Apollo Endosurgery, Inc. (NASDAQ:APEN) Q1 2019 Earnings Conference Call Transcript

May 02, 2019 • 04:30 pm ET


Apollo Endosurgery, Inc. (NASDAQ:APEN) Q1 2019 Earnings Conference Call Transcript


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Good afternoon. My name is Kenzie, and I will be your conference operator today. At this time, I would like to welcome everyone to the Apollo Endosurgery First Quarter 2019 Results Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. (Operator Instructions) Thank you.

John Gillings, You may begin your conference.

John Gillings

Thanks, Kenzie, and thanks, everyone for participating in today's call. Joining me on the call are Todd Newton, Chief Executive Officer; and Stefanie Cavanaugh, Chief Financial Officer. Before we begin, I would like to caution listeners that comments made by management during this conference call will include forward-looking statements within the meaning of Federal Securities Laws, including Apollo's financial outlook and Apollo's plans and timing for product development and sales. These forward-looking statements involve material risks and uncertainties and Apollo's actual results may differ materially.

For a discussion of risk factors, I encourage you to review the Company's quarterly report on Form 10-Q filed today, May 2, 2019, with the Securities and Exchange Commission. The content of this conference call contains time-sensitive information that is accurate only as of the date of the live broadcast, May 2, 2019. Except as required by law, Apollo undertakes no obligation to revise or update any statement to reflect events or circumstances after the date of this call.

During this call, we will interchangeably use the terms ESS for OverStitch and the term IGB for Orbera and vice versa. In this call, we will also refer to the term continuing product revenue, which excludes the revenue associated with our Surgical products, which we divested on December 17, 2018. Continuing product revenue will differ from our GAAP revenue as we will still report historical and transitional Surgical product sales as part of our GAAP revenues.

Now, I would like to turn the call over to Todd.

Todd Newton

Thank you, John. And good afternoon, everyone. And thank you for joining today's call to discuss our first quarter 2019 results. We are pleased with our product sales growth this quarter, especially for ESS. The constant currency information that we reported in our press release removes the effects of foreign exchange rate changes and provides a better understanding of our real local currency sales performance in the first quarter versus our GAAP reported revenue, which includes currency effects. Constant currency sales performance, also aligns better to what management expects from our commercial organization worldwide, that being year-over-year growth in the local currency in which our respected teams operate.

In the first quarter of 2019, our Endo-bariatric product sales, which represent our continuing product sales increased 9% in constant currency. Worldwide ESS or OverStitch sales increased 17% in constant currency, and we are very pleased with this result. Of these continuing product sales in the quarter, about 60% were from markets outside the United States where our periodic sales reporting has exposure to changing foreign currency rates.

In our 2018 year-end call, we said we