Endologix Reports 20% Revenue Growth for the Third Quarter 2012

Endologix Reports 20% Revenue Growth for the Third Quarter 2012

Updates 2012 Revenue Guidance to 25% to 27% Growth

IRVINE, Calif., Oct. 25, 2012 (GLOBE NEWSWIRE) -- Endologix, Inc.
(Nasdaq:ELGX), developer and marketer of innovative treatments for aortic
disorders, today announced financial results for the three and nine months
ended September 30, 2012.

John McDermott, Endologix President and Chief Executive Officer, said, "During
the third quarter we continued to gain market share, achieving 20% revenue
growth over the prior year. There continues to be strong interest in the AFX®
Endovascular AAA System and our new product pipeline, which will further
expand our market opportunity. During the quarter we made good progress
advancing our new products and expanding our global sales force and remain on
track to achieve our goals for the remainder of the year."

Mr. McDermott added, "We recently announced the settlement of a patent dispute
with Cook Incorporated. We are pleased to put this lawsuit behind us and
eliminate the ongoing costs and uncertainty of litigation."

Financial Results

Global revenue in the third quarter of 2012 was $26.7 million, a 20% increase
from $22.3 million in the same quarter of 2011. For the nine months ended
September 30, 2012, total revenue increased 28% to $76.7 million, compared to
$60.0 million for the nine months ended September 30, 2011.

U.S. revenue in the third quarter of 2012 was $21.3 million, a 5% increase
compared with $20.3 million in the third quarter of 2011, which was largely
driven by the continued adoption of the AFX system and the expansion of the
U.S. sales force through the addition of clinical specialists. International
revenue was $5.4 million, a 170% increase compared to $2.0 million in the
third quarter of 2011. The international sales increase is attributable to a
transition to a direct sales organization in Europe, beginning in September
2011, and improved penetration in the Latin American and Japanese markets.

Gross profit was $20.3 million in the third quarter of 2012, which represents
a gross margin of 76%. This compares with gross margin of 78% in the third
quarter of 2011.Gross profit was $58.6 million for the nine months ended
September30, 2012, representing a gross margin of 76%. This compares with
gross margin of 78% for the nine months ended September30, 2011. Lower gross
margins for the three and nine months ended September30, 2012 are the result
of a greater proportion of international sales to global sales in both
periods, and royalty payments to CR Bard Inc. that had not yet commenced in
the corresponding 2011 periods.

Total operating expenses were $27.2 million in the third quarter of 2012,
compared to $22.6 million in the third quarter of 2011. Total operating
expenses for the nine months ended September30, 2012 were $74.8 million,
compared with $61.8 million for the nine months ended September30, 2011.
Operating expense for the three and nine months ended September30, 2012
include a $5.0 million charge related to the Company's previously announced
settlement agreement with Cook Incorporated ("Cook").

Marketing and sales expenses were $12.7 million in the third quarter of 2012,
an increase from $12.3 million in the prior year period.For the nine months
ended September30, 2012, marketing and sales expenses were $38.9 million, an
increase from $33.2 million in the prior year period. These increases were
driven primarily by costs associated with building the direct sales
organization in Europe.

Research and development expenses were $3.1 million in the third quarter of
2012, a decrease from $3.6 million in the prior year period. For the nine
months ended September 30, 2012, research and development expenses were $11.9
million, a decrease from $12.8 million in the prior year period. The decrease
in the third quarter of 2012 primarily reflects decreasing Ventana®
Fenestrated System development activities, as the device progresses towards
production and European commercialization. The decrease for the nine months
ended September 30, 2012 largely represents the aforementioned Ventana
progression, partially offset by a $1.0 million charge in the current period
to acquire an exclusive patent license.

Clinical and regulatory affairs expenses were $1.5 million in the third
quarter of 2012, an increase from $1.2 million in the prior year period. For
the nine months ended September 30, 2012, clinical and regulatory affairs
expenses were $4.7 million, an increase from $3.0 million in the prior year
period. These increases were primarily driven by the continued enrollment and
follow-up costs associated with PEVAR and Ventana clinical trials, and various
costs to achieve CE Mark approval of Ventana and the Nellix® EndoVascular
Aneurysm Sealing System.

General and administrative expenses were $4.9 million in the third quarter of
2012, up from $4.2 million in the same period in 2011. For the nine months
ended September30, 2012, general and administrative expenses were $13.8
million, up from $11.1 million in the same period last year. These increases
were driven primarily by expenses associated with the establishment of
European operations.

Endologix reported a net loss for the third quarter of 2012 of $(5.9) million,
or $(0.10) per share, compared with a net loss of $(6.6) million, or $(0.12)
per share, for the third quarter of 2011. The third quarter 2012 loss includes
a $1.0 million non-cash credit for the reduction of the contingent liability
related to the Nellix acquisition, and a $5.0 million charge for the Cook
settlement.Endologix reported Adjusted Net Loss (non-GAAP and defined below)
for the third quarter of 2012 of $(1.8) million, or $(0.03) per share,
compared with an Adjusted Net Loss (non-GAAP and defined below) for the third
quarter of 2011 of $(3.9) million, or $(0.07) per share.

For the nine months ended September30, 2012, Endologix reported a net loss of
$(29.3) million, or $(0.49) per share, compared to a net loss of $(25.1)
million, or $(0.44) per share, for the nine months ended September30, 2011.
Endologix reported an Adjusted Net Loss (non-GAAP and defined below) for the
nine months ended September30, 2012 of $(10.1) million, or $(0.17) per share,
compared with an Adjusted Net Loss (non-GAAP and defined below) for the first
nine months of 2011 of $(13.3) million, or $(0.24) per share.

Total cash and cash equivalents were $47.7 million as of September30, 2012,
compared to total cash and cash equivalents of $20.0 million as of
December31, 2011.

Financial Guidance

Based on the third quarter results, Endologix is updating its full year 2012
revenue guidance. Endologix anticipates 2012 revenue to be in the range of
$104 million to $106 million, representing growth of 25% to 27% from 2011.
This compares to previous guidance of $102 million to $107 million, which
represented growth of 22% to 28% from 2011. Endologix continues to anticipate
2012 Adjusted Net Loss (non-GAAP and defined below) to be in the range of
$(0.20) to $(0.24) per share.

Conference Call Information

Endologix management will host a conference call today to discuss these
topics, beginning at 5:00 p.m. Eastern time (2:00 p.m. Pacific time). To
participate via telephone please call (877) 407-0789 from the U.S. or
1-201-689-8562 from outside the U.S. A telephone replay will be available for
seven days following the completion of the call by dialing (877) 870-5176 from
the U.S. or 1-858-384-5517 from outside the U.S., and entering pin number
401535. The conference call will be broadcast live over the Internet at
www.endologix.com and will be available for 30 days. After the live webcast, a
webcast replay of the call and a transcript of the call will be available
online from the investor relations page of Endologix's website for 30 days.

About Endologix

Endologix, Inc. develops and manufactures minimally invasive treatments for
aortic disorders. Endologix focus is endovascular stent grafts for the
treatment of abdominal aortic aneurysms (AAA). AAA is a weakening of the wall
of the aorta, the largest artery in the body, resulting in a balloon-like
enlargement. Once AAA develops, it continues to enlarge and, if left
untreated, becomes increasingly susceptible to rupture. The overall patient
mortality rate for ruptured AAA is approximately 75%, making it a leading
cause of death in the U.S. Additional information can be found on Endologix's
website at www.endologix.com.

The Nellix® EndoVascular Aneurysm Sealing System is not approved in the United
States for either investigational use or commercial sale. The Ventana™
Fenestrated System is an investigational device in the United States and
international markets.

Cautions Regarding Forward-Looking Statements

Except for historical information contained herein, this news release contains
forward-looking statements, including with respect to increase in market
share, 2012 financial guidance, and litigation expenses, the accuracy of which
are necessarily subject to risks and uncertainties, all of which are difficult
or impossible to predict accurately and many of which are beyond the control
of Endologix. The Nellix system is an investigational device and is not
available for marketing. Many factors may cause actual results to differ
materially from anticipated results, including the success of sales efforts
for the Company's existing products and related new products, product research
and development efforts, unexpected litigation expenses, risks associated with
the Company's international operations, the Company's ability to protect its
intellectual property, and other economic, business, competitive and
regulatory factors. Undue reliance should not be placed on forward-looking
statements, which speak only as of the date they are made. The Company
undertakes no obligation to update any forward looking statements to reflect
new information, events or circumstances after the date they are made, or to
reflect the occurrence of unanticipated events. Please refer to the Company's
Annual Report on Form 10-K for the year ended December 31, 2011, and the
Company's other filings with the Securities and Exchange Commission, for more
detailed information regarding these risks and other factors that may cause
actual results to differ materially from those expressed or implied.

Discussion of Non-GAAP Financial Measures

The Endologix management believes that the non-GAAP measures of (1) "Adjusted
Net Income (Loss)", (2) "Adjusted Net Income (Loss) Per Share", and (3)
"Adjusted EBITDA'"measures enhance an investor's overall understanding of
Endologix's financial and operating performance and its future prospects by
(i) being more reflective of core operating performance; (ii) providing
enhanced measures of progress towards generating positive cash flows from core
operations; and (iii) being more comparable with financial results over
various periods. Endologix management uses these financial measures for
strategic decision making, forecasting future financial results, and
evaluating current period financial and operating performance.

Adjusted Net Income (Loss) and Adjusted Net Earnings (Loss) per Share
Definitions:

"Adjusted Net Income (Loss)" is a non-GAAP measure defined by Endologix as net
income (loss) under GAAP, excluding: (i) all effects arising from applicable
business combination accounting under GAAP for its acquisition of Nellix; (ii)
settlement costs; (iii) contract termination fees and business acquisition
expenses; and (iv) business development expenses.

In the three months ended September 30, 2012, this GAAP adjustment to net loss
specifically represents: (i) the fair value adjustment to the liability for
contingent payments (in the form of Endologix common stock) to the former
shareholders of Nellix and (ii) the cost of the Cook settlement.

In the nine months ended September 30, 2012, this GAAP adjustment to net loss
specifically represents: (i) the fair value adjustment to the liability for
contingent payments to the former shareholders of Nellix; (ii) the cost of the
Cook settlement; (iii) expenses associated with the acquisition of its
distributor in Italy; and (iv) the cost of an exclusive patent.

In the three months ended September 30, 2011, this GAAP adjustment to net loss
specifically represents: (i) the fair value adjustment to the liability for
contingent payments (in the form of Endologix common stock) to the former
shareholders of Nellix; and (ii) distribution agreement termination fees with
a pan-European distributor.

In the nine months ended September 30, 2011, this GAAP adjustment to net loss
specifically represents: (i) the fair value adjustment to the liability for
contingent payments to the former shareholders of Nellix; and (ii)
distribution agreement fees with a pan-European distributor and a separate
distributor in Italy.

In future periods, Adjusted Net Income (Loss) will continue to exclude: (i)
the fair value adjustments to the liability for contingent payments to the
former shareholders of Nellix (in the form of Endologix common stock); (ii)
contract termination fees; (iii) the effects of acquisitions or other business
development transactions; and (iv) other non-recurring expenses or income, as
described by Endologix.

"Adjusted Net Income (Loss) per Share" is a non-GAAP measure defined by
Endologix as Adjusted Net Income (Loss) divided by average shares outstanding
(basic and diluted, as applicable under GAAP).

"GAAP" is generally accepted accounting principles in the United States.

Adjusted EBITDA Definition:

"Adjusted EBITDA" is a non-GAAP measure defined by Endologix as "Adjusted Net
Loss" plus the provision or benefit for income taxes, depreciation expense,
amortization expense, and stock-based compensation expense.

ENDOLOGIX, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Unaudited
(In thousands, except per share amounts)
                                                                
                                                                
                                    Three Months Ended  Nine Months Ended
                                    September 30,       September 30,
                                    2012      2011      2012       2011
Revenue:                                                         
U.S.                                 $21,289 $20,320 $63,695  $52,280
International                        5,407     1,982     13,030     7,745
Total revenue:                       26,696    22,302    76,725     60,025
Cost of goods sold                   6,444     4,829     18,148     13,352
Gross profit                         $20,252 $17,473 $58,577  $46,673
Operating expenses:                                              
Research and development             $3,076  $3,628  $11,886  $12,812
Clinical and regulatory affairs      1,462     1,179     4,727      2,994
Marketing and sales                  12,705    12,331    38,923     33,201
General and administrative           4,942     4,184     13,813     11,087
Contract termination and business    —         1,300     422        1,730
acquisition expenses
Settlement costs                     5,000     —         5,000      —
Total operating expenses             27,185    22,622    74,771     61,824
Loss from operations                 $ (6,933) $ (5,149) $ (16,194) $ (15,151)
Other expense                        (67)      (54)      (65)       87
Change in fair value of contingent   990       (1,400)   (12,700)   (10,000)
consideration related to acquisition
Total other expense                  923       (1,454)   (12,765)   (9,913)
Net loss before income tax           $ (6,010) $ (6,603) $ (28,959) $ (25,064)
Income tax expense                   $ 153     $ —       $ (297)    $ —
Net loss                             $ (5,857) $ (6,603) $ (29,256) $ (25,064)
Basic and diluted net loss per share $ (0.10)  $ (0.12)  $ (0.49)   $ (0.44)
Shares used in computing basic and   61,327    56,961    59,224     56,365
diluted net loss per share

                                                                
Non-GAAP Reconciliations:                                        
                                                                
                                    Three Months Ended  Nine Months Ended
                                    September 30,       September 30,
                                    2012      2011      2012       2011
Net Loss to Adjusted Net Loss and                                
Adjusted Net Loss per Share:
Net loss                             $ (5,857) $ (6,603) $ (29,256) $ (25,064)
Fair value adjustment to Nellix      (990)     1,400     12,700     10,000
contingent consideration liability
Settlement costs                     5,000     —         5,000      —
Contract termination and business    —         1,300     422        1,730
acquisition expenses
Acquisition of exclusive             —         —         1,000      —
intellectual property rights
(1) Adjusted Net Loss                $ (1,847) $ (3,903) $ (10,134) $ (13,334)
(2) Adjusted Net Loss per Share      $ (0.03)  $ (0.07)  $ (0.17)   $ (0.24)
                                                                
                                                                
Adjusted Net Loss to Adjusted                                    
EBITDA:
Adjusted Net Loss                    $ (1,847) $ (3,903) $ (10,134) $ (13,334)
Income tax expense (benefit)         (153)     —         297        —
Depreciation and amortization        773       707       2,047      2,244
Stock-based compensation             1,164     1,280     3,521      3,164
(3) Adjusted EBITDA                  $ (63)    $ (1,916) $ (4,269)  $ (7,926)


ENDOLOGIX, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
Unaudited
(In thousands)
                                                       
                                          September 30, December 31,
                                          2012          2011
ASSETS                                                  
Current assets:                                         
Cash and cash equivalents                  $47,740     $20,035
Accounts receivable, net                   19,616        15,542
Other receivables                          302           405
Inventories                                19,061        18,099
Other current assets                       1,579         1,023
Total current assets                       88,298        55,104
Property and equipment, net                4,951         4,454
Goodwill                                   28,969        27,073
Intangibles, net                           43,399        43,439
Other assets                               211           185
Total assets                               $165,828    $130,255
LIABILITIES AND STOCKHOLDERS' EQUITY                    
Current liabilities:                                    
Accounts payable and accrued expenses      $18,728     $13,949
Total current liabilities                  18,728        13,949
Long term liabilities:                                  
Deferred income taxes                      1,029         1,029
Deferred rent                              —             8
Contingently issuable common stock         51,400        38,700
Long term liabilities                      52,429        39,737
Total liabilities                          71,157        53,686
Stockholders' equity:                                   
                                                       
Common stock, $0.001 par value             63            59
Additional paid-in capital                 288,797       241,441
Accumulated deficit                        (193,496)     (164,240)
Treasury stock at cost, 495 shares         (661)         (661)
Accumulated other comprehensive loss       (32)          (30)
Total stockholders' equity                 94,671        76,569
Total liabilities and stockholders' equity $165,828    $130,255

CONTACT: COMPANY CONTACT:
         Endologix, Inc.
         John McDermott, CEO
         (949) 595-7200
         www.endologix.com
        
         INVESTOR CONTACTS:
         The Ruth Group
         Nick Laudico (646) 536-7030
         Zack Kubow (646) 536-7020
 
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