback pull switch? And I realize it's early days, but any initial feedback that you've gotten from either from some of the physicians that were already using the device or others that maybe even looking that or kind of waking up to the story again? Any color there would be helpful. Thank you..

Yes, no problem. As you mentioned it is in the very early days. I think we announced it on March 29, so it's incredibly early days. But we're very pleased by the reaction from our customers, we're very pleased how Renuvion is trending on some of the social media sites.

And we couldn't be happier with the progress that we are having right now with the change in the brand to Renuvion..

Great, thank you..

Thank you..

Your next question comes from David Turkaly from JMP Securities. Your line is open..

Thanks.

Just on the study front, could you just remind us a couple of quick things, sort of what's the follow-up time on that? Do you plan to share those results when they're compiled? And then I guess sort of your best guess as to when a 510(k) clearance should come?.

Well, I can't necessarily speak to you about a 510(k) clearance because I'm not the FDA. But what I can help you with is that our focus now shifts to being preparing for that submission.

And really what the timeline for that is, is our last patient was enrolled in the study today there is a 90-day follow-up for that and then we will need at least a couple months to analyze the data and prepare that submission.

And so we are estimating to prepare – to have that to be able to submit to the FDA in November of this year, in November of 2018..

Thank you for that.

And I guess may be along the line to some of Matt’s questions, you're selling the plastic cosmetic surgeons and dermatologists, I guess any color as to where the product is resonating in the most strong today? And any difference in sort of how those different custom bases react to the new Renuvion?.

Well I think among the three different groups it's really for the same procedure and the primary procedure target is liposuction and where J-Plasma is used as a subdermal coagulator. And just as a reminder for that there's about 400,000 of those procedures in the U.S. per year with about 50% of those being done by plastic surgeons.

And so the response is still very, very good, the customers, our physician customers are very ecstatic with the results that they are seeing because their patients are very happy with the results they are seeing. And so remain and very positive and very excited about the future of this technology in this space..

Okay last one from me. I’d just say congrats to all the hires, the KOLs, the new Board members, it seems sort of like a new Bovie I guess for you Charlie.

Is your team assembled now? That sort of seems like you got a lot of new folks that could help you continue getting Renuvion out there?.

Yes, thank you. I am very happy with the additions that we have. And just like any team if I have the ability to find a great athlete, we will try to find a place on the team if they can help us out with our strategic initiatives. And so I couldn't be happier with the way things are going and the way things are shaping up.

And I couldn't be more excited about the future of this company..

Thanks, have a great day..

Thank you..

[Operator Instructions] Your next question comes from Russell Cleveland with RENN Capital. Your line is open..

Thanks for taking the call. First of all congratulations on the numbers, certainly very encouraging. My questions are around body sculpting. And you mentioned that there was 400 body sculpting.

Could you give us more feeling about how big this industry is in body sculpting as opposed to face? And secondly, are we already cleared from other approvals with J-Plasma the body sculpturing or do we have to do a number of new studies? So that’s my two questions..

Yes well the first is Renuvion right now is used in those procedures as a subdermal coagulator. And so it is approved for that in those procedures.

And as I mentioned before in the United States alone there are over 400,000 of these liposuction procedures that are being done where I mentioned that half of them were done by plastic surgeons, the other half of them are done by cosmetics and dermatologists.

And so obviously with that huge procedure base and us being very early in the adoption curve, we have long ways to go. We will also be pursuing regulatory clearance for dermal resurfacing which offers another 165,000 to 200 procedures in the U.S.

for the fully ablative resurfacing, so that right there just in the United States alone gives us somewhere around 600,000 procedures to be able to take Renuvion technology to. And in this space that is about 15,000 physicians in the United States alone.

And so given all of this we've got a lot of execution left to go into and a lot of runway left for this company..

Great thanks so much. I appreciate it..

Thanks Russell..

This is all the time we have for today's – for tonight's call. Thank you for participating. You may now disconnect..