Endologix Reports 22% Revenue Growth
for the First Quarter 2013
Provides Update on New Product Pipeline Including Enhancements to Ventana Program That Will Delay IDE Enrollment and Limited Market Introduction in Europe
Reiterates 2013 Financial Guidance
Endologix, Inc. (Nasdaq:ELGX), developer and marketer of innovative treatments for aortic disorders, today announced financial results for the three months ended March 31, 2013 and provided an update on the company's new product pipeline.
John McDermott, Endologix President and Chief Executive Officer, said, "We are very pleased with our sales growth in the U.S. and international markets in the first quarter 2013, driven by continued adoption of the AFX® Endovascular AAA System. In Europe, we began the limited market introduction of the Nellix® EndoVascular Aneurysm Sealing System and have received very positive physician feedback on its ease-of-use and clinical outcomes from these first commercial procedures. In addition, we recently received FDA approval for our percutaneous EVAR (PEVAR) indication with AFX and have physician training courses scheduled to begin in May. After our first 120 procedures with the Ventana™ Fenestrated System, we have seen good overall safety results, but a higher than expected number of renal re-interventions. Before we continue enrolling patients in the IDE clinical study and begin the EU limited introduction, we plan to integrate our next generation covered renal stent and conduct additional testing and training to optimize future outcomes. We hope to begin enrolling patients in the study again and start the limited market introduction in Europe by the end of this year."
Mr. McDermott concluded, "Despite the temporary delay in the Ventana program, we are reiterating our guidance for the year based on the strong performance trends in our core business. We continue to believe Ventana represents a significant new innovation in the treatment of juxta and para-renal aortic aneurysms, with the potential to expand the addressable EVAR market. In addition, the limited market introduction of Nellix is going extremely well and we hope to begin enrolling patients in the U.S. IDE by the end of this year".
Global revenue in the first quarter of 2013 was $29.8 million, a 22% increase from $24.5 million in the first quarter of 2012. U.S. revenue in the first quarter of 2013 was $24.7 million, a 17% increase compared with $21.1 million in the first quarter of 2012, which was largely driven by the continued adoption of the AFX system and the expansion of the U.S. sales force through the addition of sales representatives and clinical specialists that exclusively provide field support to our sales representatives, increasing overall sales force productivity. International revenue was $5.1 million, a 46% increase compared to $3.5 million in the first quarter of 2012. The international sales increase is primarily attributable to a transition to a direct sales organization in Europe, beginning in September 2011.
Gross profit was $22.5 million in the first quarter of 2013, which represents a gross margin of 76%. This compares with gross margin of 78% in the first quarter of 2012. Lower gross margins are primarily the result of product mix and the greater proportion of our global sales from international customers, as opposed to U.S. customers.
Total operating expenses were $27.0 million in the first quarter of 2013, compared to $22.8 million in the first quarter of 2012.
Marketing and sales expenses were $15.2 million in the first quarter of 2013, an increase from $13.5 million in the prior year period. The increase was driven by the costs associated with our direct sales expansion in Europe, and the increase in variable compensation expense associated with our revenue increase.
Research and development expenses were $3.5 million in the first quarter of 2013, substantially similar to the prior year period. Research and development expenses in the first quarter of 2013 were primarily related to the continued development of our Nellix and Ventana systems and enhancements to the AFX system.
Clinical and regulatory affairs expenses were $2.4 million in the first quarter of 2013, an increase from $1.4 million in the prior year period. The increase was primarily driven by the continued enrollment in the Ventana U.S. clinical trial, follow-up costs associated with Ventana and Nellix studies, and regulatory costs for CE and FDA submissions.
General and administrative expenses were $5.9 million in the first quarter of 2013, up from $4.1 million in the prior year period. The increase was driven primarily by the Company's expanding European operations, the new federal Medical Device Excise Tax, and legal and consulting expenses associated with general business growth.
Endologix reported a net loss for the first quarter of 2013 of $9.3 million, or $(0.15) per share, compared with a net loss of $16.7 million, or $(0.29) per share, for the first quarter of 2012. The first quarter 2013 loss includes a $5.2 million non-cash charge, or $(0.08) per share, for the increase of the contingent consideration (solely payable in the form of our common stock) related to the Nellix acquisition. Endologix reported Adjusted Net Loss (non-GAAP and defined below) for the first quarter of 2013 of $4.1 million, or $(0.07) per share, compared with an Adjusted Net Loss (non-GAAP and defined below) for the first quarter of 2012 of $4.3 million, or $(0.07) per share.
Total cash and cash equivalents were $42.0 million as of March 31, 2013, compared to $45.1 million as of December 31, 2012.
Based on the first quarter 2013 results and recent developments, Endologix is reiterating its full year 2013 financial guidance. Endologix anticipates 2013 revenue to be in the range of $126 million to $133 million, representing growth of 19% to 25% from 2012. Endologix anticipates a GAAP loss in 2013 of $(0.14) to $(0.17) per share, excluding the effect of increases or decreases in the Nellix contingent consideration and an Adjusted EBITDA (non-GAAP and defined below) of $0.01 to $0.05 per share. Endologix anticipates generating positive cash flows from operations in the second half of 2013.
Conference Call Information
Endologix's 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 1-201-689-8562 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 1-(858)-384-5517 from outside the U.S., and entering pin number 412281. The conference call will be broadcast live over the Internet at www.endologix.com and will be available for 30 days. After the live webcast, a webcast replay of the call and a transcript of the call will be available online from the investor relations page of Endologix's website for 30 days.http://seekingalpha.com/news-article/6396241-endologix-reports-22-revenue-growth-for-the-first-quarter-2013