Endologix, Inc. (Nasdaq: ELGX), developer and
manufacturer of the Powerlink� endovascular stent graft for the
minimally invasive treatment of abdominal aortic aneurysms (AAA),
today announced financial results for the three months and 12
months ended December 31, 2008.
�We had a strong finish to 2008, reporting record revenue for
the fourth quarter. Domestic product revenue grew 35% compared with
the 2007 fourth quarter and reflected initial sales from our
suprarenal proximal extensions and Powerlink XL� introduced late
last year. Feedback regarding these new products has been very
positive,� said John McDermott, Endologix President and Chief
Executive Officer. �We exceeded our fourth quarter revenue
guidance, while significantly improving gross margins and reducing
our cash burn.
�2009 is a pivotal year for Endologix in which we expect to
build on our momentum and continue taking market share,� he added.
�We are affirming our financial guidance for year-over-year revenue
growth of 17% to 22%, or $44 million to $46 million, driven by new
products and our sales force initiatives. We expect that our
continued growth, strong gross margins and expense controls will
enable us to achieve positive cash flow from operations in this
year�s second quarter.�
Financial Results
Endologix reported record product revenue for the fourth quarter
of 2008 of $10.7 million, up 35% from $7.9 million in the fourth
quarter of 2007, and up 14% from $9.4 million in the third quarter
of 2008. Domestic product revenue was $9.1 million, compared with
$6.7 million in the fourth quarter of 2007, and $8.1 million in the
third quarter of 2008. International product revenue of $1.6
million for the fourth quarter of 2008 compares with $1.2 million
during the comparable quarter in 2007 and $1.3 million in the third
quarter of 2008. For the 12 months ended December 31, 2008, product
revenue was $37.6 million, a 39% increase from product revenue of
$27.0 million for the 12 months ended December 31, 2007. For the
2008 full year, domestic product revenue increased 39% to $31.9
million from $23.0 million for the 2007 full year, and
international revenue increased 44% to $5.7 million from $4.0
million for 2007. Including a decline in license revenue, total
revenue increased 36% to $37.7 million in 2008 from $27.8 million
in 2007.
Gross profit of $7.8 million was 73% of total revenue in the
fourth quarter of 2008. This compares with $5.1 million and 64%,
respectively, in the fourth quarter of 2007, and $6.9 million and
74%, respectively, in the third quarter of 2008. Gross profit of
$27.3 million was 72% of total revenue for the 12 months ended
December 31, 2008. This compares with $17.2 million and 62%,
respectively, for the 12 months of 2007. Endologix expects moderate
gross margin improvement in 2009 due to efficiencies from higher
manufacturing volumes required to support sales growth.
Total operating expenses were $9.3 million in the fourth quarter
of 2008, compared with $8.9 million in the fourth quarter of 2007.
Marketing and sales expenses increased to $5.8 million in the
fourth quarter of 2008 from $5.5 million in the comparable quarter
last year due to commission expense on the increased revenue and
costs related to the launch of Powerlink XL. General and
administrative expenses increased to $2.2 million from $1.7 million
in the fourth quarter of 2007, due to costs related to the
settlement of a legal dispute with Cook Medical Products, Inc. and
Endologix�s analysis and response to the unsolicited acquisition
proposal from Elliott Associates. Total operating expenses for 2008
were $39.3 million, versus $33.4 million in 2007. The increase in
operating expenses was due primarily to higher sales and marketing
costs, the settlement of two legal disputes, and costs related to
the CEO transition.
Endologix reported a net loss in the fourth quarter of 2008 of
$1.6 million, or $0.04 per share, which compares with a net loss of
$3.5 million, or $0.08 per share, for the fourth quarter of 2007.
Endologix reported a net loss for the 12 months ended December 31,
2008 of $12.0 million, or $0.28 per share, compared with a net loss
of $15.1 million, or $0.35 per share, for the 12 months ended
December 31, 2007.
Total cash and cash equivalents as of December 31, 2008 was $8.1
million. This compares with total cash and cash equivalents as of
December 31, 2007 of $9.2 million, and $9.0 million at September
30, 2008. Net cash used was $6.1 million for the 2008 full year and
$902,000 in the fourth quarter of 2008.
�In reviewing 2008 fourth quarter earnings before interest,
taxes, depreciation and amortization, together with non-cash
stock-based compensation expenses, we came very close to reaching
breakeven on that basis. We believe these results demonstrate our
ability to achieve positive cash flow from operations in upcoming
quarters,� stated Endologix Chief Financial Officer Bob Krist.
Mr. McDermott continued, �We are currently conducting a limited
market release of our new IntuiTrak� Delivery System and receiving
very positive physician feedback. The new device simplifies
delivery and deployment of the Powerlink stent graft and features a
low-profile catheter with enhanced flexibility, advanced hemostasis
control and a hydrophilic coating to facilitate smooth delivery.
Additionally, the device has an integrated sheath which was
designed to reduce procedure time, blood loss and vessel
trauma.
�In addition to the full launch of IntuiTrak in the second
quarter of 2009, we expect continued sales growth from our
suprarenal proximal extensions and Powerlink XL, both of which were
launched in November 2008. These new devices together with our
sales force initiatives provide a solid foundation for long-term
growth,� he concluded.
Conference Call Information
Endologix management will host a conference call to discuss
these topics today beginning at 5:00 p.m. Eastern time (2:00 p.m.
Pacific time). To participate via telephone please call (888)
463-4487 from the U.S. or (706) 634-5615 from outside the U.S. A
telephone replay will be available for two days following the
completion of the call by dialing (800) 642-1687 from the U.S. or
(706) 645-9291 from outside the U.S., and entering reservation
number 83078806. The conference call will be broadcast live over
the Internet at www.endologix.com and will be available for 14
days.
About Endologix
Endologix, Inc. develops and manufactures innovative therapies
for aortic disorders. Endologix's Powerlink System is an
endovascular stent graft for treating 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 75%, making it a
leading cause of death in the U.S. Additional information can be
found on Endologix�s Web site at www.endologix.com.
Except for historical information contained herein, this news
release contains forward-looking statements, specifically with
respect to new product introductions and 2009 financial guidance
for revenue, gross margins, and cash flow, the accuracy of which
are necessarily subject to risks and uncertainties, all of which
are difficult or impossible to predict accurately and many of which
are beyond the control of Endologix. Many factors may cause actual
results to differ materially from anticipated results, including
the success of sales efforts for the Powerlink System and related
new products, product research and development efforts, and other
economic, business, competitive and regulatory factors. The Company
undertakes no obligation to update its forward looking statements.
Please refer to the Company's Annual Report on Form 10-K for the
year ended December 31, 2007, and the Company's other filings with
the Securities and Exchange Commission, for more detailed
information regarding these risks and other factors that may cause
actual results to differ materially from those expressed or
implied.
ENDOLOGIX, INC.
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
�
(Unaudited)
� �
(In thousands, except per share
amounts)
� �
Three Months EndedDecember 31, Twelve Months
EndedDecember 31, 2008 �
2007 2008
�
2007 Revenue: Domestic Product Revenue $ 9,128 $ 6,742 $
31,936 $ 23,049 Non-US Product Revenue � 1,551 � � 1,175 � � 5,695
� � 3,968 � Total Product Revenue 10,679 7,917 37,631 27,017
License Revenue � --- � � 76 � � 33 � � 754 � Total revenue 10,679
7,993 37,664 27,771 Cost of product revenue � 2,835 � � 2,890 � �
10,380 � � 10,539 � Gross profit � 7,844 � � 5,103 � � 27,284 � �
17,232 � Operating expenses: Research, development and clinical
1,352 1,707 6,060 6,372 Marketing and sales 5,777 5,476 23,794
20,142 General and administrative 2,207 1,678 9,477 6,380
Termination of supply agreement � --- � � --- � � --- � � 550 �
Total operating expenses � 9,336 � � 8,861 � � 39,331 � � 33,444 �
Loss from operations � (1,492 ) � (3,758 ) � (12,047 ) � (16,212 )
Other income (loss): Interest income (expense) (37 ) 106 22 664
Other income (expense) � (47 ) � 124 � � 33 � � 473 � Total other
income (expense) � (84 ) � 230 � � 55 � � 1,137 �
Net loss
� ($1,576 ) � ($3,528 ) � ($11,992 ) � ($15,075 )
Basic and diluted net loss per
share
� ($0.04 ) � ($0.08 ) � ($0.28 ) � ($0.35 )
Shares used in computing basic
and
diluted net loss per share
� 43,127 � � 42,881 � � 43,045 � � 42,796 � � �
ENDOLOGIX, INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS
(Unaudited)
(In thousands, except per share
amounts)
� �
�
�
December 31,
2008
�
December 31,
2007
ASSETS
Current assets: Cash and cash equivalents $ 7,611 $ 8,728
Restricted cash equivalents 500 500 Marketable securities
available-for-sale --- --- Accounts receivable, net 6,371 4,527
Other receivables 3 234 Inventories 7,099 8,054 Other current
assets � 443 � � 581 � Total current assets 22,027 22,624 Property
and equipment, net 2,993 3,771 Marketable securities
available-for-sale --- --- Goodwill 4,631 4,631 Intangibles, net
7,508 8,913 Other assets � 104 � � 104 � Total Assets $ 37,263 � $
40,043 �
LIABILITIES AND STOCKHOLDERS� EQUITY Current
liabilities: Accounts payable and accrued expenses $ 5,401 $ 4,259
Current portion of long term debt � 750 � � --- � Current
liabilities 6,151 4,259 Long term liabilities: Long term debt �
4,250 � � --- � Other long term liabilities � 1,045 � � 1,109 �
Long term liabilities � 5,295 � � 1,109 � Total liabilities �
11,446 � � 5,368 � � Stockholders� equity:
Convertible preferred stock, $.001
par value; 5,000 shares authorized, no shares issued and
outstanding
Common stock, $.001 par value; 60,000 shares authorized, 44,365 and
43,453 shares issued, and 43,870 and 42,958 outstanding
�
44
�
43
Additional paid-in capital 170,239 166,912 Accumulated deficit
(143,730 ) (131,738 ) Treasury stock, at cost, 495 shares
(661
)
(661
)
Accumulated other comprehensive income � (75 ) � 119 � Total
stockholders� equity � 25,817 � � 34,675 � Total Liabilities and
Stockholders� Equity $ 37,263 � $ 40,043 � �
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