Good afternoon, ladies and gentlemen, and welcome to the Third 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 you – 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 President and Chief Financial Officer [sic] Chief Executive Officer. Please go ahead sir.

Thank you, operator. Welcome, everyone, to our third quarter 2018 earnings call. I’m joined on this afternoon’s call by our Chief Financial Officer, Jay Ewers. Let me provide you with a quick agenda for today’s call. I’ll begin with a high-level overview of our third quarter sales results, along with commentary on the factors that contributed to our strong growth performance during the period. Then I will discuss our recently completed strategic transaction with Symmetry Surgical, which we closed during the third quarter. I will then briefly review the strategic initiatives that we’re pursuing this year as part of our longer-term growth strategy before turning the call over to Jay to discuss our third quarter financial results in detail and review our fiscal 2018 guidance, which we increased in our earnings press release this afternoon. Following Jay’s discussion, I’ll close by sharing some additional thoughts on why we believe NewCo is well-positioned for success in the years to come before opening the call for questions. With that, let’s begin with a review of our sales performance during the third quarter. As a reminder, our results are reported on a continuing operations basis for the period ending September 30. Any financial impacts related to the divestment and sale of our Core segment are excluded from the commentary that follows. We achieved total revenue of $3.7 million in the third quarter, which represented a 39% growth year-over-year. Our total revenue growth in the third quarter was primarily driven by our strong sales performance in our Advanced Energy business, which increased $859,000, or 40% year-over-year. We also saw contributions from our OEM business, which increased by $162,000, or 31% year-over-year. From a geographic standpoint, during the third quarter, U.S. sales increased by $551,000, or 25% year-over-year, while international sales increased by $470,000, or…

Thanks, Charlie. By way of reminder as discussed on our corporate update call in September, beginning with the third quarter of 2018, we will report our results on the continuing operations basis and any financial impacts related to the divested Core segment will appear as discontinued operations. Total revenue for the third quarter 2018 increased $1 million, or 38.5% year-over-year to $3.7 million, compared to $2.7 million last year. By business segment, total revenue growth in the third quarter was driven by Advanced Energy segment sales, which increased $0.9 million, or 40.4% year-over-year to $3 million. OEM segment sales increased $162,000, or 30.9% year-over-year to $687,000 in Q3, driven by strong demand from third-party equipment manufacturers for our proprietary generator products. OEM sales results also benefited from the initial orders for certain core products that we are manufacturing for Symmetry as part of the electrosurgical disposables and accessory supply agreement we signed with them as part of the divestiture of the Core business. Sales related to this agreement are expected to approximate $800,000 in full-year 2018, the majority of which we expect to contribute to our fourth quarter OEM sales. Revenue in the United States increased approximately $0.6 million, or 25% year-over-year to $2.8 million and international revenue increased approximately $470,000, or 107% year-over-year to $0.9 million. International revenue represented approximately 25% of sales in the third quarter of 2018, compared to 17% of total sales in the third quarter of 2017. Our international sales growth was primarily driven by sales to our Advanced Energy international distributors. Moving down to P&L. Gross profit increased $608,000, or 31.8% year-over-year to $2.5 million, compared to $1.9 million for the third quarter of 2017. The increase in third quarter 2018 gross profit was driven by strong sales in the company’s Advanced Energy segment.…

Thanks, Jay. I’d like to conclude today’s prepared remarks with some additional thoughts on why we’re excited about the opportunities that we see in-store for NewCo over the coming years and believe we are well-positioned to succeed going forward. First, we believe the U.S. cosmetic surgery market represents a large and compelling market opportunity for our company, which will enable us to drive strong and sustained growth. With our current indication for Renuvion as a subdermal coagulator following liposuction procedures, we estimate that our potential addressable market for generators and handpieces is approximately $1.5 billion in the U.S. alone. Importantly, this addressable opportunity includes an annual reoccurring revenue component for the sale of Renuvion handpieces, which we hope to expand in the addition of new specific clinical indications for additional target procedures. And second, we believe that the J-Plasma technology, which powers our Renuvion generators and handpieces represents a truly unique Energy Modality that is able to deliver heat to tissue in an incredibly efficient and controlled manner. Specifically, the combination of our proprietary RF energy and helium plasma allows Renuvion to quickly heat subdermal tissue to the optimal treatment temperatures and then cool the tissue almost instantaneously. We believe this approach enables physicians to minimize dermal diffusion to the surrounding tissue that is not being treated. Our technology also allows Renuvion to deliver full power to all types of soft tissue and to heat the subdermal tissue in a faster and more efficient manner. And lastly, the fact that Renuvion does not rely on direct contact with the tissue being treated provides physicians with more freedom to deliver energy to all desired tissues within the subdermal space. In closing, with a highly differentiated technology, supported by strong physician feedback in the cosmetic surgery market, a recently completed strategic transaction that positions us to more effectively pursue our $1.5 billion-plus opportunity in this market and multiple strategic initiatives in place to encourage broad-based adoption of our technology in the years to come, we now couldn’t be more excited about the future prospects for NewCo. We are increasing our revenue guidance today based on strong performance that we saw in our Advanced Energy business during the third quarter, and we look forward to bringing the year to a strong close. I’d like to take the opportunity, again, to thank our employees for their commitment and focus in the recent months, as we completed our transition to NewCo. I’d also like to thank our shareholders for their continued support of our strategic vision, as well as everyone on tonight’s call for their interest in our story. With that, operator, let’s now open the call for questions.

Thank you. [Operator Instructions] Our first question comes from the line of Dave Turkaly of JMP Securities. Please go ahead. Your line is open.

Thank you. Maybe one just a strategic question to start off. You mentioned the – potentially disruptive transition period. And Charlie, I just love to get your thoughts maybe a little of softer evaluation here on how the culture feels and the operations feel, given the large divestiture that you did, certainly excited to see you raised guidance on the Advanced Energy side. But maybe some color on how you think that whole transition has gone and where you stand today looking ahead to the last quarter of the year and next year?

Yes. Thanks, Dave. There is no question, Dave, that I threw a lot on the organization in this quarter to get everything taken care of and to execute this transition and to move things forward. And I caused a lot of sleepless nights for a lot of people in the organization and a lot of people put in a lot of hours. And I can’t thank them enough for all the time and dedication and hard work that the employees did to make this success and make this transaction and transition a success. But at the same time, I think from a culture point of view is, everybody in NewCo is incredibly excited about the opportunity that we have with the unique property of J-Plasma and our ability to do something that no others can really do in this space. I think, everybody is very much excited and focused about the future, and is looking forward to that opportunity that we have with our ability to – the unique heating, the ability to deliver power to all soft tissues and non-contact energy, we think that we’ve got a game changer and everybody’s excited about it. But it was a lot of work for everybody in the organization and it was a lot to do.

I appreciate that. I’m sure, it was. And then, you mentioned 50 people and you’re selling organization by the end of the year expected. Just any color on sort of – I love to hear the reps you have today. How some of them are performing, maybe even at the high-end? And then, what you think would be an average, maybe if you get an idea of sort of productivity for those folks. It certainly seems like based on the ASP of the product that they could be very productive, but I guess maybe talk about the fact you’re adding some new people and where your average is standing today, or where you think some of these folks can go, let’s say, after their onboard for year or so?

Yes. There’s obviously a transition period, where somebody has to get up to speed and they have to go build the pipeline and do all that kind of stuff. So, you think a good six months for that before we really get things go. And – but there’s no reason that anybody after a year in the field could not be doing somewhere around $1 million in sales. And I know that’s kind of what you’re looking for, because you want to take the numbers that I’ve got and start multiplying them. But there’s no reason to think that somebody couldn’t do that. And the other part, though, that is important to keep in mind is, we’ve only been doing this for a little bit over a year in this cosmetic space. And right now, our business is still capital-dependent, and so we still have to go find new people every quarter. And so, that makes things difficult every quarter. And as we grow and move this business forward, obviously, over the years, we’ll rely more and more on our reoccurring revenue stream. But right now, we’re still – we still got to go find new capital business.

All right. Thanks a lot.

Your next question comes from the line of Matthew O’Brien from Piper Jaffray. Please go ahead. Your line is open.

Good afternoon. This is Drew on from Matt. Thank you for taking the questions here.

Good afternoon.

Looking at your Advanced Energy business, I think, your guidance into year-end implies a pretty meaningful acceleration in Q4. Can you kind of walk us through some of the factors that would contribute to that?

Well, there’s a whole variety of factors that we’re facing in the business. every day. Every day, Renuvion is getting used more and more. There are more and more people talking about Renuvion. We are getting more and more people to write about Renuvion, to talk about Renuvion. Our presence at shows from the podium about Renuvion are great. And you look at social media and the social media results that are been seen about Renuvion are very good. And so all of these things, obviously, there’s not one thing, but all of these things help to just kind of start building that. And as we add more people to the mix and are able to have them go articulate our method of action story and really convince people and show people why our technology is different, it just starts to build some momentum and starts to build some excitement.

Okay, great. I guess, looking forward to 2019, and I know you’re not guiding for 2019 at this time. But is that the type of run rate you – we can expect to see in that business going forward?

Yes. We’re not going to comment on 2019 tonight. We’re going to focus on the great work that we did in having the Symmetry transaction and the quarter, and we’ll talk a lot about that I know in our next call.

Okay, it’s clear to understand. And then last, real quick one for me here. Can you kind of provide any details on the momentum you’re receiving internationally? Are there any particular regions that you feel could drive significant growth in the next several months here?

Yes. The demand that we’ve seen internationally has been from our existing distributors, okay? And we’ve been incredibly well, incredibly pleased with the efforts in these countries. But as I’ve mentioned before, we still are in the early innings and we’ve got a lot of countries to expand to over time. But right now, it is the same type of story that you’re seeing here in the United States. In that, we’re having very good success in select countries through the cosmetic portion of it, and it’s being driven by the excitement and the uniqueness of Renuvion.

Okay, great. Thank you for taking the questions.

Your next question comes from the line of Matt Hewitt of Craig-Hallum. Please go ahead. Your line is open.

Yes. This is Lucas Baranowski on for Matt Hewitt here at Craig-Hallum. Yes, congrats on the quarter. It sounds like you’re still planning to get to 50 sales reps by year-end. So maybe you could provide some color on the hiring strategy, like are you targeting specific geographies for expansion, or is it more broad-based?

Yes. Well, well employ, as you know, a hybrid sales model, where we have directs and independent agencies. And it gives us the flexibility to look at each region of the country and to find the best option and the best talent for that region. And so really what we’re looking for is, if you will, lack of a better word, the best athlete in the space and somebody who we think that can obviously drive business for us. And so I like the flexibility that we have. I like the model that we have, and I think it works nicely.

Okay. And then one other question here. Looking at the influx of cash from the divestiture, could you provide an update on the M&A environment? And whether you are seeing anything out there in the Advanced Energy space or elsewhere that you might look to acquire?

Yes. We’re not going to – I’m not going to comment on that today. Obviously, we’ve been very focused in making sure that this transaction everything there gets taken care of and focused on the third quarter and the Renuvion. And obviously, having the cash is a luxury that we did not have before this. So – but we’re not – I’m not going to comment on that today.

Okay. Thank you very much. That’s all I had.

Thank you.

Your next question comes from the line of Kyle Bauser of Dougherty. Please go ahead. Your line is open.

Hi, good evening. Can you hear me, okay?

Yes, I hear your great, Kyle. Thank you.

Great. Thanks. So can you speak a bit more about the expanded J-Plasma indication for dermal skin resurfacing. So, what sort of steps are remaining in before you submit the 510(k) application. I think, the ID enrolled 55 patients with three or six months follow-up. I can’t remember. But can you talk about kind of what’s left? How many patients you’re still trying to follow and then data analysis associated with that?

Yes. So we’re in the data analysis portion of this. And this is the part that is kind of out of our hands, our CRO does this work. And so they are evaluating the data and when there are done, they will submit to us the report. We’ll use that data for our submission for our 510(k), but this is the portion that is a little bit outside of our control.

Okay. And then if we fast forward to your expected indication for that, for the dermal resurfacing next year, can you speak a little bit more about the initial launch strategies? Are you going to focus on driving sales in the single use within existing accounts that already have the generator for subdermal coagulation, or are you going to focus more on driving the installed base? Any sort of color on that would be great?

Yes. It would obviously be a two-prong strategy for that is, obviously, there would be a big push on cosmetic surgeons that are doing dermal resurfacing procedures and we would have a big capital push for that. But also it’s a natural to go to our existing base of people that are doing it and be able to add disposables to those accounts to increase the the utilization of the hand pieces also. So we would have a two-prong approach on that.

Okay. And then lastly for me, how many users of J-Plasma are currently out there for the subdermal coagulation?

Yes. We haven’t given out the exact numbers of that yet. But just as a reminder, the subdermal coagulation market in the United States alone has over $400,000 procedures. So that market itself is double the size of the dermal resurfacing market. So it represents an incredible opportunity also. And when you put the two of them together, obviously, you can do the math, that’s a lot of procedures every year just in the United States alone and outside the United States, it’s even bigger.

All right, great. Thank you.

Thank you.

[Operator Instructions] Your next question comes from the line of Russell Cleveland of RENN Capital. Please go ahead. Your line is open.

Thank you, Charlie and team for a very good report, makes for good reading. One [Technical Difficulty] we’re doing a 510(k) for the skin resurfacing here in the United States. Are we already cleared in Europe CE Mark or can be solar products there now, or do we have to do some test for the European market?

Yes. For the dermal resurfacing, we would need the 510(k) first. But we are obviously selling our products in the countries that is registered in for the subdermal coagulation.

So the 510(k) from the United States, but also sure for Europe, is that right? We wouldn’t have to do additional test or anything?

We would not have to do additional study. We would have to register the products though in each of the different and get approval in each of the different countries.

Okay. You can’t just do one and then have the whole European market?

Well, for the European market, there is one, yes. But the rest of the countries are all separate, but the EU is the same, that’s correct, one for the EU.

And the timing on that getting all cleared and for Europe would be what?

Well, it depends on each company – countries. It depends on everything. I don’t have a time for you that for you right now. We’ve been focused on the U.S. market and getting that going.

Okay. I know there’s a lot of skin resurfacing going on using Renuvion without the FDA study. And so it seems like, there’s a lot of data here on the effectiveness and how it works? Again, any comments on this? It’s already happening here long before the FDA approval, any thoughts there?

Well, it is being used off-label, and clinicians can take any technology that they want and use it in anyway that they want. But yes, you are correct that the results that they are seeing from their patients are very good. And that’s about all I can comment on that, because it is an off-label procedure.

Right. Okay, that’s all I had. Thanks, again, for the results.

Thank you, Russell.

That does conclude our conference for today. Thank you for your participation. You may now disconnect.