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Endologix Reports Third Quarter 2015 Financial Results

The following excerpt is from the company's SEC filing.

Nellix European Systems Increase 45% Over Prior Year

FDA Approves Additional Patient Enrollment in Nellix U.S. CAP

IRVINE, Calif., October 26, 2015

- Endologix, Inc. (NASDAQ: ELGX), developer and marketer of innovative treatments for aortic disorders, today announced financial results for the three and nine months ended September 30, 2015.

John McDermott, Endologix Chairman and Chief Executive Officer, said, We achieved solid third quarter results, highlighted by a 45% increase in European Nellix® system sales. We are also pleased with FDA approval to restart enrolling patients in o ur continued access protocol for the IDE trial and look forward to providing physicians and patients in the U.S. with access to Nellix again later this year. On the regulatory front, we expect to submit the final PMA module in early 2016, with potential FDA approval by the end of the year. Lastly, we recently received FDA approval for AFX2 and plan to introduce this new device in the first quarter of 2016.

Financial Results

Global revenue in the third quarter of 2015 was $38.2 million, a 3% increase from $37.2 million in the third quarter of 2014. For the nine months ended September 30, 2015, global revenue increased 5% to $114.4 million, compared to $108.7 million for the nine months ended September 30, 2014. On a constant currency basis, revenue for the third quarter and nine months ended September 30, 2015 increased 7% and 9%, respectively.

U.S. revenue in the third quarter of 2015 was $26.9 million, slightly down from $27.1 million in the third quarter of 2014 due to the temporary delay in patient enrollment in the Nellix CAP. Excluding the impact of the CAP, U.S. third quarter revenue increased 1% over 2014. International revenue was $11.3 million, a 12% increase compared to $10.1 million in the third quarter of 2014. On a constant currency basis, third quarter international revenue increased 26%. European revenue was $7.8 million, a 12% increase as compared to $6.9 million in the third quarter of 2014, representing 32% growth on a constant currency basis.

Gross profit was $27.0 million in the third quarter of 2015, which represents a gross margin of 71%, compared to gross margin of 63% in the third quarter of 2014. Gross profit was $78.1 million for the nine months ended September 30, 2015, representing a gross margin of 68%. This compares with gross margin of 70% for the nine months ended September 30, 2014. The increase in gross margin for the third quarter was primarily due to an inventory write-off of $4.7 million in the third quarter of 2014 for product inventory that was replaced with the Companys new DURAPLY ePTFE Graft Material for the AFX® Endovascular AAA System.

Total operating expenses were $36.4 million in the third quarter of 2015, compared to $32.5 million in the third quarter of 2014. Total operating expenses for the nine months ended September 30, 2015 were

$109.2 million, compared with $94.4 million for the nine months ended September 30, 2014. The increase in operating expenses for the third quarter and nine months ended September 30, 2015 was driven primarily by expansion of sales and clinical personnel in the U.S. and Europe and by research, development, clinical and regulatory expenses.

Endologix reported a net loss for the third quarter of 2015 of $10.9 million or $(0.16) per share, compared with net loss of $13.9 million, or $(0.21) per share, for the third quarter of 2014. Endologix reported Adjusted Net Loss (non-GAAP and defined below) for the third quarter of 2015 of $9.1 million, or $(0.13) per share, compared with an Adjusted Net Loss for the third quarter of 2014 of $8.5 million, or $(0.13) per share.

For the nine months ended September 30, 2015, Endologix reported a net loss of $35.1 million, or $(0.52) per share, compared to a net loss of $17.6 million, or $(0.28) per share, for the nine months ended September 30, 2014. Endologix reported an Adjusted Net Loss (non-GAAP and defined below) for the nine months ended September 30, 2015 of $30.4 million or $(0.45) per share, compared with an Adjusted Net Loss (non-GAAP and defined below) for the nine months ended September 30, 2014 of $17.6 million, or $(0.28) per share.

Total cash, cash equivalents and marketable securities were $68.3 million as of September 30, 2015, compared to $86.7 million as of December 31, 2014.

Conference Call Information

Endologixs 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...


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