Apollo Endosurgery, Inc.

Good afternoon, ladies and gentlemen, and welcome to the Apollo Endosurgery First Quarter 2022 Results Conference Call. At this time, all participants have been placed on a listen-only mode, and we will open the floor for your questions and comments after the presentation. It is now my pleasure to turn the floor over to your host, Matt Kreps. Sir, the floor is yours.

Thank you, John, and thanks, everyone, for participating in today's call to discuss Apollo's First Quarter 2022 Financial and Operating Results. Joining me on the call are Chas McCann, Chief Executive Officer, and Jeff Black, Chief Financial Officer. Today's call will include slides to accompany the audio presentation. For those of you joining us by telephone only, you can download a copy of the slides that are on Vessel Relations' site, ir.apolloendo.com, and choosing events and presentations. Before we begin, I'd like to caution listeners that comments made by management during this conference call today will include forward-looking statements within the meaning of federal security laws. including Apollo's financial outlook and Apollo's plans and timing for product development and sales. In addition, there is uncertainty about the continued spread of COVID-19 virus and the ongoing impact it may have on our operations, demand for our products, global supply chain, and economic activity in general. 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 most recent annual report on Form 10-K, and our most recent Form 10-Q. The content of this conference call contains time-sensitive information that is accurate only as of the date of the live broadcast, May 30, 2022. 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. Additionally, today's discussion will include certain non-GAAP financial measures, which we believe provide an additional tool for evaluating the company's core performance. Management uses these metrics in its own evaluation, continuing operating performance, and a baseline for assessing the future earnings potential of the company. Included in the press release issue today with our financial results and corresponding 8K filing are supplemental tables reconciling non-GAAP figures to their closest GAAP comparable. And now, if I would like to turn the call over to Chad.

Thank you, Matt, and thank you, everybody, for joining us here today. We really appreciate it. So, look, we are about a year into a new strategy to transform Apollo, and I'm really excited about the progress that we've made in a relatively short period of time. We've repositioned the company to go after larger market opportunities, and we're building a much stronger organization that's poised to capitalize on those opportunities as we focus on energizing the business and then over the course of this year moving into an acceleration mode and eventually building leadership positions in the markets we serve. This afternoon, we reported solid performance for the first quarter of the year with sales of $16.7 million. And that was even in the face of the Omicron wave that impacted a lot of companies and procedures around the world, really. And then other global macroeconomic challenges, which we'll refer to over the course of the call. But despite that, and I'll have some of the highlights for the quarter, we achieved 20% year-on-year growth. And it was well-balanced growth. It was 24%. in our ESS franchise. That's our OverStitch device and our Extac product. And we also achieved 16% growth with our Integrastic Balloon franchise. And so again, nice balance across our products. This quarter, our growth was primarily driven by the U.S., with 33% growth in the U.S., 40% for our IGB franchise, 34% for ESS. So really nice performance here in the U.S. An interesting fact here over what we've observed, and this is an extension of what we reported on our prior call, our top 10 accounts grew by 63% year on year. And these are not distributors. These are individual accounts. And the average sales in those top 10 accounts is right around $1 million annualized. So it gives you a sense of what we can achieve when our customers really incorporate Apollo's products into their clinical practice and really make it the focus of patient care. And then in addition, we achieved 14% sequential growth in the number of ordering accounts for XTAC here in the U.S. And we also achieved sequential sales growth in terms of ordering accounts up 14% as well as sequential growth in XTAC sales quarter on quarter. And so while delivering on a strong quarter, we also remain very focused on a broader set of priorities for XTAC. for the overall year, both delivering on the near term, but also building the foundation for the growth in years to come. And so our four main priorities, first is to expand our core GI business and defect closure and fixation. And that's inclusive of both OverStitch and XTAC. It involves training new users, continuing to build adoption, and preparing for the approval of XTAC, the CE mark approval outside the US. Second priority is leveraging a resurgence in Orbera. The Intragastric Balloon franchise has done very well since I've gotten here, and it's been a big, important part of our business, continues to grow. We want to make sure that's sustainable growth, and we're putting a lot of focus and energy behind that. And that fits part and parcel with our third priority, which is preparing for the launch of Apollo ESG and Apollo Revise. We're working through the process with the FDA for a new regulatory clearance and preparing for the new product launch associated with that. and all the while building the organization. We need to have the right capabilities in place to make sure that we can go after those opportunities. And we've been making very important ads, really top to bottom. And I will come back to that. So Jeff's going to provide some updates on the financial results in the quarter. And then I will come back and talk through each of these four priorities and give you updates of how we're doing against each of them. Jeff?