On February 25, 2021 Apollo Endosurgery, Inc. ("Apollo") (Nasdaq: APEN), a global leader in less invasive medical devices for gastrointestinal and bariatric procedures, reported financial results for the fourth quarter and year ended December 31, 2020 (Press release, Apollo Endosurgery, FEB 25, 2021, View Source [SID1234575639]). The Company will hold a conference call today at 3:30 p.m. CT / 4:30 p.m. ET to discuss its results.

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Highlights
•Fourth quarter U.S. Endoscopy product sales increased 14.9%
•Net operating loss in the fourth quarter was $3.2 million, a 53.0% reduction from the $6.9 million net operating loss in the fourth quarter of 2019
•Operations used $2.8 million of cash in the fourth quarter of 2020, a 58.1% improvement compared to $6.7 million used in the fourth quarter of 2019
•Received FDA clearance for the X-Tack Endoscopic HeliX Tacking system
Todd Newton, CEO of Apollo, said, "Our revenue in the fourth quarter reflected a continuing recovery of US market procedure volumes. This recovery combined with our cost reduction efforts resulted in a pronounced improvement in our profitability and cash utilization in the fourth quarter, providing a solid foundation as we transition leadership to Apollo’s next CEO, Chas McKhann."
"In addition the 510k clearance of our X-Tack Endoscopic HeliX Tacking System in December adds a new product to our portfolio and opens for our suturing franchise a new and significant addressable market in the lower gastrointestinal tract," said Newton. "With over 20 million lower gastrointestinal tract endoscopic procedures performed annually in the U.S., X-Tack fulfills a long-expressed need for a readily-available advanced closure device to improve healing and reduce adverse event risks."
Total worldwide revenue increased 7.3% to $12.9 million in the fourth quarter of 2020 compared to the fourth quarter of 2019.
ESS product sales increased $0.2 million, or 2.3% in the fourth quarter of 2020 compared to 2019. Fourth quarter U.S. ESS product sales increased 10.2% while OUS ESS product sales decreased 9.3% due to a reduction in European direct market procedures following resurgent COVID-19 concerns during the quarter.
IGB product sales increased 7.1% during the fourth quarter 2020 compared to the fourth quarter 2019. In the U.S., IGB product sales increased 32.7% while OUS IGB product sales decreased 2.4%.
Gross margin for the fourth quarter of 2020 was 55.9%, compared to 48.7% for the fourth quarter of 2019 due to continued progress on the Company’s gross margin improvement projects, higher overhead absorption in the fourth quarter of 2020 due to increased inventory production, and an increase in direct market IGB sales as a percentage of total revenue.
Total operating expenses decreased $2.3 million to $10.4 million for the fourth quarter of 2020 compared to the same period of 2019. This reduction was the result of the operating cost restructuring completed earlier in 2020.
Net loss for the fourth quarter of 2020 was $3.5 million compared to $7.2 million for the fourth quarter 2019.
Cash, cash equivalents and restricted cash were $37.2 million as of December 31, 2020.
In December 2020, the Company entered into an agreement with Solar Capital Ltd. to extend the interest only period and maturity date of its existing term loan by 12 months, improving the Company’s 2021 liquidity by approximately $12.0 million. The amendment will further extend the interest only period and term by an additional 6 months if 2021 revenue milestones are achieved.
Conference Call
Apollo will host a conference call on February 25, 2021 at 3:30 p.m. Central Time / 4:30 p.m. Eastern Time to discuss Apollo’s operating results for the fourth quarter and year ended December 31, 2020. To join the conference call dial +1 973-528-0011. 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 remain available on Apollo’s website, www.apolloendo.com, following the call.

Non-GAAP Financial Measures
To supplement our financial results, we are providing a non-GAAP financial measure, Endoscopy product sales percentage change in constant currency, which removes the impact of changes in foreign currency exchange rates that affect the comparability and trend of revenues compared to the same period of the prior year. Endoscopy product sales percentage change in constant currency is calculated by translating current foreign currency sales at last year’s exchange rate. This supplemental measure of our performance is not required by, and is not determined in accordance with GAAP.
We believe the non-GAAP financial measure included herein is helpful in understanding our current financial performance. We use this supplemental non-GAAP financial measure internally to understand, manage and evaluate our business, and make operating decisions. We believe that making non-GAAP financial information available to investors, in addition to GAAP financial information, may facilitate more consistent comparisons between the company’s performance over time with the performance of other companies in the medical device industry, which may use similar financial measures to supplement their GAAP financial information. However, our non-GAAP financial measure is not meant to be considered in isolation or as a substitute for the comparable GAAP metric.