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Endologix boosts Q4 sales, narrows losses

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Endologix Inc. (NSDQ:ELGX) posted fourth-quarter sales of $13.7 million for the three months ended Dec. 31, 2009, up 27.9 percent compared with $10.7 million during the same period in 2008. Net losses narrowed 57.1 percent to $676,000, compared with $1.6 million during Q4 2008:

Press Release

Endologix Reports 28% Fourth Quarter 2009 Revenue Growth and Continued Positive Cash Flow from Operations

Provides 2010 revenue guidance of $62 to $66 million, an increase of 18% to 26%

IRVINE, Calif., Feb. 18 /PRNewswire-FirstCall/ — 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, 2009.

John McDermott, Endologix President and Chief Executive Officer, said, “The fourth quarter marks the close of a significant year for Endologix. In 2009, we launched our new delivery systems, IntuiTrak™ and IntuiTrak Express, which simplify AAA procedures for physicians and give us the lowest profile device available in the U.S. to treat large neck aneurysms.  We strengthened our domestic sales force, continued to expand in international markets, generated positive cash flow and raised additional capital so we can continue investing in the growth of our business. In November, we became the first and only company to receive FDA approval for a fully percutaneous EVAR clinical trial. Overall, we are in an excellent position to execute on our growth strategy in 2010.”  

Financial Results

Total revenue in the fourth quarter of 2009 was $13.7 million, a 28% increase from $10.7 million in the fourth quarter of 2008.  Domestic revenue was $10.8 million, an 18% increase compared with $9.1 million in the fourth quarter of 2008. International revenue was $2.9 million, an 85% increase compared with $1.6 million in the fourth quarter of 2008.

For the 12 months ended December 31, 2009, total revenue increased 39% to $52.4 million, compared with $37.7 million for the 12 months ended December 31, 2008.  For the full year 2009, domestic revenue was $43.7 million, a 37% increase compared with $31.9 million for the full year 2008.  International revenue for the full year 2009 was $8.8 million, a 54% increase compared with $5.7 million for the full year 2008.

Gross profit was $10.3 million in the fourth quarter of 2009, representing a gross margin of 75%. This compares with gross profit of $7.8 million and a gross margin of 73% in the fourth quarter of 2008.  Gross profit was $39.3 million for the 12 months ended December 31, 2009, representing a gross margin of 75%. This compares with gross profit of $27.3 million and a gross margin of 72% for the 12 months ended December 31, 2008. Higher gross margin for the 12 months ended December 31, 2009 was driven by more favorable product mix due to new products and lower cost of sales due to volume efficiencies.

Total operating expenses were $11.0 million in the fourth quarter of 2009, compared with $9.3 million in the fourth quarter of 2008. Marketing and sales expenses increased to $6.7 million in the fourth quarter of 2009 from $5.8 million in the same period last year. Research, development and clinical expenses increased to $2.1 million in the fourth quarter of 2009 from $1.4 million in the same period last year. General and administrative expenses increased to $2.3 million in the fourth quarter of 2009 from $2.2 million in the same period last year.

Total operating expenses for the 12 months ended December 31, 2009 were $41.6 million, compared with $39.3 million for the 12 months ended December 31, 2008.  Marketing and sales expenses increased to $26.5 million for the full year 2009, up from $23.8 million for the full year 2008. Research, development and clinical expenses increased to $6.6 million for the full year 2009, up from $6.1 million for the full year 2008.  General and administrative expenses decreased to $8.6 million for the full year 2009, down from $9.5 million for the full year 2008.

Endologix reported a net loss for the fourth quarter of 2009 of $676,000, or $0.01 per share, compared with a net loss of $1.6 million, or $0.04 per share, for the fourth quarter of 2008. For the 12 months ended December 31, 2009, the Company reported a net loss of $2.4 million, or $0.05 per share, compared with a net loss of $12.0 million, or $0.28 per share, for the 12 months ended December 31, 2008.

Total cash and cash equivalents increased by $3.0 million during the fourth quarter and were $24.1 million as of December 31, 2009, compared with total cash and cash equivalents of $7.6 million as of December 31, 2008. The Company generated positive cash flow from operations for the third consecutive quarter during the fourth quarter of 2009. In August 2009, the Company raised net proceeds of approximately $14.7 million in an underwritten public offering.

“During the fourth quarter we generated strong positive cash flow from operations and we finished the year with more than $24 million in cash and cash equivalents, a $10 million available line of credit, and no meaningful outstanding debt.  We believe the Company is in a solid financial position to aggressively expand our sales force and make significant investments in research and development programs that will support long term growth,” stated Endologix Chief Financial Officer Bob Krist.

Financial Guidance

For the full year 2010, the Company anticipates total revenue to be in the range of $62 million to $66 million, representing annual growth of 18% to 26%.  For the full year 2010, the Company expects to generate positive GAAP earnings per share.  The Company’s GAAP EPS guidance assumes planned investments in sales force expansion, research and development, and clinical initiatives and excludes the potential impact of litigation and acquisitions or other business development transactions.  

Based on the timing of new product launches and continued improvements in sales force productivity, the Company expects that the majority of the revenue and earnings growth in 2010 may be weighted to the second half of the year. For the first quarter of 2010, the Company expects domestic revenue to grow sequentially from the fourth quarter of 2009.

Mr. McDermott commented, “In 2010, we plan to continue focusing on sales force productivity while increasing our number of territories by nearly 30%. We expect to make significant investments in research and development to expand our product offerings and enable us to participate in additional aortic markets. The combination of our sales force expansion and promising new product pipeline puts us in an excellent position to continue to drive growth in the years ahead, while remaining cash flow positive.”

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