On November 5, 2020 Apollo Endosurgery, Inc. ("Apollo") (Nasdaq: APEN), a global leader in less invasive medical devices for gastrointestinal and bariatric procedures, reported financial results for the third quarter ended September 30, 2020 (Press release, Apollo Endosurgery, NOV 5, 2020, View Source [SID1234570065]).
Third Quarter 2020 and Recent Highlights
•Total Endoscopy revenue increased 21% compared to the third quarter of 2019 to $12.5 million
•U.S. Endoscopy revenue increased 37% compared to the third quarter of 2019 to $6.6 million
•Gross margin increased to 55% compared to 48% in the third quarter of 2019
•Net loss improved by 70% to $2.6 million compared to $8.7 million for the third quarter of 2019
•Ended the quarter with $38.2 million in cash, cash equivalents and restricted cash
"The third quarter rebound in elective procedures in our direct markets was both quicker and stronger than our early expectations," stated Todd Newton, Apollo’s Chief Executive Officer. "We also took steps in the third quarter to lower our annual operating expenses and improve our liquidity position. As a result, we believe our liquidity provides sufficient runway through 2021 and through the COVID-19 pandemic, completion of the MERIT trial, and launch of X-Tack."
Third Quarter Results
Worldwide Endoscopy product sales were $12.5 million for the third quarter of 2020, an increase of 21% compared to the third quarter of 2019 as the easing of public health interventions due to the COVID-19 pandemic generated a resurgence in elective procedures that use our Endoscopy products.
Geographically, U.S. Endoscopy sales increased 37% to $6.6 million for the third quarter of 2020 and OUS Endoscopy sales increased 7% to $5.9 million.
By product group, U.S. ESS product sales increased 28% to $4.7 million for the third quarter of 2020 compared to the same period in 2019, while OUS ESS sales remained unchanged at $2.9 million. U.S. IGB product sales increased 70% to $1.9 million for the third quarter of 2020, while OUS IGB product sales increased 15% to $3.0 million.
Total revenue for the third quarter of 2020 was $12.8 million, an increase of 14% from $11.3 million in the prior year third quarter. Excluding $0.1 million and $0.8 million of transition service revenue in the third quarter of 2020 and 2019, respectively, related to the Surgical product line which was divested in December of 2018, total revenue increased 21%.
Gross margin increased to 55% for the third quarter of 2020 from 48% in the third quarter of 2019 primarily due to benefits from completed gross margin improvement projects and the higher mix of IGB product sales and direct market sales as a percentage of total revenue.
Total operating expenses decreased $3.7 million, or 30%, for the third quarter of 2020 due to the liquidity preservation program implemented in the second quarter of 2020 in response to the COVID-19 pandemic.
Net loss for the third quarter of 2020 was $2.6 million compared to $8.7 million for the third quarter of 2019, an improvement of 70%.
Cash, cash equivalents and restricted cash were $38.2 million as of September 30, 2020.
Conference Call
Apollo will host a conference call on November 5, 2020 at 3:30 p.m. Central Time / 4:30 p.m. Eastern Time to discuss operating results for the third quarter ended September 30, 2020. To join the conference call by telephone, please dial +1-785-424-1667. A live webcast of the conference call will be made available on the "Events and Presentations" section of our Investor Relations website: ir.apolloendo.com.
A replay of the webcast will be made available on Apollo’s website, www.apolloendo.com following the event.

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