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|
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x
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
|
o
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
|
Delaware
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68-0328265
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(State or other jurisdiction of
incorporation or organization)
|
(I.R.S. Employer
Identification Number)
|
Large accelerated filer
|
|
o
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Accelerated filer
|
|
x
|
Non-accelerated filer
|
|
o
(Do not check if a smaller reporting company)
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Smaller reporting company
|
|
o
|
|
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Page
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|
||
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Item 1.
|
|
|
|
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||
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||
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Item 2.
|
||
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Item 3.
|
||
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Item 4.
|
||
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Item 1.
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||
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Item 6.
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||
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||||
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September 30,
|
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December 31,
|
||||
|
2012
|
|
2011
|
||||
ASSETS
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
47,740
|
|
|
$
|
20,035
|
|
Accounts receivable, net of allowance for doubtful accounts of $224 and $161, respectively.
|
19,616
|
|
|
15,542
|
|
||
Other receivables
|
302
|
|
|
405
|
|
||
Inventories
|
19,061
|
|
|
18,099
|
|
||
Prepaid expenses and other current assets
|
1,579
|
|
|
1,023
|
|
||
Total current assets
|
88,298
|
|
|
55,104
|
|
||
Property and equipment, net
|
4,951
|
|
|
4,454
|
|
||
Goodwill
|
28,969
|
|
|
27,073
|
|
||
Intangibles, net
|
43,399
|
|
|
43,439
|
|
||
Deposits and other assets
|
211
|
|
|
185
|
|
||
Total assets
|
$
|
165,828
|
|
|
$
|
130,255
|
|
|
|
|
|
||||
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable
|
$
|
9,487
|
|
|
$
|
6,377
|
|
Accrued payroll
|
6,977
|
|
|
6,569
|
|
||
Accrued expenses and other current liabilities
|
2,264
|
|
|
1,003
|
|
||
Total current liabilities
|
18,728
|
|
|
13,949
|
|
||
Deferred income taxes
|
1,029
|
|
|
1,029
|
|
||
Deferred rent
|
—
|
|
|
8
|
|
||
Contingently issuable common stock
|
51,400
|
|
|
38,700
|
|
||
Total liabilities
|
71,157
|
|
|
53,686
|
|
||
Commitments and contingencies
|
|
|
|
||||
Stockholders’ equity:
|
|
|
|
||||
Convertible preferred stock, $0.001 par value; 5,000,000 shares authorized. No shares issued and outstanding.
|
—
|
|
|
—
|
|
||
Common stock, $0.001 par value; 75,000,000 shares authorized. 62,365,676 and 58,577,484 shares issued, respectively. 61,870,976 and 58,082,784 shares issued and outstanding, respectively.
|
62
|
|
|
59
|
|
||
Additional paid-in capital
|
288,798
|
|
|
241,441
|
|
||
Accumulated deficit
|
(193,496
|
)
|
|
(164,240
|
)
|
||
Treasury stock, at cost, 494,700 shares
|
(661
|
)
|
|
(661
|
)
|
||
Accumulated other comprehensive loss
|
(32
|
)
|
|
(30
|
)
|
||
Total stockholders’ equity
|
94,671
|
|
|
76,569
|
|
||
Total liabilities and stockholders’ equity
|
$
|
165,828
|
|
|
$
|
130,255
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
September 30,
|
|
September 30,
|
||||||||||||
|
2012
|
|
2011
|
|
2012
|
|
2011
|
||||||||
Revenue
|
$
|
26,696
|
|
|
$
|
22,302
|
|
|
$
|
76,725
|
|
|
$
|
60,025
|
|
Cost of goods sold
|
6,444
|
|
|
4,829
|
|
|
18,148
|
|
|
13,352
|
|
||||
Gross profit
|
20,252
|
|
|
17,473
|
|
|
58,577
|
|
|
46,673
|
|
||||
Operating expenses:
|
|
|
|
|
|
|
|
||||||||
Research and development
|
3,076
|
|
|
3,628
|
|
|
11,886
|
|
|
12,812
|
|
||||
Clinical and regulatory affairs
|
1,462
|
|
|
1,179
|
|
|
4,727
|
|
|
2,994
|
|
||||
Marketing and sales
|
12,705
|
|
|
12,331
|
|
|
38,923
|
|
|
33,201
|
|
||||
General and administrative
|
4,942
|
|
|
4,184
|
|
|
13,813
|
|
|
11,087
|
|
||||
Contract termination and business acquisition expenses
|
—
|
|
|
1,300
|
|
|
422
|
|
|
1,730
|
|
||||
Settlement costs
|
5,000
|
|
|
—
|
|
|
5,000
|
|
|
—
|
|
||||
Total operating expenses
|
27,185
|
|
|
22,622
|
|
|
74,771
|
|
|
61,824
|
|
||||
Loss from operations
|
(6,933
|
)
|
|
(5,149
|
)
|
|
(16,194
|
)
|
|
(15,151
|
)
|
||||
Other income (expense):
|
|
|
|
|
|
|
|
||||||||
Interest income
|
34
|
|
|
3
|
|
|
24
|
|
|
19
|
|
||||
Interest expense
|
—
|
|
|
(19
|
)
|
|
(3
|
)
|
|
(28
|
)
|
||||
Gain on sale of equipment
|
—
|
|
|
—
|
|
|
—
|
|
|
141
|
|
||||
Other expense, net
|
(101
|
)
|
|
(38
|
)
|
|
(86
|
)
|
|
(45
|
)
|
||||
Change in fair value of contingent consideration
related to acquisition
|
990
|
|
|
(1,400
|
)
|
|
(12,700
|
)
|
|
(10,000
|
)
|
||||
Total other income (expense)
|
923
|
|
|
(1,454
|
)
|
|
(12,765
|
)
|
|
(9,913
|
)
|
||||
Net loss before income tax expense
|
$
|
(6,010
|
)
|
|
$
|
(6,603
|
)
|
|
$
|
(28,959
|
)
|
|
$
|
(25,064
|
)
|
Income tax (expense) benefit
|
153
|
|
|
—
|
|
|
(297
|
)
|
|
—
|
|
||||
Net loss
|
$
|
(5,857
|
)
|
|
$
|
(6,603
|
)
|
|
$
|
(29,256
|
)
|
|
$
|
(25,064
|
)
|
Basic and diluted net loss per share
|
$
|
(0.10
|
)
|
|
$
|
(0.12
|
)
|
|
$
|
(0.49
|
)
|
|
$
|
(0.44
|
)
|
Shares used in computing basic and diluted net loss per share
|
61,327
|
|
|
56,961
|
|
|
59,224
|
|
|
56,365
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Comprehensive loss:
|
|
|
|
|
|
|
|
||||||||
Net loss
|
$
|
(5,857
|
)
|
|
$
|
(6,603
|
)
|
|
$
|
(29,256
|
)
|
|
$
|
(25,064
|
)
|
Foreign currency translation adjustment
|
(139
|
)
|
|
—
|
|
|
(32
|
)
|
|
—
|
|
||||
Comprehensive loss
|
$
|
(5,996
|
)
|
|
$
|
(6,603
|
)
|
|
$
|
(29,288
|
)
|
|
$
|
(25,064
|
)
|
|
Nine Months Ended
|
||||||
|
September 30,
|
||||||
|
2012
|
|
2011
|
||||
Cash flows from operating activities:
|
|
|
|
||||
Net loss
|
$
|
(29,256
|
)
|
|
$
|
(25,064
|
)
|
Adjustments to reconcile net loss to net cash used in operating activities:
|
|
|
|
||||
Depreciation and amortization
|
1,651
|
|
|
2,244
|
|
||
Stock-based compensation
|
3,522
|
|
|
3,164
|
|
||
Change in fair value of contingent consideration related to acquisition
|
12,700
|
|
|
10,000
|
|
||
Loss on sale of equipment
|
—
|
|
|
(141
|
)
|
||
Changes in operating assets and liabilities:
|
|
|
|
||||
Accounts receivable
|
(4,074
|
)
|
|
(4,055
|
)
|
||
Other receivables
|
103
|
|
|
407
|
|
||
Inventories
|
(957
|
)
|
|
(7,126
|
)
|
||
Prepaid expenses and other current assets
|
(582
|
)
|
|
(668
|
)
|
||
Accounts payable
|
(1,983
|
)
|
|
699
|
|
||
Accrued payroll
|
407
|
|
|
1,929
|
|
||
Accrued expenses and other current liabilities
|
1,262
|
|
|
1,058
|
|
||
Settlement cost
|
5,000
|
|
|
—
|
|
||
Deferred revenue
|
(8
|
)
|
|
—
|
|
||
Net cash used in operating activities
|
(12,215
|
)
|
|
(17,553
|
)
|
||
Cash flows from investing activities:
|
|
|
|
||||
Purchases of property and equipment
|
(1,408
|
)
|
|
(1,801
|
)
|
||
Purchases of patent license
|
(100
|
)
|
|
—
|
|
||
Business acquisition
|
(2,367
|
)
|
|
—
|
|
||
Net cash used in investing activities
|
(3,875
|
)
|
|
(1,801
|
)
|
||
Cash flows from financing activities:
|
|
|
|
||||
Proceeds from sale of common stock under secondary offering, net of expenses
|
40,069
|
|
|
—
|
|
||
Proceeds from sale of common stock under employee stock purchase plan
|
1,409
|
|
|
1,053
|
|
||
Proceeds from exercise of stock options
|
2,355
|
|
|
4,044
|
|
||
Repayments of long-term debt
|
—
|
|
|
(62
|
)
|
||
Net cash provided by financing activities
|
43,833
|
|
|
5,035
|
|
||
Effect of exchange rate changes on cash and cash equivalents
|
(38
|
)
|
|
—
|
|
||
Net increase (decrease) in cash and cash equivalents
|
27,705
|
|
|
(14,319
|
)
|
||
Cash and cash equivalents, beginning of period
|
20,035
|
|
|
38,191
|
|
||
Cash and cash equivalents, end of period
|
$
|
47,740
|
|
|
$
|
23,872
|
|
(a)
|
Description of Business
|
|
Useful Life
|
Office furniture, computer hardware, computer software, and production equipment
|
Three to eight years
|
Leasehold improvements
|
Shorter of useful life or remaining term of lease (with expected extensions)
|
|
Useful Life
|
Goodwill
|
Indefinite lived
|
In-process research and development
|
Indefinite lived until commercial launch of underlying technology, then amortized over its then remaining useful life on a pro-rata basis
|
Developed technology
|
Ten years, amortized on a straight-line basis
|
Patents
|
Five years, amortized on a straight-line basis
|
Customer list
|
Three years, amortized on a pro-rata basis
|
•
|
The sales price for the ELG System (including device extensions and accessories) is established with the customer;
|
•
|
The ELG System has been used in an EVAR procedure, or the distributor has assumed title; and
|
|
|
|
|
||||||||||||
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
September 30,
|
|
September 30,
|
||||||||||||
|
2012
|
|
2011
|
|
2012
|
|
2011
|
||||||||
Cost of goods sold
|
$
|
183
|
|
|
$
|
141
|
|
|
$
|
387
|
|
|
$
|
181
|
|
Operating expenses:
|
|
|
|
|
|
|
|
||||||||
Research and development
|
165
|
|
|
238
|
|
|
498
|
|
|
653
|
|
||||
Clinical and regulatory affairs
|
67
|
|
|
37
|
|
|
145
|
|
|
98
|
|
||||
Marketing and sales
|
361
|
|
|
269
|
|
|
1,041
|
|
|
1,120
|
|
||||
General and administrative
|
389
|
|
|
595
|
|
|
1,451
|
|
|
1,112
|
|
||||
Total operating expenses
|
$
|
982
|
|
|
$
|
1,139
|
|
|
$
|
3,135
|
|
|
$
|
2,983
|
|
|
|
|
|
|
|
|
|
||||||||
Total
|
$
|
1,165
|
|
|
$
|
1,280
|
|
|
$
|
3,522
|
|
|
$
|
3,164
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
September 30,
|
|
September 30,
|
||||||||||||
|
2012
|
|
2011
|
|
2012
|
|
2011
|
||||||||
Net loss
|
$
|
(5,857
|
)
|
|
$
|
(6,603
|
)
|
|
$
|
(29,256
|
)
|
|
$
|
(25,064
|
)
|
Weighted average shares
|
61,327
|
|
|
56,961
|
|
|
59,224
|
|
|
56,365
|
|
||||
Net loss per share - basic and diluted
|
$
|
(0.10
|
)
|
|
$
|
(0.12
|
)
|
|
$
|
(0.49
|
)
|
|
$
|
(0.44
|
)
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||
|
September 30,
|
|
September 30,
|
||||||||
|
2012
|
|
2011
|
|
2012
|
|
2011
|
||||
Common stock options
|
3,484
|
|
|
13
|
|
|
3,679
|
|
|
429
|
|
Restricted stock awards
|
487
|
|
|
640
|
|
|
487
|
|
|
640
|
|
Restricted stock units
|
419
|
|
|
—
|
|
|
419
|
|
|
—
|
|
Total
|
4,390
|
|
|
653
|
|
|
4,585
|
|
|
1,069
|
|
|
September 30,
2012 |
|
December 31,
2011 |
||||
Raw materials
|
$
|
4,741
|
|
|
$
|
3,260
|
|
Work-in-process
|
5,182
|
|
|
4,617
|
|
||
Finished goods
|
9,138
|
|
|
10,222
|
|
||
Inventories
|
$
|
19,061
|
|
|
$
|
18,099
|
|
|
September 30,
2012 |
|
December 31,
2011 |
||||
Goodwill
|
$
|
28,969
|
|
|
$
|
27,073
|
|
|
|
|
|
||||
Intangible assets:
|
|
|
|
||||
Indefinite lived intangibles
|
|
|
|
||||
In-process research and development (
a
)
|
$
|
40,100
|
|
|
$
|
40,100
|
|
Trademarks and trade names
|
2,708
|
|
|
2,708
|
|
||
Total indefinite lived intangibles
|
$
|
42,808
|
|
|
$
|
42,808
|
|
|
|
|
|
||||
Finite lived intangibles
|
|
|
|
||||
Developed technology
|
$
|
—
|
|
|
$
|
14,050
|
|
Accumulated amortization
|
—
|
|
|
(13,465
|
)
|
||
Developed technology, net
|
$
|
—
|
|
|
$
|
585
|
|
|
|
|
|
||||
Patent
|
$
|
200
|
|
|
$
|
100
|
|
Accumulated amortization
|
(75
|
)
|
|
(54
|
)
|
||
Patent, net
|
$
|
125
|
|
|
$
|
46
|
|
|
|
|
|
||||
Customer list
|
$
|
508
|
|
|
$
|
—
|
|
Accumulated amortization
|
(42
|
)
|
|
—
|
|
||
Customer list, net
|
$
|
466
|
|
|
$
|
—
|
|
|
|
|
|
||||
Intangible assets (excluding goodwill), net
|
$
|
43,399
|
|
|
$
|
43,439
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
September 30,
|
|
September 30,
|
||||||||||||
|
2012
|
|
2011
|
|
2012
|
|
2011
|
||||||||
Amortization expense
|
$
|
52
|
|
|
$
|
356
|
|
|
$
|
648
|
|
|
$
|
1,069
|
|
|
Amortization Expense
|
||
Remainder of 2012
|
$
|
54
|
|
2013
|
268
|
|
|
2014
|
392
|
|
|
2015 and thereafter
|
39,977
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
September 30,
|
|
September 30,
|
||||||||||||
|
2012
|
|
2011
|
|
2012
|
|
2011
|
||||||||
United States
|
$
|
21,289
|
|
|
$
|
20,320
|
|
|
$
|
63,695
|
|
|
$
|
52,280
|
|
|
|
|
|
|
|
|
|
||||||||
Europe:
|
|
|
|
|
|
|
|
||||||||
Direct
|
$
|
1,692
|
|
|
$
|
—
|
|
|
$
|
4,071
|
|
|
$
|
—
|
|
Distributor
|
431
|
|
|
640
|
|
|
1,612
|
|
|
2,703
|
|
||||
Total Europe
|
$
|
2,123
|
|
|
$
|
640
|
|
|
$
|
5,683
|
|
|
$
|
2,703
|
|
|
|
|
|
|
|
|
|
||||||||
Rest of World ("ROW"):
|
|
|
|
|
|
|
|
||||||||
Latin America
|
$
|
1,670
|
|
|
$
|
354
|
|
|
$
|
3,785
|
|
|
$
|
3,190
|
|
Asia/Pacific
|
1,614
|
|
|
988
|
|
|
3,562
|
|
|
1,852
|
|
||||
Total ROW
|
$
|
3,284
|
|
|
$
|
1,342
|
|
|
$
|
7,347
|
|
|
$
|
5,042
|
|
|
|
|
|
|
|
|
|
||||||||
Revenue
|
$
|
26,696
|
|
|
$
|
22,302
|
|
|
$
|
76,725
|
|
|
$
|
60,025
|
|
Remaining 2012
|
$
|
143
|
|
2013
|
656
|
|
|
2014
|
474
|
|
|
2015 and thereafter
|
—
|
|
|
|
$
|
1,273
|
|
|
Fair Value of Contingently Issuable Common Stock
|
||
December 31, 2011
|
$
|
38,700
|
|
Fair value adjustment of Contingent Payment for nine months ended September 30, 2012
|
12,700
|
|
|
September 30, 2012
|
$
|
51,400
|
|
Identifiable intangible assets (customer list)
|
$
|
500
|
|
Total identifiable net assets
|
500
|
|
|
Goodwill
|
1,867
|
|
|
Total purchase price allocation
|
$
|
2,367
|
|
|
(Pro Forma)
|
||||||
|
Three Months Ended September 30,
|
||||||
|
2012
|
|
2011
|
||||
Revenue
|
$
|
26,696
|
|
|
$
|
22,378
|
|
Cost of goods sold
|
6,444
|
|
|
4,829
|
|
||
Total operating expenses
|
27,185
|
|
|
22,770
|
|
||
Net loss
|
(5,857
|
)
|
|
(6,676
|
)
|
||
Net loss per share - basic and diluted
|
(0.10
|
)
|
|
(0.12
|
)
|
||
|
(Pro Forma)
|
||||||
|
Nine Months Ended September 30,
|
||||||
|
2012
|
|
2011
|
||||
Revenue
|
$
|
76,910
|
|
|
$
|
60,346
|
|
Cost of goods sold
|
18,148
|
|
|
13,352
|
|
||
Total operating expenses
|
74,647
|
|
|
62,271
|
|
||
Net loss
|
(28,947
|
)
|
|
(25,190
|
)
|
||
Net loss per share - basic and diluted
|
(0.49
|
)
|
|
(0.45
|
)
|
Item 2.
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
•
|
Focusing exclusively on the aorta for the commercialization of innovative medical devices.
|
•
|
Designing and manufacturing devices that are easy to use and result in excellent clinical outcomes.
|
•
|
Providing excellent clinical and technical support to physicians through an experienced and knowledgeable sales and marketing organization.
|
•
|
Anatomical Fixation
. Our ELG Device is unique in that it sits on the patient's natural aortoiliac bifurcation. This provides a solid foundation for the long-term stability of the device. Alternative ELG devices rely on hooks, barbs and radial force to anchor into the aorta (generally referred to as "proximal fixation") near the renal arteries. We believe anatomical fixation inhibits migration due to the inherent foundational support from the patient's anatomy, as opposed to proximal fixation.
|
•
|
Fully Supported
. The main body and limbs of our ELG Device are fully supported by a cobalt chromium alloy stent. The cobalt chromium alloy stent greatly reduces the risk of kinking of the device, even in
|
•
|
Unique, Minimally Invasive Delivery System
. In the majority of procedures, our ELG System requires only a small surgical incision in one leg. The other leg needs only percutaneous placement of an introducer sheath, three millimeters in diameter. Our competitors' ELG systems typically require surgical exposure of the femoral artery in both legs to introduce the multiple components.
|
•
|
Preserves Aortic Bifurcation.
Our ELG Device allows for future endovascular procedures when continued access across the aortic bifurcation is required. Approximately 30% of AAA patients also have peripheral arterial disease (“PAD”). The preferred endovascular approach to treat a patient with PAD is to access from one side of the groin and to cross over the aortic bifurcation to treat the lesion on the other side. Our ELG Device is the only device presently available that preserves the physician's ability to go back over the aortic bifurcation for future interventions. This is a meaningful feature of our ELG System, as many AAA patients are living longer and having more procedures for PAD.
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||||||||||||||
|
2012
|
|
2011
|
|
2012
|
|
2011
|
||||||||||||||||||||
Revenue
|
$
|
26,696
|
|
|
100.0
|
%
|
|
$
|
22,302
|
|
|
100.0
|
%
|
|
$
|
76,725
|
|
|
100.0
|
%
|
|
$
|
60,025
|
|
|
100.0
|
%
|
Cost of goods sold
|
6,444
|
|
|
24.1
|
%
|
|
4,829
|
|
|
21.7
|
%
|
|
18,148
|
|
|
23.7
|
%
|
|
13,352
|
|
|
22.2
|
%
|
||||
Gross profit
|
20,252
|
|
|
75.9
|
%
|
|
17,473
|
|
|
78.3
|
%
|
|
58,577
|
|
|
76.3
|
%
|
|
46,673
|
|
|
77.8
|
%
|
||||
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Research and development
|
3,076
|
|
|
11.5
|
%
|
|
3,628
|
|
|
16.3
|
%
|
|
11,886
|
|
|
15.5
|
%
|
|
12,812
|
|
|
21.3
|
%
|
||||
Clinical and regulatory affairs
|
1,462
|
|
|
5.5
|
%
|
|
1,179
|
|
|
5.3
|
%
|
|
4,727
|
|
|
6.2
|
%
|
|
2,994
|
|
|
5.0
|
%
|
||||
Marketing and sales
|
12,705
|
|
|
47.6
|
%
|
|
12,331
|
|
|
55.3
|
%
|
|
38,923
|
|
|
50.7
|
%
|
|
33,201
|
|
|
55.3
|
%
|
||||
General and administrative
|
4,942
|
|
|
18.5
|
%
|
|
4,184
|
|
|
18.8
|
%
|
|
13,813
|
|
|
18.0
|
%
|
|
11,087
|
|
|
18.5
|
%
|
||||
Contract termination and business acquisition expenses
|
—
|
|
|
—
|
%
|
|
1,300
|
|
|
5.8
|
%
|
|
422
|
|
|
0.6
|
%
|
|
1,730
|
|
|
2.9
|
%
|
||||
Settlement costs
|
5,000
|
|
|
18.7
|
%
|
|
—
|
|
|
—
|
%
|
|
5,000
|
|
|
6.5
|
%
|
|
—
|
|
|
—
|
%
|
||||
Total operating expenses
|
27,185
|
|
|
101.8
|
%
|
|
22,622
|
|
|
101.4
|
%
|
|
74,771
|
|
|
97.5
|
%
|
|
61,824
|
|
|
103.0
|
%
|
||||
Loss from operations
|
(6,933
|
)
|
|
(26.0
|
)%
|
|
(5,149
|
)
|
|
(23.1
|
)%
|
|
(16,194
|
)
|
|
(21.1
|
)%
|
|
(15,151
|
)
|
|
(25.2
|
)%
|
||||
Total other income (expense)
|
923
|
|
|
3.5
|
%
|
|
(1,454
|
)
|
|
(6.5
|
)%
|
|
(12,765
|
)
|
|
(16.6
|
)%
|
|
(9,913
|
)
|
|
(16.5
|
)%
|
||||
Net loss before income tax expense
|
(6,010
|
)
|
|
(22.5
|
)%
|
|
(6,603
|
)
|
|
(29.6
|
)%
|
|
(28,959
|
)
|
|
(37.7
|
)%
|
|
(25,064
|
)
|
|
(41.8
|
)%
|
||||
Income tax (expense) benefit
|
153
|
|
|
0.6
|
%
|
|
—
|
|
|
—
|
%
|
|
(297
|
)
|
|
(0.4
|
)%
|
|
—
|
|
|
—
|
%
|
||||
Net loss
|
$
|
(5,857
|
)
|
|
(21.9
|
)%
|
|
$
|
(6,603
|
)
|
|
(29.6
|
)%
|
|
$
|
(29,256
|
)
|
|
(38.1
|
)%
|
|
$
|
(25,064
|
)
|
|
(41.8
|
)%
|
|
|
Three Months Ended September 30,
|
|
|
|
|
|||||||||
|
|
2012
|
|
2011
|
|
Variance
|
|
Percent Change
|
|||||||
|
|
(in thousands)
|
|
|
|
|
|||||||||
Revenue
|
|
$
|
26,696
|
|
|
$
|
22,302
|
|
|
$
|
4,394
|
|
|
19.7
|
%
|
|
|
Three Months Ended September 30,
|
|
|
|
|
|||||||||
|
|
2012
|
|
2011
|
|
Variance
|
|
Percent Change
|
|||||||
|
|
(in thousands)
|
|
|
|
|
|||||||||
Cost of goods sold
|
|
$
|
6,444
|
|
|
$
|
4,829
|
|
|
$
|
1,615
|
|
|
33.4
|
%
|
Gross profit
|
|
20,252
|
|
|
17,473
|
|
|
2,779
|
|
|
15.9
|
%
|
|||
Gross margin percentage (
gross profit as a percent of revenue
)
|
|
75.9
|
%
|
|
78.3
|
%
|
|
(2.4
|
)%
|
|
|
|
|
Three Months Ended September 30,
|
|
|
|
|
|||||||||
|
|
2012
|
|
2011
|
|
Variance
|
|
Percent Change
|
|||||||
|
|
(in thousands)
|
|
|
|
|
|||||||||
Research and development
|
|
$
|
3,076
|
|
|
$
|
3,628
|
|
|
$
|
(552
|
)
|
|
(15.2
|
)%
|
Clinical and regulatory affairs
|
|
1,462
|
|
|
1,179
|
|
|
283
|
|
|
24.0
|
%
|
|||
Marketing and sales
|
|
12,705
|
|
|
12,331
|
|
|
374
|
|
|
3.0
|
%
|
|||
General and administrative
|
|
4,942
|
|
|
4,184
|
|
|
758
|
|
|
18.1
|
%
|
|||
Contract termination and business acquisition expenses
|
|
—
|
|
|
1,300
|
|
|
(1,300
|
)
|
|
(100.0
|
)%
|
|||
Settlement costs
|
|
5,000
|
|
|
—
|
|
|
5,000
|
|
|
100.0
|
%
|
|
|
Three Months Ended September 30,
|
|
|
||||||||
|
|
2012
|
|
2011
|
|
Variance
|
||||||
|
|
(in thousands)
|
|
|
||||||||
Income tax benefit
|
|
$
|
153
|
|
|
$
|
—
|
|
|
$
|
153
|
|
|
|
Nine Months Ended September 30,
|
|
|
|
|
|||||||||
|
|
2012
|
|
2011
|
|
Variance
|
|
Percent Change
|
|||||||
|
|
(in thousands)
|
|
|
|
|
|||||||||
Revenue
|
|
$
|
76,725
|
|
|
$
|
60,025
|
|
|
$
|
16,700
|
|
|
27.8
|
%
|
|
|
Nine Months Ended September 30,
|
|
|
|
|
|||||||||
|
|
2012
|
|
2011
|
|
Variance
|
|
Percent Change
|
|||||||
|
|
(in thousands)
|
|
|
|
|
|||||||||
Cost of goods sold
|
|
$
|
18,148
|
|
|
$
|
13,352
|
|
|
$
|
4,796
|
|
|
35.9
|
%
|
Gross profit
|
|
58,577
|
|
|
46,673
|
|
|
11,904
|
|
|
25.5
|
%
|
|||
Gross margin percentage (
gross profit as a percent of revenue
)
|
|
76.3
|
%
|
|
77.8
|
%
|
|
(1.5
|
)%
|
|
|
|
|
Nine Months Ended September 30,
|
|
|
|
|
|||||||||
|
|
2012
|
|
2011
|
|
Variance
|
|
Percent Change
|
|||||||
|
|
(in thousands)
|
|
|
|
|
|||||||||
Research and development
|
|
$
|
11,886
|
|
|
$
|
12,812
|
|
|
$
|
(926
|
)
|
|
(7.2
|
)%
|
Clinical and regulatory affairs
|
|
4,727
|
|
|
2,994
|
|
|
1,733
|
|
|
57.9
|
%
|
|||
Marketing and sales
|
|
38,923
|
|
|
33,201
|
|
|
5,722
|
|
|
17.2
|
%
|
|||
General and administrative
|
|
13,813
|
|
|
11,087
|
|
|
2,726
|
|
|
24.6
|
%
|
|||
Contract termination and business acquisition expenses
|
|
422
|
|
|
1,730
|
|
|
(1,308
|
)
|
|
(75.6
|
)%
|
|||
Settlement costs
|
|
5,000
|
|
|
—
|
|
|
5,000
|
|
|
100.0
|
%
|
|
|
Nine Months Ended September 30,
|
|
|
||||||||
|
|
2012
|
|
2011
|
|
Variance
|
||||||
|
|
(in thousands)
|
|
|
||||||||
Income tax expense
|
|
$
|
297
|
|
|
$
|
—
|
|
|
$
|
297
|
|
|
September 30, 2012
|
|
December 31, 2011
|
|
September 30, 2011
|
||||||
|
(in thousands, except financial metrics data)
|
||||||||||
Cash and cash equivalents
|
$
|
47,740
|
|
|
$
|
20,035
|
|
|
$
|
23,872
|
|
Accounts receivable, net
|
$
|
19,616
|
|
|
$
|
15,542
|
|
|
$
|
16,267
|
|
Total current liabilities
|
$
|
18,728
|
|
|
$
|
13,949
|
|
|
$
|
15,127
|
|
Working capital surplus (a)
|
$
|
69,570
|
|
|
$
|
41,155
|
|
|
$
|
41,930
|
|
Days sales outstanding ("DSO") (b)
|
68
|
|
|
68
|
|
|
67
|
|
|||
Current ratio (c)
|
4.71
|
|
|
3.95
|
|
|
3.77
|
|
•
|
the need for working capital to support our sales growth;
|
•
|
the need for additional capital to fund future development programs;
|
•
|
the need for additional capital to fund our sales force expansion;
|
•
|
the need for additional capital to fund strategic acquisitions;
|
•
|
our requirements for additional facility space or manufacturing capacity;
|
•
|
our requirements for additional information technology infrastructure and systems; and
|
•
|
adverse outcomes from potential litigation and the cost to defend such litigation.
|
Item 3.
|
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
|
Item 4.
|
CONTROLS AND PROCEDURES.
|
Item 1.
|
LEGAL PROCEEDINGS.
|
Item 6.
|
EXHIBIT INDEX.
|
|
ENDOLOGIX, INC.
|
|
|
October 31, 2012
|
/s/ John McDermott
|
|
President and Chief Executive Officer
|
|
|
|
|
October 31, 2012
|
/s/ Robert J. Krist
|
|
Chief Financial Officer and Secretary
|
|
|
Name of Grantee:
|
|
Total Number of Stock Units Granted:
|
|
Grant Date:
|
|
Name of Grantee:
|
|
Total Number of Stock Units Granted:
|
|
Grant Date:
|
|
THE COMPANY:
ENDOLOGIX, INC.
By:
Name:
Title:
|
GRANTEE:
|
|
Address:
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Endologix, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
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3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
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4.
|
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and we have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external reporting purposes in accordance with generally accepted accounting principals;
|
c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
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5.
|
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
October 31, 2012
|
By:
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/s/ John McDermott
|
|
|
John McDermott
|
|
|
President and Chief Executive Officer
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Endologix, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and we have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external reporting purposes in accordance with generally accepted accounting principals;
|
c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
October 31, 2012
|
By:
|
/s/ Robert J. Krist
|
|
|
Robert J. Krist
|
|
|
Chief Financial Officer
|
(1)
|
The Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2012 (the “Quarterly Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m(a) or 780(d)); and
|
(2)
|
The information contained in the Quarterly Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
October 31, 2012
|
By:
|
/s/ John McDermott
|
|
|
John McDermott
|
|
|
President and Chief Executive Officer
|
(1)
|
The Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2012 (the “Quarterly Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m(a) or 780(d)); and
|
(2)
|
The information contained in the Quarterly Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
October 31, 2012
|
By:
|
/s/ Robert J. Krist
|
|
|
Robert J. Krist
|
|
|
Chief Financial Officer
|