Apollo Endosurgery, Inc. Reports Record Endoscopy Revenue in Second Quarter, Raises Full-Year Outlook Conference Call to Discuss Results Today at 3:30 p.m. CT / 4:30 p.m. ET

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AUSTIN, TX / ACCESSWIRE / August 3, 2021 / Apollo Endosurgery, Inc. (‘Apollo’) (Nasdaq: APEN), a leading global provider of less invasive medical devices for gastrointestinal and bariatric procedures, today announced financial results for the second quarter ending June 30, 2021.

Highlights

1. Realized total revenue of $ 16.6 million, an increase of 194% compared to Q2 2020, and a new sales record for the company *
2. Endoscopic Suturing Systems (ESS) sales increased 23% and Intragastric Balloons (IGB) sales increased 16% on a sequential basis compared to Q1 2021
3. Realized gross margin of 55% with a favorable product mix
4. Continuous introduction of X-Tack ™ with now more than 120 active centers demonstrating excellent product performance, short learning curve and benefit in a variety of upper and lower GI grade applications
5. Report that investigators in the Multi-Center ESG Randomized Interventional Trial (MERIT) announced the successful achievement of the trial’s primary efficacy and safety endpoints
6. The Apollo leadership team has been strengthened with Kirk Ellis as Vice President of Sales, Steve Bosrock as Vice President of Marketing & Medical Education and Jeffrey Black as Chief Financial Officer

Outlook for 2021

Based on results for the first half of 2021, the company is increasing its guidance for full year 2021 and now expects revenue between $ 61 million and $ 63 million, compared to its previous guidance of $ 55 million to $ 57 million.

“Apollo continued to build momentum in the second quarter through strong financial performance, including record revenues and a higher gross margin,” said Chas McKhann, Apollo’s chief executive officer. ‘We have also reached a number of strategic milestones including sequential growth in our ESS and IGB businesses, positive leading indicators for the MERIT study results and a significant expansion of our X-Tack user base. We believe these accomplishments, as well as the expansion of our leadership team and trading organization, position us well for the future. ‘

Second quarter results

Total revenue for the second quarter of 2021 was $ 16.6 million, a new record for the company’s endoscopy business. Revenue increased $ 11.0 million, or 194%, from revenue of $ 5.6 million in the second quarter of 2020, which was impacted by the outbreak of the COVID-19 pandemic.

Compared to the second quarter of 2020, total sales of ESS products increased by € 7.0 million.

Gross margin increased from 43% in Q2 2020 to 55% for Q2 2021 due to higher sales, an improved mix of higher variable gross margin products, including the new X-Tack device, and unabsorbed overheads from reduced production volumes in the Quarter of the previous year due to the COVID-19 pandemic.

Total cost of ownership increased $ 7.6 million compared to Q2 2020. The increase was due to the normalization of the temporary cost controls we put in place in response to the pandemic. It was also influenced by higher stock-based compensation expenses in the second quarter of 2021.

The net loss for the second quarter of 2021 was $ 3.0 million compared to $ 6.3 million for the second quarter of 2020. Excluding the gain of $ 2.9 million from the PPP loan waiver for the second quarter 2021 and non-cash stock-based compensation expense of $ 2.5 million and $ 0.5 million for the second quarter of 2021 and 2020, respectively, the net loss for the second quarter of 2021 improved 42% from the second quarter of 2020 .

Cash, cash equivalents, and restricted cash were $ 31.2 million as of June 30, 2021, down $ 1.4 million in cash for the quarter.

* Without divested product lines.

telephone conference

Apollo will host a conference call on August 3, 2021 at 3:30 p.m. Central Time / 4:30 p.m. Eastern Time to discuss Apollo’s results of operations for the second quarter through June 30, 2021. To participate in the conference call, please call + 1-973-528-0011. A live webcast of the conference call will be made available in the Events and Presentations section of our Investor Relations website: ir.apolloendo.com.

A replay of the webcast will be made available on Apollo’s website www.apolloendo.com after it has been accessed.

Non-GAAP Financial Measures

To complement our financial results, we provide a non-GAAP financial metric, the percentage change in product sales in constant currency, the effects of changes in exchange rates, the comparability and development of sales compared to the same period last year. The percentage change in product sales in constant currency is calculated by converting the current foreign currency sales to the exchange rate of the previous year. This supplementary measure of our performance is not required by and is not determined in accordance with GAAP.

We believe the non-GAAP financial metric contained herein is helpful in understanding our current financial performance. We use this supplementary non-GAAP financial metric internally to understand, manage, and evaluate our business and to make operational decisions. We believe that providing non-GAAP financial information to investors in addition to GAAP financial information can enable a more consistent comparison of the company’s performance over time with the performance of other companies in the medical device industry that have similar financial metrics to their GAAP financial information. However, our non-GAAP financial metric should not be viewed in isolation or as a substitute for the comparable GAAP metric.

About Apollo Endosurgery, Inc.

Apollo Endosurgery, Inc. is a medical technology company focused on developing next-generation less invasive devices to advance therapeutic endoscopy, which has been developed to treat a variety of gastrointestinal disorders, including gastrointestinal occlusion Defects, Treatment of Gastrointestinal Complications, and Treatment of Obesity. Apollo’s device-based therapies are an alternative to invasive surgical procedures, reducing complication rates and lowering overall healthcare costs. Apollo’s products are now available in over 75 countries and include the OverStitch ™ endoscopic suture system, OverStitch Sx ™ endoscopic suture system, HeliX X-Tack ™ endoscopic suture system and the intragastric ORBERA® balloon.

Apollo’s common stock is traded on the Nasdaq Global Market under the symbol “APEN”. Further information on Apollo Endosurgery can be found at: www.apolloendo.com.

Cautionary Note Regarding 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 differ materially from expectations. In addition, there is uncertainty about the spread of the COVID-19 virus and its possible impact on the company’s operations, 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, but are not limited to: adverse event reports related to our products, clinical trial results related to our products, competitive development of competitive medical products, regulatory approvals, and extensive regulatory action Oversight by the FDA or other government regulatory agencies, unfavorable media coverage regarding our products or related processes, reporting and reimbursement decisions by private or government payers, Apollo’s ability to support the launch of its products and expand its product portfolio; the potential size of Apollo’s addressable markets; the execution of our gross margin improvement projects; the ability to collect future payments from ReShape; and the availability of cash for Apollo’s future operations, as well as other factors set out in Apollo’s periodic reports filed with the Securities and Exchange Commission (SEC), including Form 10-K, which ends on December 31, 2020 Year and Form 10-Q for the period ended June 30, 2021. Copies of the reports filed with the SEC will be posted on the Apollo website and are available free of charge from Apollo. These forward-looking statements are not guarantees of future performance and speak only as of the date of this release, and Apollo disclaims any obligation to update these forward-looking statements to reflect future events or circumstances, except as required by law.

Disclosure Information

Apollo uses the Investor Relations section of its website to comply with its disclosure obligations under Regulation FD. Accordingly, we encourage investors to observe Apollo’s investor relations website in addition to Apollo’s press releases, SEC filings, and public conference calls and webcasts.

contacts

Apollo Endosurgery, Inc.
investor-relations@apolloendo.com

Darrow Associates Investor Relations
Matt Kreps, 214-597-8200
mkreps@darrowir.com

APOLLO ENDOSURGERY, INC. AND SUBSIDIARIES
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APOLLO ENDOSURGERY, INC. AND SUBSIDIARIES
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The percentage change in non-GAAP product sales at constant exchange rates was as follows:

SOURCE: Apollo Endosurgery, Inc.

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