Endologix, Inc. (the “Company”) (NASDAQ:ELGX), a developer and
marketer of innovative treatments for aortic disorders, today
announced financial results for the second quarter ended June 30,
2019.
“We are pleased with our second quarter results, as stronger
execution led to a sequential improvement in revenue,” commented
John Onopchenko, Chief Executive Officer of Endologix, Inc. “Our
culture of accountability is yielding tangible results, and our
team continues to steadily leverage a growing body of clinical
evidence to rebuild credibility in the marketplace. We are excited
about the progress we made during the first half of the year
against both our near- and long-term targets, providing us
confidence in our full-year outlook. We will remain focused on
execution as we continue to take meaningful and necessary steps to
position the Company for sustainable long-term success.”
Financial Results
Global revenue in the second quarter of 2019 was $36.2 million,
a 19.0% decrease from $44.7 million in the second quarter of 2018.
U.S. revenue in the second quarter of 2019 was $24.0 million, a
19.9% decrease from U.S. revenue of $30.0 million in the second
quarter of 2018. International revenue was $12.2 million, a 17.1%
decrease from International revenue of $14.8 million in the second
quarter of 2018. On a constant currency basis, second quarter 2019
International revenue decreased 14.8% over the second quarter of
2018.
Gross profit was $23.0 million in the second quarter of 2019,
representing a gross margin of 63.4%. This compares to a gross
profit of $29.6 million, or a gross margin of 66.2%, in the second
quarter of 2018 as lower sales volumes more than offset operational
improvements.
Total operating expenses decreased 27.2% to $32.9 million in the
second quarter of 2019, compared to $45.1 million in the second
quarter of 2018.
Net loss for the second quarter of 2019 was $27.1 million, or
$(1.50) per share, compared to a net loss of $23.9 million, or
$(2.83) per share, a year ago. Adjusted Net Loss (non-GAAP, defined
below) totaled $6.6 million, compared to an Adjusted Net Loss of
$15.6 million for the second quarter of 2018. Adjusted EBITDA
(non-GAAP, defined below) loss totaled $5.6 million for the second
quarter of 2019, compared to Adjusted EBITDA loss of $9.3 million
for the second quarter of 2018.
Total cash, cash equivalents, and restricted cash were $52.1
million as of June 30, 2019.
Financial Guidance
The Company reaffirms its previously issued annual guidance and
continues to expect 2019 revenue of at least $140 million. The
Company anticipates revenue for the third quarter ending September
30, 2019 in the range of $35 million to $37 million. The Company
continues to expect 2019 operating expenses in the range of $130
million to $140 million.
Conference Call Information
The Company's management will host a conference call today at
4:30 p.m. ET (1:30 p.m. PT) to discuss its second quarter 2019
results.
To participate in the conference call, dial 877-407-9716
(domestic) or +1 201-493-6779 (international) and refer to the
passcode 13692632.
This conference call will also be webcast and can be accessed
from the “Investors” section of the Company’s website at
www.endologix.com. The webcast replay
of the call will be available at the same site approximately one
hour after the end of the call.
A recording of the call will also be available from 7:30 p.m. ET
on Thursday, August 8, 2019, until 11:59 p.m. ET on Thursday,
August 15, 2019. To hear this recording, dial 844-512-2921
(domestic) or +1 412-317-6671 (international) and enter the
passcode 13692632.
About Endologix, Inc.
The Company develops and manufactures minimally invasive
treatments for aortic disorders. The Company's focus is in
endovascular stent grafts for the treatment of abdominal aortic
aneurysms (AAA). AAA is a weakening of the wall of the aorta, the
largest artery in the body, resulting in a balloon-like
enlargement. Once an AAA develops, it continues to enlarge and, if
left untreated, becomes increasingly susceptible to rupture. The
overall patient mortality rate for ruptured AAA is approximately
80%, making it a leading cause of death in the U.S. For more
information, visit www.endologix.com.
The Nellix® EndoVascular Aneurysm Sealing System has obtained CE
Mark in the EU and is only approved as an investigational device in
the United States. The Ovation Alto® System is only approved as an
investigational device and is not currently approved in any
market.
Cautions Regarding Forward-Looking Statements
This press release contains “forward-looking statements” within
the meaning of the U.S. Private Securities Litigation Reform Act of
1995. These forward-looking statements can generally be identified
by the use of words such as “anticipate,” “expect,” “could,” “may,”
“will,” “believe,” “estimate,” “forecast,” “goal,” “project,”
“continue,” “outlook,” “guidance,” “future,” other words of similar
meaning and the use of future dates. Forward-looking statements
include all statements other than statements of historical fact
contained in this press release, including statements regarding the
Company’s confidence in its ability to accomplish its goals for the
rest of 2019; the Company’s leveraging of clinical evidence to
rebuild credibility in the marketplace; the Company’s focus on
execution as it continues to take steps to position itself for
sustainable long-term success; and the Company’s Q3 2019 and FY
2019 revenue guidance and its anticipated FY 2019 operating
expense, the accuracy of which are necessarily subject to risks and
uncertainties that may cause the Company’s actual results to differ
materially and adversely from the statements contained herein. Some
of the potential risks and uncertainties that could cause actual
results to differ materially and adversely from anticipated results
include continued market acceptance, endorsement and use of the
Company’s products, the Company’s continued compliance with its
financial covenants and other operating restrictions under its
lending facilities, the Company’s ability to access the capital
markets on terms acceptable to it or at all, the Company’s
abilities to service its indebtedness and to satisfy and discharge
its indebtedness as such indebtedness comes due, the success of
clinical trials relating to the Company’s products, product
research and development efforts, uncertainty in the process of
obtaining and maintaining regulatory approval for the Company’s
products, the Company s ability to protect its intellectual
property rights and proprietary technologies, the Company’s ability
to retain its key executive, sales and other personnel, and other
economic, business, competitive, and regulatory factors.
Forward-looking statements represent our management’s current
expectations and predictions about trends affecting our business
and industry and are based on information available as of the time
such statements are made. The forward-looking statements contained
in this press release speak only as of the date of this press
release. The Company undertakes no obligation to update any
forward- looking statements contained in this press release to
reflect new information, events or circumstances after the date
they are made, or to reflect the occurrence of unanticipated
events. Please refer to the Company’s filings with the Securities
and Exchange Commission including its Annual Report on Form 10-K
for the year ended December 31, 2018 and subsequent Quarterly
Reports on Form 10-Q for more detailed information regarding these
risks and uncertainties and other factors that may cause actual
results to differ materially from those expressed or implied in the
forward-looking statements.
Discussion of Non-GAAP Financial Measures
The Company’s management believes that the non-GAAP measures of
(1) “Adjusted Net Income (Loss)” and (2) “Adjusted EBITDA” enhance
an investor’s overall understanding of the Company’s financial and
operating performance and its future prospects by (i) being more
reflective of core operating performance and (ii) being more
comparable with financial results over various periods. These
measures, when used in conjunction with related financial measures
calculated in accordance with generally accepted accounting
principles in the United States (“GAAP”), provide investors with an
additional financial analytical framework that may be useful in
assessing the Company’s financial condition and results of
operations. The Company’s management uses these financial measures
for strategic decision making, forecasting future financial
results, and evaluating current period financial and operating
performance. The presentation of non-GAAP financial information is
not intended to be considered in isolation or as a substitute for,
or superior to, the financial information prepared and presented in
accordance with GAAP. Furthermore, these measures are not intended
to be liquidity measures. Other companies, including other
companies in the Company’s industry, may not use these measures or
may calculate these measures differently than the Company does,
limiting their usefulness as comparative measures. The Company
intends to calculate these non-GAAP financial measures in a
consistent manner from period to period. A reconciliation of each
of the non-GAAP financial measures to the most directly comparable
GAAP measures has been provided under the heading “Non-GAAP
Reconciliations” in the financial statement tables attached to this
press release.
Adjusted Net Income (Loss) Definition:
(1) “Adjusted Net Income (Loss)” is a non-GAAP measure defined
by the Company as net income (loss) under GAAP, excluding (to the
extent relevant in a particular reporting period): (i)
restructuring and other transition costs; (ii) contract
termination, product withdrawal and business acquisition expenses;
(iii) legal settlement costs; (iv) business development expenses,
including licensing costs related to research and development
activities; (v) inventory step-up amortization; (vi) interest
expense; (vii) foreign currency loss (gain); (viii) fair value
adjustment to Nellix® contingent consideration liability; (ix) fair
value adjustment of derivative liabilities; and (x) loss on debt
extinguishment.
In the three and six months ended June 30, 2019 and 2018, this
GAAP adjustment to net loss specifically represents: (i) the fair
value adjustment to Nellix® contingent consideration liability;
(ii) interest expense; (iii) foreign currency losses; (iv)
restructuring and other transition costs; (v) fair value adjustment
of derivative liabilities; and (vi) loss on extinguishment of
debt.
Adjusted EBITDA Definition:
(2) “Adjusted EBITDA” is a non-GAAP measure defined by the
Company as “Adjusted Net Income (Loss)” excluding income tax
(benefit) expense, depreciation and amortization expense, and
stock-based compensation expense.
ENDOLOGIX, INC.
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
Unaudited
(In thousands, except per
share amounts)
Three Months Ended
Six Months Ended
June 30,
June 30,
2019
2018
2019
2018
Revenue
U.S.
$
24,013
$
29,986
$
46,798
$
59,361
International
12,225
14,754
25,046
27,663
Total Revenue
36,238
44,740
71,844
87,024
Cost of goods sold
13,254
15,136
25,661
29,094
Gross profit
$
22,984
$
29,604
$
46,183
$
57,930
Operating expenses:
Research and development
4,355
6,244
9,142
11,743
Clinical and regulatory affairs
3,647
3,728
7,432
7,299
Marketing and sales
15,920
21,116
32,706
42,841
General and administrative
8,929
14,022
18,345
24,391
Restructuring costs
—
—
419
233
Total operating expenses
32,851
45,110
68,044
86,507
Loss from operations
(9,867
)
(15,506
)
(21,861
)
(28,577
)
Other income (expense)
(9,336
)
(6,544
)
(17,508
)
(11,985
)
Change in fair value of contingent
consideration related to acquisition
(300
)
(1,800
)
(100
)
(700
)
Loss on debt extinguishment
(11,756
)
—
(11,756
)
(2,270
)
Change in fair value of derivative
liabilities
872
—
(1,151
)
—
Total other expense, net
(20,520
)
(8,344
)
(30,515
)
(14,955
)
Net loss before income taxes
$
(30,387
)
$
(23,850
)
$
(52,376
)
$
(43,532
)
Income tax benefit (expense)
3,253
(26
)
3,214
(111
)
Net loss
$
(27,134
)
$
(23,876
)
$
(49,162
)
$
(43,643
)
Other comprehensive income (loss) foreign
currency translation
588
(552
)
(10
)
(679
)
Comprehensive loss
$
(26,546
)
$
(24,428
)
$
(49,172
)
$
(44,322
)
Basic and diluted net loss per share
$
(1.50
)
$
(2.83
)
$
(3.44
)
$
(5.19
)
Shares used in computing basic and diluted
net loss per share
18,142
8,446
14,280
8,411
Non-GAAP Reconciliations:
Three Months Ended
Six Months Ended
June 30,
June 30,
2019
2018
2019
2018
Net Loss to Adjusted Net Loss:
Net loss
$
(27,134
)
$
(23,876
)
$
(49,162
)
$
(43,643
)
Fair value adjustment to Nellix contingent
consideration liability
300
1,800
100
700
Interest expense
8,857
5,861
17,347
11,665
Foreign currency loss
521
656
122
331
Restructuring and other transition
costs
—
—
419
233
Fair value adjustment of derivative
liabilities
(872
)
—
1,151
—
Loss on extinguishment of debt
11,756
—
11,756
2,270
(1) Adjusted Net Loss
$
(6,572
)
$
(15,559
)
$
(18,267
)
$
(28,444
)
Adjusted Net Loss to Adjusted
EBITDA:
Adjusted Net Loss
$
(6,572
)
$
(15,559
)
$
(18,267
)
$
(28,444
)
Income tax (benefit) expense
(3,253
)
26
(3,214
)
111
Depreciation and amortization expense
1,740
1,939
3,475
3,931
Stock-based compensation expense
2,523
4,265
$
4,884
7,286
(2) Adjusted EBITDA
$
(5,562
)
$
(9,329
)
$
(13,122
)
$
(17,116
)
ENDOLOGIX, INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS
Unaudited
(In thousands)
June 30,
December 31,
2019
2018
ASSETS
Current assets:
Cash and cash equivalents
$
50,943
$
23,531
Restricted cash
1,200
1,200
Accounts receivable, net of allowance for
doubtful accounts of $1,397 and $802, respectively
21,926
20,651
Other receivables
332
329
Inventories
30,747
30,399
Prepaid expenses and other current
assets
2,270
2,821
Total current assets
107,418
78,931
Property and equipment, net
14,495
16,033
Goodwill
120,837
120,848
Other intangible assets, net
74,441
76,163
Deposits and other assets
1,372
1,095
Operating lease right-of-use assets
5,728
—
Total assets
$
324,291
$
293,070
LIABILITIES AND STOCKHOLDERS’
EQUITY
Current liabilities:
Accounts payable
$
12,454
$
10,986
Accrued payroll
13,836
14,627
Accrued expenses and other current
liabilities
16,241
13,314
Total current liabilities
42,531
38,927
Deferred income taxes
150
150
Deferred rent
—
8,065
Operating lease liabilities
11,812
—
Derivative liabilities
28,072
4,012
Other liabilities
2,326
1,992
Contingently issuable common stock
2,300
2,200
Debt
165,024
198,078
Total liabilities
252,215
253,424
Commitments and contingencies
Stockholders’ equity:
Convertible preferred stock, $0.001 par
value, 5,000,000 shares authorized, no shares issued and
outstanding
—
—
Common stock, $0.001 par value,
170,000,000 and 170,000,000 shares authorized, respectively,
17,408,863 and 10,387,926 shares issued, respectively, and
17,352,698 and 10,345,367 shares outstanding, respectively
17
10
Treasury stock, at cost, 56,165 and 42,559
shares, respectively
(4,120
)
(4,026
)
Additional paid-in capital
722,478
640,789
Accumulated deficit
(648,877
)
(599,715
)
Accumulated other comprehensive income
2,578
2,588
Total stockholders’ equity
72,076
39,646
Total liabilities and stockholders’
equity
$
324,291
$
293,070
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190808005594/en/
INVESTORS: Endologix, Inc. Vaseem Mahboob, CFO (949)
595-7200
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