Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2018 | Apr. 30, 2018 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | APOLLO ENDOSURGERY, INC. | |
Entity Central Index Key | 1,251,769 | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2018 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 17,509,449 | |
Document Fiscal Year Focus | 2,018 | |
Document Fiscal Period Focus | Q1 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 |
Current assets: | ||
Cash and cash equivalents | $ 22,341 | $ 30,513 |
Accounts receivable, net of allowance for doubtful accounts of $483 and $452, respectively | 11,860 | 11,729 |
Inventory, net | 15,443 | 14,343 |
Prepaid expenses and other current assets | 1,255 | 1,015 |
Total current assets | 50,899 | 57,600 |
Restricted cash | 916 | 905 |
Property and equipment, net of accumulated depreciation of $7,184 and $6,658, respectively | 6,879 | 6,885 |
Goodwill | 6,828 | 6,828 |
Intangible assets, net of accumulated amortization of $30,263 and $28,415, respectively | 34,693 | 36,421 |
Other assets | 404 | 422 |
Total assets | 100,619 | 109,061 |
Current liabilities: | ||
Accounts payable | 18,840 | 18,327 |
Accrued expenses | 6,842 | 7,500 |
Total current liabilities | 25,682 | 25,827 |
Long-term debt | 33,118 | 33,321 |
Total liabilities | 58,800 | 59,148 |
Commitments and contingencies | ||
Stockholders' equity: | ||
Common stock; $0.001 par value; 100,000,000 shares authorized; 17,335,627 and 17,291,209 shares issued and outstanding at March 31, 2018 and December 31, 2017, respectively | 17 | 17 |
Additional paid-in capital | 225,548 | 225,122 |
Accumulated other comprehensive income | 1,409 | 1,795 |
Accumulated deficit | (185,155) | (177,021) |
Total stockholders' equity | 41,819 | 49,913 |
Total liabilities and stockholders' equity | $ 100,619 | $ 109,061 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 |
Statement of Financial Position [Abstract] | ||
Allowance for doubtful accounts | $ 483 | $ 452 |
Accumulated depreciation | 7,184 | 6,658 |
Accumulated amortization | $ 30,263 | $ 28,415 |
Common stock, par value (USD per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized (shares) | 100,000,000 | 100,000,000 |
Common stock, shares issued (shares) | 17,335,627 | 17,291,209 |
Common stock, shares outstanding (shares) | 17,335,627 | 17,291,209 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations and Comprehensive Loss - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Income Statement [Abstract] | ||
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) |
Other comprehensive income (loss): | ||
Foreign currency translation | (386) | 142 |
Comprehensive loss | $ (8,520) | $ (8,075) |
Net loss per share, basic and diluted (USD per share) | $ (0.47) | $ (0.77) |
Shares used in computing net loss per share, basic and diluted (shares) | 17,299,414 | 10,694,221 |
Condensed Consolidated Stateme5
Condensed Consolidated Statements of Changes in Stockholders’ Equity - 3 months ended Mar. 31, 2018 - USD ($) $ in Thousands | Total | Common Stock [Member] | Additional Paid-in Capital [Member] | Accumulated Other Comprehensive Income [Member] | Accumulated Deficit [Member] |
Beginning balance, shares at Dec. 31, 2017 | 17,291,209 | 17,291,209 | |||
Beginning balance at Dec. 31, 2017 | $ 49,913 | $ 17 | $ 225,122 | $ 1,795 | $ (177,021) |
Exercise of common stock options, shares | 44,418 | ||||
Exercise of common stock options | 103 | 103 | |||
Stock based compensation | 323 | 323 | |||
Foreign currency translation | (386) | (386) | |||
Net loss | $ (8,134) | (8,134) | |||
Ending balance, shares at Mar. 31, 2018 | 17,335,627 | 17,335,627 | |||
Ending balance at Mar. 31, 2018 | $ 41,819 | $ 17 | $ 225,548 | $ 1,409 | $ (185,155) |
Condensed Consolidated Stateme6
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Cash flows from operating activities: | ||
Net loss | $ (8,134) | $ (8,217) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation and amortization | 2,358 | 2,399 |
Amortization of deferred financing costs | 58 | 172 |
Non-cash interest expense | 92 | 284 |
Change in inventory reserve | 102 | 80 |
Stock based compensation | 323 | 110 |
Foreign currency exchange on short-term intercompany loans | (403) | (236) |
Changes in operating assets and liabilities: | ||
Accounts receivable | 62 | 658 |
Inventory | (1,206) | 514 |
Prepaid expenses and other assets | (210) | (131) |
Accounts payable and accrued expenses | 272 | 916 |
Net cash used in operating activities | (6,686) | (3,451) |
Cash flows from investing activities: | ||
Purchases of property and equipment | (1,173) | (253) |
Purchase of intangibles and other assets | (120) | (177) |
Net cash used in investing activities | (1,293) | (430) |
Cash flows from financing activities: | ||
Proceeds from exercise of stock options | 103 | 21 |
Payments of deferred financing costs | (353) | 0 |
Payment of debt | 0 | (7,000) |
Net cash used in financing activities | (250) | (6,979) |
Effect of exchange rate changes on cash | 68 | 53 |
Net decrease in cash, cash equivalents and restricted cash | (8,161) | (10,807) |
Cash, cash equivalents and restricted cash at beginning of year | 31,418 | 20,041 |
Cash, cash equivalents and restricted cash at end of period | 23,257 | 9,234 |
Supplemental disclosure of cash flow information: | ||
Cash paid for interest | 889 | 1,057 |
Cash paid for income taxes | $ 14 | $ 18 |
Organization and Business Descr
Organization and Business Description | 3 Months Ended |
Mar. 31, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization and Business Description | Organization and Business Description Apollo Endosurgery, Inc. is a Delaware corporation with both domestic and foreign wholly-owned subsidiaries. Throughout these Notes "Apollo" and the "Company" refer to Apollo Endosurgery, Inc. and its consolidated subsidiaries. Apollo is a medical technology company primarily focused on the design, development, and commercialization of innovative medical devices. The Company's products are used by general surgeons, bariatric surgeons and gastroenterologists in a variety of settings to provide interventional therapy to patients who suffer from obesity and the many co-morbidities associated with obesity as well as various other gastrointestinal conditions. |
Significant Accounting Policies
Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2018 | |
Accounting Policies [Abstract] | |
Significant Accounting Policies | Significant Accounting Policies (a) Basis of Presentation The Company prepared its interim condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States of America ("GAAP"). They do not include all of the information and footnotes required by GAAP for complete financial statements. The accompanying condensed consolidated financial statements include the Company's accounts and the accounts of its wholly-owned subsidiaries. The Company has eliminated all intercompany balances and transactions. The Company has made estimates and judgments affecting the amounts reported in its condensed consolidated financial statements and the accompanying notes. The actual results that the Company experiences may differ materially from the Company's estimates. The accounting estimates that require the Company's most significant, difficult and subjective judgments include revenue recognition, useful lives of intangible assets and long-lived assets, valuation of inventory, allowance for doubtful accounts, stock compensation, and deferred tax asset valuation. (b) Unaudited Interim Results In management's opinion, the unaudited financial information for the interim periods presented includes all adjustments necessary for a fair presentation of the results of operations, financial position, and cash flows. All adjustments are of a normal recurring nature unless otherwise disclosed. Revenues, expenses, assets and liabilities can vary during each quarter of the year. Therefore, the results and trends in these interim financial statements may not be the same as those for the full year. This interim information should be read in conjunction with the audited consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2017 . Certain reclassifications of prior period amounts have been made to conform to the current presentation. (c) Revenue Recognition The Company's principal source of revenue is from the sale of its products. Revenue is recognized when control of the promised goods is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in an exchange for those goods. Generally, these conditions are met under the Company's agreements with most customers upon product shipment. This includes sales to distributors, who sell the products to their customers, take title to the products and assume all risks of ownership at the time of shipment. Our distributors are obligated to pay within specified terms regardless of when, if ever, they sell the products. Customers and distributors generally have the right to return or exchange products purchased from the Company for up to thirty days from the date of product shipment. At the end of each period, the Company determines the extent to which its revenues need to be reduced to account for expected returns and exchanges. Certain customers may receive volume rebates or discounts, which are accounted for as variable consideration. We estimate these amounts based on the expected amount to be provided to customers and reduce revenues recognized. We record deferred revenues when cash payments are received or due in advance of the transfer of goods. The Company accounts for taxes collected from customers and remitted to governmental authorities on a net basis. Accordingly, such amounts are excluded from revenues. Amounts billed to customers related to shipping and handling are included in revenues. Shipping and handling costs related to revenue producing activities are included in cost of sales. (d) Recent Accounting Pronouncements On January 1, 2018, the Company adopted the provisions of ASU 2014-09, Revenue from Contracts with Customers ("ASC 606"), which requires an entity to recognize revenue when it transfers control of promised goods or services to customers in an amount that reflects the consideration to which it expects to be entitled in exchange for those goods or services. The Company adopted this new standard using the modified retrospective method and applied this method only to contracts that were not completed as of January 1, 2018. Prior periods were not retrospectively adjusted. There was no material impact on the Company's financial statement upon adoption of the new revenue recognition standard. In February 2016, the FASB issued ASU 2016-02, Leases ("ASU 2016-02") which requires a lessee to recognize assets and liabilities for leases with a maximum possible term of more than 12 months. A lessee would recognize a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the leased asset (the underlying asset) for the lease term which will require companies to recognize most leases on the balance sheet, thereby increasing reported assets and liabilities. ASU 2016-02 will be effective for the Company on January 1, 2019. The Company is evaluating the effect that ASU 2016-02 will have on its consolidated financial statements. In January 2017, the FASB issued ASU 2017-04, Intangibles - Goodwill and Other: Simplifying the Test for Goodwill Impairment |
Concentrations
Concentrations | 3 Months Ended |
Mar. 31, 2018 | |
Risks and Uncertainties [Abstract] | |
Concentrations | Concentrations Consolidated financial instruments that potentially subject the Company to a concentration of credit risk principally consist of cash, cash equivalents, restricted cash, and accounts receivable. At March 31, 2018 , the Company's cash, cash equivalents and restricted cash are held in deposit accounts at three different banks totaling $23,257 |
Inventory
Inventory | 3 Months Ended |
Mar. 31, 2018 | |
Inventory Disclosure [Abstract] | |
Inventory | Inventory Inventory consists of the following as of: March 31, 2018 December 31, 2017 (unaudited) Raw materials $ 5,649 $ 4,937 Work in progress 401 493 Finished goods 11,529 10,947 Less inventory reserve (2,136 ) (2,034 ) Total inventory, net $ 15,443 $ 14,343 The Company recorded an inventory impairment charge of $102 and $80 for the three months ended March 31, 2018 and 2017 , respectively. Finished goods included $379 of consigned inventory at March 31, 2018 |
Accrued Expenses
Accrued Expenses | 3 Months Ended |
Mar. 31, 2018 | |
Payables and Accruals [Abstract] | |
Accrued Expenses | Accrued Expenses Accrued expenses consist of the following: March 31, 2018 December 31, 2017 (unaudited) Accrued employee compensation and expenses $ 3,442 $ 4,243 Accrued professional service fees 492 522 Accrued returns and rebates 402 438 Accrued insurance and taxes 736 527 Other 1,770 1,770 Total accrued expenses $ 6,842 $ 7,500 |
Long-Term Debt
Long-Term Debt | 3 Months Ended |
Mar. 31, 2018 | |
Debt Disclosure [Abstract] | |
Long-Term Debt | Long-Term Debt Long-term debt consists of the following as of: March 31, 2018 December 31, 2017 (unaudited) Senior secured credit facility $ 32,000 $ 32,000 Payment-in-kind interest 2,254 2,223 Discount on long-term debt (473 ) (534 ) Deferred financing costs (663 ) (368 ) Long-term debt $ 33,118 $ 33,321 On February 28, 2018, the Company entered into a Sixth Amendment to the Credit Agreement with its lender, Athyrium Opportunities II Acquisition LP ("Athyrium") which removed the minimum quarterly revenue requirement and increased the maximum debt-to-revenue ratio to 0.54 from 0.49 with the maximum debt-to-revenue ratio declining gradually each quarter over the remaining term of the facility. As of March 31, 2018 |
Stock Based Compensation
Stock Based Compensation | 3 Months Ended |
Mar. 31, 2018 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Stock Based Compensation | Stock Based Compensation In June 2017, the 2017 Equity Incentive Plan (the "2017 Plan") was approved by the Company's stockholders and replaced the Company's 2016 Equity Incentive Plan (the "2016 Plan"), which was the successor to the 2006 Stock Option Plan ("the 2006 Plan")(collectively with the 2016 Plan, the "Prior Plans"). Grants will no longer be made under the Prior Plans, but the awards that remain outstanding will continue to be governed by the terms of the applicable Prior Plan and the applicable award agreement. A summary of the stock option activity under the Company's 2017 Plan and Prior Plans (collectively, the "Equity Plans") as of March 31, 2018 is presented below. Options Weighted Average Exercise Price Weighted Average Remaining Contractual Term Aggregate Intrinsic Value Options outstanding, December 31, 2017 1,390,428 $4.64 7.0 years $2,432 Options granted 580,901 $6.58 Options exercised (44,418 ) $2.32 Options forfeited (20,410 ) $4.35 Options vested and expected to vest, March 31, 2018 1,906,501 $5.29 7.7 years $2,888 Options exercisable 715,925 $3.60 5.0 years $2,149 Shares subject to awards granted under the 2017 Plan which expire, are repurchased, or are canceled or forfeited will again become available for issuance under the 2017 Plan. The shares available will not be reduced by awards settled in cash or by shares withheld to satisfy tax withholding obligations. Only the net number of shares issued upon the exercise of options by means of a net exercise will be deducted from the shares available under the 2017 Plan. The fair value of stock option grants has been estimated at the date of grant using the Black-Scholes option pricing model with the following weighted average assumptions: Three Months Ended March 31, 2018 Three Months Ended March 31, 2017 Risk free interest rate 2.7 % 2.1 % Expected dividend yield — % — % Estimated volatility 63.2 % 63.9 % Expected life 5.8 years 6.0 years Additional information regarding options is as follows: Three Months Ended March 31, 2018 Three Months Ended March 31, 2017 Weighted-average grant date fair value of options granted during the period $ 3.86 $ 6.99 Aggregate intrinsic value of options exercised during the period $ 170 $ 93 The total compensation cost recognized for stock-based awards was $323 for the three months ended March 31, 2018 and $110 for the three months ended March 31, 2017 . The aggregate intrinsic value in the table above represents the total pre-tax value of the options shown, calculated as the difference between the Company’s closing stock price on March 31, 2018 and the exercise prices of the options shown, multiplied by the number of in-the money options. This is the aggregate amount that would have been received by the option holders if they had all exercised their options on March 31, 2018 and sold the shares thereby received at the closing price of the Company’s stock on that date. This amount changes based on the closing price of the Company’s stock. The Company has 248,500 options outstanding to purchase common shares that vest upon the Company's achievement of certain revenue targets for calendar year 2018. Achievement of the performance targets deemed probable are included in total stock compensation expense. Unrecognized compensation expense related to unvested options was approximately $4,041 at March 31, 2018 , with a remaining amortization period of 3.2 years . A summary of the restricted stock unit activity under the Company's Equity Plans as of March 31, 2018 is presented below. Units Weighted Average Grant Date Fair Value Aggregate Intrinsic Value Unvested units, December 31, 2017 61,198 $5.60 $343 Restricted stock units granted 58,863 $6.58 Restricted stock units forfeited (894 ) $6.50 Unvested units, March 31, 2018 119,167 $6.08 $747 Unrecognized compensation expense related to unvested restricted stock units was approximately $621 at March 31, 2018 , with a remaining amortization period of 3.2 years |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2018 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The provision for income taxes for the three months ended March 31, 2018 and 2017 includes both domestic and foreign income taxes at applicable statutory rates. The provision primarily consists of foreign income taxes. The Company has established a valuation allowance equal to the total net domestic deferred tax asset due to uncertainties regarding the realization of deferred tax assets based on the Company's lack of earnings history. As of March 31, 2018 , the Company has no unrecognized tax benefits or accrued interest or penalties associated with uncertain tax positions. As of March 31, 2018 , the Company has not completed its accounting for the tax effects of the Tax Cut and Jobs Act but has made reasonable estimates of the effects on the remeasurement of its deferred tax assets and liabilities as well as its transition tax liability. The Company will continue to make and refine its calculations as additional analysis is completed. No revisions were recorded during the three months ended March 31, 2018 |
Net Loss Per Share
Net Loss Per Share | 3 Months Ended |
Mar. 31, 2018 | |
Earnings Per Share [Abstract] | |
Net Loss Per Share | Net Loss Per Share The basic and diluted net loss per common share presented in the condensed consolidated statements of operations and comprehensive loss is calculated by dividing net loss attributable to common stockholders by the weighted-average number of common shares outstanding during the period, without consideration for common stock equivalents. Potentially dilutive shares, which include warrants for the purchase of common stock, restricted stock units, and options outstanding under the Company's equity incentive plans, are considered to be common stock equivalents and are only included in the calculation of diluted net loss per share when their effect is dilutive. Potentially dilutive securities not included in the calculation of diluted net loss per share attributable to common stockholders because to do so would be anti-dilutive are as follows (in common stock equivalent shares on a weighted-average basis): Three Months Ended March 31, 2018 2017 Warrants for common stock 251,891 252,021 Common stock options 1,525,688 1,146,196 Restricted stock units 80,579 — 1,858,158 1,398,217 |
Liquidity and Capital Resources
Liquidity and Capital Resources | 3 Months Ended |
Mar. 31, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Liquidity and Capital Resources | Liquidity and Capital Resources The Company has experienced operating losses since inception and occasional debt covenant violations and has an accumulated deficit of $185,155 as of March 31, 2018 . To date, the Company has funded its operating losses and acquisitions through equity offerings and the issuance of debt instruments. The Company's ability to fund future operations will depend upon its level of future operating cash flow and its ability to access additional funding through either equity offerings, issuances of debt instruments or both. In December 2017, the Company filed a shelf registration statement on Form S-3 with the Securities and Exchange Commission ("SEC"), which permits the offering, issuance and sale by it of up to $50,000 of its common stock. In December 2017, the Company also entered into a sales agreement with Cantor Fitzgerald & Co. for the sale and issuance of shares of its common stock of up to $16,000 from time to time in an "at-the-market" program. During the three months ended March 31, 2018, the Company has not sold any shares of common stock under this registration statement. In February 2015, the Company entered into the Credit Agreement that requires the Company to meet minimum revenue requirements and other covenants each quarter and provides a cure provision in the event this requirement is not met. In February 2018, the Company entered into a Sixth Amendment to the Credit Agreement that removed the minimum quarterly revenue requirement and increased the maximum debt-to-revenue ratio to 0.54 from 0.49 |
Fair Value Measurements
Fair Value Measurements | 3 Months Ended |
Mar. 31, 2018 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Fair Value Measurements The carrying amounts of the Company's financial instruments, which primarily include cash, cash equivalents, and restricted cash, accounts receivable, accounts payable and accrued expenses, approximate their fair values due to their short maturities. The fair value of the Company's long-term debt is estimated by management to approximate $32,144 at March 31, 2018 . Management's estimates are based on comparisons of the characteristics of the Company's obligations, comparable ranges of interest rates on recently issued debt, and maturity. Such valuation inputs are considered a Level 3 measurement in the fair value valuation hierarchy. The accounting guidance defines fair value, establishes a consistent framework for measuring fair value and expands disclosure for each major asset and liability category measured at fair value on either a recurring or nonrecurring basis. Fair value is defined as an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, the accounting guidance establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows: Level 1: Observable inputs such as quoted prices in active markets; Level 2: Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and |
Segment and Geographic Informat
Segment and Geographic Information | 3 Months Ended |
Mar. 31, 2018 | |
Segment Reporting [Abstract] | |
Segment and Geographic Information | Segment and Geographic Information Operating segments are defined as components of an enterprise for which separate financial information is available and evaluated regularly by the chief operating decision maker, or decision-making group, in deciding how to allocate resources and in assessing performance. The Company globally manages the business within one reportable segment. Segment information is consistent with how management reviews the business, makes investing and resource allocation decisions and assesses operating performance. The Company’s products are principally sold in the U.S. No other countries are individually significant. Product sales by product group and geographic market, based on the location of the customer, whether the U.S. or outside the U.S. ("OUS") for the periods shown were as follows: Three Months Ended March 31, 2018 Three Months Ended March 31, 2017 (unaudited) U.S. OUS Total Revenues % Total Revenues U.S. OUS Total Revenues % Total Revenues Endo-bariatric $ 4,108 $ 6,188 $ 10,296 65.4 % $ 3,496 $ 3,838 $ 7,334 50.5 % Surgical 2,938 2,266 5,204 33.1 % 4,097 2,923 7,020 48.4 % Other 233 10 243 1.5 % 157 6 163 1.1 % Total revenues $ 7,279 $ 8,464 $ 15,743 100.0 % $ 7,750 $ 6,767 $ 14,517 100.0 % % Total revenues 46.2 % 53.8 % 53.4 % 46.6 % Total distributor sales were 19.7% and 18.8% of total OUS revenues for the three months ended March 31, 2018 and 2017 , respectively. The largest individual country outside the U.S. was 7.7% and 7.8% of total revenues for the three months ended March 31, 2018 and 2017 , respectively. The following table represents property and equipment, net based on the physical geographic location of the asset: March 31, 2018 December 31, 2017 (unaudited) United States $ 3,085 $ 2,855 Costa Rica 3,538 3,748 Other 256 282 Total property and equipment, net $ 6,879 $ 6,885 |
Significant Accounting Polici19
Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2018 | |
Accounting Policies [Abstract] | |
Organization and Business Description | Organization and Business Description Apollo Endosurgery, Inc. is a Delaware corporation with both domestic and foreign wholly-owned subsidiaries. Throughout these Notes "Apollo" and the "Company" refer to Apollo Endosurgery, Inc. and its consolidated subsidiaries. Apollo is a medical technology company primarily focused on the design, development, and commercialization of innovative medical devices. The Company's products are used by general surgeons, bariatric surgeons and gastroenterologists in a variety of settings to provide interventional therapy to patients who suffer from obesity and the many co-morbidities associated with obesity as well as various other gastrointestinal conditions. |
Revenue Recognition | Revenue Recognition The Company's principal source of revenue is from the sale of its products. Revenue is recognized when control of the promised goods is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in an exchange for those goods. Generally, these conditions are met under the Company's agreements with most customers upon product shipment. This includes sales to distributors, who sell the products to their customers, take title to the products and assume all risks of ownership at the time of shipment. Our distributors are obligated to pay within specified terms regardless of when, if ever, they sell the products. Customers and distributors generally have the right to return or exchange products purchased from the Company for up to thirty days from the date of product shipment. At the end of each period, the Company determines the extent to which its revenues need to be reduced to account for expected returns and exchanges. Certain customers may receive volume rebates or discounts, which are accounted for as variable consideration. We estimate these amounts based on the expected amount to be provided to customers and reduce revenues recognized. We record deferred revenues when cash payments are received or due in advance of the transfer of goods. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements On January 1, 2018, the Company adopted the provisions of ASU 2014-09, Revenue from Contracts with Customers ("ASC 606"), which requires an entity to recognize revenue when it transfers control of promised goods or services to customers in an amount that reflects the consideration to which it expects to be entitled in exchange for those goods or services. The Company adopted this new standard using the modified retrospective method and applied this method only to contracts that were not completed as of January 1, 2018. Prior periods were not retrospectively adjusted. There was no material impact on the Company's financial statement upon adoption of the new revenue recognition standard. In February 2016, the FASB issued ASU 2016-02, Leases ("ASU 2016-02") which requires a lessee to recognize assets and liabilities for leases with a maximum possible term of more than 12 months. A lessee would recognize a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the leased asset (the underlying asset) for the lease term which will require companies to recognize most leases on the balance sheet, thereby increasing reported assets and liabilities. ASU 2016-02 will be effective for the Company on January 1, 2019. The Company is evaluating the effect that ASU 2016-02 will have on its consolidated financial statements. In January 2017, the FASB issued ASU 2017-04, Intangibles - Goodwill and Other: Simplifying the Test for Goodwill Impairment |
Net Loss Per Share | The basic and diluted net loss per common share presented in the condensed consolidated statements of operations and comprehensive loss is calculated by dividing net loss attributable to common stockholders by the weighted-average number of common shares outstanding during the period, without consideration for common stock equivalents. Potentially dilutive shares, which include warrants for the purchase of common stock, restricted stock units, and options outstanding under the Company's equity incentive plans, are considered to be common stock equivalents and are only included in the calculation of diluted net loss per share when their effect is dilutive. |
Inventory (Tables)
Inventory (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Inventory Disclosure [Abstract] | |
Schedule of Inventory | Inventory consists of the following as of: March 31, 2018 December 31, 2017 (unaudited) Raw materials $ 5,649 $ 4,937 Work in progress 401 493 Finished goods 11,529 10,947 Less inventory reserve (2,136 ) (2,034 ) Total inventory, net $ 15,443 $ 14,343 |
Accrued Expenses (Tables)
Accrued Expenses (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Payables and Accruals [Abstract] | |
Schedule of Accrued Expenses | Accrued expenses consist of the following: March 31, 2018 December 31, 2017 (unaudited) Accrued employee compensation and expenses $ 3,442 $ 4,243 Accrued professional service fees 492 522 Accrued returns and rebates 402 438 Accrued insurance and taxes 736 527 Other 1,770 1,770 Total accrued expenses $ 6,842 $ 7,500 |
Long-Term Debt (Tables)
Long-Term Debt (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Debt Disclosure [Abstract] | |
Schedule of Long-term Debt | Long-term debt consists of the following as of: March 31, 2018 December 31, 2017 (unaudited) Senior secured credit facility $ 32,000 $ 32,000 Payment-in-kind interest 2,254 2,223 Discount on long-term debt (473 ) (534 ) Deferred financing costs (663 ) (368 ) Long-term debt $ 33,118 $ 33,321 |
Stock Based Compensation (Table
Stock Based Compensation (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Schedule of Stock Option Activity | A summary of the stock option activity under the Company's 2017 Plan and Prior Plans (collectively, the "Equity Plans") as of March 31, 2018 is presented below. Options Weighted Average Exercise Price Weighted Average Remaining Contractual Term Aggregate Intrinsic Value Options outstanding, December 31, 2017 1,390,428 $4.64 7.0 years $2,432 Options granted 580,901 $6.58 Options exercised (44,418 ) $2.32 Options forfeited (20,410 ) $4.35 Options vested and expected to vest, March 31, 2018 1,906,501 $5.29 7.7 years $2,888 Options exercisable 715,925 $3.60 5.0 years $2,149 |
Schedule of Fair Value of Stock Options | The fair value of stock option grants has been estimated at the date of grant using the Black-Scholes option pricing model with the following weighted average assumptions: Three Months Ended March 31, 2018 Three Months Ended March 31, 2017 Risk free interest rate 2.7 % 2.1 % Expected dividend yield — % — % Estimated volatility 63.2 % 63.9 % Expected life 5.8 years 6.0 years |
Schedule of Other Stock Option Information | Additional information regarding options is as follows: Three Months Ended March 31, 2018 Three Months Ended March 31, 2017 Weighted-average grant date fair value of options granted during the period $ 3.86 $ 6.99 Aggregate intrinsic value of options exercised during the period $ 170 $ 93 |
Schedule of Restricted Stock Unit Activity | A summary of the restricted stock unit activity under the Company's Equity Plans as of March 31, 2018 is presented below. Units Weighted Average Grant Date Fair Value Aggregate Intrinsic Value Unvested units, December 31, 2017 61,198 $5.60 $343 Restricted stock units granted 58,863 $6.58 Restricted stock units forfeited (894 ) $6.50 Unvested units, March 31, 2018 119,167 $6.08 $747 |
Net Loss Per Share (Tables)
Net Loss Per Share (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Earnings Per Share [Abstract] | |
Schedule of Antidilutive Securities Excluded from Computation of Diluted Loss Per Share | Potentially dilutive securities not included in the calculation of diluted net loss per share attributable to common stockholders because to do so would be anti-dilutive are as follows (in common stock equivalent shares on a weighted-average basis): Three Months Ended March 31, 2018 2017 Warrants for common stock 251,891 252,021 Common stock options 1,525,688 1,146,196 Restricted stock units 80,579 — 1,858,158 1,398,217 |
Segment and Geographic Inform25
Segment and Geographic Information (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Segment Reporting [Abstract] | |
Schedule of Product Sales by Product Group and Geographic Market | Product sales by product group and geographic market, based on the location of the customer, whether the U.S. or outside the U.S. ("OUS") for the periods shown were as follows: Three Months Ended March 31, 2018 Three Months Ended March 31, 2017 (unaudited) U.S. OUS Total Revenues % Total Revenues U.S. OUS Total Revenues % Total Revenues Endo-bariatric $ 4,108 $ 6,188 $ 10,296 65.4 % $ 3,496 $ 3,838 $ 7,334 50.5 % Surgical 2,938 2,266 5,204 33.1 % 4,097 2,923 7,020 48.4 % Other 233 10 243 1.5 % 157 6 163 1.1 % Total revenues $ 7,279 $ 8,464 $ 15,743 100.0 % $ 7,750 $ 6,767 $ 14,517 100.0 % % Total revenues 46.2 % 53.8 % 53.4 % 46.6 % |
Schedule of Long-Lived Assets by Geographic Area | The following table represents property and equipment, net based on the physical geographic location of the asset: March 31, 2018 December 31, 2017 (unaudited) United States $ 3,085 $ 2,855 Costa Rica 3,538 3,748 Other 256 282 Total property and equipment, net $ 6,879 $ 6,885 |
Concentrations (Details)
Concentrations (Details) $ in Thousands | Mar. 31, 2018USD ($)bank | Dec. 31, 2017USD ($) | Mar. 31, 2017USD ($) | Dec. 31, 2016USD ($) |
Risks and Uncertainties [Abstract] | ||||
Number of banks | bank | 3 | |||
Cash and cash equivalents and restricted cash | $ | $ 23,257 | $ 31,418 | $ 9,234 | $ 20,041 |
Inventory (Details)
Inventory (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2018 | Mar. 31, 2017 | Dec. 31, 2017 | |
Inventory Disclosure [Abstract] | |||
Raw materials | $ 5,649 | $ 4,937 | |
Work in progress | 401 | 493 | |
Finished goods | 11,529 | 10,947 | |
Less inventory reserve | (2,136) | (2,034) | |
Total inventory, net | 15,443 | $ 14,343 | |
Change in inventory reserve | 102 | $ 80 | |
Consigned inventory | $ 379 |
Accrued Expenses (Details)
Accrued Expenses (Details) - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 |
Payables and Accruals [Abstract] | ||
Accrued employee compensation and expenses | $ 3,442 | $ 4,243 |
Accrued professional service fees | 492 | 522 |
Accrued returns and rebates | 402 | 438 |
Accrued insurance and taxes | 736 | 527 |
Other | 1,770 | 1,770 |
Total accrued expenses | $ 6,842 | $ 7,500 |
Long-Term Debt (Schedule of Lon
Long-Term Debt (Schedule of Long-term Debt) (Details) - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 |
Debt Instrument [Line Items] | ||
Discount on long-term debt | $ (473) | $ (534) |
Deferred financing costs | (663) | (368) |
Long-term debt | 33,118 | 33,321 |
Payment in Kind Interest [Member] | ||
Debt Instrument [Line Items] | ||
Long-term debt | 2,254 | 2,223 |
Line of Credit [Member] | Secured Debt [Member] | Credit Facility [Member] | ||
Debt Instrument [Line Items] | ||
Long-term debt | $ 32,000 | $ 32,000 |
Long-Term Debt (Narrative) (Det
Long-Term Debt (Narrative) (Details) | Feb. 28, 2018 | Dec. 31, 2017 |
Secured Debt [Member] | Line of Credit [Member] | Credit Facility Sixth Amendment [Member] | ||
Debt Instrument [Line Items] | ||
Minimum debt to revenue ratio | 0.54 | 0.49 |
Stock Based Compensation (Stock
Stock Based Compensation (Stock Option Activity) (Details) - Stock Option [Member] - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended |
Mar. 31, 2018 | Dec. 31, 2017 | |
Options | ||
Options outstanding, beginning balance (in shares) | 1,390,428 | |
Options granted (in shares) | 580,901 | |
Options exercised (in shares) | (44,418) | |
Options forfeited (in shares) | (20,410) | |
Options vested and expected to vest (in shares) | 1,906,501 | |
Options exercisable (in shares) | 715,925 | |
Weighted Average Exercise Price | ||
Weighted average exercise price, beginning balance (in USD per share) | $ 4.64 | |
Options granted (in USD per share) | $ 6.58 | |
Options exercised (in USD per share) | 2.32 | |
Options forfeited (in USD per share) | 4.35 | |
Options vested and expected to vest (in USD per share) | 5.29 | |
Options exercisable (in USD per share) | $ 3.60 | |
Weighted Average Remaining Contractual Term | ||
Weighted Average Remaining Contractual Term | 7 years | |
Options vested and expected to vest, March 31, 2018 | 7 years 8 months 12 days | |
Options exercisable | 5 years | |
Aggregate Intrinsic Value | ||
Aggregate intrinsic value | $ 2,432 | |
Options vested and expected to vest, March 31, 2018 | $ 2,888 | |
Options exercisable | $ 2,149 |
Stock Based Compensation (Fair
Stock Based Compensation (Fair Value of Stock Options) (Details) - Stock Option [Member] | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Risk free interest rate | 2.70% | 2.10% |
Expected dividend yield | 0.00% | 0.00% |
Estimated volatility | 63.20% | 63.90% |
Expected life | 5 years 9 months 18 days | 6 years |
Stock Based Compensation (Addit
Stock Based Compensation (Additional Information) (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | ||
Mar. 31, 2018 | Mar. 31, 2017 | Dec. 31, 2017 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Stock compensation cost | $ 323 | $ 110 | |
Unrecognized compensation expense related to unvested options | $ 4,041 | ||
Remaining amortization period, less then | 3 years 2 months 12 days | ||
Stock Option [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Weighted-average grant date fair value of options granted during the period (USD per share) | $ 3.86 | $ 6.99 | |
Aggregate intrinsic value of options exercised during the period | $ 170 | $ 93 | |
Stock compensation cost | $ 323 | $ 110 | |
Options granted in period (in shares) | 1,390,428 | ||
Performance Shares [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Options granted in period (in shares) | 248,500 | ||
Restricted stock units [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Remaining amortization period, less then | 3 years 2 months 12 days | ||
Unrecognized compensation expense related to unvested restricted stock units | $ 621 |
Stock Based Compensation (Restr
Stock Based Compensation (Restricted Stock Units Activity) (Details) - Restricted stock units [Member] - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Dec. 31, 2017 | |
Number of Units | ||
Unvested Units, December 31, 2017 (shares) | 61,198 | |
Restricted stock units granted (shares) | 58,863 | |
Restricted stock units forfeited (shares) | (894) | |
Unvested Units, March 31, 2018 (shares) | 119,167 | |
Weighted-Average Grant Date Fair Value | ||
Unvested Units, December 31, 2017 (USD per share) | $ 5.60 | |
Restricted stock units granted (USD per share) | 6.58 | |
Restricted stock units forfeited (USD per share) | 6.50 | |
Unvested Units, March 31, 2018 (USD per share) | $ 6.08 | |
Aggregate Intrinsic Value | ||
Aggregate Intrinsic Value | $ 747 | $ 343 |
Income Taxes (Details)
Income Taxes (Details) | Mar. 31, 2018USD ($) |
Income Tax Disclosure [Abstract] | |
Unrecognized tax benefits | $ 0 |
Accrued interest | 0 |
Tax penalties | $ 0 |
Net Loss Per Share (Details)
Net Loss Per Share (Details) - shares | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities excluded from computation of diluted loss per share | 1,858,158 | 1,398,217 |
Warrants for common [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities excluded from computation of diluted loss per share | 251,891 | 252,021 |
Common stock options [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities excluded from computation of diluted loss per share | 1,525,688 | 1,146,196 |
Restricted stock units [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities excluded from computation of diluted loss per share | 80,579 | 0 |
Liquidity and Capital Resourc37
Liquidity and Capital Resources (Details) $ in Thousands | Feb. 28, 2018 | Dec. 31, 2017USD ($) | Dec. 31, 2017USD ($) | Mar. 31, 2018USD ($) |
Subsidiary, Sale of Stock [Line Items] | ||||
Accumulated deficit | $ (177,021) | $ (177,021) | $ (185,155) | |
Secured Debt [Member] | Credit Facility Sixth Amendment [Member] | Line of Credit [Member] | ||||
Subsidiary, Sale of Stock [Line Items] | ||||
Minimum debt to revenue ratio | 0.54 | 0.49 | ||
Shelf Registration [Member] | ||||
Subsidiary, Sale of Stock [Line Items] | ||||
Authorized amount | 16,000 | |||
Shelf Registration [Member] | Common Stock [Member] | ||||
Subsidiary, Sale of Stock [Line Items] | ||||
Authorized amount | $ 50,000 |
Fair Value Measurements (Detail
Fair Value Measurements (Details) $ in Thousands | Mar. 31, 2018USD ($) |
Fair Value Disclosures [Abstract] | |
Fair value of long-term debt | $ 32,144 |
Segment and Geographic Inform39
Segment and Geographic Information (Segment Information) (Details) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018USD ($)segment | Mar. 31, 2017USD ($) | |
Segment Reporting [Abstract] | ||
Number of reportable segments | segment | 1 | |
Revenue, Major Customer [Line Items] | ||
Revenues | $ 15,743 | $ 14,517 |
Segment Revenue [Member] | Product Risk [Member] | ||
Revenue, Major Customer [Line Items] | ||
Percentage of revenue or sales | 100.00% | 100.00% |
United States [Member] | ||
Revenue, Major Customer [Line Items] | ||
Revenues | $ 7,279 | $ 7,750 |
United States [Member] | Segment Revenue [Member] | Product Risk [Member] | ||
Revenue, Major Customer [Line Items] | ||
Percentage of revenue or sales | 46.20% | 53.40% |
United States [Member] | Distributor Sales [Member] | Product Risk [Member] | ||
Revenue, Major Customer [Line Items] | ||
Percentage of revenue or sales | 7.70% | 7.80% |
Other countries [Member] | ||
Revenue, Major Customer [Line Items] | ||
Revenues | $ 8,464 | $ 6,767 |
Other countries [Member] | Segment Revenue [Member] | Product Risk [Member] | ||
Revenue, Major Customer [Line Items] | ||
Percentage of revenue or sales | 53.80% | 46.60% |
Other countries [Member] | Distributor Sales [Member] | Product Risk [Member] | ||
Revenue, Major Customer [Line Items] | ||
Percentage of revenue or sales | 19.70% | 18.80% |
Endo-Bariatric [Member] | ||
Revenue, Major Customer [Line Items] | ||
Revenues | $ 10,296 | $ 7,334 |
Endo-Bariatric [Member] | Segment Revenue [Member] | Product Risk [Member] | ||
Revenue, Major Customer [Line Items] | ||
Percentage of revenue or sales | 65.40% | 50.50% |
Endo-Bariatric [Member] | United States [Member] | ||
Revenue, Major Customer [Line Items] | ||
Revenues | $ 4,108 | $ 3,496 |
Endo-Bariatric [Member] | Other countries [Member] | ||
Revenue, Major Customer [Line Items] | ||
Revenues | 6,188 | 3,838 |
Surgical [Member] | ||
Revenue, Major Customer [Line Items] | ||
Revenues | $ 5,204 | $ 7,020 |
Surgical [Member] | Segment Revenue [Member] | Product Risk [Member] | ||
Revenue, Major Customer [Line Items] | ||
Percentage of revenue or sales | 33.10% | 48.40% |
Surgical [Member] | United States [Member] | ||
Revenue, Major Customer [Line Items] | ||
Revenues | $ 2,938 | $ 4,097 |
Surgical [Member] | Other countries [Member] | ||
Revenue, Major Customer [Line Items] | ||
Revenues | 2,266 | 2,923 |
Other [Member] | ||
Revenue, Major Customer [Line Items] | ||
Revenues | $ 243 | $ 163 |
Other [Member] | Segment Revenue [Member] | Product Risk [Member] | ||
Revenue, Major Customer [Line Items] | ||
Percentage of revenue or sales | 1.50% | 1.10% |
Other [Member] | United States [Member] | ||
Revenue, Major Customer [Line Items] | ||
Revenues | $ 233 | $ 157 |
Other [Member] | Other countries [Member] | ||
Revenue, Major Customer [Line Items] | ||
Revenues | $ 10 | $ 6 |
Segment and Geographic Inform40
Segment and Geographic Information (Long-Lived Assets by Geographic Area) (Details) - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 |
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Total property and equipment, net | $ 6,879 | $ 6,885 |
United States [Member] | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Total property and equipment, net | 3,085 | 2,855 |
Costa Rica [Member] | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Total property and equipment, net | 3,538 | 3,748 |
Other countries [Member] | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Total property and equipment, net | $ 256 | $ 282 |