According to the news report by MarketWatch, Bovie Medical Corp.’s share price shot up by 10% to reach a 20-month high after the company confirmed that it had reached a deal to sell its core business as well as the company’s “Bovie” brand name.
According to the announcement, the medical device company is selling its brand name as well as core business for a sum of $97 million to Specialty Surgical Instrumentation Inc., which is a wholly-owned subsidiary of Symmetry Surgical Inc. The sale will be a cash transaction and is expected to close by the third quarter of this year.
As a part of this deal, Bovie will enter into patent licensing, disposables supply, transition services and generator supply as well as manufacturing agreements with Symmetry. The generator supply and manufacturing agreement would establish Bovie as the OEM-provider of specialized generators to Symmetry for a minimum period of 10 years.
The company’s President and member of the board of directors, J Robert Saron will give up his position in Bovie as well as the company’s board of directors. He will then join Symmetry once the transaction is finalized.
Bovie’s Chief Executive Officer Charlie Goodwin stated that this was a milestone for the company – a moment that creates value for Bovie’s shareholders by dramatically increasing the company’s balance sheet. This is being done through the addition of cash proceeds to the tune of more than $70 million – after taxes and transaction related expenses are taken care of.
Bovie published its press release on Business Wire, where it stated that the purchase had been approved by its board of directors, but is still pending final approval from the company’s shareholders as well as regulatory approvals.
Bovie is a medical devices and supplies manufacturer and is also the developer of the J-Plasma, an energy device that is used for skin resurfacing (more colloquially known as a facelift). J-Plasma is a patented cosmetic surgery product that is being marketed and sold under the Renuvion Cosmetic Technology brand umbrella.
Goodwin also said that this cash deal would also allow the company to increase its focus on Bovie’s strategic ambition of commercializing their J-Plasma/Renuvion technology for the cosmetic surgery sector.
Bovie also stated that it would be retaining its OEM as well as Advanced Energy business divisions, its factories in Clearwater, Florida and in Sofia, Bulgaria. The company will also certain intellectual properties related to its specialty generators.
Bovie’s “core” business, which it is selling to Symmetry, consists of the electrosurgical as well as cauteries businesses, which were the two business the company started with when it was founded. CEO Goodwin stated that they believed that these businesses’ customers and employees stood to gain from this deal, especially considering the focus and investment that they would get from Symmetry.
According to the press release, until the deal is closed, Bovie will continue to manage its core business, and will ensure that there is complete product availability as well as support for its customers. Once the deal is closed, Bovie will update its financial guidance for this year.
The company also released its preliminary second quarter results for this year. Bovie announced that it was expecting a quarterly revenue in the range of $11.2 million to $11.5 million, which will be a 15% to 17% increase vis-à-vis the same time last year. It is also above the market consensus target of $10.1 million.
So far this year, Bovie’s share prices have skyrocketed massively, going up by a huge 92% year-to-date. In comparison, the S&P 500 has only gained 3.2% so far this year.