On May 3, 2022 Apollo Endosurgery, Inc. ("Apollo") (Nasdaq: APEN), a global leader in less invasive medical devices for gastrointestinal and bariatric procedures, reported financial results for the first quarter ended March 31, 2022 and recent corporate highlights (Press release, Apollo Endosurgery, MAY 3, 2022, View Source [SID1234613384]).

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First Quarter 2022 Selected Financial Results
First Quarter and Corporate Highlights
•Grew first quarter 2022 Endoscopic Suturing System (ESS) revenue 24% over the same period in 2021;
•Grew first quarter 2022 Intragastric Balloon (IGB) revenue 16% over the same period in 2021;
•Increased first quarter 2022 revenue from the Company’s top 10 direct accounts by 63% over the same period in 2021;
•Appointed Jeannette Bankes to Board of Directors, deepening Apollo Endosurgery’s Board-level expertise in developing and commercializing new medical technologies.
•Appointed Keely Scamperle as Vice President, Reimbursement & Market Access and promoted Tom Neudeck to Vice President of Research and Development, furthering the Company’s capabilities in key functions driving future growth strategies.
•Secured clearance of OverStitch Sx in Japan
"We commenced 2022 with a strong first quarter performance, including U.S. sales up 33% and total sales up 20% on a year-over-year basis. Perhaps most exciting to our business transformation efforts, we demonstrated sequential growth across all of our product lines in the first quarter overcoming both historical seasonal order patterns and impact from the Omicron outbreak throughout the quarter," said Chas McKhann, Apollo’s president and CEO. "We continue to focus on driving increased utilization of our therapeutic endoscopy portfolio in 2022 as we leverage our expanded sales team and growing adoption of our platforms."
Selected GAAP and Non-GAAP Financial Results for First Quarter 2022 Compared to First Quarter 2021
Total worldwide revenues of $16.7 million for the first quarter of 2022 reflected an increase of 20% compared to $13.9 million in revenue during the first quarter of 2021. Compared to the first quarter of 2021, U.S. product sales increased 33% and OUS increased 6% (or 10% on a constant currency basis).
Compared to the first quarter of 2021, total ESS product sales increased $2.1 million, or 24%, and total IGB product sales increased $0.8 million, or 16%, due to the continued demand in our OverStitch and X-Tack product sales, and strong growth in sales of ORBERA in the U.S. compared to the prior year quarter.
Gross margin increased to 56% for the first quarter of 2022, from 54% in the first quarter of 2021, due to higher product sales and improved variable gross margin on our ESS product sales.
Total operating expenses increased $5.4 million compared to the first quarter of 2021. The increase was primarily due to the expanded salesforce higher and trained during 2021, higher non-cash stock-based compensation, and an increase in marketing spend.

Net loss for the first quarter of 2022 was $8.4 million compared to $4.6 million for the first quarter of 2021.
Non-GAAP adjusted EBITDA, which excludes interest, taxes, depreciation, amortization, unrealized foreign exchange and stock-based compensation, in the first quarter 2022 was a loss of $5.0 million, compared to a loss of $2.0 million in the first quarter 2021.
Cash, cash equivalents and restricted cash were $82.7 million as of March 31, 2022.
Conference Call
Apollo will host a live webcast audio call with slides today at 3:30 p.m. CT / 4:30 p.m. ET. Investors are invited to join the live call via webcast from the Investors section of the Company’s corporate website at www.apolloendo.com. An audio-only option is available is available by dialing +1-973-528-0011 and referencing access code 103583 or the "Apollo Endosurgery First Quarter 2022 Earnings Call." Investors who opt for audio-only will need to download the related slides at www.apolloendo.com.
A replay of the webcast will be made available on Apollo’s website, www.apolloendo.com, shortly after completion of the call.
Non-GAAP Financial Measures
To supplement the Company’s financial statements presented in accordance with U.S. generally accepted accounting principles (GAAP), the Company reports certain non-GAAP financial measures, including non-GAAP adjusted operating expenses, non-GAAP Adjusted EBITDA and non-GAAP product sales percentage change in constant currency. Adjusted operating expense is calculated as operating expense less stock-based compensation. Adjusted EBITDA is calculated as GAAP net loss, plus depreciation and amortization, interest expense, net, income tax expense, stock-based compensation and unrealized foreign exchange. Product sales percentage change in constant currency is calculated by translating current foreign currency sales at last year’s exchange rate. These supplemental measures of our performance are not required by, and are not determined in accordance with GAAP. The Company believes that these non-GAAP financial measures provide investors with an additional tool for evaluating the Company’s core performance, which management uses in its own evaluation of continuing operating performance, and a baseline for assessing the future earnings potential of the Company. The Company’s non-GAAP financial measures may not provide information that is directly comparable to that provided by other companies in the Company’s industry, as other companies in the industry may calculate non-GAAP financial results differently. Non-GAAP financial results should be considered in addition to, and not as a substitute for, or superior to, financial measures calculated in accordance with GAAP. Included in the supplemental tables to this press release is a reconciliation of non-GAAP adjusted EBITDA to GAAP net loss.