Apollo Endosurgery, Inc. Reports 50% Revenue Growth in 2021
Apollo Endosurgery reported a notable 26% revenue growth in Q4 2021, reaching $16.2 million, despite COVID-19 impacts. Total 2021 revenue stood at $63.0 million, with gross margins at 56.3%. The company secured over $175 million in new capital and recorded significant growth in its Endoscopic Suturing System and Intragastric Balloon product lines. However, they faced increased operating expenses ($14.8 million) and a net loss of $10.4 million. Apollo forecasts 2022 revenue between $73 million and $75 million, reflecting a growth of 16%-19%.
- Q4 2021 revenue grew 26% to $16.2 million.
- Full year 2021 revenue was $63 million.
- Gross margin improved to 56.3% in Q4 2021.
- ESS revenue increased by 37%, IGB revenue by 20% in Q4 2021.
- Over $175 million secured in new capital and borrowing capacity.
- Successful MERIT study results for ESG indicating 49.2% excess body weight loss at 12 months.
- Operating expenses rose to $14.8 million in Q4 2021, up from $10.4 million in Q4 2020.
- Net loss of $10.4 million in Q4 2021, compared to $3.5 million in Q4 2020.
- Increased interest expense affected overall financial performance.
- Potential risks from ongoing COVID-19 impact on elective procedures.
- Increased adoption across all product lines in both U.S. and international
- Grew fourth quarter 2021 revenue
26%
AUSTIN, TX / ACCESSWIRE / February 22, 2022 / Apollo Endosurgery, Inc. ("Apollo") (NASDAQ:APEN), a global leader in less invasive medical devices for gastrointestinal and bariatric procedures, today announced financial results for the fourth quarter and year ended December 31, 2021 and corporate highlights.
Fourth Quarter and Full Year 2021 Selected Financial Results
(Numbers in millions, except percentages) | Quarter Ended December 31, 2021 | Year Ended December 31, 2021 | ||||||
Revenue | $ | 16.2 | $ | 63.0 | ||||
Gross margin | 56.3 | % | 55.5 | % | ||||
Operating expenses | $ | 14.8 | $ | 54.2 | ||||
Non-GAAP adjusted operating expenses | $ | 13.3 | $ | 47.9 | ||||
Operating loss | $ | (5.7 | ) | $ | (19.2 | ) | ||
Non-GAAP adjusted EBITDA | $ | (3.5 | ) | $ | (9.9 | ) | ||
Cash, cash equivalents and restricted cash | $ | 91.8 | ||||||
Fourth Quarter and Full Year Financial and Corporate Highlights
- Grew fourth quarter 2021 and full year Endoscopic Suturing System (ESS) revenue
37% and55% over the same periods in 2020; - Grew fourth quarter 2021 and full year Intragastric Balloon (IGB) revenue
20% and50% over the same periods of 2020; - Increased fourth quarter 2021 and full year revenue from the Company's top 10 direct accounts by over
50% and85% over the same periods in 2020; - Continued X-Tack penetration in key accounts, with fourth quarter 2021 revenue growth of nearly
40% and an increase in ordering customers of nearly20% compared to the third quarter 2021; - Secured over
$175 million in new capital and borrowing capacity, providing cash runway to fund Apollo's planned growth initiatives; - Announced that investigators in the Multi-Center ESG Randomized Interventional (MERIT) study reported that the study met its primary endpoints for safety and efficacy. Patients undergoing the Endoscopic Sleeve Gastroplasty (ESG) achieved excess body weight loss of
49.2% at 12 months and demonstrated improvements in weight-related comorbidities. The MERIT study reported a serious adverse event rate of2% for patients undergoing the ESG procedure. - Submitted a De Novo classification request to the U.S. Food and Drug Administration seeking 510(k) classification and clearance for the Apollo ESGTM and Apollo REVISETM devices; and
- Announced the publication of a multi-center study of Apollo's X-Tack System, demonstrating high success rates, ease of use, and economic value in the treatment of GI defects.
"The fourth quarter capped a transformative year at Apollo, during which we drove increased utilization of our innovative therapeutic endoscopy portfolio, positioned the Company to expand our reach into new indications such as our recent De Novo 510(k) classification request for Apollo ESG and Apollo REVISE, and significantly enhanced our balance sheet to support our growth runway," said Chas McKhann, Apollo's president and CEO. "We remain focused on long-term value creation, expanding our base of trained physicians, working closely with our customers to drive product utilization, and maximizing the impact of our expanded sales team."
Comparison of Selected GAAP and Non-GAAP Financial Results for Fourth Quarter 2021 to Fourth Quarter 2020
Total worldwide revenue increased to
ESS product sales increased
Gross margin increased by 40 basis points, from
Total operating expenses in the fourth quarter were
Loss from operations in the fourth quarter 2021 was
For more detailed information on non-GAAP calculations, please refer to the tables that follow.
Cash, cash equivalents and restricted cash were
Current and long-term debt at face value as of December 31, 2021 included
Financial Outlook for 2022
Apollo expects full year 2022 revenue between
Resignation of Bruce Robertson from Apollo Board of Directors
Apollo also announced today that Bruce Robertson has retired from the Apollo Board of Directors, effective immediately, to focus on other commitments. Dr. Robertson, Managing Director of H.I.G. Capital, LLC, has served as a member of the Apollo Board of Directors since February 2008.
"Bruce has been instrumental in Apollo's development in his 14 years of service on our Board," said Chas McKhann. "Personally, he has been a highly valued colleague and advisor in my first year as CEO. We thank Bruce for his unwavering contributions to Apollo's formation and growth, and we wish him all the best in his future endeavors."
"Since our initial investment in Apollo, my colleagues at H.I.G. Capital and I have been excited about the Company's potential to play a transformative role in therapeutic endoscopy," said Dr. Robertson, "I leave knowing that Apollo is in good hands under a new leadership team, with a sound strategy to realize the full potential of our original vision."
The Company has engaged Spencer Stuart, a global executive search firm, to lead a search process for Dr. Robertson's successor.
Conference Call
Apollo will host a live webcast audio call with slides today at 3:30 p.m. CT / 4:30 p.m. ET. Investors are invited to join the live call via webcast from the Investors section of the Company's corporate website at www.apolloendo.com. An audio-only option is available by dialing +1 973-528-0011 and referencing access code 718442 or the "Apollo Endosurgery Fourth Quarter 2021 Earnings Call." Investors who opt for audio-only will need to download the related slides at www.apolloendo.com.
A replay of the webcast will be made available on Apollo's website, www.apolloendo.com, shortly after completion of the call.
Non-GAAP Financial Measures
To supplement the Company's financial statements presented in accordance with U.S. generally accepted accounting principles (GAAP), the Company reports certain non-GAAP financial measures, including non-GAAP adjusted operating expenses and non-GAAP Adjusted EBITDA. Adjusted operating expenses is calculated as operating expense less stock-based compensation. Adjusted EBITDA is calculated as GAAP net loss, plus depreciation and amortization, interest expense, net, income tax expense, stock-based compensation, gain on forgiveness of PPP loan, and unrealized foreign exchange. These supplemental measures of our performance are not required by, and are not determined in accordance with GAAP. The Company believes that these non-GAAP financial measures provide investors with an additional tool for evaluating the Company's core performance, which management uses in its own evaluation of continuing operating performance, and a baseline for assessing the future earnings potential of the Company. The Company's non-GAAP financial measures may not provide information that is directly comparable to that provided by other companies in the Company's industry, as other companies in the industry may calculate non-GAAP financial results differently. Non-GAAP financial results should be considered in addition to, and not as a substitute for, or superior to, financial measures calculated in accordance with GAAP. Included in the supplemental tables to this press release is a reconciliation of non-GAAP adjusted EBITDA to GAAP net loss.
About Apollo Endosurgery, Inc.
Apollo Endosurgery, Inc. is a medical technology company focused on the development of next-generation, less invasive devices to advance therapeutic endoscopy designed to treat a variety of gastrointestinal conditions including closure of gastrointestinal defects, managing gastrointestinal complications and the treatment of obesity. Apollo's device-based therapies are an alternative to invasive surgical procedures, thus lowering complication rates and reducing total healthcare costs. Apollo's products are offered in over 75 countries today and include the OverStitch® Endoscopic Suturing System, the OverStitch Sx® Endoscopic Suturing System, X-Tack® Endoscopic HeliX Tacking System and the ORBERA® Intragastric Balloon.
Apollo's common stock is traded on Nasdaq Global Market under the symbol "APEN". For more information regarding Apollo Endosurgery, go to: www.apolloendo.com.
Cautionary Note on Forward-Looking Statements
Certain statements in this press release are forward-looking statements that are subject to risks and uncertainties that could cause results to be materially different than expectations. In addition, there is uncertainty about the spread of the COVID-19 virus and the impact it may have on the Company's operations, the Company's financial outlook for future periods, the demand for the Company's products, the Company's liquidity position, global supply chains and economic activity in general. Important factors that could cause actual results to differ materially include: the ongoing effects of the COVID-19 pandemic; reports of adverse events related to the Company's products, outcomes of clinical studies related to the Company's products, development of competitive medical products by competitors, regulatory approvals and extensive regulatory oversight by the FDA or other regulatory authorities, unfavorable media coverage related to the Company's products or related procedures, coverage and reimbursement decisions by private or government payors, the Company's ability to support the adoption of its products and broaden its product portfolio; the potential size of the Company's addressable markets; the execution of our gross margin improvement projects; global supply chain constraints; the effect of inflationary pressure; and the availability of cash for Apollo's future operations as well as other factors detailed in Apollo's periodic reports filed with the Securities and Exchange Commission, or SEC, including its Form 10-K for the year ended December 31, 2021. Copies of reports filed with the SEC are posted on Apollo's website and are available from Apollo without charge. These forward-looking statements are not guarantees of future performance and speak only as of the date hereof, and, except as required by law, Apollo disclaims any obligation to update these forward-looking statements to reflect future events or circumstances.
Disclosure Information
Apollo uses the investor relations section of its website as a means of complying with its disclosure obligations under Regulation FD. Accordingly, we recommend that investors should monitor Apollo's investor relations website in addition to following Apollo's press releases, SEC filings, and public conference calls and webcasts.
Contact:
Apollo Endosurgery, Inc.
Jeff Black, 512-279-5126
investor-relations@apolloendo.com
Darrow Associates Investor Relations
Matt Kreps, 214-597-8200
mkreps@darrowir.com
APOLLO ENDOSURGERY, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(In thousands, except for share data)
| Three Months Ended December 31, | Year Ended December 31, | |||||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||||
| (Unaudited) | (Unaudited) | |||||||||||||||
Revenues | $ | 16,171 | $ | 12,860 | $ | 62,989 | $ | 42,048 | ||||||||
Cost of sales | 7,069 | 5,670 | 28,030 | 19,806 | ||||||||||||
Gross margin | 9,102 | 7,190 | 34,959 | 22,242 | ||||||||||||
Operating expenses: | ||||||||||||||||
Sales and marketing | 7,393 | 4,582 | 24,311 | 17,355 | ||||||||||||
General and administrative | 4,467 | 3,192 | 18,448 | 11,062 | ||||||||||||
Research and development | 2,479 | 2,186 | 9,524 | 7,670 | ||||||||||||
Amortization of intangible assets | 463 | 477 | 1,875 | 1,949 | ||||||||||||
Total operating expenses | 14,802 | 10,437 | 54,158 | 38,036 | ||||||||||||
Loss from operations | (5,700 | ) | (3,247 | ) | (19,199 | ) | (15,794 | ) | ||||||||
Other expenses: | ||||||||||||||||
Interest expense, net | 4,290 | 1,356 | 8,318 | 5,251 | ||||||||||||
Gain on forgiveness of PPP loan | - | - | (2,852 | ) | - | |||||||||||
Other (income) expense | 479 | (1,150 | ) | (139 | ) | 1,424 | ||||||||||
Net loss before income taxes | (10,469 | ) | (3,453 | ) | (24,526 | ) | (22,469 | ) | ||||||||
Income tax expense | (64 | ) | 52 | 156 | 142 | |||||||||||
Net loss | $ | (10,405 | ) | $ | (3,505 | ) | $ | (24,682 | ) | $ | (22,611 | ) | ||||
Net loss per share, basic and diluted | $ | (0.27 | ) | $ | (0.14 | ) | $ | (0.82 | ) | $ | (.99 | ) | ||||
Shares used in computing net loss per share, basic and diluted | 38,258,431 | 25,608,839 | 30,243,264 | 22,756,167 | ||||||||||||
APOLLO ENDOSURGERY, INC. AND SUBSIDIARIES
Product Sales by Product Group and Geographic Market
Unaudited (In thousands)
Three Months Ended December 31, 2021 | Three Months Ended December 31, 2020 | % Increase / (Decrease) | ||||||||||||||||||||||||||||||||||
| U.S. | OUS | Total Revenues | U.S. | OUS | Total Revenues | U.S. | OUS | Total Revenues | ||||||||||||||||||||||||||||
ESS | $ | 6,940 | $ | 3,536 | $ | 10,476 | $ | 4,901 | $ | 2,744 | $ | 7,645 | 41.6 | % | 28.9 | % | 37.0 | % | ||||||||||||||||||
IGB | 1,623 | 3,862 | 5,485 | 1,535 | 3,050 | 4,585 | 5.7 | % | 26.6 | % | 19.6 | % | ||||||||||||||||||||||||
Other | 205 | 5 | 210 | 599 | 31 | 630 | (65.8 | )% | (83.9 | )% | (66.7 | )% | ||||||||||||||||||||||||
Total revenues | $ | 8,768 | $ | 7,403 | $ | 16,171 | $ | 7,035 | $ | 5,825 | $ | 12,860 | 24.6 | % | 27.1 | % | 25.7 | % | ||||||||||||||||||
Year Ended December 31, 2021 | Year Ended December 31, 2020 | % Increase / (Decrease) | ||||||||||||||||||||||||||||||||||
| U.S. | OUS | Total Revenues | U.S. | OUS | Total Revenues | U.S. | OUS | Total Revenues | ||||||||||||||||||||||||||||
ESS | $ | 25,917 | $ | 14,048 | $ | 39,965 | $ | 15,774 | $ | 9,955 | $ | 25,729 | 64.3 | % | 41.1 | % | 55.3 | % | ||||||||||||||||||
IGB | 7,193 | 14,904 | 22,097 | 5,045 | 9,739 | 14,784 | 42.6 | % | 53.0 | % | 49.5 | % | ||||||||||||||||||||||||
Other | 894 | 33 | 927 | 1,453 | 82 | 1,535 | (38.5 | )% | (59.8 | )% | (39.6 | )% | ||||||||||||||||||||||||
Total revenues | $ | 34,004 | $ | 28,985 | $ | 62,989 | $ | 22,272 | $ | 19,776 | $ | 42,048 | 52.7 | % | 46.6 | % | 49.8 | % | ||||||||||||||||||
APOLLO ENDOSURGERY, INC. AND SUBSIDIARIES
Reconciliation of Non-GAAP Adjusted Operating Expenses and Adjusted EBITDA
Unaudited (In millions)
| Three Months Ended December 31, | Year Ended December 31, | |||||||||||||||
(Numbers in millions) | 2021 | 2020 | 2021 | 2020 | ||||||||||||
Operating expenses | $ | 14.8 | $ | 10.4 | $ | 54.2 | $ | 38.0 | ||||||||
Less: Stock-based compensation in operating expenses | 1.6 | 0.6 | 6.3 | 2.1 | ||||||||||||
Non-GAAP adjusted operating expenses | $ | 13.3 | $ | 9.8 | $ | 47.9 | $ | 35.9 | ||||||||
| Three Months Ended December 31, | Year Ended December 31, | |||||||||||||||
(Numbers in millions) | 2021 | 2020 | 2021 | 2020 | ||||||||||||
Net loss | $ | (10.4 | ) | $ | (3.5 | ) | $ | (24.7 | ) | $ | (22.6 | ) | ||||
Depreciation and amortization | 0.7 | 0.9 | 3.2 | 3.7 | ||||||||||||
Interest expense, net | 4.3 | 1.4 | 8.3 | 5.3 | ||||||||||||
Income tax expense | (0.1 | ) | 0.1 | 0.2 | 0.1 | |||||||||||
EBITDA | (5.5 | ) | (1.1 | ) | (13.0 | ) | (13.5 | ) | ||||||||
Add back significant items: | ||||||||||||||||
Stock-based compensation | 1.6 | 0.6 | 6.4 | 2.1 | ||||||||||||
Gain on forgiveness of PPP loan | - | - | (2.9 | ) | - | |||||||||||
Unrealized foreign exchange | 0.4 | (1.2 | ) | (0.4 | ) | 1.2 | ||||||||||
Adjusted EBITDA | $ | (3.5 | ) | $ | (1.7 | ) | $ | (9.9 | ) | $ | (10.2 | ) | ||||
SOURCE: Apollo Endosurgery, Inc.
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