IRVINE, Calif., Feb. 22, 2011 /PRNewswire/ -- Endologix, Inc.
(Nasdaq: ELGX), developer of minimally invasive treatments for
aortic disorders, today announced financial results for the three
and twelve months ended December 31,
2010.
John McDermott, Endologix
President and Chief Executive Officer, said, "We made tremendous
progress in all areas of our business during the fourth quarter of
2010. Revenue grew by 41% over the corresponding quarter of
2009, driven by our expanded sales force and the availability of
new product sizes launched in the third quarter of 2010. On
the product development front, we completed the acquisition of
Nellix, which represents the next generation in EVAR technology,
and advanced our organic pipeline with the first patients treated
with our Ventana™ fenestrated stent graft. We believe these
two new products will significantly expand the addressable AAA
market and further secure Endologix as the innovation leader in the
market."
Mr. McDermott added, "Looking to 2011, we believe we are well
positioned to continue to gain market share and further separate
Endologix's technology from the competition. During the year
we expect to roll out our new product sizes in Europe and other international markets, launch
our new lower profile device, the AFX™ Endovascular AAA System, and
complete patient enrollment in our PEVAR clinical trial. We
will also be focused on integrating Nellix and building the
infrastructure for our direct sales force in Europe in anticipation of the 2012 launch of
the Nellix and Ventana systems in this market. Overall, there
are significant near and long term growth drivers for our business
that will allow us to meet our financial goals and drive toward
market leadership."
Financial Results
Total revenue in the fourth quarter of 2010 was $19.2 million, a 41% increase from $13.7 million in the fourth quarter of 2009 and
an 8% sequential increase. Domestic revenue was $15.4 million, a 43% increase compared with
$10.8 million in the fourth quarter
of 2009 and a 1% sequential increase. International revenue was
$3.8 million, a 34% increase compared
with $2.9 million in the fourth
quarter of 2009 and a 45% sequential increase.
For the twelve months ended December 31,
2010, total revenue increased 28% to $67.3 million, compared with $52.4 million for the twelve months ended
December 31, 2009. For the full
year 2010, domestic revenue was $55.4
million, a 27% increase compared with $43.7 million for the full year 2009.
International revenue for the full year 2010 was $11.8 million, a 35% increase compared with
$8.8 million for the full year
2009.
Gross profit was $15.0 million in
the fourth quarter of 2010, which represents a gross margin of 78%.
This compares with gross profit of $10.3
million and a gross margin of 75% in the fourth quarter of
2009. Gross profit was $52.2
million for the twelve months ended December 31, 2010, representing a gross margin of
78%. This compares with gross profit of $39.3 million and a gross margin of 75% for the
twelve months ended December 31,
2009. Higher gross margin for the three and twelve months
ended December 31, 2010 was driven by
more favorable product mix due to new products.
Total operating expenses were $18.3
million in the fourth quarter of 2010, a 66% increase
compared with $11.0 million in the
fourth quarter of 2009. Marketing and sales expenses increased to
$8.7 million in the fourth quarter of
2010 from $6.7 million in the same
period last year. Research, development and clinical expenses
increased to $3.1 million in the
fourth quarter of 2010 from $2.1
million in the same period last year. General and
administrative expenses increased to $6.5
million in the fourth quarter of 2010, from $2.3 million in the same period last year.
General and administrative expenses in the fourth quarter of 2010
included $3.4 million of
non-recurring transaction costs for the Nellix acquisition; and,
$830,000 in litigation expense
related to the patent disputes with Cook Medical, Inc. and Bard
Peripheral Vascular, Inc. General and administrative expenses
in the fourth quarter of 2009 included $310,000 in litigation expense related to the
patent dispute with Cook Medical.
Total operating expenses for the twelve months ended
December 31, 2010 were $56.4 million, a 36% increase compared with
$41.6 million for the twelve months
ended December 31, 2009. Marketing
and sales expenses increased to $31.9
million for the full year 2010, up from $26.5 million in the same period last year.
Research, development and clinical expenses increased to
$11.2 million for the full year 2010,
up from $6.6 million in the same
period last year. General and administrative expenses
increased to $13.4 million, up from
$8.6 million in the same period last
year. General and administrative expenses for the twelve months
ended December 31, 2010 included
$3.8 million of non-recurring
transaction costs for the Nellix acquisition; and, $1.6 million in litigation expense related to the
patent disputes with Cook Medical and Bard Peripheral Vascular.
General and administrative expenses for the twelve months
ended December 31, 2009 included
$317,000 in litigation expense
related to the patent dispute with Cook Medical.
On a GAAP basis, Endologix reported net earnings for the fourth
quarter of 2010 of $8.0 million, or
$0.15 per fully diluted share,
compared with a net loss of $676,000,
or $(0.01) per share, for the fourth
quarter of 2009. On an adjusted (non-GAAP) basis, excluding
non-recurring Nellix transaction costs and other effects of the
Nellix acquisition (principally the partial reversal of valuation
allowance against the Endologix, Inc. deferred tax asset resulting
from recording a deferred tax liability associated with the
acquisition of Nellix, which resulted in an $11.3 million favorable income tax provision
impact), Endologix reported Adjusted Net Earnings for the fourth
quarter of 2010 of $116,000, or
$0.00 per share.
For the twelve months ended December 31,
2010, the Company reported net earnings of $6.9 million, or $0.14 per fully diluted share, compared with a
net loss of $2.4 million, or
$(0.05) per share, for the twelve
months ended December 31, 2009. On an
adjusted (non-GAAP) basis, excluding the non-recurring Nellix
transaction costs and other effects of the Nellix acquisition
(principally the partial reversal of valuation allowance against
the Endologix, Inc. deferred tax asset resulting from recording a
deferred tax liability associated with the acquisition of Nellix,
which resulted in an $11.3 million
favorable income tax provision impact), Endologix reported an
Adjusted Net Loss for the twelve months ended December 31, 2010 of $664,000, or $(0.01) per share.
Total cash and cash equivalents increased by $15.3 million during the fourth quarter and were
$38.2 million as of December 31, 2010, compared with total cash and
cash equivalents of $24.1 million as
of December 31, 2009. In December 2010, in conjunction with the
acquisition of Nellix, Endologix completed its previously announced
private placement offering of common stock to Essex Woodlands
Health Ventures, which resulted in gross proceeds to Endologix of
$15.0 million.
"Excluding effects from the Nellix acquisition, we achieved
positive Adjusted Net Earnings for the fourth quarter, and positive
cash flow for the fourth quarter and full year," stated Endologix
Chief Financial Officer Bob Krist.
"This demonstrates our ability to leverage revenue growth and the
strength in our core business. Our revenue growth in 2011,
much as it was in 2010, will be weighted toward the second half of
the year due to the timing of new product launches."
Financial Guidance
For the full year 2011, the Company is reiterating its guidance
for total revenue to be in the range of $78
million to $82 million, representing growth of 16% to 22%.
In 2011, the Company expects to generate a GAAP net loss of
between $0.25 to $0.30 per share due
to planned investments in building a direct sales force in
Europe and developing the acquired
Nellix technology in anticipation of both a commercial launch in
Europe and the initiation of a
U.S. IDE clinical trial in 2012. The Company's 2011 loss per share
guidance also includes ongoing investments in the U.S. sales force,
research and development and clinical initiatives, and litigation
expenses, but excludes the potential impact of adverse litigation
outcomes, acquisitions, or other business development
transactions.
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 (877)
407-0789 from the U.S. or (201) 689-8562 from outside the U.S. A
telephone replay will be available for seven days following the
completion of the call by dialing (877) 870-5176 from the U.S. or
(858) 384-5517 from outside the U.S., and entering pin number
365657. The conference call will be broadcast live over the
Internet at www.endologix.com and will be available for 30
days.
About Endologix
Endologix, Inc. develops and manufactures minimally invasive
treatments for aortic disorders. The Company's flagship product is
the Powerlink® System, which is an endovascular stent graft 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 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, including with respect
to 2011 financial guidance, the launch and market acceptance of new
products and product sizes, planned investments in research and
development and sales and marketing activities, the integration of
Nellix's technology, the progress of clinical trial initiatives,
and the establishment of a direct sales force in Europe, 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, 2009, 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.
Adjusted Net Earnings (Loss) and Adjusted Net Earnings (Loss)
per Share Definitions:
"Adjusted Net Earnings (Loss)" is a non-GAAP measure defined
by Endologix as GAAP Net Earnings (Loss) excluding all effects
arising from the application of FAS 141R to the purchase accounting
treatment of Endologix' acquisition of Nellix Inc, which was
completed on December 10, 2010.
These effects include the following: (1) non-recurring
transaction costs from the acquisition of Nellix Inc. and, (2) the
partial reversal of valuation allowance against the Endologix, Inc.
deferred tax asset resulting from recording a deferred tax
liability associated with the acquisition of Nellix Inc.
In future periods, the adjustment may also include (1) the
mark-to-market adjustment to the liability for contingent payments
to the Nellix shareholders as the probability of achieving the
payment milestones changes (the corresponding charge or credit will
flow through the earnings statement); and (2) the amortization of
capitalized In Process Research & Development (IPR&D) as a
charge to cost of goods sold as the products resulting from the
Nellix technology are commercialized.
"Adjusted Net Earnings (Loss) per Share" is a non-GAAP
measure defined by Endologix as Adjusted Net Earnings (Loss)
divided by average diluted or non-diluted shares outstanding,
respectively.
Management believes that the "Adjusted Net Earnings (Loss)"
and "Adjusted Net Earnings (Loss) Per Share" measures enhance an
investor's overall understanding of Endologix's financial
performance and future prospects by being more reflective of
Endologix's core operational activities and more comparable with
the results of the Company over various periods. Management
uses these financial measures internally for strategic decision
making, forecasting future results and evaluating current
performance.
COMPANY
CONTACT:
|
INVESTOR
CONTACTS:
|
|
Endologix, Inc.
|
The Ruth Group
|
|
John McDermott, CEO
|
Nick Laudico (646)
536-7030
|
|
(949) 595-7200
|
Zack Kubow (646)
536-7020
|
|
www.endologix.com
|
|
|
|
|
ENDOLOGIX,
INC.
CONDENSED
CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited)
(In
thousands, except per share amounts)
|
|
|
|
|
Three Months
Ended
December
31,
|
|
Twelve
Months Ended
December
31,
|
|
|
2010
|
2009
|
|
2010
|
2009
|
|
Revenue:
|
|
|
|
|
|
|
Domestic
Revenue
|
$ 15,420
|
|
10,800
|
|
$ 55,443
|
$ 43,682
|
|
Non-US Revenue
|
3,823
|
|
2,862
|
|
11,808
|
8,759
|
|
Total
revenue
|
$ 19,243
|
|
$ 13,662
|
|
$ 67,251
|
$ 52,441
|
|
Cost of revenue
|
4,236
|
|
3,361
|
|
15,030
|
13,181
|
|
Gross profit
|
15,007
|
|
10,301
|
|
$ 52,221
|
$ 39,260
|
|
Operating expenses:
|
|
|
|
|
|
|
Research,
development and clinical
|
3,127
|
|
2,058
|
|
11,166
|
6,569
|
|
Marketing and
sales
|
8,735
|
|
6,700
|
|
31,869
|
26,483
|
|
General and
administrative
|
6,453
|
|
2,260
|
|
13,410
|
8,550
|
|
Total
operating costs and expenses
|
18,315
|
|
11,018
|
|
56,445
|
41,602
|
|
Loss
from operations
|
(3,308)
|
|
(717)
|
|
(4,224)
|
(2,342)
|
|
Other income
(expense):
|
|
|
|
|
|
|
Interest income
(expense), net
|
4
|
|
9
|
|
14
|
(144)
|
|
Other income
(expense)
|
(9)
|
|
32
|
|
(174)
|
52
|
|
Total
other income (expense)
|
(5)
|
|
41
|
|
(160)
|
(92)
|
|
Net loss before taxes
|
$
(3,313)
|
|
$
(676)
|
|
($4,384)
|
($2,434)
|
|
Income Tax Benefit
|
11,272
|
|
—
|
|
11,272
|
—
|
|
Net earnings (loss)
|
$ 7,959
|
|
$
(676)
|
|
6,888
|
($2,434)
|
|
Basic net earnings (loss) per
share
|
$
0.16
|
|
$
(0.01)
|
|
$0.14
|
$
(0.05)
|
|
Shares used in computing basic
net earnings (loss) per share
|
50,421
|
|
47,801
|
|
48,902
|
45,194
|
|
Diluted earnings (loss) per
share
|
$
0.15
|
|
$
(0.01)
|
$
0.14
|
$
(0.05)
|
|
Shares used in computing diluted
earnings (loss) per share
|
52,538
|
|
47,801
|
|
50,544
|
45,194
|
|
|
|
|
|
|
|
|
|
|
ENDOLOGIX,
INC.
CONDENSED
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In
thousands, except per share amounts)
|
|
|
|
|
December 31,
|
|
|
2010
|
|
2009
|
|
ASSETS
|
|
|
|
|
Current assets:
|
|
|
|
|
Cash and cash
equivalents
|
$
|
38,191
|
|
|
$
|
24,065
|
|
|
Accounts receivable, net of
allowance for doubtful accounts of $118 and $97
|
12,212
|
|
|
8,342
|
|
|
Other receivables
|
515
|
|
|
3
|
|
|
Inventories
|
8,350
|
|
|
5,540
|
|
|
Other current assets
|
560
|
|
|
389
|
|
|
Total current assets
|
59,828
|
|
|
38,339
|
|
|
Property and equipment,
net
|
2,429
|
|
|
2,089
|
|
|
Goodwill
|
33,507
|
|
|
4,631
|
|
|
Intangibles, net
|
34,598
|
|
|
6,104
|
|
|
Other assets
|
247
|
|
|
129
|
|
|
Total assets
|
$
|
130,609
|
|
|
$
|
51,292
|
|
|
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
|
|
|
|
Current liabilities:
|
|
|
|
|
Accounts payable and accrued
expenses
|
$
|
11,160
|
|
|
$
|
7,199
|
|
|
Current portion of long term
debt
|
83
|
|
|
79
|
|
|
Total current
liabilities
|
11,243
|
|
|
7,278
|
|
|
Long-term
liabilities:
|
|
|
|
|
Long term debt
|
—
|
|
|
83
|
|
|
Other long-term
liabilities
|
29,229
|
|
|
1,051
|
|
|
Total long-term
liabilities
|
29,229
|
|
|
1,134
|
|
|
Total liabilities
|
40,472
|
|
|
8,412
|
|
|
Commitments and contingencies
(Note 9)
|
|
|
|
|
Stockholders' equity:
|
|
|
|
|
Preferred stock, $0.001 par
value; 5,000,000 shares authorized, no shares issued and
outstanding
|
—
|
|
|
—
|
|
|
Common stock, $0.001 par value;
75,000,000 shares authorized, 56,896,000 and 49,152,000 shares
issued, and 56,401,000 and 48,657,000 outstanding
|
57
|
|
|
49
|
|
|
Additional paid-in
capital
|
230,017
|
|
|
189,656
|
|
|
Accumulated deficit
|
(139,276)
|
|
|
(146,164)
|
|
|
Treasury stock, at cost, 495,000
shares
|
(661)
|
|
|
(661)
|
|
|
Total stockholders'
equity
|
90,137
|
|
|
42,880
|
|
|
Total liabilities and
stockholders' equity
|
$
|
130,609
|
|
|
$
|
51,292
|
|
|
|
|
|
|
|
|
|
|
|
|
Endologix,
Inc.
|
|
Reconciliation of Net Earnings
(Loss) and Earnings (Loss) per Share to Adjusted Net
|
|
Earnings
(Loss) and Adjusted Net Earnings (Loss) per Share
|
|
|
|
|
|
|
|
|
|
(Unaudited,
in thousands except for per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Twelve
Months Ended
|
|
|
|
December
31,
|
|
December
31,
|
|
|
|
2010
|
2009
|
|
2010
|
2009
|
|
|
|
|
|
|
|
|
|
GAAP Net Earnings
(Loss)
|
7,959
|
|
($676)
|
|
|
6,888
|
|
($2,434)
|
|
|
|
Nellix acquisition costs
(1)
|
$3,459
|
|
—
|
|
|
$3,750
|
|
—
|
|
|
|
Income tax effect of Nellix
acquisition (2)
|
(11,302)
|
|
—
|
|
|
(11,302)
|
|
—
|
|
|
Adjusted Net Earnings
(Loss)
|
$
|
116
|
|
$
|
(676)
|
|
|
$
|
(664)
|
|
$
|
(2,434)
|
|
|
|
|
|
|
|
|
|
|
GAAP Earnings (Loss) per
Share
|
$
|
0.15
|
|
$
|
(0.01)
|
|
|
$
|
0.14
|
|
$
|
(0.05)
|
|
|
|
Effect of non-GAAP adjustments
on earnings per share
|
$
|
(0.15)
|
|
$
|
0.00
|
|
|
$
|
(0.15)
|
|
$
|
0.00
|
|
|
Adjusted Net Earnings (Loss) per
Share
|
$
|
0.00
|
|
$
|
(0.01)
|
|
|
$
|
(0.01)
|
|
$
|
(0.05)
|
|
|
|
|
|
|
|
|
|
|
Shares used for calculating GAAP
Earnings (Loss) per share
|
52,538
|
|
47,801
|
|
|
50,544
|
|
45,194
|
|
|
Shares used for calculating
Adjusted Earnings (Loss) per share
|
52,538
|
|
47,801
|
|
|
48,902
|
|
45,194
|
|
|
|
|
(1) Non-recurring transaction
costs related to the acquisition of Nellix Inc. on December 10,
2010.
(2) Partial reversal of
valuation allowance against the Endologix, Inc. deferred tax asset
resulting from recording a deferred tax liability associated with
the acquisition of Nellix Inc.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SOURCE Endologix, Inc.