ELGX Endologix Inc

Endologix, Inc. (the “Company”) (NASDAQ: ELGX), a developer and marketer of innovative treatments for aortic disorders, today announced financial results for the third quarter ended September 30, 2018.

“While there is still significant work to be done, our third quarter results reflect the Company’s commitment to realizing the full potential of our recently announced strategic plan, with the ultimate goal of restoring credibility with customers and building value for stockholders. Our revenue came in slightly above the pre-announced range, and we also demonstrated gross margin expansion and operating expense discipline during the quarter. These results were largely driven by recent process improvements, giving us confidence in our ability to achieve our 2018 financial targets,” commented John Onopchenko, Chief Executive Officer of Endologix, Inc. “Additionally, we continue to make progress toward our clinical development and regulatory milestones and to educate customers and investigators around the world on the clinical benefits of AFX2, Ovation®, Alto®, and Nellix® in the treatment of AAA.”

Financial Results

Global revenue in the third quarter of 2018 was $34.8 million, a 24.4% decrease from $46.0 million in the third quarter of 2017. U.S. revenue in the third quarter of 2018 was $25.7 million, a 16.8% decrease from U.S. revenue of $30.9 million in the third quarter of 2017. International revenue was $9.1 million, a 40.1% decrease from International revenue of $15.1 million in the third quarter of 2017. On a constant currency basis, third quarter 2018 International revenue decreased 39.6% over the third quarter of 2017.

Gross profit was $22.6 million in the third quarter of 2018, which represents a gross margin of 65.1%. This compares to a gross profit of $29.1 million, or a gross margin of 63.3%, in the third quarter of 2017.

Total operating expenses of $38.5 million in the third quarter of 2018 was flat when compared to the third quarter of 2017. Excluding restructuring charges of $2.9 million in the third quarter of 2018 and $0.1 million in the third quarter of 2017, operating expense decreased 7.1% versus the third quarter of 2017.

Net loss for the third quarter of 2018 was $10.1 million, or $(0.12) per share, compared to a net loss of $14.3 million, or $(0.17) per share, a year ago. The net loss includes a $5.0 million favorable fair market valuation of our Nellix contingent consideration and an $8.3 million favorable change in derivative related to the Deerfield credit facility. Adjusted Net Loss (non-GAAP measure, defined below) totaled $13.0 million, compared to an Adjusted Net Loss of $9.3 million for the third quarter of 2017. Adjusted EBITDA (non-GAAP measure, defined below) loss totaled $9.3 million for the third quarter of 2018, compared to Adjusted EBITDA loss of $4.3 million for the third quarter of 2017.

Total cash, cash equivalents, and restricted cash were $42.4 million as of September 30, 2018, and the Company had $10.0 million outstanding under the Deerfield revolving credit facility.

Financial Guidance

As previously disclosed at its Investor Meeting in October, the Company continues to anticipate 2018 revenue in the range of $150 million to $155 million. The Company now expects 2018 GAAP loss per share to be in the range of $(0.91) to $(0.87), compared to the previous range of $(1.12) to $(1.04). These loss per share numbers contemplate the impact of restructuring charges in the second half of the fiscal year but exclude the impact of any future changes in fair value of contingent consideration or derivative liabilities.

Furthermore, the Company continues to expect 2019 revenue of at least $140 million, while operating expenses are anticipated to be in the range of $130 million to $140 million.

Conference Call Information

Endologix's management will host a conference call today at 4:30 p.m. ET (1:30 p.m. PT) to discuss its third quarter 2018 results.

To participate in the conference call, dial 877-270-2148 (domestic) or 412-902-6510 (international) and refer to the passcode 13684321.

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, November 1, 2018, until 11:59 p.m. ET on Thursday, November 8, 2018. To hear this recording, dial 844-512-2921 (domestic) or 412-317-6671 (international) and enter the passcode 13684321.

About Endologix, Inc.

Endologix, Inc. 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

Except for historical information contained herein, this press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements generally can 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 used in this press release include Endologix’s success in restoring credibility with customers and building value for stockholders; Endologix’s confidence in its ability to achieve its 2018 financial targets; implementation of Endologix’s strategic and commercial execution plans; Endologix’s progress toward its clinical development and regulatory milestones; improvement in reducing operating expenses; key strategic initiatives including educating physicians on the clinical benefits of Endologix’s product offerings; prospects for Endologix’s pipeline products, including Ovation Alto and Nellix; positioning Endologix for profitable growth; Endologix’s 2018 revenue guidance and its anticipated 2018 GAAP loss per share; and Endologix’s 2019 revenue guidance and its anticipated 2019 operating expense, the accuracy of which are necessarily subject to risks and uncertainties that may cause Endologix’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 Endologix's products, the success of clinical trials relating to Endologix’s products, product research and development efforts, uncertainty in the process of obtaining and maintaining regulatory approval for Endologix's products, Endologix’s ability to protect its intellectual property rights and proprietary technologies, and other economic, business, competitive and regulatory factors. The forward-looking statements contained in this press release speak only as of the date of this press release. Endologix 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 Endologix's filings with the Securities and Exchange Commission including its Annual Report on Form 10-K for the year ended December 31, 2017, and its Quarterly Reports on Form 10-Q for the quarters ended March 31, 2018, June 30, 2018, and September 30, 2018 (once it is filed) 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.

Discussion of Non-GAAP Financial Measures

Endologix'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 Endologix'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 GAAP financial measures, provide investors with an additional financial analytical framework that may be useful in assessing the Company’s financial condition and results of operations. Endologix'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.

"GAAP" is generally accepted accounting principles in the United States.

Adjusted Net Income (Loss) Definition:

(1) "Adjusted Net Income (Loss)" is a non-GAAP measure defined by Endologix as net income (loss) under GAAP, excluding (to the extent relevant in a particular reporting period): (i) the fair value adjustment to the Nellix® acquisition contingent consideration liability; (ii) interest expense; (iii) foreign currency (gains) or losses; (iv) legal settlement costs; (v) contract termination and business acquisition expenses; (vi) business development expenses, including licensing costs related to research and development activities; (vii) restructuring and other transition costs; (viii) inventory step-up amortization; and (ix) loss on extinguishment of debt; and (x) fair value adjustment of derivative liabilities. Endologix intends to calculate "Adjusted Net Income (Loss)" in a consistent manner from period to period.

In the three and nine months ended September 30, 2018 and 2017, this GAAP adjustment to net loss specifically represents: (i) the fair value adjustment to Nellix® contingent consideration liability; (ii) interest expense; (iii) foreign currency (gains) or losses; (iv) restructuring and other transition costs; (v) loss on extinguishment of debt; and (vi) fair value adjustment of derivative liabilities.

Adjusted EBITDA Definition:

(2) “Adjusted EBITDA” is a non-GAAP measure defined by Endologix as “Adjusted Net Income (Loss)” excluding income tax (benefit) expense, depreciation and amortization expense, and stock-based compensation expense.

Exhibit 99.1 ENDOLOGIX, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS Unaudited (In thousands, except per share amounts)     Three Months Ended Nine Months Ended September 30, September 30, 2018   2017 2018   2017 Revenue U.S. $ 25,699 $ 30,877 $ 85,060 $ 93,672 International 9,057   15,109   36,720   43,482   Total Revenue 34,756   45,986   121,780   137,154   Cost of goods sold 12,129   16,879   41,223   47,181   Gross profit $ 22,627   $ 29,107   $ 80,557   $ 89,973   Operating expenses: Research and development 5,037 5,277 16,780 16,541 Clinical and regulatory affairs 3,208 3,211 10,507 9,786 Marketing and sales 17,072 21,536 59,913 71,217 General and administrative 10,330 8,332 34,721 25,109 Restructuring costs 2,899   98   3,132   235   Total operating expenses 38,546   38,454   125,053   122,888   Loss from operations (15,919 ) (9,347 ) (44,496 ) (32,915 ) Other income (expense) (7,336 ) (5,664 ) (19,321 ) (15,514 ) Change in fair value of contingent consideration related to acquisition 5,000 800 4,300 3,400 Change in fair value of derivative liabilities 8,305 — 8,305 — Loss on debt extinguishment —   —   (2,270 ) (6,512 ) Total other income (expense) 5,969   (4,864 ) (8,986 ) (18,626 ) Net loss before income tax expense $ (9,950 ) $ (14,211 ) $ (53,482 ) $ (51,541 ) Income tax expense (166 ) (62 ) (277 ) (338 ) Net loss $ (10,116 ) $ (14,273 ) $ (53,759 ) $ (51,879 ) Other comprehensive income (loss) foreign currency translation 32   232   (647 ) 1,369   Comprehensive loss $ (10,084 ) $ (14,041 ) $ (54,406 ) $ (50,510 )   Basic and diluted net loss per share $ (0.12 ) $ (0.17 ) $ (0.64 ) $ (0.62 ) Shares used in computing basic and diluted net loss per share 85,226   83,496 84,487   83,225

Exhibit 99.1

Non-GAAP Reconciliations:           Three Months Ended Nine Months Ended September 30, September 30, 2018 2017   2018 2017 Net Loss to Adjusted Net Loss: Net loss $ (10,116 ) $ (14,273 ) $ (53,759 ) $ (51,879 ) Fair value adjustment to Nellix contingent consideration liability (5,000 ) (800 ) (4,300 ) (3,400 ) Interest expense 7,225 6,021 18,895 16,119 Foreign currency (gain) loss 133 (354 ) 464 (560 ) Restructuring and other transition costs 3,071 98 3,304 629 Loss on extinguishment of debt — — 2,270 6,512 Fair value adjustment of derivative liabilities (8,305 ) —   (8,305 ) —   (1) Adjusted Net Loss $ (12,992 ) $ (9,308 ) $ (41,431 ) $ (32,579 )   Adjusted Net Loss to Adjusted EBITDA: Adjusted Net Loss $ (12,992 ) $ (9,308 ) $ (41,431 ) $ (32,579 ) Income tax expense 166 62 277 338 Depreciation and amortization expense 1,988 2,287 5,919 6,934 Stock-based compensation expense 1,525   2,613   8,811   8,801   (2) Adjusted EBITDA $ (9,313 ) $ (4,346 ) $ (26,424 ) $ (16,506 )

Exhibit 99.1

ENDOLOGIX, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

Unaudited

(In thousands)

    September 30, December 31, 2018 2017 ASSETS Current assets: Cash and cash equivalents $ 38,271 $ 57,991 Restricted cash 4,143 2,608 Accounts receivable, net allowance for doubtful accounts of $869 and $470, respectively. 22,756 32,294 Other receivables 75 418 Inventories 42,254 45,153 Prepaid expenses and other current assets 2,606   4,670   Total current assets 110,105   143,134   Property and equipment, net 16,895 19,212 Goodwill 120,872 120,927 Intangibles, net 77,312 80,403 Deposits and other assets 1,147   1,371   Total assets $ 326,331   $ 365,047     LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable $ 11,340 $ 12,351 Accrued payroll 14,260 15,054 Accrued expenses and other current liabilities 17,364 16,002 Current portion of debt 18,036 17,202 Revolving line of credit 10,000   21   Total current liabilities 71,000   60,630   Deferred income taxes 201 201 Deferred rent 7,761 7,724 Derivative liabilities 8,216 — Other liabilities 1,920 3,877 Contingently issuable common stock 5,000 9,300 Debt 189,090   208,253   Total liabilities 283,188   289,985   Commitments and contingencies Stockholders’ equity:

Convertible preferred stock, $0.001 par value; 5,000,000 shares authorized. No shares issuedand outstanding.

— —

Common stock, $0.001 par value; 170,000,000 and 135,000,000 shares authorized, respectively.85,891,011 and 83,855,824 shares issued, respectively. 85,465,426 and 83,643,585 sharesoutstanding, respectively.

86 84 Treasury stock, at cost, 425,585 and 212,239 shares, respectively. (4,026 ) (2,942 ) Additional paid-in capital 618,155 594,586 Accumulated deficit (573,760 ) (520,001 ) Accumulated other comprehensive income 2,688   3,335   Total stockholders’ equity 43,143   75,062   Total liabilities and stockholders’ equity $ 326,331   $ 365,047  

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INVESTOR:Endologix, Inc.Vaseem Mahboob, CFO(949) 595-7200