Apollo Endosurgery (APEN) 10-Q 3 May 18 2018 Q1 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	3 Months Ended
	Mar. 31, 2018	Apr. 30, 2018
Document and Entity Information [Abstract]
Entity Registrant Name	APOLLO ENDOSURGERY, INC.
Entity Central Index Key	1,251,769
Document Type	10-Q
Document Period End Date	Mar. 31, 2018
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		17,509,449
Document Fiscal Year Focus	2,018
Document Fiscal Period Focus	Q1

Condensed Consolidated Balance

Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Mar. 31, 2018	Dec. 31, 2017
Current assets:
Cash and cash equivalents	$ 22,341	$ 30,513
Accounts receivable, net of allowance for doubtful accounts of $483 and $452, respectively	11,860	11,729
Inventory, net	15,443	14,343
Prepaid expenses and other current assets	1,255	1,015
Total current assets	50,899	57,600
Restricted cash	916	905
Property and equipment, net of accumulated depreciation of $7,184 and $6,658, respectively	6,879	6,885
Goodwill	6,828	6,828
Intangible assets, net of accumulated amortization of $30,263 and $28,415, respectively	34,693	36,421
Other assets	404	422
Total assets	100,619	109,061
Current liabilities:
Accounts payable	18,840	18,327
Accrued expenses	6,842	7,500
Total current liabilities	25,682	25,827
Long-term debt	33,118	33,321
Total liabilities	58,800	59,148
Commitments and contingencies
Stockholders' equity:
Common stock; $0.001 par value; 100,000,000 shares authorized; 17,335,627 and 17,291,209 shares issued and outstanding at March 31, 2018 and December 31, 2017, respectively	17	17
Additional paid-in capital	225,548	225,122
Accumulated other comprehensive income	1,409	1,795
Accumulated deficit	(185,155)	(177,021)
Total stockholders' equity	41,819	49,913
Total liabilities and stockholders' equity	$ 100,619	$ 109,061

Consolidated Balance Sheets (Pa

Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Mar. 31, 2018	Dec. 31, 2017
Statement of Financial Position [Abstract]
Allowance for doubtful accounts	$ 483	$ 452
Accumulated depreciation	7,184	6,658
Accumulated amortization	$ 30,263	$ 28,415
Common stock, par value (USD per share)	$ 0.001	$ 0.001
Common stock, shares authorized (shares)	100,000,000	100,000,000
Common stock, shares issued (shares)	17,335,627	17,291,209
Common stock, shares outstanding (shares)	17,335,627	17,291,209

Condensed Consolidated Statemen

Condensed Consolidated Statements of Operations and Comprehensive Loss - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Income Statement [Abstract]
Revenues	$ 15,743	$ 14,517
Cost of sales	6,553	5,096
Gross margin	9,190	9,421
Operating expenses:
Sales and marketing	9,245	8,274
General and administrative	3,319	4,187
Research and development	2,456	1,957
Amortization of intangible assets	1,802	1,814
Total operating expenses	16,822	16,232
Loss from operations	(7,632)	(6,811)
Other expenses:
Interest expense, net	960	1,481
Other income	(516)	(125)
Net loss before income taxes	(8,076)	(8,167)
Income tax expense	58	50
Net loss	(8,134)	(8,217)
Other comprehensive income (loss):
Foreign currency translation	(386)	142
Comprehensive loss	$ (8,520)	$ (8,075)
Net loss per share, basic and diluted (USD per share)	$ (0.47)	$ (0.77)
Shares used in computing net loss per share, basic and diluted (shares)	17,299,414	10,694,221

Condensed Consolidated Stateme5

Condensed Consolidated Statements of Changes in Stockholders’ Equity - 3 months ended Mar. 31, 2018 - USD ($) $ in Thousands	Total	Common Stock [Member]	Additional Paid-in Capital [Member]	Accumulated Other Comprehensive Income [Member]	Accumulated Deficit [Member]
Beginning balance, shares at Dec. 31, 2017	17,291,209	17,291,209
Beginning balance at Dec. 31, 2017	$ 49,913	$ 17	$ 225,122	$ 1,795	$ (177,021)
Exercise of common stock options, shares		44,418
Exercise of common stock options	103		103
Stock based compensation	323		323
Foreign currency translation	(386)			(386)
Net loss	$ (8,134)				(8,134)
Ending balance, shares at Mar. 31, 2018	17,335,627	17,335,627
Ending balance at Mar. 31, 2018	$ 41,819	$ 17	$ 225,548	$ 1,409	$ (185,155)

Condensed Consolidated Stateme6

Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Cash flows from operating activities:
Net loss	$ (8,134)	$ (8,217)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	2,358	2,399
Amortization of deferred financing costs	58	172
Non-cash interest expense	92	284
Change in inventory reserve	102	80
Stock based compensation	323	110
Foreign currency exchange on short-term intercompany loans	(403)	(236)
Changes in operating assets and liabilities:
Accounts receivable	62	658
Inventory	(1,206)	514
Prepaid expenses and other assets	(210)	(131)
Accounts payable and accrued expenses	272	916
Net cash used in operating activities	(6,686)	(3,451)
Cash flows from investing activities:
Purchases of property and equipment	(1,173)	(253)
Purchase of intangibles and other assets	(120)	(177)
Net cash used in investing activities	(1,293)	(430)
Cash flows from financing activities:
Proceeds from exercise of stock options	103	21
Payments of deferred financing costs	(353)	0
Payment of debt	0	(7,000)
Net cash used in financing activities	(250)	(6,979)
Effect of exchange rate changes on cash	68	53
Net decrease in cash, cash equivalents and restricted cash	(8,161)	(10,807)
Cash, cash equivalents and restricted cash at beginning of year	31,418	20,041
Cash, cash equivalents and restricted cash at end of period	23,257	9,234
Supplemental disclosure of cash flow information:
Cash paid for interest	889	1,057
Cash paid for income taxes	$ 14	$ 18

Organization and Business Descr

Organization and Business Description	3 Months Ended
	Mar. 31, 2018
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Organization and Business Description	Organization and Business Description Apollo Endosurgery, Inc. is a Delaware corporation with both domestic and foreign wholly-owned subsidiaries. Throughout these Notes "Apollo" and the "Company" refer to Apollo Endosurgery, Inc. and its consolidated subsidiaries. Apollo is a medical technology company primarily focused on the design, development, and commercialization of innovative medical devices. The Company's products are used by general surgeons, bariatric surgeons and gastroenterologists in a variety of settings to provide interventional therapy to patients who suffer from obesity and the many co-morbidities associated with obesity as well as various other gastrointestinal conditions.

Significant Accounting Policies

Significant Accounting Policies	3 Months Ended
	Mar. 31, 2018
Accounting Policies [Abstract]
Significant Accounting Policies	Significant Accounting Policies (a) Basis of Presentation The Company prepared its interim condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States of America ("GAAP"). They do not include all of the information and footnotes required by GAAP for complete financial statements. The accompanying condensed consolidated financial statements include the Company's accounts and the accounts of its wholly-owned subsidiaries. The Company has eliminated all intercompany balances and transactions. The Company has made estimates and judgments affecting the amounts reported in its condensed consolidated financial statements and the accompanying notes. The actual results that the Company experiences may differ materially from the Company's estimates. The accounting estimates that require the Company's most significant, difficult and subjective judgments include revenue recognition, useful lives of intangible assets and long-lived assets, valuation of inventory, allowance for doubtful accounts, stock compensation, and deferred tax asset valuation. (b) Unaudited Interim Results In management's opinion, the unaudited financial information for the interim periods presented includes all adjustments necessary for a fair presentation of the results of operations, financial position, and cash flows. All adjustments are of a normal recurring nature unless otherwise disclosed. Revenues, expenses, assets and liabilities can vary during each quarter of the year. Therefore, the results and trends in these interim financial statements may not be the same as those for the full year. This interim information should be read in conjunction with the audited consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2017 . Certain reclassifications of prior period amounts have been made to conform to the current presentation. (c) Revenue Recognition The Company's principal source of revenue is from the sale of its products. Revenue is recognized when control of the promised goods is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in an exchange for those goods. Generally, these conditions are met under the Company's agreements with most customers upon product shipment. This includes sales to distributors, who sell the products to their customers, take title to the products and assume all risks of ownership at the time of shipment. Our distributors are obligated to pay within specified terms regardless of when, if ever, they sell the products. Customers and distributors generally have the right to return or exchange products purchased from the Company for up to thirty days from the date of product shipment. At the end of each period, the Company determines the extent to which its revenues need to be reduced to account for expected returns and exchanges. Certain customers may receive volume rebates or discounts, which are accounted for as variable consideration. We estimate these amounts based on the expected amount to be provided to customers and reduce revenues recognized. We record deferred revenues when cash payments are received or due in advance of the transfer of goods. The Company accounts for taxes collected from customers and remitted to governmental authorities on a net basis. Accordingly, such amounts are excluded from revenues. Amounts billed to customers related to shipping and handling are included in revenues. Shipping and handling costs related to revenue producing activities are included in cost of sales. (d) Recent Accounting Pronouncements On January 1, 2018, the Company adopted the provisions of ASU 2014-09, Revenue from Contracts with Customers ("ASC 606"), which requires an entity to recognize revenue when it transfers control of promised goods or services to customers in an amount that reflects the consideration to which it expects to be entitled in exchange for those goods or services. The Company adopted this new standard using the modified retrospective method and applied this method only to contracts that were not completed as of January 1, 2018. Prior periods were not retrospectively adjusted. There was no material impact on the Company's financial statement upon adoption of the new revenue recognition standard. In February 2016, the FASB issued ASU 2016-02, Leases ("ASU 2016-02") which requires a lessee to recognize assets and liabilities for leases with a maximum possible term of more than 12 months. A lessee would recognize a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the leased asset (the underlying asset) for the lease term which will require companies to recognize most leases on the balance sheet, thereby increasing reported assets and liabilities. ASU 2016-02 will be effective for the Company on January 1, 2019. The Company is evaluating the effect that ASU 2016-02 will have on its consolidated financial statements. In January 2017, the FASB issued ASU 2017-04, Intangibles - Goodwill and Other: Simplifying the Test for Goodwill Impairment

Concentrations

Concentrations	3 Months Ended
	Mar. 31, 2018
Risks and Uncertainties [Abstract]
Concentrations	Concentrations Consolidated financial instruments that potentially subject the Company to a concentration of credit risk principally consist of cash, cash equivalents, restricted cash, and accounts receivable. At March 31, 2018 , the Company's cash, cash equivalents and restricted cash are held in deposit accounts at three different banks totaling $23,257

Inventory

Inventory	3 Months Ended
	Mar. 31, 2018
Inventory Disclosure [Abstract]
Inventory	Inventory Inventory consists of the following as of: March 31, 2018 December 31, 2017 (unaudited) Raw materials $ 5,649 $ 4,937 Work in progress 401 493 Finished goods 11,529 10,947 Less inventory reserve (2,136 ) (2,034 ) Total inventory, net $ 15,443 $ 14,343 The Company recorded an inventory impairment charge of $102 and $80 for the three months ended March 31, 2018 and 2017 , respectively. Finished goods included $379 of consigned inventory at March 31, 2018

Accrued Expenses

Accrued Expenses	3 Months Ended
	Mar. 31, 2018
Payables and Accruals [Abstract]
Accrued Expenses	Accrued Expenses Accrued expenses consist of the following: March 31, 2018 December 31, 2017 (unaudited) Accrued employee compensation and expenses $ 3,442 $ 4,243 Accrued professional service fees 492 522 Accrued returns and rebates 402 438 Accrued insurance and taxes 736 527 Other 1,770 1,770 Total accrued expenses $ 6,842 $ 7,500

Long-Term Debt

Long-Term Debt	3 Months Ended
	Mar. 31, 2018
Debt Disclosure [Abstract]
Long-Term Debt	Long-Term Debt Long-term debt consists of the following as of: March 31, 2018 December 31, 2017 (unaudited) Senior secured credit facility $ 32,000 $ 32,000 Payment-in-kind interest 2,254 2,223 Discount on long-term debt (473 ) (534 ) Deferred financing costs (663 ) (368 ) Long-term debt $ 33,118 $ 33,321 On February 28, 2018, the Company entered into a Sixth Amendment to the Credit Agreement with its lender, Athyrium Opportunities II Acquisition LP ("Athyrium") which removed the minimum quarterly revenue requirement and increased the maximum debt-to-revenue ratio to 0.54 from 0.49 with the maximum debt-to-revenue ratio declining gradually each quarter over the remaining term of the facility. As of March 31, 2018

Stock Based Compensation

Stock Based Compensation	3 Months Ended
	Mar. 31, 2018
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Stock Based Compensation	Stock Based Compensation In June 2017, the 2017 Equity Incentive Plan (the "2017 Plan") was approved by the Company's stockholders and replaced the Company's 2016 Equity Incentive Plan (the "2016 Plan"), which was the successor to the 2006 Stock Option Plan ("the 2006 Plan")(collectively with the 2016 Plan, the "Prior Plans"). Grants will no longer be made under the Prior Plans, but the awards that remain outstanding will continue to be governed by the terms of the applicable Prior Plan and the applicable award agreement. A summary of the stock option activity under the Company's 2017 Plan and Prior Plans (collectively, the "Equity Plans") as of March 31, 2018 is presented below. Options Weighted Average Exercise Price Weighted Average Remaining Contractual Term Aggregate Intrinsic Value Options outstanding, December 31, 2017 1,390,428 $4.64 7.0 years $2,432 Options granted 580,901 $6.58 Options exercised (44,418 ) $2.32 Options forfeited (20,410 ) $4.35 Options vested and expected to vest, March 31, 2018 1,906,501 $5.29 7.7 years $2,888 Options exercisable 715,925 $3.60 5.0 years $2,149 Shares subject to awards granted under the 2017 Plan which expire, are repurchased, or are canceled or forfeited will again become available for issuance under the 2017 Plan. The shares available will not be reduced by awards settled in cash or by shares withheld to satisfy tax withholding obligations. Only the net number of shares issued upon the exercise of options by means of a net exercise will be deducted from the shares available under the 2017 Plan. The fair value of stock option grants has been estimated at the date of grant using the Black-Scholes option pricing model with the following weighted average assumptions: Three Months Ended March 31, 2018 Three Months Ended March 31, 2017 Risk free interest rate 2.7 % 2.1 % Expected dividend yield — % — % Estimated volatility 63.2 % 63.9 % Expected life 5.8 years 6.0 years Additional information regarding options is as follows: Three Months Ended March 31, 2018 Three Months Ended March 31, 2017 Weighted-average grant date fair value of options granted during the period $ 3.86 $ 6.99 Aggregate intrinsic value of options exercised during the period $ 170 $ 93 The total compensation cost recognized for stock-based awards was $323 for the three months ended March 31, 2018 and $110 for the three months ended March 31, 2017 . The aggregate intrinsic value in the table above represents the total pre-tax value of the options shown, calculated as the difference between the Company’s closing stock price on March 31, 2018 and the exercise prices of the options shown, multiplied by the number of in-the money options. This is the aggregate amount that would have been received by the option holders if they had all exercised their options on March 31, 2018 and sold the shares thereby received at the closing price of the Company’s stock on that date. This amount changes based on the closing price of the Company’s stock. The Company has 248,500 options outstanding to purchase common shares that vest upon the Company's achievement of certain revenue targets for calendar year 2018. Achievement of the performance targets deemed probable are included in total stock compensation expense. Unrecognized compensation expense related to unvested options was approximately $4,041 at March 31, 2018 , with a remaining amortization period of 3.2 years . A summary of the restricted stock unit activity under the Company's Equity Plans as of March 31, 2018 is presented below. Units Weighted Average Grant Date Fair Value Aggregate Intrinsic Value Unvested units, December 31, 2017 61,198 $5.60 $343 Restricted stock units granted 58,863 $6.58 Restricted stock units forfeited (894 ) $6.50 Unvested units, March 31, 2018 119,167 $6.08 $747 Unrecognized compensation expense related to unvested restricted stock units was approximately $621 at March 31, 2018 , with a remaining amortization period of 3.2 years

Income Taxes

Income Taxes	3 Months Ended
	Mar. 31, 2018
Income Tax Disclosure [Abstract]
Income Taxes	Income Taxes The provision for income taxes for the three months ended March 31, 2018 and 2017 includes both domestic and foreign income taxes at applicable statutory rates. The provision primarily consists of foreign income taxes. The Company has established a valuation allowance equal to the total net domestic deferred tax asset due to uncertainties regarding the realization of deferred tax assets based on the Company's lack of earnings history. As of March 31, 2018 , the Company has no unrecognized tax benefits or accrued interest or penalties associated with uncertain tax positions. As of March 31, 2018 , the Company has not completed its accounting for the tax effects of the Tax Cut and Jobs Act but has made reasonable estimates of the effects on the remeasurement of its deferred tax assets and liabilities as well as its transition tax liability. The Company will continue to make and refine its calculations as additional analysis is completed. No revisions were recorded during the three months ended March 31, 2018

Net Loss Per Share

Net Loss Per Share	3 Months Ended
	Mar. 31, 2018
Earnings Per Share [Abstract]
Net Loss Per Share	Net Loss Per Share The basic and diluted net loss per common share presented in the condensed consolidated statements of operations and comprehensive loss is calculated by dividing net loss attributable to common stockholders by the weighted-average number of common shares outstanding during the period, without consideration for common stock equivalents. Potentially dilutive shares, which include warrants for the purchase of common stock, restricted stock units, and options outstanding under the Company's equity incentive plans, are considered to be common stock equivalents and are only included in the calculation of diluted net loss per share when their effect is dilutive. Potentially dilutive securities not included in the calculation of diluted net loss per share attributable to common stockholders because to do so would be anti-dilutive are as follows (in common stock equivalent shares on a weighted-average basis): Three Months Ended March 31, 2018 2017 Warrants for common stock 251,891 252,021 Common stock options 1,525,688 1,146,196 Restricted stock units 80,579 — 1,858,158 1,398,217

Liquidity and Capital Resources

Liquidity and Capital Resources	3 Months Ended
	Mar. 31, 2018
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Liquidity and Capital Resources	Liquidity and Capital Resources The Company has experienced operating losses since inception and occasional debt covenant violations and has an accumulated deficit of $185,155 as of March 31, 2018 . To date, the Company has funded its operating losses and acquisitions through equity offerings and the issuance of debt instruments. The Company's ability to fund future operations will depend upon its level of future operating cash flow and its ability to access additional funding through either equity offerings, issuances of debt instruments or both. In December 2017, the Company filed a shelf registration statement on Form S-3 with the Securities and Exchange Commission ("SEC"), which permits the offering, issuance and sale by it of up to $50,000 of its common stock. In December 2017, the Company also entered into a sales agreement with Cantor Fitzgerald & Co. for the sale and issuance of shares of its common stock of up to $16,000 from time to time in an "at-the-market" program. During the three months ended March 31, 2018, the Company has not sold any shares of common stock under this registration statement. In February 2015, the Company entered into the Credit Agreement that requires the Company to meet minimum revenue requirements and other covenants each quarter and provides a cure provision in the event this requirement is not met. In February 2018, the Company entered into a Sixth Amendment to the Credit Agreement that removed the minimum quarterly revenue requirement and increased the maximum debt-to-revenue ratio to 0.54 from 0.49

Fair Value Measurements

Fair Value Measurements	3 Months Ended
	Mar. 31, 2018
Fair Value Disclosures [Abstract]
Fair Value Measurements	Fair Value Measurements The carrying amounts of the Company's financial instruments, which primarily include cash, cash equivalents, and restricted cash, accounts receivable, accounts payable and accrued expenses, approximate their fair values due to their short maturities. The fair value of the Company's long-term debt is estimated by management to approximate $32,144 at March 31, 2018 . Management's estimates are based on comparisons of the characteristics of the Company's obligations, comparable ranges of interest rates on recently issued debt, and maturity. Such valuation inputs are considered a Level 3 measurement in the fair value valuation hierarchy. The accounting guidance defines fair value, establishes a consistent framework for measuring fair value and expands disclosure for each major asset and liability category measured at fair value on either a recurring or nonrecurring basis. Fair value is defined as an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, the accounting guidance establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows: Level 1: Observable inputs such as quoted prices in active markets; Level 2: Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and

Segment and Geographic Informat

Segment and Geographic Information	3 Months Ended
	Mar. 31, 2018
Segment Reporting [Abstract]
Segment and Geographic Information	Segment and Geographic Information Operating segments are defined as components of an enterprise for which separate financial information is available and evaluated regularly by the chief operating decision maker, or decision-making group, in deciding how to allocate resources and in assessing performance. The Company globally manages the business within one reportable segment. Segment information is consistent with how management reviews the business, makes investing and resource allocation decisions and assesses operating performance. The Company’s products are principally sold in the U.S. No other countries are individually significant. Product sales by product group and geographic market, based on the location of the customer, whether the U.S. or outside the U.S. ("OUS") for the periods shown were as follows: Three Months Ended March 31, 2018 Three Months Ended March 31, 2017 (unaudited) U.S. OUS Total Revenues % Total Revenues U.S. OUS Total Revenues % Total Revenues Endo-bariatric $ 4,108 $ 6,188 $ 10,296 65.4 % $ 3,496 $ 3,838 $ 7,334 50.5 % Surgical 2,938 2,266 5,204 33.1 % 4,097 2,923 7,020 48.4 % Other 233 10 243 1.5 % 157 6 163 1.1 % Total revenues $ 7,279 $ 8,464 $ 15,743 100.0 % $ 7,750 $ 6,767 $ 14,517 100.0 % % Total revenues 46.2 % 53.8 % 53.4 % 46.6 % Total distributor sales were 19.7% and 18.8% of total OUS revenues for the three months ended March 31, 2018 and 2017 , respectively. The largest individual country outside the U.S. was 7.7% and 7.8% of total revenues for the three months ended March 31, 2018 and 2017 , respectively. The following table represents property and equipment, net based on the physical geographic location of the asset: March 31, 2018 December 31, 2017 (unaudited) United States $ 3,085 $ 2,855 Costa Rica 3,538 3,748 Other 256 282 Total property and equipment, net $ 6,879 $ 6,885

Significant Accounting Polici19

Significant Accounting Policies (Policies)	3 Months Ended
	Mar. 31, 2018
Accounting Policies [Abstract]
Organization and Business Description	Organization and Business Description Apollo Endosurgery, Inc. is a Delaware corporation with both domestic and foreign wholly-owned subsidiaries. Throughout these Notes "Apollo" and the "Company" refer to Apollo Endosurgery, Inc. and its consolidated subsidiaries. Apollo is a medical technology company primarily focused on the design, development, and commercialization of innovative medical devices. The Company's products are used by general surgeons, bariatric surgeons and gastroenterologists in a variety of settings to provide interventional therapy to patients who suffer from obesity and the many co-morbidities associated with obesity as well as various other gastrointestinal conditions.
Revenue Recognition	Revenue Recognition The Company's principal source of revenue is from the sale of its products. Revenue is recognized when control of the promised goods is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in an exchange for those goods. Generally, these conditions are met under the Company's agreements with most customers upon product shipment. This includes sales to distributors, who sell the products to their customers, take title to the products and assume all risks of ownership at the time of shipment. Our distributors are obligated to pay within specified terms regardless of when, if ever, they sell the products. Customers and distributors generally have the right to return or exchange products purchased from the Company for up to thirty days from the date of product shipment. At the end of each period, the Company determines the extent to which its revenues need to be reduced to account for expected returns and exchanges. Certain customers may receive volume rebates or discounts, which are accounted for as variable consideration. We estimate these amounts based on the expected amount to be provided to customers and reduce revenues recognized. We record deferred revenues when cash payments are received or due in advance of the transfer of goods.
Recent Accounting Pronouncements	Recent Accounting Pronouncements On January 1, 2018, the Company adopted the provisions of ASU 2014-09, Revenue from Contracts with Customers ("ASC 606"), which requires an entity to recognize revenue when it transfers control of promised goods or services to customers in an amount that reflects the consideration to which it expects to be entitled in exchange for those goods or services. The Company adopted this new standard using the modified retrospective method and applied this method only to contracts that were not completed as of January 1, 2018. Prior periods were not retrospectively adjusted. There was no material impact on the Company's financial statement upon adoption of the new revenue recognition standard. In February 2016, the FASB issued ASU 2016-02, Leases ("ASU 2016-02") which requires a lessee to recognize assets and liabilities for leases with a maximum possible term of more than 12 months. A lessee would recognize a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the leased asset (the underlying asset) for the lease term which will require companies to recognize most leases on the balance sheet, thereby increasing reported assets and liabilities. ASU 2016-02 will be effective for the Company on January 1, 2019. The Company is evaluating the effect that ASU 2016-02 will have on its consolidated financial statements. In January 2017, the FASB issued ASU 2017-04, Intangibles - Goodwill and Other: Simplifying the Test for Goodwill Impairment
Net Loss Per Share	The basic and diluted net loss per common share presented in the condensed consolidated statements of operations and comprehensive loss is calculated by dividing net loss attributable to common stockholders by the weighted-average number of common shares outstanding during the period, without consideration for common stock equivalents. Potentially dilutive shares, which include warrants for the purchase of common stock, restricted stock units, and options outstanding under the Company's equity incentive plans, are considered to be common stock equivalents and are only included in the calculation of diluted net loss per share when their effect is dilutive.

Inventory (Tables)

Inventory (Tables)	3 Months Ended
	Mar. 31, 2018
Inventory Disclosure [Abstract]
Schedule of Inventory	Inventory consists of the following as of: March 31, 2018 December 31, 2017 (unaudited) Raw materials $ 5,649 $ 4,937 Work in progress 401 493 Finished goods 11,529 10,947 Less inventory reserve (2,136 ) (2,034 ) Total inventory, net $ 15,443 $ 14,343

Accrued Expenses (Tables)

Accrued Expenses (Tables)	3 Months Ended
	Mar. 31, 2018
Payables and Accruals [Abstract]
Schedule of Accrued Expenses	Accrued expenses consist of the following: March 31, 2018 December 31, 2017 (unaudited) Accrued employee compensation and expenses $ 3,442 $ 4,243 Accrued professional service fees 492 522 Accrued returns and rebates 402 438 Accrued insurance and taxes 736 527 Other 1,770 1,770 Total accrued expenses $ 6,842 $ 7,500

Long-Term Debt (Tables)

Long-Term Debt (Tables)	3 Months Ended
	Mar. 31, 2018
Debt Disclosure [Abstract]
Schedule of Long-term Debt	Long-term debt consists of the following as of: March 31, 2018 December 31, 2017 (unaudited) Senior secured credit facility $ 32,000 $ 32,000 Payment-in-kind interest 2,254 2,223 Discount on long-term debt (473 ) (534 ) Deferred financing costs (663 ) (368 ) Long-term debt $ 33,118 $ 33,321

Stock Based Compensation (Table

Stock Based Compensation (Tables)	3 Months Ended
	Mar. 31, 2018
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Schedule of Stock Option Activity	A summary of the stock option activity under the Company's 2017 Plan and Prior Plans (collectively, the "Equity Plans") as of March 31, 2018 is presented below. Options Weighted Average Exercise Price Weighted Average Remaining Contractual Term Aggregate Intrinsic Value Options outstanding, December 31, 2017 1,390,428 $4.64 7.0 years $2,432 Options granted 580,901 $6.58 Options exercised (44,418 ) $2.32 Options forfeited (20,410 ) $4.35 Options vested and expected to vest, March 31, 2018 1,906,501 $5.29 7.7 years $2,888 Options exercisable 715,925 $3.60 5.0 years $2,149
Schedule of Fair Value of Stock Options	The fair value of stock option grants has been estimated at the date of grant using the Black-Scholes option pricing model with the following weighted average assumptions: Three Months Ended March 31, 2018 Three Months Ended March 31, 2017 Risk free interest rate 2.7 % 2.1 % Expected dividend yield — % — % Estimated volatility 63.2 % 63.9 % Expected life 5.8 years 6.0 years
Schedule of Other Stock Option Information	Additional information regarding options is as follows: Three Months Ended March 31, 2018 Three Months Ended March 31, 2017 Weighted-average grant date fair value of options granted during the period $ 3.86 $ 6.99 Aggregate intrinsic value of options exercised during the period $ 170 $ 93
Schedule of Restricted Stock Unit Activity	A summary of the restricted stock unit activity under the Company's Equity Plans as of March 31, 2018 is presented below. Units Weighted Average Grant Date Fair Value Aggregate Intrinsic Value Unvested units, December 31, 2017 61,198 $5.60 $343 Restricted stock units granted 58,863 $6.58 Restricted stock units forfeited (894 ) $6.50 Unvested units, March 31, 2018 119,167 $6.08 $747

Net Loss Per Share (Tables)

Net Loss Per Share (Tables)	3 Months Ended
	Mar. 31, 2018
Earnings Per Share [Abstract]
Schedule of Antidilutive Securities Excluded from Computation of Diluted Loss Per Share	Potentially dilutive securities not included in the calculation of diluted net loss per share attributable to common stockholders because to do so would be anti-dilutive are as follows (in common stock equivalent shares on a weighted-average basis): Three Months Ended March 31, 2018 2017 Warrants for common stock 251,891 252,021 Common stock options 1,525,688 1,146,196 Restricted stock units 80,579 — 1,858,158 1,398,217

Segment and Geographic Inform25

Segment and Geographic Information (Tables)	3 Months Ended
	Mar. 31, 2018
Segment Reporting [Abstract]
Schedule of Product Sales by Product Group and Geographic Market	Product sales by product group and geographic market, based on the location of the customer, whether the U.S. or outside the U.S. ("OUS") for the periods shown were as follows: Three Months Ended March 31, 2018 Three Months Ended March 31, 2017 (unaudited) U.S. OUS Total Revenues % Total Revenues U.S. OUS Total Revenues % Total Revenues Endo-bariatric $ 4,108 $ 6,188 $ 10,296 65.4 % $ 3,496 $ 3,838 $ 7,334 50.5 % Surgical 2,938 2,266 5,204 33.1 % 4,097 2,923 7,020 48.4 % Other 233 10 243 1.5 % 157 6 163 1.1 % Total revenues $ 7,279 $ 8,464 $ 15,743 100.0 % $ 7,750 $ 6,767 $ 14,517 100.0 % % Total revenues 46.2 % 53.8 % 53.4 % 46.6 %
Schedule of Long-Lived Assets by Geographic Area	The following table represents property and equipment, net based on the physical geographic location of the asset: March 31, 2018 December 31, 2017 (unaudited) United States $ 3,085 $ 2,855 Costa Rica 3,538 3,748 Other 256 282 Total property and equipment, net $ 6,879 $ 6,885

Concentrations (Details)

Concentrations (Details) $ in Thousands	Mar. 31, 2018USD ($)bank	Dec. 31, 2017USD ($)	Mar. 31, 2017USD ($)	Dec. 31, 2016USD ($)
Risks and Uncertainties [Abstract]
Number of banks | bank	3
Cash and cash equivalents and restricted cash | $	$ 23,257	$ 31,418	$ 9,234	$ 20,041

Inventory (Details)

Inventory (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017	Dec. 31, 2017
Inventory Disclosure [Abstract]
Raw materials	$ 5,649		$ 4,937
Work in progress	401		493
Finished goods	11,529		10,947
Less inventory reserve	(2,136)		(2,034)
Total inventory, net	15,443		$ 14,343
Change in inventory reserve	102	$ 80
Consigned inventory	$ 379

Accrued Expenses (Details)

Accrued Expenses (Details) - USD ($) $ in Thousands	Mar. 31, 2018	Dec. 31, 2017
Payables and Accruals [Abstract]
Accrued employee compensation and expenses	$ 3,442	$ 4,243
Accrued professional service fees	492	522
Accrued returns and rebates	402	438
Accrued insurance and taxes	736	527
Other	1,770	1,770
Total accrued expenses	$ 6,842	$ 7,500

Long-Term Debt (Schedule of Lon

Long-Term Debt (Schedule of Long-term Debt) (Details) - USD ($) $ in Thousands	Mar. 31, 2018	Dec. 31, 2017
Debt Instrument [Line Items]
Discount on long-term debt	$ (473)	$ (534)
Deferred financing costs	(663)	(368)
Long-term debt	33,118	33,321
Payment in Kind Interest [Member]
Debt Instrument [Line Items]
Long-term debt	2,254	2,223
Line of Credit [Member] | Secured Debt [Member] | Credit Facility [Member]
Debt Instrument [Line Items]
Long-term debt	$ 32,000	$ 32,000

Long-Term Debt (Narrative) (Det

Long-Term Debt (Narrative) (Details)	Feb. 28, 2018	Dec. 31, 2017
Secured Debt [Member] | Line of Credit [Member] | Credit Facility Sixth Amendment [Member]
Debt Instrument [Line Items]
Minimum debt to revenue ratio	0.54	0.49

Stock Based Compensation (Stock

Stock Based Compensation (Stock Option Activity) (Details) - Stock Option [Member] - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended	12 Months Ended
	Mar. 31, 2018	Dec. 31, 2017
Options
Options outstanding, beginning balance (in shares)		1,390,428
Options granted (in shares)	580,901
Options exercised (in shares)	(44,418)
Options forfeited (in shares)	(20,410)
Options vested and expected to vest (in shares)	1,906,501
Options exercisable (in shares)	715,925
Weighted Average Exercise Price
Weighted average exercise price, beginning balance (in USD per share)		$ 4.64
Options granted (in USD per share)	$ 6.58
Options exercised (in USD per share)	2.32
Options forfeited (in USD per share)	4.35
Options vested and expected to vest (in USD per share)	5.29
Options exercisable (in USD per share)	$ 3.60
Weighted Average Remaining Contractual Term
Weighted Average Remaining Contractual Term		7 years
Options vested and expected to vest, March 31, 2018	7 years 8 months 12 days
Options exercisable	5 years
Aggregate Intrinsic Value
Aggregate intrinsic value		$ 2,432
Options vested and expected to vest, March 31, 2018	$ 2,888
Options exercisable	$ 2,149

Stock Based Compensation (Fair

Stock Based Compensation (Fair Value of Stock Options) (Details) - Stock Option [Member]	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Risk free interest rate	2.70%	2.10%
Expected dividend yield	0.00%	0.00%
Estimated volatility	63.20%	63.90%
Expected life	5 years 9 months 18 days	6 years

Stock Based Compensation (Addit

Stock Based Compensation (Additional Information) (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017	Dec. 31, 2017
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock compensation cost	$ 323	$ 110
Unrecognized compensation expense related to unvested options	$ 4,041
Remaining amortization period, less then	3 years 2 months 12 days
Stock Option [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Weighted-average grant date fair value of options granted during the period (USD per share)	$ 3.86	$ 6.99
Aggregate intrinsic value of options exercised during the period	$ 170	$ 93
Stock compensation cost	$ 323	$ 110
Options granted in period (in shares)			1,390,428
Performance Shares [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Options granted in period (in shares)	248,500
Restricted stock units [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Remaining amortization period, less then	3 years 2 months 12 days
Unrecognized compensation expense related to unvested restricted stock units	$ 621

Stock Based Compensation (Restr

Stock Based Compensation (Restricted Stock Units Activity) (Details) - Restricted stock units [Member] - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended
	Mar. 31, 2018	Dec. 31, 2017
Number of Units
Unvested Units, December 31, 2017 (shares)	61,198
Restricted stock units granted (shares)	58,863
Restricted stock units forfeited (shares)	(894)
Unvested Units, March 31, 2018 (shares)	119,167
Weighted-Average Grant Date Fair Value
Unvested Units, December 31, 2017 (USD per share)	$ 5.60
Restricted stock units granted (USD per share)	6.58
Restricted stock units forfeited (USD per share)	6.50
Unvested Units, March 31, 2018 (USD per share)	$ 6.08
Aggregate Intrinsic Value
Aggregate Intrinsic Value	$ 747	$ 343

Income Taxes (Details)

Income Taxes (Details)	Mar. 31, 2018USD ($)
Income Tax Disclosure [Abstract]
Unrecognized tax benefits	$ 0
Accrued interest	0
Tax penalties	$ 0

Net Loss Per Share (Details)

Net Loss Per Share (Details) - shares	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of diluted loss per share	1,858,158	1,398,217
Warrants for common [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of diluted loss per share	251,891	252,021
Common stock options [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of diluted loss per share	1,525,688	1,146,196
Restricted stock units [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of diluted loss per share	80,579	0

Liquidity and Capital Resourc37

Liquidity and Capital Resources (Details) $ in Thousands	Feb. 28, 2018	Dec. 31, 2017USD ($)	Dec. 31, 2017USD ($)	Mar. 31, 2018USD ($)
Subsidiary, Sale of Stock [Line Items]
Accumulated deficit		$ (177,021)	$ (177,021)	$ (185,155)
Secured Debt [Member] | Credit Facility Sixth Amendment [Member] | Line of Credit [Member]
Subsidiary, Sale of Stock [Line Items]
Minimum debt to revenue ratio	0.54		0.49
Shelf Registration [Member]
Subsidiary, Sale of Stock [Line Items]
Authorized amount		16,000
Shelf Registration [Member] | Common Stock [Member]
Subsidiary, Sale of Stock [Line Items]
Authorized amount		$ 50,000

Fair Value Measurements (Detail

Fair Value Measurements (Details) $ in Thousands	Mar. 31, 2018USD ($)
Fair Value Disclosures [Abstract]
Fair value of long-term debt	$ 32,144

Segment and Geographic Inform39

Segment and Geographic Information (Segment Information) (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2018USD ($)segment	Mar. 31, 2017USD ($)
Segment Reporting [Abstract]
Number of reportable segments | segment	1
Revenue, Major Customer [Line Items]
Revenues	$ 15,743	$ 14,517
Segment Revenue [Member] | Product Risk [Member]
Revenue, Major Customer [Line Items]
Percentage of revenue or sales	100.00%	100.00%
United States [Member]
Revenue, Major Customer [Line Items]
Revenues	$ 7,279	$ 7,750
United States [Member] | Segment Revenue [Member] | Product Risk [Member]
Revenue, Major Customer [Line Items]
Percentage of revenue or sales	46.20%	53.40%
United States [Member] | Distributor Sales [Member] | Product Risk [Member]
Revenue, Major Customer [Line Items]
Percentage of revenue or sales	7.70%	7.80%
Other countries [Member]
Revenue, Major Customer [Line Items]
Revenues	$ 8,464	$ 6,767
Other countries [Member] | Segment Revenue [Member] | Product Risk [Member]
Revenue, Major Customer [Line Items]
Percentage of revenue or sales	53.80%	46.60%
Other countries [Member] | Distributor Sales [Member] | Product Risk [Member]
Revenue, Major Customer [Line Items]
Percentage of revenue or sales	19.70%	18.80%
Endo-Bariatric [Member]
Revenue, Major Customer [Line Items]
Revenues	$ 10,296	$ 7,334
Endo-Bariatric [Member] | Segment Revenue [Member] | Product Risk [Member]
Revenue, Major Customer [Line Items]
Percentage of revenue or sales	65.40%	50.50%
Endo-Bariatric [Member] | United States [Member]
Revenue, Major Customer [Line Items]
Revenues	$ 4,108	$ 3,496
Endo-Bariatric [Member] | Other countries [Member]
Revenue, Major Customer [Line Items]
Revenues	6,188	3,838
Surgical [Member]
Revenue, Major Customer [Line Items]
Revenues	$ 5,204	$ 7,020
Surgical [Member] | Segment Revenue [Member] | Product Risk [Member]
Revenue, Major Customer [Line Items]
Percentage of revenue or sales	33.10%	48.40%
Surgical [Member] | United States [Member]
Revenue, Major Customer [Line Items]
Revenues	$ 2,938	$ 4,097
Surgical [Member] | Other countries [Member]
Revenue, Major Customer [Line Items]
Revenues	2,266	2,923
Other [Member]
Revenue, Major Customer [Line Items]
Revenues	$ 243	$ 163
Other [Member] | Segment Revenue [Member] | Product Risk [Member]
Revenue, Major Customer [Line Items]
Percentage of revenue or sales	1.50%	1.10%
Other [Member] | United States [Member]
Revenue, Major Customer [Line Items]
Revenues	$ 233	$ 157
Other [Member] | Other countries [Member]
Revenue, Major Customer [Line Items]
Revenues	$ 10	$ 6

Segment and Geographic Inform40

Segment and Geographic Information (Long-Lived Assets by Geographic Area) (Details) - USD ($) $ in Thousands	Mar. 31, 2018	Dec. 31, 2017
Revenues from External Customers and Long-Lived Assets [Line Items]
Total property and equipment, net	$ 6,879	$ 6,885
United States [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Total property and equipment, net	3,085	2,855
Costa Rica [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Total property and equipment, net	3,538	3,748
Other countries [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Total property and equipment, net	$ 256	$ 282