ALPHARETTA, Ga., Nov. 5, 2015 /PRNewswire/ -- EndoChoice Holdings, Inc. (NYSE: GI) announced today financial results for the third quarter 2015.
Highlights
- Total revenue of $18.4 million, up 30% year-over-year (32% in constant currency)
- Installed base of Fuse® now exceeds 100 systems
- Pathology revenue accelerating; 23% growth in specimens processed and 8% growth in number of customers year-over-year
- International revenue up 188% year-over-year, now 12% of total revenue compared to 5% in Q3 2014
- Updated full year 2015 financial guidance
Mark Gilreath, Founder and Chief Executive Officer of EndoChoice, said, “We delivered strong results in the third quarter, with total revenue up 30%, a growing Fuse installed base that surpassed 100 units, strong trends in our Pathology business and robust growth in our international territories. Fuse continues to take share from larger competitors, as physicians are increasingly recognizing the benefits of its unique 330 degree view and published data demonstrating 69% more polyps detected than standard 170 degree forward viewing scopes. During the quarter we continued to expand our sales and marketing team, with a goal of reaching 70 sales territories, up from 50, by year-end. As we expand this presence, realize the benefits of a larger installed base, and as the territory managers hired over the past four quarters ramp in productivity, we are confident our market share gains will accelerate as we move into 2016.”
David Gill, Chief Financial Officer of EndoChoice, added, “We made continued progress toward profitability in the third quarter, with increased leverage across all expense categories, which declined both in absolute dollars and as a percent of revenues from the second quarter.”
Financial Review
Total revenue for the third quarter 2015 was $18.4 million, compared to $14.2 million in the third quarter 2014, an increase of 30% as reported and an increase of 32% on a constant currency basis. Foreign currency exchange rates negatively impacted third quarter 2015 reported revenue by $0.4 million. Third quarter 2015 revenue growth was driven by Fuse system shipments and strong growth in single use products and pathology revenues. Third quarter 2015 total revenue consisted of $5.6 million of Imaging revenue, $9.1 million of Single-Use Product revenue, and $3.7 million of Pathology revenue. This compares to third quarter 2014 total revenue, which consisted of $2.3 million of Imaging revenue, $8.5 million of Single-Use Product revenue, and $3.4 million of Pathology revenue.
Gross profit was $6.1 million, or 33.4% of revenue, for the third quarter 2015, compared to gross profit of $5.8 million, or 41% of revenue, for the third quarter 2014. On a sequential basis, gross margin decreased almost 2% from 35% in the second quarter 2015 due to fewer Fuse unit sales and decreased leverage of fixed manufacturing costs. Operating expenses for the third quarter 2015 were $16.6 million, compared to $17.5 million for the third quarter 2014, a decrease of 5%. On a sequential basis operating expenses declined $4.8 million from $21.4 million primarily due to lower non-cash stock compensation expenses.
Net loss for the third quarter 2015 was $11.6 million, or ($0.47) per share, compared to a net loss of $14.0 million for the third quarter 2014, or ($1.16) per share. Weighted average basic shares outstanding were 24.7 million for the third quarter 2015.
On a non-GAAP basis, the Company reported Adjusted EBITDA of ($7.3) million, or (40%) of revenue, for the third quarter 2015, compared to ($10.4) million, or (73%) of revenue, for the third quarter 2014 and ($9.6) million or (51%) of revenue for the second quarter 2015. Cash, cash equivalents and investments were $102.7 million as of September 30, 2015.
Financial Guidance
The Company is updating its financial guidance for full year 2015, as follows:
- Total revenue in the range of $72 million to $74 million;
- Gross margin in the range of 33% to 34%;
- Operating expenses in the range of $75 million to $76 million;
- Net loss in the range of ($60) million to ($61) million, or to ($2.85) to ($2.90) per share assuming 21,080,000 weighted average shares outstanding for the year; and
- Adjusted EBITDA in the range of ($37) million to ($38) million.
Additional information regarding EndoChoice’s results can be found by visiting the Investor Relations section of EndoChoice’s website at http://investor.endochoice.com.
Conference Call
EndoChoice will hold a conference call on Thursday, November 5, 2015 at 9:00 a.m. ET to discuss the results. The dial-in numbers are (866) 328-5344 for domestic callers and (412) 317-5469 for international callers. A live webcast of the conference call will be available on the investor relations section of the Company’s website at http://investor.endochoice.com.
A replay of the call will be available starting on November 5, 2015 through November 13, 2015. To access the replay, dial (877) 344-7529 for domestic and (412) 317-0088 for international callers, with the replay access code 10074102. The webcast replay will be available in the investor relations section of the Company’s website for 90 days following the completion of the call.
Forward-Looking Statement
This press release contains “forward-looking statements” as defined under U.S. federal securities laws, including, among other things, statements about our operations and financial performance. Examples of forward-looking statements include, but are not limited to, our projected total revenue, gross margin, operating expense, net loss and Adjusted EBITDA for the full year 2015.
Forward-looking statements include all statements that are not historical facts. Forward-looking statements involve known and unknown risks, uncertainties, and other factors that may cause our actual results, performance, or achievements to be materially different from any future results, performance, or achievements expressed or implied by the forward-looking statements. Given these uncertainties, you should not place undue reliance on any forward-looking statements in this press release. Factors that could affect these statements include, but are not limited to, our ability to achieve or sustain profitability; general economic, market, or business conditions; the opportunities that may be presented to and pursued by the Company; conditions in the medical technology industry; the ability to generate sufficient cash flow or otherwise obtain funds to repay new or outstanding indebtedness; the ability to successfully commercialize our products, including Fuse®; competition from new or existing competitors; and other risks described from time to time in EndoChoice’s filings with the Securities and Exchange Commission (“SEC”) (including the prospectus filed by EndoChoice with the SEC on June 5, 2015). The discussion of these risks is specifically incorporated by reference into this press release.
Forward-looking statements are based on currently available information and our current assumptions, expectations and projections about future events. You should not rely on our forward-looking statements. These statements are not guarantees of future performance and are subject to future events, risks and uncertainties many of which are beyond our control or are currently unknown to us as well as potentially inaccurate assumptions that could cause actual results to differ materially from our expectations and projections. Except as required by law, we disclaim any obligation to update any forward-looking statements for any reason after the date of this press release.
Use of Non-GAAP Financial Measures
The Company has supplemented its GAAP net loss with a non-GAAP measure of Adjusted EBITDA. Management believes that this non-GAAP financial measure provides useful supplemental information to management and investors regarding the performance of EndoChoice, and provides an additional meaningful comparison of results for current periods with previous operating results, and assists management in analyzing future trends, making strategic and business decisions and establishing internal budgets and forecasts.
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