8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported):May 3, 2018

Apollo Endosurgery, Inc.

(Exact name of registrant as specified in its charter)

Delaware	001-35706	16-1630142
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

1120 S. Capital of Texas Highway

Building 1, Suite #300

Austin, Texas 78746

(Address of principal executive offices) (Zip Code)

(512) 279-5100

(Registrant’s telephone number, including area code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligations of the registrant under any of the following provisions:

	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).

Emerging growth company 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. 

Item 2.02    Results of Operations and Financial Condition.

On May 3, 2018, the Company issued a press release reporting its financial results for the fiscal quarter ended March 31, 2018. A copy of the Company’s press release is attached hereto as Exhibit 99.1.

The press release attached hereto as Exhibit 99.1, is furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or subject to the liabilities of that Section or Sections 11 and 12(a)(2) of the Securities Act of 1933, as amended. The information contained herein and in the accompanying Exhibit 99.1 shall not be incorporated by reference into any filing with the Securities and Exchange Commission made by the Company, whether made before or after the date hereof, regardless of any general incorporation language in such filing.

Item 9.01    Financial Statements and Exhibits.

(d)    Exhibits

Exhibit No.	Description of Document
99.1	Press release, issued by Apollo Endosurgery, Inc., dated May 3, 2018.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

		APOLLO ENDOSURGERY, INC.
Dated:	May 3, 2018
		By:	/s/ Todd Newton
		Name:	Todd Newton
		Title:	Chief Executive Officer

EX-99.1

Exhibit 99.1

APOLLO ENDOSURGERY, INC. REPORTS FIRST QUARTER 2018 RESULTS

Total Endo-bariatric Product Sales Increased 40% in the First Quarter

Conference Call to Discuss Results Today at 3:30 p.m. CT / 4:30 p.m. ET

AUSTIN, Texas (May 3, 2018) - Apollo Endosurgery, Inc. ("Apollo") (Nasdaq: APEN), a leader in less invasive medical devices for bariatric and gastrointestinal procedures, today announced financial results for the first quarter ended March 31, 2018.

First Quarter 2018 Highlights

• Total revenues increased 8% over the first quarter of 2017 to $15.7 million

• Total Endo-bariatric product sales were $10.3 million, up 40% over the first quarter of 2017

Todd Newton, CEO of Apollo, said, "We are pleased with our first quarter results and 2018 is off to a great start for the Company. Our worldwide Endo-bariatric product sales increased 40% compared to the first quarter of 2017, with OverStitch™ sales more than doubling compared to the same quarter of last year. For Orbera^®, the launch of Orbera365™ produced both higher selling prices and increased unit sales in our European markets and in the U.S. Orberaimplant volume increased 27% compared to the fourth quarter of 2017 as we rebuild U.S. momentum."

First Quarter 2018 Results

Total revenues in the first quarter of 2018 were $15.7 million, compared to $14.5 million in the first quarter 2017, an increase of 8%.

Total Endo-bariatric product sales increased 40% to $10.3 million in the first quarter of 2018 compared to $7.3 million in the first quarter of 2017, primarily due to higher OverStitch product sales in all markets. Outside the U.S. ("OUS") Endo-bariatric product sales increased 61% or $2.4 million and U.S. Endo-bariatric product sales increased 18%, or $0.6 million in the first quarter of 2018 compared to the first quarter of 2017. Endo-bariatric product sales comprised 65% of total revenues in the first quarter of 2018 compared to 51% in the first quarter of 2017.

Total Surgical product sales decreased $1.8 million, or 26% in the first quarter 2018 compared to the first quarter of 2017 due to reductions in gastric banding procedures being performed.

Gross margin for the first quarter of 2018 was 58.4%, compared to 64.9% for the first quarter of 2017 as a result of a greater proportion of our overall product sales coming from our Endo-bariatric products. We have several gross margin improvement projects underway that are expected to be completed over the next couple of years with the goal to reduce the unit cost of our Endo-bariatric products.

Total operating expenses increased $0.6 million to $16.8 million in the first quarter of 2018, compared to the first quarter of 2017. Higher sales and marketing expenses and research and development expenses in the first quarter were partially offset by lower general and administrative expenses. The increase in sales and marketing expenses was primarily due to higher sales compensation costs while the increase in research and development expense was primarily the result of an increase in clinical study activity and associated costs. Lower general and administrative expenses in the quarter were due to non-recurring fees and costs we incurred in the first quarter of 2017 associated with new public company activities.

Interest expense for the first quarter of 2018 decreased $0.5 million when compared to the first quarter of 2017 due to lower interest charges as a result of a $7.0 million principal payment in March 2017.

Net loss for the first quarter 2018 was $8.1 million compared to $8.2 million for the first quarter of 2017.

Cash, cash equivalents and restricted cash were $23.3 million as of March 31, 2018. During the first quarter of 2018, we used $1.2 million of cash for capital expenditures associated with gross margin improvement projects, $1.2 million for inventory purchases required to maintain safety stock for Endo-bariatric product growth, and $1.2 million for interest and debt amendment fees related to our credit facility. The remaining $4.6 million change was due to cash outflows from our operating activities.

Conference Call

Apollo will host a conference call on May 3, 2018 at 3:30 p.m. Central Time / 4:30 p.m. Eastern Time to discuss Apollo's operating results for the first quarter ended March 31, 2018.

To participate in the conference call dial (888) 213-3934 for domestic callers and (323) 794-2557 for international callers. The conference ID number is 7312360. A live webcast of the conference call will be made available on the "Events and Presentations" section of our Investor Relations website: www.ir.apolloendo.com.

A replay of the webcast will remain available on Apollo's website, www.apolloendo.com, until Apollo releases its second quarter 2018 financial results. In addition, a telephonic replay of the call will be available until May 10, 2018. The replay dial-in numbers are (844) 512-2921 for domestic callers and (412) 317-6671 for international callers. The replay conference ID number is 7312360.

About Apollo Endosurgery, Inc.

Apollo Endosurgery, Inc. is a medical technology company focused on less invasive therapies for the treatment of obesity, a condition facing over 600 million people globally, as well as other gastrointestinal conditions. Apollo's device based therapies are an alternative to invasive surgical procedures, thus lowering complication rates and reducing total healthcare costs. Apollo's products are offered in over 70 countries today.

Apollo’s common stock is traded on Nasdaq Global Market under the symbol "APEN". For more information regarding Apollo Endosurgery, go to: www.apolloendo.com.

Cautionary Note on Forward-Looking Statements

Certain statements in this press release are forward-looking statements that are subject to risks and uncertainties that could cause results to be materially different than expectations. Important factors that could cause actual results to differ materially include: the advancement of Apollo products; development of enhancements to Apollo’s existing products and technologies; market acceptance of Apollo’s products; and statements relating to the availability of cash for Apollo's future operations, Apollo’s ability to support the adoption of its Endo-bariatric products and its ability to broaden its product portfolio as well as other factors detailed in Apollo’s periodic reports filed with the Securities and Exchange Commission, or SEC, including its Form 10-K for the year ended December 31, 2017 and quarterly report on Form 10-Q for the quarter ended March 31, 2018. Copies of reports filed with the SEC are posted on Apollo’s website and are available from Apollo without charge. These forward-looking statements are not guarantees of future performance and speak only as of the date hereof, and, except as required by law, Apollo disclaims any obligation to update these forward-looking statements to reflect future events or circumstances.

Contacts

Apollo Endosurgery, Inc.

Stefanie Cavanaugh, 512-279-5100

Chief Financial Officer

investor-relations@apolloendo.com

The Ruth Group

Lee Roth, 646-536-7000

apolloendo@theruthgroup.com

APOLLO ENDOSURGERY, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Operations

(In thousands, except for share data)

(unaudited)

	Three months ended March 31,
	2018			2017
Revenues	$	15,743		$	14,517
Cost of sales	6,553			5,096
Gross margin	9,190			9,421
Operating expenses:
Sales and marketing	9,245			8,274
General and administrative	3,319			4,187
Research and development	2,456			1,957
Amortization of intangible assets	1,802			1,814
Total operating expenses	16,822			16,232
Loss from operations	(7,632		)	(6,811		)
Other expenses:
Interest expense, net	960			1,481
Other income	(516		)	(125		)
Net loss before income taxes	(8,076		)	(8,167		)
Income tax expense	58			50
Net loss	$	(8,134	)	$	(8,217	)
Net loss per share, basic and diluted	$	(0.47	)	$	(0.77	)
Shares used in computing net loss per share, basic and diluted (1)	17,299,414			10,694,221

_________________________________________

⁽¹⁾ On July 25, 2017, 6.5 million common shares were issued upon completion of a public offering.

APOLLO ENDOSURGERY, INC. AND SUBSIDIARIES

Product Sales by Product Group and Geographic Market

Unaudited (In thousands)

		Three Months Ended March 31, 2018								Three Months Ended March 31, 2017								% Increase / (Decrease)
		U.S.			OUS			Total Revenues		U.S.			OUS			Total Revenues		U.S.		OUS		Total Revenues
Endo-bariatric		4,108			6,188			10,296		3,496			3,838			7,334		17.5	%	61.2	%	40.4	%
Surgical		2,938			2,266			5,204		4,097			2,923			7,020		(28.3	)%	(22.5	)%	(25.9	)%
Other		233			10			243		157			6			163		48.4	%	66.7	%	49.1	%
	Total revenues	$	7,279		$	8,464		$	15,743	$	7,750		$	6,767		$	14,517	(6.1	)%	25.1	%	8.4	%
	% Total revenues	46.2		%	53.8		%			53.4		%	46.6		%