Endologix CEO McDermott to step down; shares slide -10% on Q4 results

Endologix (NSDQ:ELGX) CEO John McDermott is planning to step down once an appropriate replacement is found, the company said yesterday as it announced fourth-quarter results that handily topped earnings expectations but missed on the top line.

“Despite the business challenges over the past couple of years, I am confident that Endologix has a bright future. Our vision is clear, the value proposition is compelling, and our pipeline of new products positions us for significant long-term growth. I remain deeply committed to our employees, physicians, and patients and will do whatever I can to support an effective leadership transition,” McDermott said in prepared remarks.

“On behalf of the board of directors and the entire Endologix team, I would like to thank John for his remarkable passion and dedication to our company. His leadership has been critical in positioning Endologix as an innovative market leader and in bringing novel solutions to doctors and patients across the globe. We appreciate John’s continued involvement and support of the company, and we wish him well in his future endeavors,” added chairman Daniel Lemaitre.

Fourth-quarter earnings surprise despite sales miss

Endologix pared its losses to -$14.5 million, or -17¢ per share, on sales of $44.0 million for the three months ended Dec. 31, 2017, down -41.7% despite a -7.3% sales decline compared with Q4 2016.

Adjusted EPS came in at -8¢, bettering the consensus by 12¢; analysts on Wall Street were looking for sales of $44.9 million.

Full-year losses were down -58.0% to -$64.6 million, or -80¢ per share, on a -6.1% sales decline to $181.2 million compared with 2016.

“While our top-line performance during the fourth quarter finished at the low end of our guidance, we were pleased to have achieved expanded gross margins and to have further lowered our operating expenses,” McDermott said in a separate release. “Subsequent to the quarter end, we completed patient enrollment in the Elevate IDE clinical study. We plan to file regulatory submissions in the third quarter of 2018 and currently anticipate potential approval of the Alto device in both the U.S. and European markets in 2019. The Alto device incorporates several design enhancements that are intended to simplify the procedure and enable the system to treat a wider range of AAA anatomies than Ovation iX. We also welcomed Greg Morrow as our chief marketing officer, and we believe that under his leadership our team will be able to further strengthen our brand value proposition and maximize the impact of our innovative new product pipeline. Looking forward, we are confident that we have sufficient resources to drive innovation and position the Company for future growth in its addressable markets.”

Endologix said it expects to report losses per share of -89¢ to -95¢ this year on sales of $170 million to $180 million.

ELGX shares, which slid -10.5% to $ 3.92 apiece in pre-market trading, opened down -13.0% at $3.81 apiece before recovering somewhat to $3.93 per share in early trading.

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