On August 4, 2020, Apollo Endosurgery, Inc., or the Company, reported its financial results for the second quarter of 2020 and provided a revenue outlook for the third quarter of 2020. At that time, during the earnings conference call, the Company’s management commented on COVID-19 risks and its historical experience of lower procedure volumes in the third quarter especially in its OUS markets. As a result, management indicated that third quarter sales were expected to be higher sequentially compared to the second quarter of 2020, but still below the third quarter of 2019. Sales in the third quarter of 2019 were $11.3 million.

Since then, third quarter 2020 revenue has exceeded those expectations. As a result, the Company expects third quarter 2020 revenue to exceed its third quarter 2019 revenue.

On September 23, 2020, the Company discontinued the employee furlough program previously announced on its Current Report on Form 8-K, filed with the SEC on April 20, 2020. Of the U.S.-based employees originally placed on furlough, 35 employees will not be recalled. The normalized annual compensation costs associated with these positions prior to previously announced compensation reductions due to the COVID-19 pandemic were approximately $5.0 million. Total severance costs in the third quarter of 2020 are expected to be approximately $0.2 million to $0.3 million.

The disclosures set forth in Item 7.01 is furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or subject to the liabilities of that section. The information contained herein shall not be deemed incorporated by reference into any other filing with the Securities and Exchange Commission made by the Company, whether made before or after the date hereof, regardless of any general incorporation language in such filing.

Cautionary Note on Forward-Looking Statements

Certain statements in this report are forward-looking statements, including the Company’s revenue outlook and total severance costs for the third quarter 2020, that are subject to risks and uncertainties that could cause results to be materially different than expectations. In addition, there is uncertainty about the spread of the COVID-19 pandemic and the continued impact it may have on the Company’s operations, the demand for the Company’s products, global supply chains and economic activity in general. Important factors that could cause actual results to differ materially include: the advancement of the Company’s products; development of enhancements to the Company’s existing products and technologies; market acceptance of the Company’s products; the execution of our gross margin improvement projects; and the Company’s ability to support the adoption of its products and broaden its product portfolio as well as other factors detailed in the Company’s periodic reports filed with the Securities and Exchange Commission, or SEC, including its Form 10-K for the year ended December 31, 2019 and its Form 10-Q for the period ending June 30, 2020. Copies of reports filed with the SEC are posted on Apollo’s website and are available from Apollo without charge. These forward-looking statements are not guarantees of future performance and speak only as of the date hereof, and, except as required by law, Apollo disclaims any obligation to update these forward-looking statements to reflect future events or circumstances.

About Apollo Endosurgery, Inc. (NASDAQ:APEN)

Apollo Endosurgery, Inc., formerly Lpath, Inc., is a medical device company. The Company is focused on less invasive therapies for the treatment of obesity, as well as other gastrointestinal disorders. The Company’s device-based therapies are an alternative to invasive surgical procedures. The Company offers products in over 80 countries. The Company’s products include ORBERA, LAP-BAND and OverStitch. The Company’s product, ORBERA, is a gastric balloon. The ORBERA Intragastric Balloon System is a weight loss aid for adults suffering from obesity. The LAP-BAND System is a minimally invasive procedure that offers weight loss. The LAP-BAND System is indicated for weight reduction for patients with obesity. The OverStitch Endoscopic Suturing System enables advanced endoscopic surgery by allowing physicians to place full-thickness sutures through a flexible endoscope. OverStitch offers solutions for defects in both the upper and lower gastrointestinal tract.