On August 3, 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 second quarter ended June 30, 2021 (Press release, Apollo Endosurgery, AUG 3, 2021, View Source [SID1234585608]).

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Highlights
•Achieved total revenue of $16.6 million, an increase of 194% compared to the second quarter of 2020, and a new revenue record for the Company*
•Increased Endoscopic Suturing System (ESS) revenue 23% and Intragastric Balloon (IGB) revenue 16% on a sequential basis compared to the first quarter of 2021
•Realized gross margin of 55% on favorable product mix
•Continued rollout of X-Tack with now more than 120 active sites, demonstrating excellent product performance, a short learning curve, and utility in a diverse range of upper and lower GI applications
•Reported that the Multi-Center ESG Randomized Interventional Trial (MERIT) study investigators announced successful achievement of the study’s primary efficacy and safety endpoints
•Strengthened the Apollo leadership team with the additions of Kirk Ellis as Vice President of Sales, Steve Bosrock as Vice President of Marketing & Medical Education, and Jeffrey Black as Chief Financial Officer
2021 Outlook
Based on results in the first half of 2021, the Company is increasing its guidance for the full year 2021 and now expects revenue between $61-$63 million, compared to its prior guidance of $55-$57 million.
"In the second quarter, Apollo continued to build momentum by delivering strong financial performance, including record revenue and increased gross margin," said Chas McKhann, Apollo’s Chief Executive Officer. "We also achieved a number of strategic milestones, including sequential growth in our ESS and IGB business lines, positive early indication on MERIT study outcomes and a significant expansion of our X-Tack user base. We believe that these accomplishments plus additions to our leadership team and commercial organization position us well for the future."
Second Quarter Results
Total revenues were $16.6 million for the second quarter of 2021, a new record for the Company’s endoscopy business. Revenue increased $11.0 million or 194% compared to $5.6 million in revenue during the second quarter of 2020 which was impacted by the onset of the COVID-19 pandemic.
Compared to the second quarter of 2020, total ESS product sales increased $7.0 million or 196% and total IGB product sales increased $4.0 million or 220% due to the improvement in demand for our products as the impact of the pandemic continued to dissipate.
Gross margin increased to 55% for the second quarter of 2021 from 43% in the second quarter of 2020 due to higher sales, improved mix of higher variable gross margin products including the new X-Tack device, and unabsorbed overhead costs from reduced production volumes in the prior year quarter as a result of the COVID-19 pandemic.
Total operating expenses increased $7.6 million compared to the second quarter of 2020. The increase was due to the normalization of temporary cost controls that we implemented in response to the pandemic. It also was impacted by higher stock-based compensation expense in the second quarter of 2021.
Net loss for the second quarter of 2021 was $3.0 million compared to $6.3 million for the second quarter of 2020. Excluding the $2.9 million gain on forgiveness of the PPP loan for the second quarter of 2021, and non-cash stock-based compensation expense of $2.5 million and $0.5 million for the second quarter of 2021 and 2020, respectively, net loss for the second quarter of 2021 improved 42% from the second quarter of 2020.
Cash, cash equivalents and restricted cash were $31.2 million as of June 30, 2021, representing a decrease of $1.4 million in cash for the quarter.
* Excluding divested product lines.

Conference Call
Apollo will host a conference call on August 3, 2021 at 3:30 p.m. Central Time / 4:30 p.m. Eastern Time to discuss Apollo’s operating results for the second quarter ended June 30, 2021. To join the conference call by telephone, please 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 be made 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, 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. 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.