Endologix Inc., a developer and marketer of treatments for aortic disorders, announced that, after evaluating a variety of strategic options, it has initiated a voluntary Chapter 11 case and simultaneously filed a consensual plan of reorganization supported by Deerfield Partners as its largest creditor. The company firmly believes these actions provide the best path to address financial challenges resulting from COVID-19 and the related delays in elective medical procedures and to realize the full benefits of operational enhancements made over the past two years. Under the terms of the plan filed today, Endologix will become a private company and emerge financially well-equipped to realize the full potential of the most advanced and innovative abdominal aortic aneurysm (AAA) pipeline in the industry.
 
“We are excited to begin a new chapter for our organization now characterized by financial stability. Although COVID-19 has presented a delay in many AAA procedures that, in turn, has negatively impacted our revenue, we remain confident we have taken the right steps to ensure we are consistently providing valued support to customers and the patients we serve with the highest quality products and the most talented and committed employees in the industry,” said John Onopchenko, CEO of Endologix. “The path we are now taking to strengthen our balance sheet and transition to private ownership will allow us to accelerate our progress with our strong patient-first business focus, an enduring spirit of innovation, and an unrelenting commitment to advancing our life-saving products supported by industry-leading evidence.”
 
Onopchenko continued: “As Endologix’s largest lender, Deerfield has demonstrated consistent support for our company’s business strategy and mission to transform aortic care for life. We are confident that, with their continued support and the benefit of this comprehensive financial restructuring, we will be well-positioned to serve physicians and patients for many years to come. We remain focused on elevating the standard of care for patients suffering from AAA by advancing our strategy and executing our plans with confidence. We will initiate the commercial launch of Alto in the U.S. market in the coming weeks and in Europe later this year. In addition, we intend to enroll our first patient in our ChEVAS ONE IDE in Q3 2020 and initiate enrollment of our Alto RCT later this year, while preparing our Nellix 3.5 PMA submission to the FDA. These are just a few meaningful, near-term steps to execute our strategy, now bolstered by new investment and a secure financial foundation to reach our full potential.”
 
Under the terms of the proposed plan of financial reorganization, Endologix will eliminate approximately $180 million of debt from its balance sheet on a net basis, including approximately $130 million of debt currently held by Deerfield that will convert to equity in the reorganized company. The company also expects to gain access to $110.8 million of new financing through this process, including $30.8 million in debtor-in-possession (DIP) financing from Deerfield, an additional $30 million in exit financing from Deerfield, and $50 million in rolled over debt from the company’s current first lien debt.
 
To implement its agreement with Deerfield, Endologix and its U.S. subsidiaries initiated a voluntary case under Chapter 11 of the U.S. Bankruptcy Code and simultaneously filed a consensual plan of reorganization with Deerfield’s support. The Company expects to complete the process by end of the third quarter of 2020, emerging as a private company with the financial flexibility necessary to accelerate investment in new technologies that further its leadership as the largest company focused solely on the AAA space. Endologix fully intends to operate its business as usual during the process.
 
Onopchenko added, “This announcement is a means to a new beginning for Endologix. Our next chapter enables us to exclusively look forward, continue to earn the trust of our physicians, patients and partners, and remain steadfast in operating with accountability and transparency in everything we do. We firmly believe this is a positive development for our company and, most importantly, our customers and the patients we proudly serve. Our goal is to emerge from this process as a private company, backed by a supportive and experienced health care investor that is committed to investing in our continued innovation and growth.”
 
Based on the additional financing received, Endologix fully intends to meet its financial obligations, including paying suppliers in the normal course of business for goods and services delivered. The agreement with Deerfield, once approved by the court, would allow trade suppliers who agree to provide terms to the company during and after the Chapter 11 process to also be paid in full for pre-petition goods and services. The company also has filed the customary motions to honor its ongoing commitments to employees and customers.
 
Endologix’s case is being heard in the U.S. Bankruptcy Court for the Northern District of Texas (Dallas). 
 
Endologix is advised by DLA Piper LLP, Jefferies, and FTI Consulting.