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Business Observer Friday, Mar. 8, 2019 8 months ago

Extreme makeover: Cosmetic surgery supplier bear-hugs change as it breaks with its past

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The well-pedigreed medical technology firm has risked a lot of tangibles — and intangibles — to score big in a billion-dollar market.
by: Brian Hartz Tampa Bay Editor

The second day of 2019 marked the end of an era in more ways than one for Bovie Medical Corp. It signaled the demise of the Clearwater-based medical technology company as it’s been known since it was founded in 1982.

A maker of surgical devices and supplies for cosmetic surgeons, dermatologists, veterinarians, gynecologists and other health care specialists, Bovie recently took a giant risk. It sold the rights to its name and many of its core products for $97 million to Antioch, Tenn.-based Symmetry Surgical. Bovie, after the sale, rebranded as Apyx Medical Corp.

The plan? Focus on the growth potential of a single technology: Renuvion, originally known as J-Plasma, which is used to facilitate subdermal coagulation and shrink collagen as part of post-liposuction surgical procedures. The product also minimizes damage to collateral tissue. (Per U.S. Food and Drug Administration regulations, the company says it’s not allowed to use the term “skin tightening” in its marketing.)

But why make such a seismic shift? It goes back to the adage that the odds of success go up when you focus on doing one thing better than anyone else. And sometimes the best way to do that is to let go of the past — and the baggage it carries.

“We found a niche,” says Apyx Medical Corp. President and CEO Charlie Goodwin, hired in December 2017, succeeding Robert Gershon. Goodwin has shepherded the company through a rollercoaster year of change that also saw the retirement of CFO Jay Ewers. “It’s transformed this business into a high-tech, high-growth company, and we’re a completely different company than we were a year ago.”

In addition to the new moniker, Apyx moved its shares from the New York Stock Exchange to Nasdaq composite index and changed its ticker symbol to APYX. To celebrate the new era, Goodwin and other executives recently traveled to New York to ring the Nasdaq opening bell.

“We wanted to have a fresh start as a new company,” says Goodwin, 52. “We were fortunate to get listed on the Global Select Market, the top market within Nasdaq, so it was the perfect time to come out with a new name.”

Investors are keen on Apyx — shares were trading over $8 each for most of January, up nearly fourfold since early 2018, when the shares were stuck at around $2. (Apyx/Bovie was a strong performer even before the sale to Symmetry, with revenue rising 40%, from $27.68 million in 2014 to $38.88 million in 2017.)

“We’ve got a very nice growth rate,” Goodwin says. “And with the Symmetry transaction where we got all of that cash, we’ve got a great balance sheet to fuel the growth. We are probably one of the best-funded startups in the medical device space. We’ve got a market and a technology that we’re already selling into [that market].”

EMBRACE CHANGE

Goodwin, who hails from Spokane, Wash., and has a sales and marketing background, says he’s never shied away from being aggressive at the helm of a company. He led Gyrus ACMI, another medical device company, to more than $450 million in annual sales before selling it in 2008 to Olympus Corp. for $2.2 billion.

“We wanted to have a fresh start as a new company … it was the perfect time to come out with a new name.” Charlie Goodwin, president and CEO of Apyx Medical Corp.

While Apyx, for now, is a much smaller venture, Goodwin plans to move fast while the company is flush with cash. He says the market for Renuvion is massive, with as many as 15,000 dermatologists and cosmetic surgeons nationwide who are potential customers. The product is under review by the FDA for dermal resurfacing purposes, which could allow facelifts to be performed without the need for invasive surgery.

The challenge, Goodwin says, comes down to his old territory: sales and marketing. Apyx has more than 200 employees, including 77 at its European office in Sofia, Bulgaria. But because Bovie was such a well-known, established brand, less than 20 are full-time sales professionals out in the field. That number will need to rise substantially for Apyx to capture the market share it believes is out there for the taking.

“It’s a $1.5 billion opportunity,” says Todd Hornsby, Apyx Medical’s executive vice president. “It’s a market that’s growing, and now we’ve come in with a technology that’s very different than what’s being used today, an ability to deliver heat to tissue than anything else out there. While we did over $13 million in 2018 with this technology, we still have a long way to go. Fortunately, we have the right product.”

OVERCOME DOUBTS

Having come aboard in August 2014 as vice president and general manager of advanced energy, Hornsby is one of the company’s longest-tenured executives. He admits there was some uncertainty and doubt about the drastic business model shift. 

“Change is always difficult, especially when you do something as big as changing the name of the company,” he says. “But what’s in a name, right? It’s about what you put behind it, the people that are behind it.”

Hornsby says Goodwin made him a believer in the company’s new identity and direction — so much so that not only did Hornsby choose to stay on following the Symmetry deal, he accepted a promotion to executive vice president that became effective last month.

“Charlie is probably the most different type of CEO any of us have come across,” Hornsby says. “And that is a very positive thing. He is straightforward, down to earth and supportive of his employees. He’s the guy who will walk around and talk to people all over the building regardless of their job title, and of course he works extremely hard, but what he really brought to the organization is focus.”

DISRUPT YOURSELF

Hornsby parses out the enormous, but potentially lucrative, challenge Goodwin placed before the company.

“We weren’t focused,” he says. “We were trying to be everything to everybody. Charlie came along and really brought a level of discipline and focus to the whole organization, so now we’re just going after the cosmetic technology space. It was about, ‘OK, what projects are we working on? If it’s anything other than the plastic surgery space, let’s put it on the back burner.’”

Under the Goodwin regime, Apyx abandoned the hospital market in favor of an all-out assault on specialist clinics. It worked.

Hornsby explains: “When you look at Bovie and its legacy, it's got strong brand recognition, but it certainly wasn't known for being a growth organization, by any means. So with J-Plasma finding its way into the plastic surgery space, we started seeing dramatic outcomes, a lot of strong potential. And so now all of a sudden we have a legacy company that's been thrust into growth mode.”

To take the opportunity even further, and give it that much more focus, the next move was to sell the legacy business and the Bovie name. "It’s allowed us to completely advance who we are and given us the opportunity to change our name to something that fits with the direction we’re now moving in," Hornsby adds. 

It’s one thing to embrace change but quite another to give it a vise-like bear hug the way Apyx has done. Yet for Goodwin and Hornsby, the potential benefits of the company’s new path far outweigh the risks, especially because Bovie’s legacy as a stalwart company backed by evidence-based medical science gives Apyx instant credibility.

“It’s a calculated risk, for sure,” Hornsby says, “but the nice thing is we know we have a technology that actually works, and that is pretty rare to find in this industry. We bring a level of conservativeness, in a good way, where we want to not just talk about how great we are and have amazing before-and-after pictures, but have the data to back it up.”

Hence, the process of obtaining FDA approval to market Renuvion to the cosmetic surgery market. Apyx’s case is supported by a clinical study that involved 55 patients who underwent procedures to reduce facial wrinkles.

“We have doctors who are using it off-label right now, and the results are very good,” Goodwin says. “We’re selling a surgical procedure, so we’re going to make sure we’ve got the protocols, the clinical results, and we’re educating and making sure our clinicians are able to use the technology in a way that is going to give their patients the results that they want.”

The cosmetic surgery market, Goodwin adds, “is about flash and advertisements and things like that. But we come it at from a surgical route. We’re a little bit different.”

More than a little bit. A lot. And not afraid to break with the past.

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