Endologix (ELGX) Prelim. Q3 Revenue Flat with Expectations; FY14 Outlook Updated

Endologix (NASDAQ: ELGX) preliminary unaudited revenue for the third quarter ended September 30, 2014. Endologix anticipates third quarter 2014 global revenue of approximately $37.0 million, representing approximately 11% growth as compared to $33.3 million for the third quarter 2013.

The Company anticipates U.S. revenue to be approximately $27.0 million in the third quarter 2014, representing approximately 2% growth compared to $26.5 million for the same quarter in 2013. International revenue is anticipated to be approximately $10.0 million in the third quarter 2014, representing approximately 47% growth compared to $6.8 million for the same quarter in 2013.

*** The Street sees Q3 revenue of $37.7 million and loss of $0.08 per share.

John McDermott, Endologix Chairman and Chief Executive Officer, said, "Our third quarter preliminary revenue reflects anticipated seasonality and increased competition in the U.S. Internationally, Nellix® continues to perform very well with a significant amount of physician interest. However, during the quarter we began to see some softness in Japan, which we expect will continue through the end of the year. Accordingly, we are updating our revenue guidance for the full year."

DURAPLY ePTFE Graft Material

Endologix also announced the introduction of DURAPLY™ ePTFE Graft Material for the AFX® Endovascular AAA System. DURAPLY is manufactured with an advanced, proprietary ePTFE processing technology that optimizes strength and conformability. As a result, the Company will realize an inventory write-off of approximately $4.5 million for existing graft material inventory, or $0.07 per share, in the third quarter 2014.

Mr. McDermott added, "While our existing graft material and AFX platform already achieve very good clinical results, we anticipate the new DURAPLY material will be even better. We decided to proactively make the switch to DURAPLY to provide our latest biomaterials technology to our physicians and their patients. The introduction of DURAPLY, along with the announcement earlier today of the LEOPARD clinical trial and completion of enrollment in the EVAS FORWARD – Global Registry, demonstrates our commitment to be the innovation leader in the treatment of AAA."

"We are updating our full year Adjusted Net Loss per Share and EBITDA guidance to reflect the $4.5 million inventory charge and our updated expectations for full year revenue," Mr. McDermott concluded.

Financial Guidance

Based on the preliminary third quarter 2014 revenue results and recent developments, Endologix is updating its full year 2014 financial guidance as follows:

Revenue: $145 million to $148 million, representing growth of 10% to 12% from 2013, compared to previous guidance of $148 million to $152 million.

Adjusted Net Loss Per Share (non-GAAP and defined below): $(0.37) to $(0.43) per share, compared to previous guidance of $(0.27) to $(0.33).

Adjusted EBITDA Per share (non-GAAP and defined below): $(0.20) to $(0.26) per share, compared to previous guidance of $(0.10) to $(0.16) per share.

*** The Street sees FY14 revenue of $151 million and loss of $0.28 per share.

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