News

Endologix Reports 13% Global Revenue Growth for the Second Quarter 2014

Jul 30 2014

IRVINE, California—(GLOBE NEWSWIRE)—Endologix, Inc. (Nasdaq:ELGX), developer and marketer of innovative treatments for aortic disorders, today announced financial results for the three and six months ended June 30, 2014.

John McDermott, Endologix Chairman and Chief Executive Officer, said, “We achieved strong second quarter results, with global sales up 15% sequentially from the first quarter. In the U.S., adoption of the VELA™ Proximal Endograft System and our PEVAR physician training programs continued to increase procedure volumes. Our results in Europe were primarily driven by growing
demand for the Nellix® EndoVascular Aneurysm Sealing System. During the second quarter, we announced the achievement of $10 million in trailing twelve month international sales of Nellix, further underscoring the continued physician interest in this ground breaking new technology. This accomplishment triggered a milestone payment under the Nellix merger agreement,
payable in shares of Endologix common stock, to the former Nellix stockholders.”

Financial Results

Global revenue in the second quarter of 2014 was $38.3 million, a 13% increase from $34.0 million in the second quarter of 2013. For the six months ended June 30, 2014, global revenue increased 12% to $71.6 million, compared to $63.7 million for the six months ended June 30, 2013.

U.S. revenue in the second quarter of 2014 was $28.0 million, a 6% increase compared with $26.4 million in the second quarter of 2013. The increase in the U.S. was due to improving AFX procedure trends following a slow start to the year in the first quarter 2014. International revenue was $10.3 million, a 36% increase compared to $7.6 million in the second quarter of 2013.
The international sales increase was primarily attributable to strong direct sales growth in Europe.

Gross profit was $28.5 million in the second quarter of 2014, which represents a gross margin of 74%, consistent with a gross margin of 74% in the second quarter of 2013. Gross profit was $52.8 million for the six months ended June 30, 2014, representing a gross margin of 74%. This compares with gross margin of 75% for the six months ended June 30, 2013. The slight decrease in the six months gross margin was primarily driven by geography and product mix, with a greater proportion of sales from international markets, which carry lower gross margins.

Total operating expenses were $32.3 million in the second quarter of 2014, compared to $27.5 million in the second quarter of 2013. Total operating expenses for the six months ended June 30, 2014 were $61.9 million, compared with $54.5 million for the six months ended June 30, 2013. The increase in operating expenses was driven by research and development, sales and
marketing and general and administrative expenses.

Marketing and sales expenses were $19.2 million in the second quarter of 2014, an increase from $16.5 million in the prior year period. For the six months ended June 30, 2014, marketing and sales expenses were $35.3 million, an increase from $32.0 million in the prior year period. These increases were driven by the costs associated with the continued expansion of the
Company’s direct sales in the U.S. and Europe, including sales and clinical personnel worldwide.

Research and development expenses were $4.5 million in the second quarter of 2014, an increase from $3.8 million in the prior year period. For the six months ended June 30, 2014, research and development expenses were $8.6 million, an increase from $7.3 million in the prior year period. These increases were driven by continued product development investments.

Clinical and regulatory affairs expenses were $2.7 million in the second quarter of 2014, an increase from $2.2 million in the prior year period. For the six months ended June 30, 2014, clinical and regulatory affairs expenses were $4.9 million, an increase from $4.6 million in the prior year period, due to increased clinical study activity.

General and administrative expenses were $5.9 million in the second quarter of 2014, an increase from $5.0 million in the prior ear period. For the six months ended June 30, 2014, general and administrative expenses were $13.1 million, an increase from $10.6 million in the prior year period. These increases were driven by increased expenses to support the Company’s growth.

Endologix reported a net loss for the second quarter of 2014 of $9.0 million, or $(0.14) per share, compared with net income of $5.7 million, or $0.09 per share, for the second quarter of 2013. The second quarter 2013 net income includes non-cash other income of $7.6 million, or $0.12 per share, which reflects the decrease in the fair value of the contingent consideration related to
the Nellix acquisition. Endologix reported Adjusted Net Loss (non-GAAP and defined below) for the second quarter of 2014 of $3.8 million, or $(0.06) per share, compared with an Adjusted Net Loss (non-GAAP and defined below) for the second quarter of 2013 of $1.9 million , or $(0.03) per share.

For the six months ended June 30, 2014, Endologix reported a net loss of $3.7 million, or $(0.06) per share, compared to a net loss of $3.7 million, or $(0.06) per share, for the six months ended June 30, 2013. Endologix reported an Adjusted Net Loss (non-GAAP and defined below) for the six months ended June 30, 2014 of $8.9 million or $(0.14) per share, compared with an
Adjusted Net Loss (non-GAAP and defined below) for the six months ended June 30, 2013 $6.1 million, or $(0.10) per share.

Total cash, cash equivalents and marketable securities were $110.8 million as of June 30, 2014, compared to $126.5 million as
of December 31, 2013.

Financial Guidance

Endologix is narrowing its full year 2014 financial guidance, within the previous guidance range. The Company anticipates 2014 revenue to be in the range of $148 million to $152 million, representing growth of 12% to 15% from 2013, compared to the previous range of $146 million to $152 million. Endologix anticipates an Adjusted Net Loss per Share (non-GAAP and defined
below) in 2014 of $(0.27) to $(0.33) and an Adjusted EBITDA per Share (non-GAAP and defined below) of $(0.10) to $(0.16), compared to the previous Adjusted EBITDA per Share range of $(0.04) to $(0.17).

About Endologix

Endologix, Inc. develops and manufactures minimally invasive treatments for aortic disorders. Endologix’s focus is 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 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. Additional information can be found on Endologix’s website at 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.