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x
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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o
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Delaware
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68-0328265
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(State or other jurisdiction of
incorporation or organization)
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(IRS Employer
Identification No.)
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Title of each class
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Name of each exchange on which registered
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Common Stock, $0.001 par value
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The NASDAQ Stock Market, LLC
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Large accelerated filer
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x
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Accelerated filer
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o
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Non-accelerated filer
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o
(Do not check if a smaller reporting company)
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Smaller reporting company
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o
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Item
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Description
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Page
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PART I
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1.
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Business
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1A.
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||
1B.
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||
2.
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3.
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||
4.
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Mine Safety Disclosures
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PART II
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5.
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Market for Endologix's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
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6.
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7.
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7A.
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||
8.
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9.
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9A.
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9B.
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Other Information
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PART III
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10.
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11.
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12.
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13.
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14.
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PART IV
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15.
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Signatures
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•
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continued market acceptance of our endovascular systems;
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•
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our ability to successfully commercialize products which incorporate the technology obtained as part of the Nellix acquisition;
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•
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the level and availability of third party payor reimbursement for our products;
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•
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our ability to effectively manage our business and keep pace with our anticipated revenue growth;
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•
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our ability to protect our intellectual property rights and proprietary technologies;
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•
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our ability to operate our business without infringing the intellectual property rights and proprietary technology of third parties;
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our ability to effectively develop new or complementary technologies;
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•
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our ability to attract, retain, and motivate qualified personnel;
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•
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our ability to manufacture our endovascular systems to meet demand;
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the nature of regulatory requirements that apply to us, our suppliers, and competitors, and our ability to obtain and maintain any required regulatory approvals;
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•
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our ability to maintain adequate liquidity to fund our operational needs;
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our ability to effectively compete with the products offered by our competitors;
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general macroeconomic and world-wide business conditions; and
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other risks set forth under “Risk Factors” in Item 1A of this Annual Report on Form 10-K.
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Item 1.
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Business
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•
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The 30-day mortality rate of all patients in the study undergoing EVAR was approximately 1.2%, as compared to 4.8% for open surgical repair.
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•
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Patients treated by EVAR were three times as likely to be discharged to their homes rather than another rehabilitation facility as compared to patients treated with open repair.
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The average hospital stay for patients in the study undergoing EVAR was 3.4 days versus 9.3 days for patients undergoing open surgical repair.
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Focus exclusively on the aorta for the commercialization of innovative products.
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Design and manufacture ELG Systems that are easy to use and result in excellent clinical outcomes.
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Provide exceptional clinical and technical support to physicians through an experienced and knowledgeable sales and marketing organization.
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Anatomical Fixation
. Our ELG Device is unique in that the main body of the device 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 within the aorta (generally referred to as "proximal fixation") near the renal arteries. We have proven in our clinical studies that anatomical fixation inhibits device migration within the aorta due to the inherent foundational support of the patients own anatomy.
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•
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Unique, Minimally Invasive Delivery System
. In the majority of procedures, our ELG System requires only a small incision in one leg. The other leg needs only percutaneous placement of a non-surgical introducer sheath, three millimeters in diameter. With the expected FDA approval of our totally percutaneous EVAR in the first half of 2013 (see "PEVAR" section below), we will have the only FDA approval for a label for this advantageous treatment option. Our competitors' ELG systems typically require surgical exposure of the femoral artery in both legs to introduce multiple device components.
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•
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Preserves Aortic Bifurcation.
Our ELG Device allows for future endovascular procedures when continued access across the aortic bifurcation is required. Approximately 30% to 40% of AAA patients also have peripheral arterial disease (“PAD”). Our ELG Device is the only one 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 today living longer and returning to the hospital for PAD procedures.
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•
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clinical effectiveness;
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•
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product safety, reliability, and durability;
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•
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ease of use;
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sales force experience and relationships; and
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price.
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The trial primary endpoint was met, definitively demonstrating the non-inferiority of PEVAR using the accompanying closure device to surgical access EVAR.
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A 94% procedural technical success rate was achieved in a multicenter setting.
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Mean procedure time was reduced in PEVAR patients by 34 minutes. Likewise, mean procedure time to femoral artery hemostasis was reduced following PEVAR by 13 minutes.
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•
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PEVAR patients required significantly fewer concomitant procedures.
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Favorable trending of PEVAR was observed in several clinical utility outcomes including reduced anesthesia time, reduced blood loss and need for transfusion, shorter hospital length of stay, and less analgesics prescribed for groin pain.
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The PEVAR non-inferiority to surgical access EVAR in terms of the procedure success persisted through the final six-month follow-up.
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a)
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The healthcare fraud statute prohibits knowingly and willfully executing a scheme to defraud any healthcare benefit program, including private payors. A violation of this statute is a felony and may result in fines, imprisonment, and/or exclusion from government sponsored programs.
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b)
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The false statements statute prohibits knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false, fictitious, or fraudulent statement in connection with the delivery of or payment for healthcare benefits, items or services. A violation of this statute is a felony and may result in fines or imprisonment.
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c)
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Standards govern the conduct of certain electronic transmission of health care information and to protect the security and privacy of individually identifiable health information maintained or transmitted by health care providers, health plans, and health care clearinghouses. These standards include: (i) Standards for Electronic Transactions and (ii) Standards for Privacy and Security of Individually Identifiable Information.
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i)
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The Standards for Electronic Transactions establishes standards for common health care transactions such as claims information, plan eligibility, and payment information. It also establishes standards for the use of electronic signatures, unique identifiers for providers, employers, health plans, and individuals.
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ii)
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The Standards for Privacy of Individually Identifiable Information restrict our use and disclosure of certain individually identifiable health information. The HIPAA privacy and security regulations establish a uniform federal “floor” and do not supersede state laws that are more stringent or provide individuals with greater rights with respect to the privacy or security of, and access to, their records containing patient/private health information (“PHI”). As a result, we are required to comply with both HIPAA privacy regulations and varying state privacy and security laws, which include physical and electronic safeguard requirements. These laws contain significant fines and other penalties for wrongful use or disclosure of PHI.
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Item 1A.
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Risk Factors
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•
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greater financial and human resources for product development, sales and marketing and patent litigation;
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greater name recognition;
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long established relationships with physicians, customers, and third-party payors;
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additional lines of products, and the ability to offer rebates or bundle products to offer greater discounts or incentives;
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more established sales and marketing programs, and distribution networks; and
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greater experience in conducting research and development, manufacturing, clinical trials, preparing regulatory submissions, and obtaining regulatory clearance or approval for products and marketing approved products.
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the results of future clinical trials of the Nellix System.
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the receipt of further CE Mark approvals of enhanced versions of the Nellix System from our European Union notified body;
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the receipt of approval from the FDA to sell the Nellix System in the U.S.;
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obtaining and maintaining patent rights relating to the Nellix technology; and
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further developing an effective direct sales and marketing organization in Europe.
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difficulties in enforcing or defending intellectual property rights;
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pricing pressure that we may experience internationally;
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a shortage of high-quality sales people and distributors;
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changes in third-party reimbursement policies that may require some of the patients who receive our products to directly absorb medical costs or that may necessitate the reduction of the selling prices of our products;
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the imposition of additional U.S. and foreign governmental controls or regulations;
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economic instability;
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changes in duties and tariffs, license obligations and other non-tariff barriers to trade;
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the imposition of restrictions on the activities of foreign agents, representatives and distributors;
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scrutiny of foreign tax authorities which could result in significant fines, penalties and additional taxes being imposed on us;
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laws and business practices favoring local companies;
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longer payment cycles;
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foreign currency translation adjustments;
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difficulties in maintaining consistency with our internal guidelines;
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difficulties in enforcing agreements and collecting receivables through certain foreign legal systems;
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the imposition of costly and lengthy new export licensing requirements;
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the imposition of U.S. or international sanctions against a country, company, person or entity with whom we do business that would restrict or prohibit continued business with the sanctioned country, company, person or entity; and
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the imposition of new trade restrictions.
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the FDA, institutional review boards or other regulatory authorities do not approve a clinical study protocol, force us to modify a previously approved protocol, or place a clinical study on hold;
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patients do not enroll in, or enroll at the expected rate, or complete a clinical study;
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•
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patients or investigators do not comply with study protocols;
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•
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patients do not return for post-treatment follow-up at the expected rate;
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patients experience serious or unexpected adverse side effects for a variety of reasons that may or may not be related to our products such as the advanced stage of co-morbidities that may exist at the time of treatment, causing a clinical study to be put on hold;
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•
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sites participating in an ongoing clinical study may withdraw, requiring us to engage new sites;
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difficulties or delays associated with establishing additional clinical sites;
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•
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third-party clinical investigators decline to participate in our clinical studies, do not perform the clinical studies on the anticipated schedule, or are inconsistent with the investigator agreement, clinical study protocol, good clinical practices, and other FDA and Institutional Review Board requirements;
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third-party organizations do not perform data collection and analysis in a timely or accurate manner;
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•
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regulatory inspections of our clinical studies require us to undertake corrective action or suspend or terminate our clinical studies;
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•
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changes in federal, state, or foreign governmental statutes, regulations or policies;
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•
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interim results are inconclusive or unfavorable as to immediate and long-term safety or efficacy; or
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•
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the study design is inadequate to demonstrate safety and efficacy; or
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•
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do not meet the study endpoints.
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•
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failure of our supplier to comply with regulatory requirements;
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•
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any strike or work stoppage;
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•
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disruptions in shipping;
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•
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a natural disaster caused by fire, flood or earthquakes; or
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•
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a supply shortage experienced by our single source supplier.
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•
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we may fail to secure necessary patents prior to or after obtaining regulatory clearances, thereby permitting competitors to market competing products; and
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•
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our already-granted patents may be re-examined, re-issued or invalidated.
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stop selling, making, or using products that use the disputed intellectual property;
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obtain a license from the intellectual property owner to continue selling, making, licensing, or using products, which license may not be available on reasonable terms, or at all;
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•
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redesign our products, processes or services; or
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•
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subject us to significant liabilities to third parties.
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•
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John McDermott, our Chief Executive Officer and Chairman of our Board of Directors;
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•
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Todd Abraham, our Vice President of Operations;
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•
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Robert D. Mitchell, our President of International; and
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•
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Stefan G. Schreck, Ph.D., our Vice President of Technology
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•
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the possibility that we will pay more than the value we derive from the acquisition, which could result in future non-cash impairment charges;
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•
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difficulties in integration of the operations, technologies, and products of the acquired companies, which may require significant attention of our management that otherwise would be available for the ongoing development of our business;
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•
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the assumption of certain known and unknown liabilities of the acquired companies; and
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•
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difficulties in retaining key relationships with employees, customers, partners, and suppliers of the acquired company.
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the results of our commercialization efforts for our existing and future products;
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•
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the need for additional capital to fund future development programs;
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•
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the costs involved in obtaining and enforcing patents or any litigation by third parties regarding intellectual property;
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•
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the establishment of high volume manufacturing and increased sales and marketing capabilities; and
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•
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our success in entering into collaborative relationships with other parties.
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•
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properly identify and anticipate physicians and patient needs;
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•
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develop and introduce new products or product enhancements in a timely manner;
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•
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avoid infringing upon the intellectual property rights of third parties;
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•
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demonstrate, if required, the safety and efficacy of new products with data from preclinical studies and clinical trials;
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•
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obtain the necessary regulatory clearances or approvals for new products or product enhancements;
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be fully FDA-compliant with marketing of new devices or modified products;
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•
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provide adequate training to potential users of our products;
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•
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receive adequate coverage and reimbursement for procedures performed with our products; and
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•
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develop an effective and FDA-compliant, dedicated marketing and distribution network.
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•
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FDA Regulations (Title 21 CFR);
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•
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European Union CE mark requirements;
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•
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Medical Device Quality Management System Requirements (ISO 13485:2003);
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•
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Occupational Safety and Health Administration requirements; and
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•
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California Department of Health Services requirements.
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•
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physician acceptance of our products;
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•
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the conduct and results of clinical trials;
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•
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the timing and expense of obtaining future regulatory approvals;
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•
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fluctuations in our expenses associated with expanding our operations;
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•
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the introduction of new products by our competitors;
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•
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supplier, manufacturing or quality problems with our devices;
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•
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the timing of stocking orders from our distributors;
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•
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changes in our pricing policies or in the pricing policies of our competitors or suppliers; and
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•
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changes in third-party payors' reimbursement policies.
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•
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announcements by us or our competitors concerning technological innovations;
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•
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introductions of new products;
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•
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FDA and foreign regulatory actions;
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•
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developments or disputes relating to patents or proprietary rights;
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•
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failure of our results of operations to meet the expectations of stock market analysts and investors;
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•
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changes in stock market analyst recommendations regarding our common stock;
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•
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changes in healthcare policy in the U.S. or other countries; and
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•
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general stock market conditions and other factors unrelated to our operating performance.
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Item 1B.
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Unresolved Staff Comments
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Item 2.
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Properties
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Item 5.
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Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity
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|
High
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Low
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||||
Year Ended December 31, 2011:
|
|
|
|
||||
First Quarter
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$
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7.26
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$
|
5.50
|
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Second Quarter
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9.30
|
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6.72
|
|
||
Third Quarter
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11.17
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7.64
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|
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Fourth Quarter
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11.95
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10.00
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Year Ended December 31, 2012:
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|
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||||
First Quarter
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$
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14.65
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$
|
11.31
|
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Second Quarter
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15.44
|
|
|
13.23
|
|
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Third Quarter
|
15.51
|
|
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11.15
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|
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Fourth Quarter
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14.66
|
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12.11
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|
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Year Ended December 31,
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||||||||||||||||||
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2012
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2011
|
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2010
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2009
|
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2008
|
||||||||||
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(In thousands, except per share data)
|
||||||||||||||||||
Consolidated Statement of Operations Data:
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||||||||||
Revenue
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$
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105,946
|
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$
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83,417
|
|
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$
|
67,251
|
|
|
$
|
52,441
|
|
|
$
|
37,664
|
|
Cost of goods sold
|
25,282
|
|
|
18,746
|
|
|
15,030
|
|
|
13,181
|
|
|
10,380
|
|
|||||
Gross profit
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80,664
|
|
|
64,671
|
|
|
52,221
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|
|
39,260
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|
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27,284
|
|
|||||
Operating expenses:
|
|
|
|
|
|
|
|
|
|
||||||||||
Research and development
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16,571
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|
|
16,738
|
|
|
8,997
|
|
|
4,454
|
|
|
3,512
|
|
|||||
Clinical and regulatory affairs
|
6,343
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|
|
4,439
|
|
|
2,169
|
|
|
2,115
|
|
|
2,570
|
|
|||||
Marketing and sales
|
53,953
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|
|
44,655
|
|
|
31,869
|
|
|
26,483
|
|
|
23,794
|
|
|||||
General and administrative
|
20,266
|
|
|
15,525
|
|
|
13,410
|
|
|
8,550
|
|
|
9,455
|
|
|||||
Contract termination and business acquisition expenses
|
422
|
|
|
1,730
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Settlement costs
|
5,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Total operating expenses
|
102,555
|
|
|
83,087
|
|
|
56,445
|
|
|
41,602
|
|
|
39,331
|
|
|||||
Loss from operations
|
(21,891
|
)
|
|
(18,416
|
)
|
|
(4,224
|
)
|
|
(2,342
|
)
|
|
(12,047
|
)
|
|||||
Other income (expense)
|
(13,352
|
)
|
|
(10,400
|
)
|
|
(160
|
)
|
|
(71
|
)
|
|
27
|
|
|||||
Net loss before income tax
|
(35,243
|
)
|
|
(28,816
|
)
|
|
(4,384
|
)
|
|
(2,413
|
)
|
|
(12,020
|
)
|
|||||
Income tax (expense) benefit
|
(531
|
)
|
|
86
|
|
|
15,037
|
|
|
(21
|
)
|
|
28
|
|
|||||
Net income (loss)
|
$
|
(35,774
|
)
|
|
$
|
(28,730
|
)
|
|
$
|
10,653
|
|
|
$
|
(2,434
|
)
|
|
$
|
(11,992
|
)
|
Basic net income (loss) per share
|
$
|
(0.60
|
)
|
|
$
|
(0.51
|
)
|
|
$
|
0.22
|
|
|
$
|
(0.05
|
)
|
|
$
|
(0.28
|
)
|
Shares used in computing basic net income (loss) per share
|
59,811
|
|
|
56,592
|
|
|
48,902
|
|
|
45,194
|
|
|
43,045
|
|
|||||
Diluted net income (loss) per share
|
$
|
(0.60
|
)
|
|
$
|
(0.51
|
)
|
|
$
|
0.21
|
|
|
$
|
(0.05
|
)
|
|
$
|
(0.28
|
)
|
Shares used in computing diluted net income (loss) per share
|
59,811
|
|
|
56,592
|
|
|
50,544
|
|
|
45,194
|
|
|
43,045
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||
|
December 31,
|
||||||||||||||||||
|
2012
|
|
2011
|
|
2010
|
|
2009
|
|
2008
|
||||||||||
|
(In thousands)
|
||||||||||||||||||
Consolidated Balance Sheet Data:
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash (including restricted cash and cash equivalents)
|
$
|
45,118
|
|
|
$
|
20,035
|
|
|
$
|
38,191
|
|
|
$
|
24,065
|
|
|
$
|
8,111
|
|
Accounts receivable, net
|
22,600
|
|
|
15,542
|
|
|
12,212
|
|
|
8,342
|
|
|
6,371
|
|
|||||
Total assets
|
$
|
165,103
|
|
|
$
|
130,255
|
|
|
$
|
134,375
|
|
|
$
|
51,292
|
|
|
$
|
37,263
|
|
Total liabilities (excluding contingent consideration payable in common stock)
|
$
|
18,229
|
|
|
$
|
14,986
|
|
|
$
|
11,243
|
|
|
$
|
8,412
|
|
|
$
|
11,446
|
|
Accumulated deficit
|
(200,014
|
)
|
|
(164,240
|
)
|
|
(135,510
|
)
|
|
(146,164
|
)
|
|
(143,730
|
)
|
|||||
Total stockholders’ equity
|
$
|
94,474
|
|
|
$
|
76,569
|
|
|
$
|
93,903
|
|
|
$
|
42,880
|
|
|
$
|
25,817
|
|
Item 7.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
•
|
Market Overview and Opportunity
|
•
|
Our Products
|
•
|
Manufacturing and Supply
|
•
|
Marketing and Sales
|
•
|
Competition
|
•
|
Clinical Trials and Product Developments
|
(i)
|
The risks of ownership must have passed to our customer;
|
(ii)
|
The customer must have made a fixed and written commitment to purchase the ELG Systems;
|
(iii)
|
The customer must request that the transaction be on a bill and hold basis;
|
(iv)
|
There must be a fixed schedule for delivery of the ELG Systems. The date for delivery must be reasonable and must be consistent with the customer's business purpose;
|
(v)
|
We have no remaining specific performance obligations and our earnings process is complete;
|
(vi)
|
Our customer's ordered ELG Systems must be segregated from our inventory and cannot be used to fulfill other customer orders; and
|
(vii)
|
The ELG Systems must be complete and ready for shipment.
|
(i)
|
The date by which we expect payment, and whether we have modified our normal billing and credit terms for the customer;
|
(ii)
|
Our past experiences with, and pattern of, bill and hold transactions;
|
(iii)
|
Whether the customer has the expected risk of loss in the event of a decline in the market value of the ELG Systems;
|
(iv)
|
Whether our custodial risks are insurable and insured; and
|
(v)
|
Whether extended procedures are necessary in order to assure that there are no exceptions to the customer's commitment to accept and pay for the ELG Systems (i.e., that the business reasons for the bill and hold have not introduced a contingency to the customer's commitment).
|
|
Year Ended December 31,
|
|||||||||||||||||||
|
2012
|
|
2011
|
|
2010
|
|||||||||||||||
Revenue
|
$
|
105,946
|
|
|
100.0
|
%
|
|
$
|
83,417
|
|
|
100.0
|
%
|
|
$
|
67,251
|
|
|
100.0
|
%
|
Cost of goods sold
|
25,282
|
|
|
23.9
|
%
|
|
18,746
|
|
|
22.5
|
%
|
|
15,030
|
|
|
22.3
|
%
|
|||
Gross profit
|
80,664
|
|
|
76.1
|
%
|
|
64,671
|
|
|
77.5
|
%
|
|
52,221
|
|
|
77.7
|
%
|
|||
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Research and development
|
16,571
|
|
|
15.6
|
%
|
|
16,738
|
|
|
20.1
|
%
|
|
8,997
|
|
|
13.4
|
%
|
|||
Clinical and regulatory affairs
|
6,343
|
|
|
6.0
|
%
|
|
4,439
|
|
|
5.3
|
%
|
|
2,169
|
|
|
3.2
|
%
|
|||
Marketing and sales
|
53,953
|
|
|
50.9
|
%
|
|
44,655
|
|
|
53.5
|
%
|
|
31,869
|
|
|
47.4
|
%
|
|||
General and administrative
|
20,266
|
|
|
19.1
|
%
|
|
15,525
|
|
|
18.6
|
%
|
|
13,410
|
|
|
19.9
|
%
|
|||
Contract termination and business acquisition expenses
|
422
|
|
|
0.4
|
%
|
|
1,730
|
|
|
2.1
|
%
|
|
—
|
|
|
—
|
%
|
|||
Settlement costs
|
5,000
|
|
|
4.7
|
%
|
|
—
|
|
|
—
|
%
|
|
—
|
|
|
—
|
%
|
|||
Total operating expenses
|
102,555
|
|
|
96.8
|
%
|
|
83,087
|
|
|
99.6
|
%
|
|
56,445
|
|
|
83.9
|
%
|
|||
Loss from operations
|
(21,891
|
)
|
|
(20.7
|
)%
|
|
(18,416
|
)
|
|
(22.1
|
)%
|
|
(4,224
|
)
|
|
(6.3
|
)%
|
|||
Total other expense
|
(13,352
|
)
|
|
(12.6
|
)%
|
|
(10,400
|
)
|
|
(12.5
|
)%
|
|
(160
|
)
|
|
(0.2
|
)%
|
|||
Net loss before income tax
|
(35,243
|
)
|
|
(33.3
|
)%
|
|
(28,816
|
)
|
|
(34.5
|
)%
|
|
(4,384
|
)
|
|
(6.5
|
)%
|
|||
Income tax (expense) benefit
|
(531
|
)
|
|
(0.5
|
)%
|
|
86
|
|
|
0.1
|
%
|
|
15,037
|
|
|
22.4
|
%
|
|||
Net income (loss)
|
$
|
(35,774
|
)
|
|
(33.8
|
)%
|
|
$
|
(28,730
|
)
|
|
(34.4
|
)%
|
|
$
|
10,653
|
|
|
15.8
|
%
|
|
Year Ended December 31,
|
|
|
|
|
|||||||||
|
2012
|
|
2011
|
|
Variance
|
|
Percent Change
|
|||||||
|
(in thousands)
|
|
|
|
|
|||||||||
Revenue
|
$
|
105,946
|
|
|
$
|
83,417
|
|
|
$
|
22,529
|
|
|
27.0
|
%
|
|
|
Year Ended December 31,
|
|
|
|
|
|||||||||
|
|
2012
|
|
2011
|
|
Variance
|
|
Percent Change
|
|||||||
|
|
(in thousands)
|
|
|
|
|
|||||||||
Cost of goods sold
|
|
$
|
25,282
|
|
|
$
|
18,746
|
|
|
$
|
6,536
|
|
|
34.9
|
%
|
Gross profit
|
|
80,664
|
|
|
64,671
|
|
|
15,993
|
|
|
24.7
|
%
|
|||
Gross margin percentage (gross profit as a percent of revenue)
|
|
76.1
|
%
|
|
77.5
|
%
|
|
(1.4
|
)%
|
|
|
|
|
Year Ended December 31,
|
|
|
|
|
|||||||||
|
|
2012
|
|
2011
|
|
Variance
|
|
Percent Change
|
|||||||
|
|
(in thousands)
|
|
|
|
|
|||||||||
Research and development
|
|
$
|
16,571
|
|
|
$
|
16,738
|
|
|
$
|
(167
|
)
|
|
(1.0
|
)%
|
Clinical and regulatory affairs
|
|
6,343
|
|
|
4,439
|
|
|
1,904
|
|
|
42.9
|
%
|
|||
Marketing and sales
|
|
53,953
|
|
|
44,655
|
|
|
9,298
|
|
|
20.8
|
%
|
|||
General and administrative
|
|
20,266
|
|
|
15,525
|
|
|
4,741
|
|
|
30.5
|
%
|
|||
Contract termination and business acquisition expenses
|
|
422
|
|
|
1,730
|
|
|
(1,308
|
)
|
|
(75.6
|
)%
|
|||
Settlement costs
|
|
5,000
|
|
|
—
|
|
|
5,000
|
|
|
100.0
|
%
|
|
|
Year Ended December 31,
|
|
|
|||||||
|
|
2012
|
|
2011
|
|
Variance
|
|||||
|
|
(in thousands)
|
|
|
|||||||
Income tax (expense) benefit
|
|
(531
|
)
|
|
$
|
86
|
|
|
$
|
(617
|
)
|
|
|
Year Ended December 31,
|
|
|
|
|
|||||||||
|
|
2011
|
|
2010
|
|
Variance
|
|
Percent Change
|
|||||||
|
|
(in thousands)
|
|
|
|
|
|||||||||
Revenue
|
|
$
|
83,417
|
|
|
$
|
67,251
|
|
|
$
|
16,166
|
|
|
24.0
|
%
|
|
|
Year Ended December 31,
|
|
|
|
|
|||||||||
|
|
2011
|
|
2010
|
|
Variance
|
|
Percent Change
|
|||||||
|
|
(in thousands)
|
|
|
|
|
|||||||||
Cost of goods sold
|
|
$
|
18,746
|
|
|
$
|
15,030
|
|
|
$
|
3,716
|
|
|
24.7
|
%
|
Gross profit
|
|
64,671
|
|
|
52,221
|
|
|
12,450
|
|
|
23.8
|
%
|
|||
Gross margin percentage (gross profit as a percent of revenue)
|
|
77.5
|
%
|
|
77.7
|
%
|
|
(0.2
|
)%
|
|
|
|
|
Year Ended December 31,
|
|
|
|
|
|||||||||
|
|
2011
|
|
2010
|
|
Variance
|
|
Percent Change
|
|||||||
|
|
(in thousands)
|
|
|
|
|
|||||||||
Research and development
|
|
$
|
16,738
|
|
|
$
|
8,997
|
|
|
$
|
7,741
|
|
|
86.0
|
%
|
Clinical and regulatory affairs
|
|
4,439
|
|
|
2,169
|
|
|
2,270
|
|
|
104.7
|
%
|
|||
Marketing and sales
|
|
44,655
|
|
|
31,869
|
|
|
12,786
|
|
|
40.1
|
%
|
|||
General and administrative
|
|
15,525
|
|
|
13,410
|
|
|
2,115
|
|
|
15.8
|
%
|
|||
Contract termination and business acquisition expenses
|
|
1,730
|
|
|
—
|
|
|
1,730
|
|
|
100.0
|
%
|
|
December 31, 2012
|
|
December 31, 2011
|
||||
|
(in thousands, except financial metrics data)
|
||||||
Cash and cash equivalents
|
$
|
45,118
|
|
|
$
|
20,035
|
|
Accounts receivable, net
|
$
|
22,600
|
|
|
$
|
15,542
|
|
Total current assets
|
$
|
87,567
|
|
|
$
|
55,104
|
|
Total current liabilities
|
$
|
17,194
|
|
|
$
|
13,949
|
|
Working capital surplus (a)
|
$
|
70,373
|
|
|
$
|
41,155
|
|
Days sales outstanding ("DSO") (b)
|
71
|
|
|
61
|
|
||
Current ratio (c)
|
5.1
|
|
|
4.0
|
|
•
|
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.
|
|
Payment due by period at December 31, 2012
|
||||||||||||||||||
|
Total
|
|
Less than 1 Year
|
|
1 - 3 Years
|
|
3 - 5 Years
|
|
After 5 Years
|
||||||||||
|
(In thousands)
|
||||||||||||||||||
Operating lease obligations
|
$
|
1,129
|
|
|
$
|
655
|
|
|
$
|
474
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Item 7A.
|
Quantitative and Qualitative Disclosures About Market Risk
|
|
Page No.
|
Reports of Independent Registered Public Accounting Firms
|
|
Consolidated Balance Sheets as of December 31, 2012 and 2011
|
|
Consolidated Statements of Operations and Comprehensive Income (Loss) for the years ended December 31, 2012, 2011, and 2010
|
|
Consolidated Statements of Stockholders’ Equity for the years ended December 31, 2012, 2011, and 2010
|
|
Consolidated Statements of Cash Flows for the years ended December 31, 2012, 2011, and 2010
|
|
Notes to Consolidated Financial Statements
|
|
Financial Statement Schedule
|
|
Schedule II - Valuation and Qualifying Accounts for the years ended December 31, 2012, 2011, and 2010
|
|
|
|
|
|
||||
|
|
December 31,
|
||||||
|
|
2012
|
|
2011
|
||||
ASSETS
|
|
|
|
|||||
Current assets:
|
|
|
|
|
||||
Cash and cash equivalents
|
|
$
|
45,118
|
|
|
$
|
20,035
|
|
Accounts receivable, net of allowance for doubtful accounts of $472 and $161, respectively
|
|
22,600
|
|
|
15,542
|
|
||
Other receivables
|
|
320
|
|
|
405
|
|
||
Inventories
|
|
18,087
|
|
|
18,099
|
|
||
Prepaid expenses and other current assets
|
|
1,442
|
|
|
1,023
|
|
||
Total current assets
|
|
87,567
|
|
|
55,104
|
|
||
Property and equipment, net
|
|
4,984
|
|
|
4,454
|
|
||
Goodwill
|
|
29,022
|
|
|
27,073
|
|
||
Intangibles, net
|
|
43,356
|
|
|
43,439
|
|
||
Deposits and other assets
|
|
174
|
|
|
185
|
|
||
Total assets
|
|
$
|
165,103
|
|
|
$
|
130,255
|
|
|
|
|
|
|
||||
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
|||||
Current liabilities:
|
|
|
|
|
||||
Accounts payable
|
|
$
|
6,348
|
|
|
$
|
6,377
|
|
Accrued payroll
|
|
7,825
|
|
|
6,569
|
|
||
Accrued expenses and other current liabilities
|
|
3,021
|
|
|
1,003
|
|
||
Total current liabilities
|
|
17,194
|
|
|
13,949
|
|
||
Commitments and contingencies
|
|
|
|
|
||||
Deferred income taxes
|
|
1,035
|
|
|
1,029
|
|
||
Deferred rent
|
|
—
|
|
|
8
|
|
||
Contingently issuable common stock
|
|
52,400
|
|
|
38,700
|
|
||
Total liabilities
|
|
70,629
|
|
|
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, 63,068,463 and 58,577,484 shares issued, respectively. 62,573,763 and 58,082,784 shares outstanding, respectively.
|
|
63
|
|
|
59
|
|
||
Additional paid-in capital
|
|
295,338
|
|
|
241,441
|
|
||
Accumulated deficit
|
|
(200,014
|
)
|
|
(164,240
|
)
|
||
Treasury stock, at cost, 494,700 shares
|
|
(661
|
)
|
|
(661
|
)
|
||
Accumulated other comprehensive loss
|
|
(252
|
)
|
|
(30
|
)
|
||
Total stockholders’ equity
|
|
94,474
|
|
|
76,569
|
|
||
Total liabilities and stockholders’ equity
|
|
$
|
165,103
|
|
|
$
|
130,255
|
|
|
|
|
|
|
|
||||||
|
Year Ended December 31,
|
||||||||||
|
2012
|
|
2011
|
|
2010
|
||||||
Revenue
|
$
|
105,946
|
|
|
$
|
83,417
|
|
|
$
|
67,251
|
|
Cost of goods sold
|
25,282
|
|
|
18,746
|
|
|
15,030
|
|
|||
Gross profit
|
80,664
|
|
|
64,671
|
|
|
52,221
|
|
|||
Operating expenses:
|
|
|
|
|
|
||||||
Research and development
|
16,571
|
|
|
16,738
|
|
|
8,997
|
|
|||
Clinical and regulatory affairs
|
6,343
|
|
|
4,439
|
|
|
2,169
|
|
|||
Marketing and sales
|
53,953
|
|
|
44,655
|
|
|
31,869
|
|
|||
General and administrative
|
20,266
|
|
|
15,525
|
|
|
13,410
|
|
|||
Contract termination and business acquisition expenses
|
422
|
|
|
1,730
|
|
|
—
|
|
|||
Settlement costs
|
5,000
|
|
|
—
|
|
|
—
|
|
|||
Total operating expenses
|
102,555
|
|
|
83,087
|
|
|
56,445
|
|
|||
Loss from operations
|
(21,891
|
)
|
|
(18,416
|
)
|
|
(4,224
|
)
|
|||
Other income (expense):
|
|
|
|
|
|
||||||
Interest income
|
30
|
|
|
23
|
|
|
30
|
|
|||
Interest expense
|
(7
|
)
|
|
(32
|
)
|
|
(16
|
)
|
|||
Gain on sale of equipment
|
—
|
|
|
141
|
|
|
—
|
|
|||
Other income (expense), net
|
325
|
|
|
(32
|
)
|
|
(174
|
)
|
|||
Change in fair value of contingent consideration
related to acquisition |
(13,700
|
)
|
|
(10,500
|
)
|
|
—
|
|
|||
Total other expense
|
(13,352
|
)
|
|
(10,400
|
)
|
|
(160
|
)
|
|||
Net loss before income tax (expense) benefit
|
$
|
(35,243
|
)
|
|
$
|
(28,816
|
)
|
|
$
|
(4,384
|
)
|
Income tax (expense) benefit
|
(531
|
)
|
|
86
|
|
|
15,037
|
|
|||
Net (loss) income
|
$
|
(35,774
|
)
|
|
$
|
(28,730
|
)
|
|
$
|
10,653
|
|
Other comprehensive loss (foreign currency translation)
|
$
|
(222
|
)
|
|
$
|
(30
|
)
|
|
$
|
—
|
|
Comprehensive income (loss)
|
$
|
(35,996
|
)
|
|
$
|
(28,760
|
)
|
|
$
|
10,653
|
|
|
|
|
|
|
|
|
|
|
|||
Basic net income (loss) per share
|
$
|
(0.60
|
)
|
|
$
|
(0.51
|
)
|
|
$
|
0.22
|
|
Diluted net income (loss) per share
|
$
|
(0.60
|
)
|
|
$
|
(0.51
|
)
|
|
$
|
0.21
|
|
Shares used in computing basic net income (loss) per share
|
59,811
|
|
|
56,592
|
|
|
48,902
|
|
|||
Shares used in computing diluted net income (loss) per share
|
59,811
|
|
|
56,592
|
|
|
50,544
|
|
|
Common Stock
|
|
Additional
Paid-In Capital |
|
Accumulated
Deficit |
|
Treasury
Stock |
|
Accumulated Other Comprehensive Loss
|
|
Total Stockholders’
Equity |
|||||||||||||||
|
Issued Shares
|
|
$0.001 Par Value
|
|
|
|
|
|
||||||||||||||||||
Balance at December 31, 2009
|
49,152
|
|
|
$
|
49
|
|
|
$
|
189,656
|
|
|
$
|
(146,164
|
)
|
|
$
|
(661
|
)
|
|
$
|
—
|
|
|
$
|
42,880
|
|
Exercise of common stock options
|
676
|
|
|
1
|
|
|
2,242
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,243
|
|
||||||
Employee stock purchase plan
|
293
|
|
|
—
|
|
|
1,117
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,117
|
|
||||||
Sale of common stock
|
3,171
|
|
|
3
|
|
|
14,987
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
14,990
|
|
||||||
Issuance of common stock for acquisition
|
3,199
|
|
|
3
|
|
|
19,385
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
19,388
|
|
||||||
Stock compensation expense
|
—
|
|
|
—
|
|
|
2,215
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,215
|
|
||||||
Issuance of restricted stock
|
405
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
||||||
Restricted stock expense
|
—
|
|
|
—
|
|
|
422
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
422
|
|
||||||
Non-employee stock option expense
|
—
|
|
|
—
|
|
|
(7
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(7
|
)
|
||||||
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
10,653
|
|
|
—
|
|
|
—
|
|
|
10,653
|
|
||||||
Balance at December 31, 2010
|
56,896
|
|
|
$
|
57
|
|
|
$
|
230,017
|
|
|
$
|
(135,510
|
)
|
|
$
|
(661
|
)
|
|
$
|
—
|
|
|
$
|
93,902
|
|
Exercise of common stock options
|
1,394
|
|
|
2
|
|
|
5,322
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5,324
|
|
||||||
Employee stock purchase plan
|
287
|
|
|
—
|
|
|
1,965
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,965
|
|
||||||
Stock compensation expense
|
—
|
|
|
—
|
|
|
2,851
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,851
|
|
||||||
Restricted stock expense
|
—
|
|
|
—
|
|
|
877
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
877
|
|
||||||
Non-employee stock option expense
|
—
|
|
|
—
|
|
|
409
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
409
|
|
||||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
(28,730
|
)
|
|
—
|
|
|
—
|
|
|
(28,730
|
)
|
||||||
Other comprehensive loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(30
|
)
|
|
(30
|
)
|
||||||
Balance at December 31, 2011
|
58,577
|
|
|
$
|
59
|
|
|
241,441
|
|
|
$
|
(164,240
|
)
|
|
$
|
(661
|
)
|
|
(30
|
)
|
|
$
|
76,569
|
|
||
Exercise of common stock options
|
1,168
|
|
|
1
|
|
|
4,991
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,992
|
|
||||||
Employee stock purchase plan
|
224
|
|
|
—
|
|
|
2,369
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,369
|
|
||||||
Sale of common stock
|
3,105
|
|
|
3
|
|
|
40,066
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
40,069
|
|
||||||
Stock compensation expense
|
—
|
|
|
—
|
|
|
3,649
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,649
|
|
||||||
Issuance of restricted stock
|
13
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Cancellation of restricted stock
|
(18
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Restricted stock expense
|
—
|
|
|
—
|
|
|
1,906
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,906
|
|
||||||
Non-employee stock option expense
|
—
|
|
|
—
|
|
|
916
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
916
|
|
||||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
(35,774
|
)
|
|
—
|
|
|
—
|
|
|
(35,774
|
)
|
||||||
Other comprehensive loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(222
|
)
|
|
(222
|
)
|
||||||
Balance at December 31, 2012
|
63,069
|
|
|
$
|
63
|
|
|
$
|
295,338
|
|
|
$
|
(200,014
|
)
|
|
$
|
(661
|
)
|
|
$
|
(252
|
)
|
|
$
|
94,474
|
|
|
Year Ended December 31,
|
||||||||||
|
2012
|
|
2011
|
|
2010
|
||||||
Cash flows from operating activities:
|
|
|
|
|
|
||||||
Net income (loss)
|
$
|
(35,774
|
)
|
|
$
|
(28,730
|
)
|
|
$
|
10,653
|
|
Adjustments to reconcile net loss to net cash used in operating activities:
|
|
|
|
|
|
||||||
Bad debt expense
|
325
|
|
|
62
|
|
|
39
|
|
|||
Depreciation and amortization
|
2,183
|
|
|
2,729
|
|
|
2,444
|
|
|||
Stock-based compensation
|
6,471
|
|
|
4,136
|
|
|
2,546
|
|
|||
Change in fair value of contingent consideration related to acquisition
|
13,700
|
|
|
10,500
|
|
|
—
|
|
|||
Gain on sale of equipment
|
—
|
|
|
(141
|
)
|
|
—
|
|
|||
Income tax expense (benefit)
|
531
|
|
|
(86
|
)
|
|
(15,067
|
)
|
|||
Changes in operating assets and liabilities:
|
|
|
|
|
|
||||||
Accounts receivable and other receivables
|
(8,319
|
)
|
|
(3,392
|
)
|
|
(3,909
|
)
|
|||
Inventories
|
12
|
|
|
(9,801
|
)
|
|
(2,964
|
)
|
|||
Prepaid expenses and other current assets
|
(408
|
)
|
|
(153
|
)
|
|
(672
|
)
|
|||
Accounts payable
|
199
|
|
|
700
|
|
|
2,098
|
|
|||
Accrued payroll
|
1,255
|
|
|
1,597
|
|
|
498
|
|
|||
Accrued expenses and other current liabilities
|
1,304
|
|
|
189
|
|
|
243
|
|
|||
Deferred rent
|
(8
|
)
|
|
8
|
|
|
(22
|
)
|
|||
Net cash used in operating activities
|
(18,529
|
)
|
|
(22,382
|
)
|
|
(4,113
|
)
|
|||
Cash flows from investing activities:
|
|
|
|
|
|
||||||
Purchases of property and equipment
|
(2,238
|
)
|
|
(3,033
|
)
|
|
(861
|
)
|
|||
Purchases of patent license
|
(100
|
)
|
|
—
|
|
|
—
|
|
|||
Cash acquired in Nellix acquisition
|
—
|
|
|
—
|
|
|
698
|
|
|||
Business acquisition
|
(1,156
|
)
|
|
—
|
|
|
—
|
|
|||
Net cash used in investing activities
|
(3,494
|
)
|
|
(3,033
|
)
|
|
(163
|
)
|
|||
Cash flows from financing activities:
|
|
|
|
|
|
||||||
Proceeds from sale of common stock under secondary offering, net of expenses
|
40,069
|
|
|
—
|
|
|
14,990
|
|
|||
Proceeds from sale of common stock under employee stock purchase plan
|
2,369
|
|
|
1,965
|
|
|
1,118
|
|
|||
Proceeds from exercise of stock options
|
4,992
|
|
|
5,324
|
|
|
2,347
|
|
|||
Repayments of long-term debt
|
—
|
|
|
—
|
|
|
(79
|
)
|
|||
Net cash provided by financing activities
|
47,430
|
|
|
7,289
|
|
|
18,376
|
|
|||
Effect of exchange rate changes on cash and cash equivalents
|
(324
|
)
|
|
(30
|
)
|
|
26
|
|
|||
Net increase (decrease) in cash and cash equivalents
|
25,083
|
|
|
(18,156
|
)
|
|
14,126
|
|
|||
Cash and cash equivalents, beginning of period
|
20,035
|
|
|
38,191
|
|
|
24,065
|
|
|||
Cash and cash equivalents, end of period
|
$
|
45,118
|
|
|
$
|
20,035
|
|
|
$
|
38,191
|
|
Supplemental disclosure of cash flow information:
|
|
|
|
|
|
||||||
Cash paid for interest
|
$
|
10
|
|
|
$
|
32
|
|
|
$
|
16
|
|
Cash paid for income taxes
|
16
|
|
|
24
|
|
|
51
|
|
|||
Non-cash investing and financing activities:
|
|
|
|
|
|
||||||
Shares issued for acquisition
|
—
|
|
|
—
|
|
|
19,388
|
|
(a)
|
Description of Business
|
|
Useful Life
|
Office furniture
|
Seven years
|
Computer hardware
|
Three years
|
Computer software
|
Three to eight years
|
Production equipment and molds
|
Three to seven years
|
Leasehold improvements
|
Shorter of expected useful life or remaining term of lease
|
|
Useful Life
|
Goodwill
|
Indefinite lived
|
Trademarks and tradenames
|
Indefinite lived
|
In-process research and development
|
Indefinite lived until commercial launch of underlying technology
|
Patents & license
|
Three to five years
|
Customer relationships
|
Three years
|
•
|
The sales price for the ELG System (including device extensions and accessories) is established with the customer;
|
•
|
The ELG System has been used by the hospital in an EVAR procedure, or the distributor has assumed title with no right of return; and
|
(i)
|
The risks of ownership must have passed to the customer;
|
(ii)
|
The customer must have made a fixed and written commitment to purchase the ELG Systems;
|
(iii)
|
The customer must request that the transaction be on a bill and hold basis;
|
(iv)
|
There must be a fixed schedule for delivery of the ELG Systems. The date for delivery must be reasonable and must be consistent with the customer's business purpose;
|
(v)
|
The Company must have no remaining specific performance obligations and its earnings process must be complete;
|
(vi)
|
The customer's ordered ELG Systems must be segregated from the Company's inventory and cannot be used to fulfill other customer orders; and
|
(vii)
|
The ELG Systems must be complete and ready for shipment.
|
(i)
|
The date by which payment is expected from the customer, and whether the Company has modified its normal billing and credit terms for the customer;
|
(ii)
|
The Company's past experiences with, and pattern of, bill and hold transactions;
|
(iii)
|
Whether the customer has the expected risk of loss in the event of a decline in the market value of the ELG Systems;
|
(iv)
|
Whether the Company's custodial risks are insurable and insured; and
|
(v)
|
Whether extended procedures are necessary in order to assure that there are no exceptions to the customer's commitment to accept and pay for the ELG Systems (i.e., that the business reasons for the bill and hold have not introduced a contingency to the customer's commitment).
|
Ending balance, December 31, 2010
|
$
|
(118
|
)
|
Bad debt expense
|
(62
|
)
|
|
Write offs
|
19
|
|
|
Ending balance, December 31, 2011
|
$
|
(161
|
)
|
Bad debt expense
|
(325
|
)
|
|
Write offs
|
14
|
|
|
Ending balance, December 31, 2012
|
$
|
(472
|
)
|
|
December 31,
|
||||||
|
2012
|
|
2011
|
||||
Production equipment, molds, and office furniture
|
$
|
7,256
|
|
|
$
|
6,440
|
|
Computer hardware and software
|
2,265
|
|
|
1,023
|
|
||
Leasehold improvements
|
2,819
|
|
|
2,459
|
|
||
Construction in progress (software and related implementation, production equipment, and leasehold improvements)
|
556
|
|
|
1,133
|
|
||
Property and equipment, at cost
|
12,896
|
|
|
11,055
|
|
||
Accumulated depreciation
|
(7,912
|
)
|
|
(6,601
|
)
|
||
Property and equipment, net
|
$
|
4,984
|
|
|
$
|
4,454
|
|
|
December 31,
|
||||||
|
2012
|
|
2011
|
||||
Goodwill
|
$
|
29,022
|
|
|
$
|
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
|
$
|
100
|
|
|
$
|
100
|
|
Accumulated amortization
|
(75
|
)
|
|
(54
|
)
|
||
Patent, net
|
$
|
25
|
|
|
$
|
46
|
|
|
|
|
|
|
|
||
License
|
$
|
100
|
|
|
$
|
—
|
|
Accumulated amortization
|
(12
|
)
|
|
—
|
|
||
License, net
|
$
|
88
|
|
|
$
|
—
|
|
|
|
|
|
|
|
||
Customer relationships
|
$
|
522
|
|
|
$
|
—
|
|
Accumulated amortization
|
(87
|
)
|
|
—
|
|
||
Customer relationships, net
|
$
|
435
|
|
|
$
|
—
|
|
|
|
|
|
|
|
||
Intangible assets (excluding goodwill), net
|
$
|
43,356
|
|
|
$
|
43,439
|
|
|
Amortization Expense
|
||
2013
|
$
|
268
|
|
2014
|
392
|
|
|
2015
|
892
|
|
|
2016
|
1,541
|
|
|
2017
|
2,011
|
|
|
2018 and thereafter
|
35,544
|
|
|
Year Ended December 31,
|
||||||||||
|
2012
|
|
2011
|
|
2010
|
||||||
Stock-based compensation expense
|
$
|
759
|
|
|
$
|
733
|
|
|
$
|
468
|
|
Common stock shares purchased by Company employees
|
224
|
|
|
287
|
|
|
293
|
|
|||
Average purchase price per share
|
$
|
10.59
|
|
|
$
|
6.84
|
|
|
$
|
3.81
|
|
|
Year Ended December 31,
|
||||||||||
|
2012
|
|
2011
|
|
2010
|
||||||
Cost of goods sold
|
$
|
597
|
|
|
$
|
209
|
|
|
$
|
188
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|||
Research and development
|
1,336
|
|
|
753
|
|
|
362
|
|
|||
Clinical and regulatory affairs
|
320
|
|
|
113
|
|
|
15
|
|
|||
Marketing and sales
|
1,558
|
|
|
1,097
|
|
|
919
|
|
|||
General and administrative
|
2,641
|
|
|
1,740
|
|
|
1,168
|
|
|||
Total operating expenses
|
$
|
5,855
|
|
|
$
|
3,703
|
|
|
$
|
2,464
|
|
|
|
|
|
|
|
|
|
|
|||
Total
|
$
|
6,452
|
|
|
$
|
3,912
|
|
|
$
|
2,652
|
|
|
Year Ended December 31,
|
||||
|
2012
|
|
2011
|
|
2010
|
Average expected option life (in years) (a)
|
6.0
|
|
6.0
|
|
6.0
|
Volatility (b)
|
55.8%
|
|
56.6%
|
|
56.4%
|
Risk-free interest rate (c)
|
1.0%
|
|
2.0%
|
|
2.4%
|
Dividend Yield (d)
|
—%
|
|
—%
|
|
—%
|
Weighted-average grant-date fair value per stock option
|
$6.90
|
|
$4.55
|
|
$2.46
|
|
Number of
Stock Options |
|
Weighted
Average Exercise Price |
|
Weighted-
Average Remaining Contractual Life (Years) |
|
Aggregate Intrinsic Value
|
Outstanding — January 1, 2011
|
5,914,884
|
|
$3.91
|
|
|
|
|
Granted
|
1,264,333
|
|
8.38
|
|
|
|
|
Exercised
|
(1,393,794)
|
|
3.84
|
|
|
(a)
|
$7,246
|
Forfeited
|
(228,889)
|
|
5.29
|
|
|
|
|
Expired
|
—
|
|
—
|
|
|
|
|
Outstanding — December 31, 2011
|
5,556,534
|
|
$4.89
|
|
|
|
|
Granted
|
756,289
|
|
13.31
|
|
|
|
|
Exercised
|
(1,167,715)
|
|
4.28
|
|
|
(a)
|
$11,135
|
Forfeited
|
(188,378)
|
|
8.32
|
|
|
|
|
Expired
|
—
|
|
—
|
|
|
|
|
Outstanding — December 31, 2012
|
4,956,730
|
|
$6.21
|
|
6.9
|
(b)
|
$39,947
|
Vested and Expected to Vest — December 31, 2012
|
4,235,058
|
|
$5.87
|
|
6.7
|
(b)
|
$35,536
|
Vested — December 31, 2012
|
2,551,156
|
|
$4.35
|
|
5.7
|
(b)
|
$25,242
|
|
|
Outstanding
|
|
Exercisable
|
||||||||||||||||||
Range of Exercise Prices
|
|
Granted
Stock Options Outstanding |
|
Weighted-
Average Remaining Contractual Life (Years) |
|
Weighted-
Average Exercise Price |
|
Granted
Stock Options Exercisable |
|
Weighted-
Average Exercise Price |
||||||||||||
$
|
1.64
|
|
—
|
$
|
2.25
|
|
|
237,196
|
|
|
5.7
|
|
$
|
2.07
|
|
|
232,301
|
|
|
$
|
2.07
|
|
$
|
2.26
|
|
—
|
$
|
2.62
|
|
|
239,228
|
|
|
5.4
|
|
2.55
|
|
|
238,707
|
|
|
2.55
|
|
||
$
|
2.67
|
|
—
|
$
|
2.69
|
|
|
442,065
|
|
|
5.4
|
|
2.67
|
|
|
442,065
|
|
|
2.67
|
|
||
$
|
2.79
|
|
—
|
$
|
3.02
|
|
|
57,658
|
|
|
4.1
|
|
2.89
|
|
|
57,033
|
|
|
2.89
|
|
||
$
|
3.35
|
|
—
|
$
|
3.45
|
|
|
154,821
|
|
|
4.4
|
|
3.42
|
|
|
146,281
|
|
|
3.42
|
|
||
$
|
3.46
|
|
—
|
$
|
3.90
|
|
|
378,248
|
|
|
4.3
|
|
3.55
|
|
|
234,333
|
|
|
3.60
|
|
||
$
|
3.92
|
|
—
|
$
|
4.31
|
|
|
302,717
|
|
|
6.0
|
|
4.14
|
|
|
149,193
|
|
|
4.10
|
|
||
$
|
4.32
|
|
—
|
$
|
4.51
|
|
|
825,479
|
|
|
7.0
|
|
4.40
|
|
|
391,046
|
|
|
4.37
|
|
||
$
|
4.63
|
|
—
|
$
|
5.49
|
|
|
284,561
|
|
|
5.7
|
|
5.26
|
|
|
121,597
|
|
|
5.03
|
|
||
$
|
5.72
|
|
—
|
$
|
7.12
|
|
|
403,986
|
|
|
5.8
|
|
6.31
|
|
|
166,458
|
|
|
6.23
|
|
||
$
|
7.14
|
|
—
|
$
|
8.26
|
|
|
632,754
|
|
|
8.3
|
|
8.02
|
|
|
268,550
|
|
|
8.12
|
|
||
$
|
8.57
|
|
—
|
$
|
11.68
|
|
|
417,570
|
|
|
8.8
|
|
10.40
|
|
|
78,254
|
|
|
10.38
|
|
||
$
|
11.97
|
|
—
|
$
|
13.93
|
|
|
307,693
|
|
|
9.5
|
|
13.32
|
|
|
18,150
|
|
|
13.53
|
|
||
$
|
14.01
|
|
—
|
$
|
15.51
|
|
|
272,754
|
|
|
9.4
|
|
14.65
|
|
|
7,188
|
|
|
14.83
|
|
||
$
|
1.64
|
|
—
|
$
|
15.51
|
|
|
4,956,730
|
|
|
6.9
|
|
$
|
6.21
|
|
|
2,551,156
|
|
|
$
|
4.35
|
|
|
Number of
Restricted Stock Awards |
|
Weighted Average
Fair Value per Share at Grant Date |
|
Grant Date Fair Value
|
|
Vest Date Fair Value*
|
|||||||
Unvested as of December 31, 2009
|
685,000
|
|
|
|
|
|
|
|
|
|||||
Granted
|
518,045
|
|
|
$
|
5.95
|
|
|
$
|
3,082
|
|
|
|
|
|
Cancelled
|
(35,965
|
)
|
|
|
|
|
|
|
|
|||||
Vested
|
(575,625
|
)
|
|
|
|
|
|
|
|
|||||
Unvested as of December 31, 2010
|
591,455
|
|
|
|
|
|
|
|
|
|||||
Granted
|
34,000
|
|
|
$
|
6.19
|
|
|
$
|
210
|
|
|
|
|
|
Cancelled
|
(6,303
|
)
|
|
|
|
|
|
|
|
|
|
|||
Vested
|
(35,851
|
)
|
|
|
|
|
|
|
|
|
|
|||
Unvested as of December 31, 2011
|
583,301
|
|
|
|
|
|
|
|
|
|
|
|||
Granted
|
475,253
|
|
|
$
|
12.67
|
|
|
$
|
6,022
|
|
|
|
|
|
Canceled
|
(43,598
|
)
|
|
|
|
|
|
|
|
|
|
|||
Vested
|
(70,111
|
)
|
|
|
|
|
|
|
|
$
|
1,002
|
|
||
Unvested as of December 31, 2012
|
944,845
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
||||||||||
|
2012
|
|
2011
|
|
2010
|
||||||
Net income (loss)
|
$
|
(35,774
|
)
|
|
$
|
(28,730
|
)
|
|
$
|
10,653
|
|
Weighted average shares - basic
|
59,811
|
|
|
56,592
|
|
|
48,902
|
|
|||
Net income (loss) per share - basic
|
$
|
(0.60
|
)
|
|
$
|
(0.51
|
)
|
|
$
|
0.22
|
|
Weighted average shares - diluted
|
59,811
|
|
|
56,592
|
|
|
50,544
|
|
|||
Net income (loss) per share - diluted
|
$
|
(0.60
|
)
|
|
$
|
(0.51
|
)
|
|
$
|
0.21
|
|
|
Year Ended December 31,
|
|||||||
|
2012
|
|
2011
|
|
2010
|
|||
Common stock options
|
2,698
|
|
|
3,127
|
|
|
—
|
|
Restricted stock awards
|
405
|
|
|
640
|
|
|
—
|
|
Restricted stock units
|
492
|
|
|
—
|
|
|
—
|
|
Total
|
3,595
|
|
|
3,767
|
|
|
—
|
|
|
Year Ended December 31,
|
|||||||||||||||||||
|
2012
|
|
2011
|
|
2010
|
|||||||||||||||
United States
|
$
|
87,092
|
|
|
82.2
|
%
|
|
$
|
71,695
|
|
|
85.9
|
%
|
|
$
|
55,443
|
|
|
82.4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Europe
|
$
|
8,404
|
|
|
7.9
|
%
|
|
$
|
4,178
|
|
|
5.0
|
%
|
|
$
|
4,402
|
|
|
6.5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Rest of World ("ROW"):
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Latin America
|
$
|
4,859
|
|
|
4.6
|
%
|
|
$
|
4,395
|
|
|
5.3
|
%
|
|
$
|
4,072
|
|
|
6.1
|
%
|
Asia/Pacific
|
5,591
|
|
|
5.3
|
%
|
|
3,149
|
|
|
3.8
|
%
|
|
3,334
|
|
|
5.0
|
%
|
|||
Total ROW
|
$
|
10,450
|
|
|
9.9
|
%
|
|
$
|
7,544
|
|
|
9.0
|
%
|
|
$
|
7,406
|
|
|
11.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Revenue
|
$
|
105,946
|
|
|
100.0
|
%
|
|
$
|
83,417
|
|
|
100.0
|
%
|
|
$
|
67,251
|
|
|
100.0
|
%
|
2013
|
$
|
655
|
|
2014
|
474
|
|
|
2015 and thereafter
|
—
|
|
|
|
$
|
1,129
|
|
|
Year Ended December 31,
|
||||||||||
|
2012 (a)
|
|
2011 (a)
|
|
2010
|
||||||
Payments from the Company to AHH:
|
|
|
|
|
|
||||||
Physician and clinical research expenses
|
$
|
125
|
|
|
$
|
209
|
|
|
$
|
114
|
|
|
|
|
|
|
|
||||||
Company revenue derived from AHH
|
$
|
690
|
|
|
$
|
912
|
|
|
$
|
1,064
|
|
|
Fair Value of Contingently Issuable Common Stock
|
||
December 31, 2011
|
$
|
38,700
|
|
Fair value adjustment of Contingent Payment for year ended December 31, 2012
|
13,700
|
|
|
December 31, 2012
|
$
|
52,400
|
|
|
Year Ended December 31,
|
||||||||||
|
2012
|
|
2011
|
|
2010
|
||||||
U.S.
|
$
|
(22,270
|
)
|
|
$
|
(26,062
|
)
|
|
$
|
(4,384
|
)
|
Foreign
|
(12,973
|
)
|
|
(2,754
|
)
|
|
—
|
|
|||
Net income (loss) before income tax
|
$
|
(35,243
|
)
|
|
$
|
(28,816
|
)
|
|
$
|
(4,384
|
)
|
|
Year Ended December 31,
|
||||||||||
|
2012
|
|
2011
|
|
2010
|
||||||
Current:
|
|
|
|
|
|
||||||
Federal
|
$
|
30
|
|
|
$
|
(148
|
)
|
|
$
|
49
|
|
State
|
176
|
|
|
27
|
|
|
20
|
|
|||
Foreign
|
319
|
|
|
35
|
|
|
—
|
|
|||
|
525
|
|
|
(86
|
)
|
|
69
|
|
|||
Deferred:
|
|
|
|
|
|
||||||
Federal
|
—
|
|
|
—
|
|
|
(13,634
|
)
|
|||
State
|
—
|
|
|
—
|
|
|
(1,472
|
)
|
|||
Foreign
|
$
|
6
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Income tax expense (benefit)
|
$
|
531
|
|
|
$
|
(86
|
)
|
|
$
|
(15,037
|
)
|
|
Year Ended December 31,
|
||||||||||
|
2012
|
|
2011
|
|
2010
|
||||||
Income tax benefit at federal statutory rate
|
$
|
(11,983
|
)
|
|
$
|
(9,797
|
)
|
|
$
|
(1,490
|
)
|
State income tax expense (benefit) net of federal benefit
|
116
|
|
|
18
|
|
|
(1,458
|
)
|
|||
Meals and entertainment
|
210
|
|
|
264
|
|
|
182
|
|
|||
Research and development credits
|
—
|
|
|
(342
|
)
|
|
(327
|
)
|
|||
Stock-based compensation
|
382
|
|
|
421
|
|
|
684
|
|
|||
Contingent consideration
|
4,658
|
|
|
3,570
|
|
|
—
|
|
|||
Foreign tax rate differential
|
4,736
|
|
|
1,025
|
|
|
—
|
|
|||
Net change in valuation allowance
|
2,244
|
|
|
4,097
|
|
|
(13,974
|
)
|
|||
Other, net
|
168
|
|
|
658
|
|
|
1,346
|
|
|||
Income tax expense (benefit)
|
$
|
531
|
|
|
$
|
(86
|
)
|
|
$
|
(15,037
|
)
|
|
Year Ended December 31,
|
||||||
|
2012
|
|
2011
|
||||
Deferred tax assets:
|
|
|
|
|
|
||
Net operating loss carryforwards
|
54,389
|
|
|
53,366
|
|
||
Accrued expenses
|
711
|
|
|
474
|
|
||
Tax credits
|
8,400
|
|
|
8,953
|
|
||
Bad debt
|
183
|
|
|
61
|
|
||
Inventory
|
578
|
|
|
327
|
|
||
Capitalized research and development
|
—
|
|
|
31
|
|
||
Other
|
—
|
|
|
150
|
|
||
Depreciation and amortization
|
—
|
|
|
758
|
|
||
Deferred compensation
|
2,364
|
|
|
1,343
|
|
||
Deferred tax assets
|
66,625
|
|
|
65,463
|
|
||
Valuation allowance
|
(50,866
|
)
|
|
(50,144
|
)
|
||
Total deferred tax assets
|
15,759
|
|
|
15,319
|
|
||
Deferred tax liabilities:
|
|
|
|
|
|
||
Developed technology and trademark
|
$
|
(15,575
|
)
|
|
$
|
(15,319
|
)
|
Trademarks and tradenames
|
(1,029
|
)
|
|
(1,029
|
)
|
||
Depreciation and amortization
|
(101
|
)
|
|
—
|
|
||
Other
|
(89
|
)
|
|
—
|
|
||
Total deferred tax liabilities
|
(16,794
|
)
|
|
(16,348
|
)
|
||
Net deferred tax liability
|
(1,035
|
)
|
|
(1,029
|
)
|
|
Year Ended December 31, 2012
|
||
Balance at January 1, 2012
|
$
|
—
|
|
Additions for tax positions related to prior periods
|
122
|
|
|
Reductions
|
—
|
|
|
Lapse of statute of limitations
|
—
|
|
|
Balance at December 31, 2012
|
$
|
122
|
|
Customer relationships
|
$
|
500
|
|
Total identifiable net assets
|
$
|
500
|
|
Goodwill
|
1,867
|
|
|
Total purchase price allocation
|
$
|
2,367
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Three Months Ended:
|
Revenue
|
|
Cost of goods sold
|
|
Operating expenses
|
|
Net loss
|
|
Basic loss per share
|
|
Diluted loss per share
|
||||||||||||
December 31, 2012 (a)
|
$
|
29,222
|
|
|
$
|
7,158
|
|
|
$
|
27,761
|
|
|
$
|
(6,518
|
)
|
|
$
|
(0.10
|
)
|
|
$
|
(0.10
|
)
|
September 30, 2012
|
26,696
|
|
|
6,444
|
|
|
27,185
|
|
|
(5,857
|
)
|
|
(0.10
|
)
|
|
(0.10
|
)
|
||||||
June 30, 2012
|
25,509
|
|
|
6,277
|
|
|
24,819
|
|
|
(6,696
|
)
|
|
(0.11
|
)
|
|
(0.11
|
)
|
||||||
March 31, 2012
|
24,519
|
|
|
5,403
|
|
|
22,790
|
|
|
(16,703
|
)
|
|
(0.29
|
)
|
|
(0.29
|
)
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Three Months Ended:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
December 31, 2011
|
$
|
23,392
|
|
|
$
|
5,394
|
|
|
$
|
21,262
|
|
|
$
|
(3,665
|
)
|
|
$
|
(0.06
|
)
|
|
$
|
(0.06
|
)
|
September 30, 2011
|
22,302
|
|
|
4,829
|
|
|
22,622
|
|
|
(6,603
|
)
|
|
(0.12
|
)
|
|
(0.12
|
)
|
||||||
June 30, 2011
|
19,175
|
|
|
4,150
|
|
|
20,202
|
|
|
(13,666
|
)
|
|
(0.24
|
)
|
|
(0.24
|
)
|
||||||
March 31, 2011
|
18,548
|
|
|
4,373
|
|
|
19,000
|
|
|
(4,795
|
)
|
|
(0.09
|
)
|
|
(0.09
|
)
|
Item 9.
|
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
|
Item 9B.
|
Other Information
|
Item 10.
|
Directors, Executive Officers and Corporate Governance
|
Item 11.
|
Executive Compensation
|
Item 12.
|
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
|
Item 13.
|
Certain Relationships and Related Transactions, and Director Independence
|
Item 14.
|
Principal Accountant Fees and Services
|
Item 15.
|
Exhibits and Financial Statement Schedules
|
Column A
|
Column B
|
|
Column C
|
|
Column D
|
|
Column E
|
||||||||||||
|
|
|
Additions
(Reductions) |
|
|
|
|
||||||||||||
Description
|
Balance at
Beginning of Period |
|
Additions to Bad Debt Expense or Deferred Tax Asset
|
|
Charged
to Other Accounts |
|
Deductions (1)
|
|
Balance at
End of Period |
||||||||||
|
(In thousands)
|
||||||||||||||||||
Year ended December 31, 2012
|
|
|
|
|
|
|
|
|
|
||||||||||
Allowance for doubtful accounts
|
$
|
161
|
|
|
$
|
325
|
|
|
$
|
—
|
|
|
$
|
(14
|
)
|
|
$
|
472
|
|
Year ended December 31, 2011
|
|
|
|
|
|
|
|
|
|
||||||||||
Allowance for doubtful accounts
|
$
|
118
|
|
|
$
|
62
|
|
|
$
|
—
|
|
|
$
|
(19
|
)
|
|
$
|
161
|
|
Year ended December 31, 2010
|
|
|
|
|
|
|
|
|
|
||||||||||
Allowance for doubtful accounts
|
$
|
97
|
|
|
$
|
39
|
|
|
$
|
—
|
|
|
$
|
(18
|
)
|
|
$
|
118
|
|
(1)
|
Deductions represent the actual write-off of accounts receivable balances.
|
Exhibit
|
|
|
|
Number
|
|
Description
|
|
|
|
|
|
2.1
|
|
|
Agreement and Plan of Merger and Reorganization, dated October 27, 2010, by and among Endologix, Inc., Nepal Acquisition Corporation, Nellix, Inc., certain of Nellix, Inc.’s stockholders listed therein and Essex Woodlands Health Ventures, Inc., as representative of Nellix, Inc.’s stockholders (Incorporated by reference to Exhibit 2.1 to Endologix, Inc. Current Report on Form 8-K, filed with the SEC on October 27, 2010).
|
|
|
|
|
3.1
|
|
|
Amended and Restated Certificate of Incorporation (Incorporated by reference to Exhibit 3.1 to Endologix, Inc. Quarterly Report on Form 10-Q, filed with the SEC on July 28, 2009).
|
|
|
|
|
3.2
|
|
|
Amended and Restated Bylaws, as amended (Incorporated by reference to Exhibit 3.1 to Endologix, Inc. Current Report on Form 8-K, filed with the SEC on December 14, 2010).
|
|
|
|
|
4.1
|
|
|
Specimen Certificate of Common Stock (Incorporated by reference to Exhibit 4.1 to Amendment No. 2 to Endologix, Inc. Registration Statement on Form S-1, No. 333-04560, filed with the SEC on June 10, 1996).
|
|
|
|
|
10.1
|
(1)
|
|
1997 Supplemental Stock Option Plan (Incorporated by reference to Exhibit 99.1 to Endologix, Inc. Registration Statement on Form S-8, No. 333-42161, filed with the SEC on December 12, 1997).
|
|
|
|
|
10.2
|
(1)
|
|
1996 Stock Option/Stock Issuance Plan (Incorporated by reference to Exhibit 4.1 to Endologix, Inc. Registration Statement on Form S-8, No. 333-122491, filed with the SEC on February 2, 2005).
|
|
|
|
|
10.3
|
(1)
|
|
2006 Stock Incentive Plan (Incorporated by reference to Exhibit 10.1 to Endologix, Inc. Current Report on Form 8-K, filed with the SEC on May 30, 2012).
|
|
|
|
|
10.4
|
(1)
|
|
Form of Stock Option Agreement under 2006 Stock Incentive Plan (Incorporated by reference to Exhibit 10.1 to Endologix, Inc. Quarterly Report on Form 10-Q, File No. 000-28440, filed with the SEC on November 9, 2006).
|
|
|
|
|
10.5
|
(1)
|
|
Form of Restricted Stock Award Agreement under 2006 Stock Incentive Plan (Incorporated by reference to Exhibit 10.2 to Endologix, Inc. Quarterly Report on Form 10-Q, File No. 000-28440, filed with the SEC on November 9, 2006).
|
|
|
|
|
10.6
|
(1)
|
|
Endologix, Inc. 2006 Employee Stock Purchase Plan, as amended and restated on July 2, 2012 (Incorporated by reference to Exhibit 10.19 to Endologix's Inc. Annual Report on form 10-Q, filed with the SEC on August 3, 2012).
|
|
|
|
|
10.7
|
|
|
Form of Indemnification Agreement entered into with Endologix, Inc. officers and directors (Incorporated by reference to Exhibit 10.41 to Endologix, Inc Quarterly Report on Form 10-Q, File No. 000-28440, filed with the SEC on November 13, 2002).
|
|
|
|
|
10.8
|
|
|
Standard Industrial/Commercial Single-Tenant Lease — Net, dated November 2, 2004, by and between Endologix, Inc. and Del Monico Investments, Inc. (Incorporated by reference to Exhibit 10.46 to Endologix, Inc. Current Report on Form 8-K, File No. 000-28440, filed with the SEC on November 24, 2004).
|
10.8.1
|
|
|
Addendum No. 2 to Standard Industrial/Commercial Single-Tenant Lease — Net, by and between Endologix, Inc. and Del Monico Investments, Inc., dated June 9, 2009 (Incorporated by reference to Exhibit 10.1 to Endologix, Inc. Quarterly Report on Form 10-Q, filed with the SEC on November 2, 2009).
|
|
|
|
|
||
10.9
|
(1)
|
|
|
Offer Letter, dated April 28, 2008, between Endologix, Inc. and John McDermott (Incorporated by reference to Exhibit 10.1 to Endologix, Inc Current Report on Form 8-K F.6 No. 000-28440, filed with the SEC on May 16, 2008).
|
|
|
|
||
10.10
|
(1)
|
|
|
Employment Agreement, dated as of December 29, 2008, by and between Endologix, Inc. and John McDermott (Incorporated by reference to Exhibit 10.1 to Endologix, Inc Current Report on Form 8-K, filed with the SEC on January 2, 2009).
|
|
|
|
||
10.11
|
(1)
|
|
|
Employment Agreement, dated as of December 29, 2008, by and between Endologix, Inc. and Robert J. Krist (Incorporated by reference to Exhibit 10.2 to Endologix, Inc Current Report on Form 8-K, filed with the SEC on January 2, 2009).
|
|
|
|
||
10.12
|
(1)
|
|
|
Employment Agreement, dated as of December 29, 2008, by and between Endologix, Inc. and Stefan G. Schreck, Ph.D. (Incorporated by reference to Exhibit 10.3 to Endologix, Inc. Current Report on Form 8-K, filed with the SEC on January 2, 2009).
|
|
|
|
||
10.13
|
(1)
|
|
|
Employment Agreement, dated as of December 29, 2008, by and between Endologix, Inc. and Janet Fauls (Incorporated by reference to Exhibit 10.4 to Endologix, Inc. Current Report on Form 8-K, filed with the SEC on January 2, 2009).
|
|
|
|
||
10.14
|
|
|
Standard Industrial/Commercial Multi -Tenant Lease — Net, by and between Endologix, Inc. and Four-In-One Associates, dated August 28, 2009 (Incorporated by reference to Exhibit 10.2 to Endologix, Inc. Quarterly Report on Form 10-Q, filed with the SEC on November 2, 2009).
|
|
|
|
|
||
10.15
|
|
|
Credit Agreement, dated October 30, 2009, by and between Endologix, Inc. and Wells Fargo Bank, National Association (Incorporated by reference to Exhibit 10.16 to Endologix, Inc. Annual Report on Form 10-K, filed with the SEC on March 5, 2010).
|
|
|
|
|
||
10.15.1
|
†
|
|
Third Amendment to Credit Agreement, dated February 20, 2012, by and between Endologix, Inc. and Wells Fargo Bank, National Association. (Incorporated by reference to Exhibit 10.15.1 to Endologix Inc. Annual Report on Form 10-K, filed with the SEC on March 6, 2012).
|
|
10.16
|
(1)
|
|
|
Employment Agreement, dated as of April 13, 2009, by and between Endologix, Inc. and Joseph DeJohn (Incorporated by reference to Exhibit 10.17 to Endologix, Inc. Annual Report on Form 10-K, filed with the SEC on March 5, 2010).
|
|
|
|
||
10.17
|
|
|
Securities Purchase Agreement, dated as of October 27, 2010, by and between Endologix, Inc. and Essex Woodlands Health Ventures Fund VII, L.P. (Incorporated by reference to Exhibit 10.1 to Endologix, Inc. Current Report on Form 8-K, filed with the SEC on October 27, 2010).
|
|
|
|
|
|
|
10.17.1
|
|
|
Amendment to Securities Purchase Agreement, dated as of December 9, 2010, by and between Endologix, Inc. and Essex Woodlands Health Ventures Fund VII, L.P. (Incorporated by reference to Exhibit 10.1 to Endologix, Inc. Current Report on Form 8-K, filed with the SEC on December 14, 2010).
|
|
|
|
|
|
|
10.18
|
(1)
|
|
Employment Agreement, dated as of December 10, 2010, by and between Endologix, Inc. and Robert D. Mitchell (Incorporated by reference to Exhibit 10.2 to Endologix, Inc. Current Report on Form 8-K, filed with the SEC on December 14, 2010).
|
|
|
|
|
|
|
10.19
|
†
|
|
Cross License Agreement dated as of October 26, 2011, by and between Endologix, Inc. and Bard Peripheral Vascular, Inc. (Incorporated by reference to Exhibit 10.19 to Endologix Inc. Annual Report on Form 10-K, filed with the SEC on March 6, 2012).
|
|
|
|
|
|
|
10.20
|
(1)
|
|
Form of Employee Restricted Stock Unit Award Agreement under 2006 Stock Incentive Plan (Incorporated by reference to Exhibit 10.1 to Endologix Inc. Quarterly Report on Form 10-Q, filed with the SEC on November 1, 2012).
|
|
|
|
|
|
|
10.21
|
(1)
|
|
Form of Director Restricted Stock Unit Award Agreement under 2006 Stock Incentive Plan (Incorporated by reference to Exhibit 10.1 to Endologix Inc. Quarterly Report on Form 10-Q, filed with the SEC on November 1, 2012).
|
|
|
|
|
|
|
10.22
|
† (2)
|
|
|
Settlement Agreement, dated October 16, 2012 by and among Endologix, Inc., Cook Incorporated, Cook Group and Cook Medical, Inc.
|
|
|
|
|
|
10.23
|
(1)
|
|
Offer Letter, dated January 2, 2013, between Endologix, Inc. and Shelly B. Thunen (Incorporated by reference to Exhibit 10.1 to Endologix, Inc. Current Report on Form 8-K, filed with the SEC on January 3, 2013).
|
|
|
|
|
|
|
10.24
|
(1)
|
|
Employment Agreement, dated January 2, 2013, between Endologix, Inc. and Shelly B. Thunen (Incorporated by reference to Exhibit 10.2 to Endologix, Inc. Current Report on Form 8-K, filed with the SEC on January 3, 2013).
|
|
|
|
|
|
|
10.25
|
(1)
|
|
Severance Agreement and General Release, dated December 31, 2012, between Endologix, Inc. and Robert J. Krist (Incorporated by reference to Exhibit 10.3 to Endologix, Inc. Current Report on Form 8-K, filed with the SEC on January 3, 2013).
|
|
|
|
|
|
|
14
|
|
|
Code of Ethics for Chief Executive Officer and Principal Financial Officers (Incorporated by reference to Exhibit 14 to Endologix, Inc. Annual Report on Form 10-K, No. 000-28440, filed with the SEC on March 26, 2004).
|
|
|
|
|
||
16.1
|
|
|
Letter from PricewaterhouseCoopers LLP to the Securities and Exchange Commission, Dated August 15, 2012 (Incorporated by reference to Exhibit 16.1 to Endologix, Inc. Current Report on Form 8-K, filed with the SEC on August 15, 2012).
|
|
|
|
|
|
|
21.1
|
(2
|
)
|
|
List of Subsidiaries.
|
|
|
|
||
23.1
|
(2
|
)
|
|
Consent of Independent Registered Public Accounting Firm (KPMG LLP).
|
|
|
|
|
|
23.2
|
(2
|
)
|
|
Consent of Independent Registered Public Accounting Firm (PricewaterhouseCoopers LLP).
|
|
|
|
||
24.1
|
(2
|
)
|
|
Power of Attorney (included on signature page hereto).
|
|
|
|
||
31.1
|
(2
|
)
|
|
Certification of Chief Executive Officer Pursuant to Rule 13a-14(a)/15d-14(a) under the Securities Exchange Act of 1934.
|
|
|
|
||
31.2
|
(2
|
)
|
|
Certification of Chief Financial Officer Pursuant to Rule 13a-14(a)/15d-14(a) under the Securities Exchange Act of 1934.
|
|
|
|
||
32.1
|
(3
|
)
|
|
Certification of Chief Executive Officer Pursuant to Rule 13a-14(b)/15d-14(b) under the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350.
|
|
|
|
||
32.2
|
(3
|
)
|
|
Certification of Chief Financial Officer Pursuant to Rule 13a-14(b)/15d-14(b) under the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350.
|
|
|
|
|
|
101.INS
|
(4
|
)
|
|
XBRL Instance Document
|
|
|
|
|
|
101.SCH
|
(4
|
)
|
|
XBRL Taxonomy Extension Schema Document
|
|
|
|
|
|
101.CAL
|
(4
|
)
|
|
XBRL Taxonomy Extension Calculation Link Base Document
|
|
|
|
|
|
101.DEF
|
(4
|
)
|
|
XBRL Taxonomy Extension Definition Link Base Document
|
|
|
|
|
|
101.LAB
|
(4
|
)
|
|
XBRL Taxonomy Extension Label Link Base Document
|
101.PRE
|
(4
|
)
|
|
XBRL Taxonomy Extension Presentation Link Base Document
|
†
|
Portions of this exhibit are omitted and were filed separately with the Securities and Exchange Commission pursuant to Endologix application requesting confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.
|
(1)
|
These exhibits are identified as management contracts or compensatory plans or arrangements of Endologix pursuant to Item 15(a)(3) of Form 10-K.
|
(2)
|
Filed herewith
|
(3)
|
Furnished herewith and not "filed" for purposes of Section 18 of the Securities Exchange Act of 1934.
|
(4)
|
Furnished herewith and not "filed" for purposes of Sections 11 and 12 of the Securities Act of 1933 and Section 18 of the Securities Exchange Act of 1934.
|
ENDOLOGIX, INC.
|
||
|
|
|
By:
|
|
/
S
/ J
OHN
M
C
D
ERMOTT
|
|
|
John McDermott
Chief Executive Officer and Chairman of the Board
(Principal Executive Officer)
|
Signature
|
|
Title
|
|
Date
|
|
|
|
||
/s/ JOHN McDERMOTT
|
|
Chief Executive Officer and Chairman of the Board
|
|
March 14, 2013
|
(John McDermott)
|
|
(Principal Executive Officer)
|
|
|
|
|
|
||
/s/ SHELLEY B. THUNEN
|
|
Chief Financial Officer
|
|
March 14, 2013
|
(Shelley B. Thunen )
|
|
(Principal Financial and Accounting Officer)
|
|
|
|
|
|
||
|
|
|
||
/s/ RODERICK DE GREEF
|
|
Director
|
|
March 14, 2013
|
(Roderick de Greef)
|
|
|
|
|
|
|
|
||
/s/ DAN LEMAITRE
|
|
Director
|
|
March 14, 2013
|
(Dan Lemaitre)
|
|
|
|
|
|
|
|
||
/s/ THOMAS C. WILDER
|
|
Director
|
|
March 14, 2013
|
(
Thomas C. Wilder
)
|
|
|
|
|
|
|
|
||
/s/ GUIDO J. NEELS
|
|
Director
|
|
March 14, 2013
|
(
Guido J. Neels
)
|
|
|
|
|
|
|
|
||
/s/ GREGORY D. WALLER
|
|
Director
|
|
March 14, 2013
|
(Gregory D. Waller)
|
|
|
|
|
COOK INCORPORATED,
Plaintiff,
v.
ENDOLOGIX, INC.,
Defendant.
|
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
|
CIVIL ACTION NO.: 1-09-cv-1248 TWP-DKL
|
ENDOLOGIX, INC.,
Counter claimant,
v.
COOK INCORPORATED,
Counter defendant.
|
|
|
|
COMPANY CONTACT
:
|
INVESTOR CONTACTS
:
|
Endologix, Inc.
|
The Ruth Group
|
John McDermott, CEO
|
Nick Laudico
(646) 536-7030
|
(949) 595-7200
|
Zack Kubow (
646) 536-7020
|
www.endologix.com
|
|
1.
|
CVD/RMS Acquisition Corp., a Delaware corporation.
|
2.
|
Endologix Deutschland GmbH, a German corporation.
|
3.
|
Nellix, Inc., a Delaware corporation.
|
4.
|
ELGX International Holdings GP, a Cayman Islands company.
|
6.
|
Endologix International Holdings B.V., a Dutch corporation.
|
7.
|
Endologix International B.V., a Dutch corporation.
|
8.
|
Endologix New Zealand Co., a New Zealand unlimited liability company.
|
9.
|
Endologix Bermuda L.P., a Bermuda partnership.
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10.
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Endologix International Holdings B.V., a Dutch corporation.
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11.
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Endologix Italia S.r.l., an Italian corporation.
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12.
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Endologix International B.V., a Dutch corporation.
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1.
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I have reviewed this Annual Report on Form 10-K of Endologix, Inc.;
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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.
|
March 14, 2013
|
By:
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/s/ JOHN MCDERMOTT
|
|
|
John McDermott
|
|
|
President and Chief Executive Officer
|
1.
|
I have reviewed this Annual Report on Form 10-K 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.
|
March 14, 2013
|
By:
|
/s/ SHELLEY B. THUNEN
|
|
|
Shelley B. Thunen
|
|
|
Chief Financial Officer
|
(1)
|
The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
/s/ JOHN MCDERMOTT
|
John McDermott
|
President and Chief Executive Officer
|
(1)
|
The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
/s/ SHELLEY B. THUNEN
|
Shelley B. Thunen
|
Chief Financial Officer
|