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ENDOLOGIX, INC. REPORTS 2004 FIRST QUARTER RESULTS

05/10/04

ENDOLOGIX, INC. REPORTS 2004 FIRST QUARTER RESULTS

ENDOLOGIX, INC. REPORTS 2004 FIRST QUARTER RESULTS

Irvine, Calif. – May 10, 2004 – Endologix, Inc., (Nasdaq: ELGX), developer and manufacturer of the Powerlink® System endoluminal stent graft (ELG) for the minimally invasive treatment for abdominal aortic aneurysms (AAAs), today reported financial results for the first quarter of 2004.

Paul McCormick, Endologix’s president and CEO, said, “We made great progress this quarter. Through a private equity offering in March, we sold 3,200,000 common shares for gross proceeds of $16.3 million ($15.4 million, net of expenses), bringing our total cash, cash equivalents and marketable securities at the end of March to $28.9 million. We believe this will provide the necessary funds for a focused U.S. product launch later this year, as well as to support further research and development.”

As we anticipated, total revenues declined to $820,000 in the first quarter of 2004, compared to $1.2 million in the same period of 2003 due primarily to the decrease in Guidant product licensing royalties as competition from drug-coated stent products and the introduction of non-licensed competing products adversely affected license revenue.

Total operating expenses increased to $2.6 million in the first quarter of 2004, compared to $2.3 million in the first quarter of 2003. After taking into account a $468,000 reimbursement of legal costs by Jomed-Endosonics in the first quarter of 2003, which reduced general and administrative expenses, total operating expenses for the first quarter of 2004 were lower than in first quarter of 2003

Endologix, Inc. develops and manufactures minimally invasive treatments for vascular diseases. The Company's Powerlink System is an endoluminal stent graft for treating 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 abdominal aortic aneurysms is approximately 75%, making it the 13th leading cause of death in the United States. Additional information can be found on the Company's Web site at www.endologix.com.

Except for historical information contained herein, this news release contains forward-looking statements, the accuracy of which are necessarily subject to risks and uncertainties, including reduction of Company revenue resulting from declines in sales of Guidant’s royalty-bearing products, and the unpredictability of clinical trials and regulatory approval, changes in future economic, competitive and market conditions, uncertainty of acceptance in the marketplace and future business decisions, adequacy of financial resources to support operations after December 31, 2004 and our ability to raise capital, all of which are difficult or impossible to predict accurately and many of which are beyond the control of Endologix, and the risk factors and other matters set forth in the Company’s Annual Report on Form 10-K for the year ended December 31, 2003.

ENDOLOGIX, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share amounts)


(Unaudited)





































 
Three Months Ended
March 31,
 
2003
2004
Revenue:   

Product sales

$490
$343

License revenue

672
477
Total revenue
1,162
820

Cost of sales

257
243
Gross profit
905
577
Operating expenses:

Research, development and clinical

1,846
1,444
Marketing and sales
283
391

General and administrative

138
779

Minority Interest

(17)
--
Total operating costs and expenses
2,250
2,614
Loss from operations
(1,345)
(2,037)
 
Other income (expense):

Interest income

154
54

Gain (loss) on disposal of assets

3
3

Other expense

(2)
7

Total other

155
64
Net loss
($1,190)
($1,973)
 
Basic and diluted net loss per share
($0.05)
($0.07)
Shares used in computing basic and
diluted net loss per share
24,047
29,273
 


ENDOLOGIX, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)



































 
December 31,
March 31,
 
2003
2004
ASSETS    

Cash, cash equivalents and marketable securities

$12,568
$27,339

Accounts receivable, net

239
263
Other receivables
656
507
Inventories
2,780
2,854
Other current assets
245
463

Total current assets

16,488
31,426
 
Property and equipment, net
141
132
Marketable securities
211
1,552
Goodwill and other intangibles, net
18,136
17,784
Other assets
367
28
Total Assets
$35,343
$50,922
 
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
$1,468
$2,112

Total current liabilities

1,468
2,112
Minority interest
--
49

Total liabilities

1,468
2,161
 
Stockholders' equity
33,875
48,471

Total Liabilities and Stockholders' Equity

$35,343
$50,922