Source: Endologix
What: After reporting second quarter financial results that fell short of analyst forecasts, shares in Endologix (ELGX.Q) fell 14% so far today.
So what: The maker of devices used in aortic disorders reports that its second quarter sales of $39.5 million grew 3% year-over-year and that its net loss for the quarter totaled $13 million, or a negative $0.19 per share.
After adjusting for currency translation, sales of Endlogix's products for the treatment of abdominal aortic aneurysms would have been a more solid 8% versus last year, and the company's adjusted net loss would be $12 million, or negative $0.18 per share, versus an adjusted net loss of 3.6 million, or negative $0.06 a year ago.
Endologix's U.S. sales increased to $28.8 million, up 14% and 3% from the first quarter and year ago periods, respectively. International revenue of $10.7 million grew 4% year-over-year; however, ex-currency growth was 20% outside the U.S., with Europe sales up 23% thanks to growing use of Nellix, the company's next-generation aortic disorder treatment.
Now what: Currency headwinds are dampening what could otherwise have been argued to be a solid quarter for sales; however, investors are likely disappointed by the risk of lower than previously expected unit volume and the surge in expenses tied to R&D and marketing.
Investments geared at improving demand and rolling out next-generation products led to total operating expenses of $36.3 million last quarter and $72.9 million through the first six months of this year.
Because of the currency drag, Endologix's forward guidance doesn't give investors much reason to cheer either.
The company thinks revenue will be between $154 million and $157 million this year, up 4% to 6% from 2014, and below prior expectations for sales of between $159 million and $165 million. Endologix also expects adjusted losses per share of between $0.59 and $0.64 in 2015.
Although that forecast is disappointing, I could argue that Endologix isn't overly pricey relative to those projected sales. Its $815 million market cap isn't out-of-bounds relative to other small cap medtech companies. However, the lack of clarity into when this company will turn profitable is enough to keep me away from buying this sell-off. Frankly, this idea might be one best revisiting in 2016 when currency headwinds normalize and Nellix could win approval for use in America.
