Endologix Reports 27% and 25% Revenue Growth for the Full Year and Fourth Quarter 2012

Endologix Reports 27% and 25% Revenue Growth for the Full Year and Fourth
Quarter 2012

IRVINE, Calif., Feb. 27, 2013 (GLOBE NEWSWIRE) -- Endologix, Inc.
(Nasdaq:ELGX), developer and marketer of innovative treatments for aortic
disorders, today announced financial results for the three and twelve months
ended December 31, 2012.

John McDermott, Endologix President and Chief Executive Officer, said, "In
2012 we achieved another year of strong revenue growth driven by continued
adoption of the AFX® Endovascular AAA System. Our U.S. sales team continues to
gain share with existing customers while also introducing more physicians to
the unique benefits of anatomical fixation. Internationally we grew 61% in
2012, led by our new direct sales and marketing team in Europe that has done a
great job building the Endologix business in a short period of time. Overall,
we believe we are well positioned to continue gaining market share,
particularly as we begin to leverage our new product pipeline."

Mr. McDermott added, "During the first quarter 2013, we received CE Mark for
the Nellix® EndoVascular Aneurysm Sealing System. This significant milestone
will allow us to begin a controlled market introduction in Europe of the
Nellix system in March 2013. The Nellix system is a revolutionary new device
that we expect will simplify aortic aneurysm repair and improve clinical
outcomes."

Financial Results

Global revenue in the fourth quarter of 2012 was $29.2 million, a 25% increase
from $23.4 million in the same quarter of 2011. For the year ended December
31, 2012, total revenue increased 27% to $105.9 million, compared to $83.4
million for the year ended December31, 2011.

U.S. revenue in the fourth quarter of 2012 was $23.4 million, a 20% increase
compared with $19.4 million in the fourth 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 $5.9 million, a 47% increase compared to $4.0 million in the
fourth 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 $22.1 million in the fourth quarter of 2012, which represents
a gross margin of 76%. This compares with gross margin of 77% in the fourth
quarter of 2011.Gross profit was $80.7 million for the year ended
December31, 2012, representing a gross margin of 76%. This compares with
gross margin of 78% for the year ended December31, 2011. Lower gross margins
for the three and twelve months ended December31, 2012 are the result of a
greater proportion of international sales to global sales in both periods, and
certain royalty payments that had not yet commenced in the corresponding 2011
periods.

Total operating expenses were $27.8 million in the fourth quarter of 2012,
compared to $21.3 million in the fourth quarter of 2011. Total operating
expenses for the year ended December31, 2012 were $102.6 million, compared
with $83.1 million for the year ended December31, 2011. Operating expenses
for the year ended December31, 2012 include a $5.0 million charge related to
the Company's previously announced settlement agreement with Cook
Incorporated, $1.0 million purchase of an exclusive license to patents used in
the Nellix system, and $0.4 million in transaction costs to acquire our former
Italian distributor's business.

Marketing and sales expenses were $15.0 million in the fourth quarter of 2012,
an increase from $11.5 million in the prior year period.For the year ended
December 31, 2012, marketing and sales expenses were $54.0 million, an
increase from $44.7 million for the year ended December31, 2011. These
increases were driven primarily by the costs associated with building the
Company's direct sales organization in Europe.

Research and development expenses were $4.7 million in the fourth quarter of
2012, an increase from $3.9 million in the prior year period.For the year
ended December31, 2012, research and development expenses were $16.6 million,
a slight decrease from $16.7 million for the year ended December31, 2011.For
the full year 2012 research and development expenses were primarily focused on
the development of Ventana and the Nellix system.

Clinical and regulatory affairs expenses were $1.6 million in the fourth
quarter of 2012, an increase from $1.4 million in the prior year period.For
the year ended December31, 2012, clinical and regulatory affairs expenses
were $6.3 million, an increase from $4.4 million for the year ended
December31, 2011. 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 system.

General and administrative expenses were $6.5 million in the fourth quarter of
2012, up from $4.4 million in the same period in 2011. For the year ended
December31, 2012, general and administrative expenses were $20.3 million, up
from $15.5 million for the year ended December31, 2011. These increases were
driven primarily by legal and administrative expenses associated with the
establishment of European operations.

Endologix reported a net loss for the fourth quarter of 2012 of $6.5 million,
or $(0.11) per share, compared with a net loss of $3.7 million, or $(0.06) per
share, for the fourth quarter of 2011. The fourth quarter 2012 loss includes a
$1.0 million non-cash charge for the increase of the contingent liability
related to the Nellix acquisition.Endologix reported Adjusted Net Loss
(non-GAAP and defined below) for the fourth quarter of 2012 of $5.5 million,
or $(0.09) per share, compared with an Adjusted Net Loss (non-GAAP and defined
below) for the fourth quarter of 2011 of $3.2 million, or $(0.06) per share.

For the year ended December31, 2012, Endologix reported a net loss of $35.8
million, or $(0.60) per share, compared to a net loss of $28.7 million, or
$(0.51) per share, for the year ended December31, 2011. Endologix reported an
Adjusted Net Loss (non-GAAP and defined below) for the year ended December31,
2012 of $15.7 million, or $(0.26) per share, compared with an Adjusted Net
Loss (non-GAAP and defined below) for the year ended December31, 2011 of
$16.5 million, or $(0.29) per share.

Total cash and cash equivalents were $45.1 million as of December31, 2012,
compared to $20.0 million as of December31, 2011.

Financial Guidance

Endologix anticipates 2013 revenue to be in the range of $126 million to $133
million, representing growth of 19% to 25% from 2012. Endologix anticipates a
GAAP loss in 2013 of ($0.14) to ($0.17) per share and an adjusted EBITDA
(non-GAAP and defined below) of $0.01 to $0.05 per share, and anticipates
generating cash in the second half of 2013.

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
408133. 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, 2013 financial guidance, product development, product launches, the
benefits of the Nellix system, sales force expansion 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 has obtained CE mark in
the EU, but is an investigational device and is not available for marketing in
the US. 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 December31, 2012, this GAAP adjustment to net loss
specifically represents: the fair value adjustment to the liability for
contingent payments (in the form of Endologix common stock) to the former
shareholders of Nellix.

In the year ended December31, 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 (in the form of
Endologix common stock); (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 December31, 2011, this GAAP adjustment to net loss
specifically represents: the fair value adjustment to the liability for
contingent payments (in the form of Endologix common stock) to the former
shareholders of Nellix. 

In the year ended December31, 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 (in the form of
Endologix common stock); 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 interest, 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  Twelve Months Ended
                                    December 31,        December 31,
                                    2012      2011      2012       2011
Revenue:                                                         
U.S.                                 $ 23,368  $ 19,415  $ 87,063   $ 71,695
International                        5,854     3,977     18,883     11,722
Total revenue:                       29,222    23,392    105,946    83,417
Cost of goods sold                   7,135     5,394     25,283     18,746
Gross profit                         $ 22,087  $ 17,998  $ 80,664   $ 64,671
Operating expenses:                                              
Research and development             $ 4,685   $ 3,926   $ 16,571   $ 16,738
Clinical and regulatory affairs      1,616     1,445     6,343      4,439
Marketing and sales                  15,030    11,453    53,952     44,655
General and administrative           6,452     4,438     20,266     15,525
Contract termination and business    —         —         422        1,730
acquisition expenses
Settlement costs                     —         —         5,000      —
Total operating expenses             27,783    21,262    102,555    83,087
Loss from operations                 $(5,696) $(3,264) $(21,891) $(18,416)
Other expense                        411       13        347        100
Change in fair value of contingent   (1,000)   (500)     (13,700)   (10,500)
consideration related to acquisition
Total other expense                  (589)     (487)     (13,353)   (10,400)
Net loss before income tax           $(6,285) $(3,751) $(35,243) $(28,816)
Income tax (expense) benefit         $(233)   $ 86      $(531)    $ 86
Net loss                             $(6,518) $(3,665) $(35,774) $(28,730)
Basic and diluted net loss per share $(0.11)  $(0.06)  $(0.60)   $(0.51)
Shares used in computing basic and   61,561    57,267    59,811     56,592
diluted net loss per share

                                                                
                                                                
Non-GAAP Reconciliations:                                        
                                                                
                                    Three Months Ended  Twelve Months Ended
                                    December 31,        December 31,
                                    2012      2011      2012       2011
Net Loss to Adjusted Net Loss and                                
Adjusted Net Loss per Share:
Net loss                             $(6,518) $(3,665) $(35,774) $(28,730)
Fair value adjustment to Nellix      1,000     500       13,700     10,500
contingent consideration liability
Settlement costs                     —         —         5,000      —
Contract termination and business    —         —         422        1,730
acquisition expenses
Acquisition of exclusive             —         —         1,000      —
intellectual property rights
(1) Adjusted Net Loss                $(5,518) $(3,165) $(15,652) $(16,500)
(2) Adjusted Net Loss per Share      $(0.09)  $(0.06)  $(0.26)   $(0.29)
                                                                
                                                                
Adjusted Net Loss to Adjusted                                    
EBITDA:
Adjusted Net Loss                    $ (5,518) $(3,165) $(15,652) $(16,500)
Interest expense                     —         8         7          32
Income tax expense (benefit)         233       (86)      530        (86)
Depreciation and amortization        532       485       2,183      2,729
Stock-based compensation             2,949     972       6,471      4,136
(3) Adjusted EBITDA                  $(1,804) $(1,786) $(6,460)  $(9,689)



ENDOLOGIX, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
Unaudited
(In thousands)
                                                   
                                                   
                                          December 31,
                                          2012      2011
ASSETS                                              
Current assets:                                     
Cash and cash equivalents                  $ 45,118  $ 20,035
Accounts receivable, net                   22,600    15,542
Other receivables                          320       405
Inventories                                18,087    18,099
Other current assets                       1,443     1,023
Total current assets                       87,568    55,104
Property and equipment, net                4,984     4,454
Goodwill                                   29,022    27,073
Intangibles, net                           43,356    43,439
Other assets                               173       185
Total assets                               $ 165,103 $ 130,255
LIABILITIES AND STOCKHOLDERS' EQUITY                
Current liabilities:                                
Accounts payable and accrued expenses      $ 17,194  $ 13,949
Total current liabilities                  17,194    13,949
Long term liabilities:                              
Deferred income taxes                      1,035     1,029
Deferred rent                              —         8
Contingently issuable common stock         52,400    38,700
Total liabilities                          70,629    53,686
Stockholders' equity:                               
Common stock, $0.001 par value             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

CONTACT: COMPANY CONTACTS:
         Endologix, Inc.
         John McDermott, CEO
         Shelley Thunen, CFO
         (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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