Endologix, Inc. (Nasdaq:ELGX), developer and marketer of innovative
medical devices for the treatment of aortic disorders, today
announced financial results for the three and twelve months ended
December 31, 2011.
John McDermott, Endologix President and Chief Executive Officer,
said, "In 2011 we continued to capture market share, while also
making significant progress in our new product portfolio, expanding
our domestic sales force and beginning to build our sales and
marketing organization in Europe. Turning to 2012, we will continue
to advance our new product pipeline and expect limited market
introductions of both Nellix and Ventana in Europe, as well as a
percutaneous indication for AFX by year end. Overall, we believe
the Company is well positioned to achieve another year of robust
revenue growth and look forward to making our new aortic
technologies available to patients worldwide."
Fourth Quarter Financial Results
Global revenue in the fourth quarter of 2011 was $23.4 million,
a 22% increase from the same quarter of 2010. U.S. revenue was
$19.4 million in the fourth quarter of 2011, a 26% increase from
the fourth quarter of 2010, and included increased sales related to
the U.S. launch of the AFX™ Endovascular AAA System. International
revenue was $4.0 million in the fourth quarter of 2011, a 4%
increase from the fourth quarter of 2010. Gross profit was $18.0
million in the fourth quarter of 2011, which represents a gross
margin of 77%. This compares with a gross margin of 78% in the
fourth quarter of 2010. Total operating expenses were $21.3
million in the fourth quarter of 2011. Marketing and sales expenses
increased to $11.5 million in the fourth quarter of 2011, from $8.7
million in the same period in 2010. This increase was driven by the
ongoing expansion of the U.S. sales force, marketing expenses
associated with the AFX launch, and costs associated with building
the direct sales organization in Europe.
Research & development, and clinical/regulatory expenses
increased to $5.4 million in the fourth quarter of 2011, from $3.1
million in the same period in 2010, driven by the ongoing
development activities associated with the Nellix® Endovascular
System and Ventana™ Fenestrated Stent Graft System.
General and administrative expenses decreased to $4.4 million in
the fourth quarter of 2011, from $6.5 million in the same period in
2010. This decrease is mainly due to $3.4 million of non-recurring
transaction costs for the Nellix acquisition in the prior year,
partially offset by an increase in administrative costs related to
the Company's European operations, and an increase in litigation
costs related to the Company's patent disputes with Cook Medical
Corporation and Bard Peripheral Vascular, Inc. During October 2011,
Endologix and Bard entered into a cross license agreement that
settled their dispute, while the Cook matter remains ongoing.
Endologix reported a net loss for the fourth quarter of 2011 of
$3.7 million, or $(0.06) per share, compared with net income of
$11.7 million, or $0.23 per share, for the fourth quarter of 2010.
The fourth quarter of 2010 included a $15.0 million favorable
income tax provision impact related to the Nellix acquisition,
partially offset by $3.4 million of non-recurring Nellix
transaction costs. The fourth quarter 2011 loss also includes a
$0.5 million non-cash fair value adjustment related to the
contingent consideration for the Nellix acquisition.
On an adjusted (non-GAAP) basis, Endologix reported Adjusted Net
Loss for the three months and year ended December 31, 2011 of $3.2
million, or $(0.06) per share; and $18.2 million, or $(0.32) per
share, respectively. This loss per share includes $1.7 million, or
$0.03 per share, of business development expenses incurred earlier
in 2011 to reacquire distribution rights to certain territories in
Europe.
Financial Guidance
Endologix anticipates 2012 revenue to be in the range of $102
million to $107 million, representing growth of 22% to 28% from
2011. Endologix expects to generate a 2012 Adjusted Net Loss
of between $(0.12) to $(0.18) per share, with quarterly progress
towards profitability over the course of the year. This guidance
takes into account the planned growth of the direct sales force in
Europe, and research & development and clinical/regulatory
initiatives, particularly for the Nellix and Ventana
devices. Not included in this loss per share guidance are
potential adverse litigation outcomes, fair value adjustments
associated with the Nellix acquisition, or the effect of other
possible business development
transactions.
The Company expects to be cash flow positive in the second half
of 2012 and believes that it has adequate cash resources to fund
its operations and growth strategies. In addition, the Company
recently amended its credit facility with Wells Fargo Bank N.A., to
increase the credit line from $10 million up to a maximum of $20
million. The Company currently does not have any outstanding
borrowings under the Wells Fargo Bank credit facility.
Conference Call
Information
Endologix management will host a conference call today to
discuss these topics, 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
388474. 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, manufactures, markets, and sells
innovative medical devices for the treatment of aortic disorders.
The Company'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 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. The Nellix® Endovascular System and Ventana™
Fenestrated Stent Graft System are investigational devices.
Except for historical information contained herein, this news
release contains forward-looking statements, including with respect
to 2012 financial guidance, the launch and market acceptance of new
products, planned investments in research and development and sales
and marketing activities, the integration of Nellix's technology,
the progress of clinical trial initiatives, the development of a
direct sales force in Europe, and litigation matters. The accuracy
of these forward-looking statements are necessarily subject to
risks and uncertainties, all of which are difficult or impossible
to accurately predict and many of which are beyond the control of
Endologix. Many factors may cause actual results to materially
differ from anticipated results, including the success of sales
efforts for Endologix's existing products and related new products,
product research and development efforts, unexpected litigation
expenses or outcomes and other economic, business, competitive and
regulatory factors. Endologix undertakes no obligation to update
its forward looking statements. Please refer to the Endologix
Annual Report on Form 10-K for the year ended December 31, 2010,
and Endologix'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 materially differ
from its estimates, whether expressed or implied.
Adjusted Net Income (Loss) and Adjusted Net Income
(Loss) per Share Definitions:
"Adjusted Net Income (Loss)" is a non-GAAP measure defined by
Endologix as GAAP Net Income (Loss), excluding all effects arising
from the application of GAAP purchase accounting treatment of
Endologix's acquisition of Nellix, which was completed on December
10, 2010. In the three and twelve months ended December 31, 2011,
this GAAP adjustment solely represents the fair value adjustment to
the liability for contingent payments to the former shareholders of
Nellix in the form of Endologix common stock.
In future periods, Adjusted Net Income (Loss) will continue to
exclude fair value adjustments to the liability for contingent
payments to the former shareholders of Nellix in the form of
Endologix common stock as the probability of achieving the payment
milestones changes and the value of Endologix common stock varies.
The corresponding charge or credit will flow through the statement
of operations. The adjustment may also include 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 Income (Loss) per Share" is a non-GAAP measure
defined by Endologix as Adjusted Net Income (Loss) divided by
average diluted or non-diluted shares outstanding, respectively.
"GAAP" is generally accepted accounting principles in the U.S.
Management believes that the "Adjusted Net Income (Loss)" and
"Adjusted Net Income (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 Endologix over various periods. Management uses
these financial measures internally for strategic decision making,
forecasting future results, and evaluating current performance.
ENDOLOGIX,
INC. |
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS |
Unaudited |
(In thousands, except
per share amounts) |
|
|
|
|
|
|
Three Months Ended December
31, |
Twelve Months Ended December
31, |
|
2011 |
2010 |
2011 |
2010 |
Revenue: |
|
|
|
|
U.S. revenue |
$ 19,408 |
$ 15,420 |
$ 71,688 |
$ 55,443 |
International revenue |
3,984 |
3,823 |
11,729 |
11,808 |
Total revenue: |
23,392 |
19,243 |
83,417 |
67,251 |
Cost of goods sold |
5,394 |
4,236 |
18,746 |
15,030 |
Gross profit |
$ 17,998 |
$ 15,007 |
$ 64,671 |
$ 52,221 |
Operating expenses: |
|
|
|
|
Research & development |
$ 3,926 |
$ 2,694 |
$ 16,738 |
$ 8,997 |
Clinical and regulatory
affairs |
1,445 |
433 |
4,439 |
2,169 |
Marketing and sales |
11,453 |
8,735 |
44,655 |
31,869 |
General and administrative |
4,438 |
6,453 |
15,525 |
13,410 |
Distribution contract
termination |
— |
— |
1,730 |
— |
Total operating expenses |
21,262 |
18,315 |
83,087 |
56,445 |
Loss from operations |
$ (3,264) |
$ (3,308) |
$ (18,416) |
$ (4,224) |
Other income (expense) |
13 |
(5) |
100 |
(160) |
Change in fair value of
contingent consideration related to acquisition |
(500) |
— |
(10,500) |
— |
Total other income
(expense) |
(487) |
(5) |
(10,400) |
(160) |
Net income (loss) before income tax |
$ (3,751) |
$ (3,313) |
$ (28,816) |
$ (4,384) |
Income tax benefit |
$ 86 |
$ 15,037 |
$ 86 |
$ 15,037 |
Net income (loss) |
$ (3,665) |
$ 11,724 |
$ (28,730) |
$ 10,653 |
Basic earnings (loss) per share |
$ (0.06) |
$ 0.23 |
$ (0.51) |
$ 0.22 |
Shares used in computing basic net earnings
(loss) per share |
57,267 |
50,421 |
56,592 |
48,902 |
Diluted earnings (loss) per share |
$ (0.06) |
$ 0.22 |
$ (0.51) |
$ 0.21 |
Shares used in computing diluted net earnings
(loss) per share |
57,267 |
52,538 |
56,592 |
50,544 |
|
|
|
|
|
Non-GAAP Reconciliation –Net Loss to
Adjusted Net Loss and Adjusted Net Loss per Share: |
|
|
|
|
Net income (loss) |
$ (3,665) |
$ 11,724 |
$ (28,730) |
$ 10,653 |
Income tax benefit |
— |
(15,037) |
— |
(15,037) |
Fair value adjustment to the liability for
contingent payments to the former Nellix shareholders |
500 |
— |
10,500 |
— |
Adjusted net loss |
$ (3,165) |
$ (3,313) |
$ (18,230) |
$ (4,384) |
Adjusted net loss per share |
$ (0.06) |
$ (0.06) |
$ (0.32) |
$ (0.09) |
|
|
|
ENDOLOGIX,
INC. |
|
|
CONDENSED CONSOLIDATED
BALANCE SHEETS |
|
|
Unaudited |
|
|
(In
thousands) |
|
|
|
|
|
|
December 31, |
|
2011 |
2010 |
|
|
|
ASSETS |
|
|
Current assets: |
|
|
Cash and cash equivalents |
$ 20,035 |
$ 38,191 |
Accounts receivable, net |
15,542 |
12,212 |
Other receivables |
405 |
515 |
Inventories |
18,099 |
8,350 |
Other current assets |
1,023 |
560 |
Total current assets |
55,104 |
59,828 |
Property and equipment, net |
4,454 |
2,429 |
Goodwill |
27,073 |
27,073 |
Intangibles, net |
43,439 |
44,863 |
Deposits and other assets |
185 |
182 |
Total assets |
$ 130,255 |
$ 134,375 |
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
Current liabilities: |
|
|
Accounts payable and accrued
expenses |
$ 13,949 |
$ 11,243 |
Total current liabilities |
13,949 |
11,243 |
Long term liabilities: |
|
|
Deferred income taxes |
1,029 |
1,029 |
Deferred rent |
8 |
— |
Contingently issuable common
stock |
38,700 |
28,200 |
Total long term
liabilities |
39,737 |
29,229 |
Total liabilities |
53,686 |
40,472 |
Commitments and contingencies |
|
|
Stockholders' equity: |
|
|
Common stock, $0.001 par value;
75,000 shares authorized, 57,958 and 56,896 shares issued,
respectively. 58,082 and 56,401 shares outstanding
respectively. |
59 |
57 |
Additional paid-in capital |
241,441 |
230,017 |
Accumulated other comprehensive
loss |
(30) |
— |
Accumulated deficit |
(164,240) |
(135,510) |
Treasury stock, at cost, 495
shares |
(661) |
(661) |
Total stockholders' equity |
76,569 |
93,903 |
Total liabilities and
stockholders' equity |
$ 130,255 |
$ 134,375 |
CONTACT: COMPANY CONTACT:
Endologix, Inc.
John McDermott, CEO
(949) 595-7200
www.endologix.com
INVESTOR CONTACTS:
The Ruth Group
Nick Laudico (646) 536-7030
Zack Kubow (646) 536-7020
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