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Apollo Endosurgery shares tumble on weak 3Q sales for obesity treatment

A reduction in gastric banding procedures worldwide undermined the company's sales
measuring a man's waistline
The medical technology company is focused on less-invasive therapies for the treatment of obesity

Apollo Endosurgery Inc (NASDAQ:APEN), a company using a variety of devices to treat obesity, reported on Friday lower third-quarter revenue than expected, causing shares to tumble in morning trade.

The company said total revenue in the third quarter reached $14.1 million, compared with $16.5 million in the same period last year. Consensus was for $17.4 million in revenue. 

Total surgical product sales decreased $2.4 million, or 34%, in the third quarter of 2018 compared with the third-quarter 2017 due to reductions in gastric banding procedures being performed worldwide.

Net loss for the third quarter 2018 was $9.8 million, compared with $4.9 million for the third-quarter 2017. The increased net loss was primarily due to lower gross profit and higher research and development expenses.

Shares of the company dropped 33.55% to trade at the session low of $3.96.

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Total operating expenses increased $1 million to $15.8 million in the third-quarter 2018, compared with the third quarter of 2017.

The company said the increase was due to higher research and development expenses in the third quarter mainly attributable to clinical study activities associated with its Endobariatric products, new product development activities, and margin improvement project activities.

Gross margin for the third quarter 2018 was 55%, compared to 64% for the third quarter of 2017, resulting from a greater proportion of product sales coming from our ESS products, which realize a lower gross margin than the company's other products.

Apollo Endosurgery is a medical technology company focused on less invasive therapies for the treatment of obesity, a condition faced by over 650 million people globally, as well as other gastrointestinal conditions.

The company is based in Austin, Texas.

Reporting by Rene Pastor, contactable on [email protected]

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