ReShape Lifesciences Announces First Quarter 2021 Financial and Operational Results
ReShape Lifesciences reported a 15.5% increase in Q1 2021 revenues to $3.2 million, driven by U.S. sales growth despite a decline in international sales caused by COVID-19. Gross profit rose to $2.3 million from $1.5 million in Q1 2020. Operating expenses decreased to $4.5 million, and the Non-GAAP adjusted EBITDA loss improved by $1.6 million to $1.8 million. The company secured a $15 million line of credit and received full forgiveness on a $1 million PPP loan, indicating strong financial positioning for future growth and sustainability.
- 15.5% increase in Q1 2021 revenue to $3.2 million compared to Q1 2020.
- Improved gross profit to $2.3 million.
- Non-GAAP adjusted EBITDA loss reduced by $1.6 million.
- Successfully obtained a $15 million line of credit.
- Full forgiveness of $1 million PPP loan.
- International sales decreased by $0.2 million due to COVID-19 impact.
- Non-GAAP adjusted EBITDA still shows a loss of $1.8 million.
SAN CLEMENTE, CA / ACCESSWIRE / May 17, 2021 / ReShape Lifesciences Inc. (OTCQB:RSLS), a leading developer and distributor of minimally invasive medical devices to treat obesity and metabolic diseases, today reported its financial and operational results for the three months ended March 31, 2021.
Recent Highlights and Accomplishments
- Increased revenues by
15.5% compared to same period in 2020 - Increased revenues by
4.6% compared to non COVID-19 pandemic affected same period in 2019 - Continued to implement previously mentioned cost savings plan reducing operating expenses by
$1.1 million - Improved Non-GAAP loss by
$1.6 million - Obtained
$15.0 million line of credit with instutional investor - Received full forgiveness of
$1.0 million on PPP loan
"2021 has proven to be a transformational year for Reshape, as we continue on our pathway to becoming the premier physician led weight loss company," said Bart Bandy, President, and Chief Executive Officer at ReShape Lifesciences. "Additionally, we are encouraged by the progress made over the course of the pandemic in driving our internal growth strategy through the expanded launch of Reshapecare, a reimbused telehealth service that supports practices and patients across the medical treatment continuum for weight loss. We have also strengthened our sustainability through the completed manufacturing transiton of the Lap-Band, which has driven increased revenues compared to the first quarters of 2020 and 2019. For the remainder of 2021, we plan to focus on patient direct marketing, adding more Lap-Band and Reshapecare accounts, and accelerating the development of internal technologies."
First Quarter 2021 Financial Results
Revenue for the three months ended March 31, 2021 increased by
Gross profit for the first quarter of 2021 was
Sales and marketing expenses for the three months ended March 31, 2021 were
General and administrative expenses were
Research and development expenses were
Total operating expenses were
Non-GAAP adjusted EBITDA loss was
Cash and cash equivalents and restricted cash were
About ReShape Lifesciences Inc.
ReShape Lifesciences is America's premier weight-loss solutions company, offering an integrated portfolio of proven products and services that manage and treat obesity and metabolic disease. The FDA-approved Lap-Band® program provides minimally invasive, long-term treatment of obesity and is an alternative to more invasive surgical stapling procedures such as the gastric bypass or sleeve gastrectomy. The ReShape Vest™ System is an investigational (outside the U.S.) minimally invasive, laparoscopically implanted medical device that wraps around the stomach, emulating the gastric volume reduction effect of conventional weight-loss surgery. It helps enable rapid weight loss in obese and morbidly obese patients without permanently changing patient anatomy. The recently launched ReShapeCare™ Virtual health coaching program is a virtual telehealth weight management program that supports lifestyle changes for all weight-loss patients, to help them keep the weight off over time.
Forward-Looking Safe Harbor Statement:
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements generally can be identified by the use of words such as "expect," "plan," "anticipate," "could," "may," "intend," "will," "continue," "future," other words of similar meaning and the use of future dates. These forward-looking statements are based on the current expectations of our management and involve known and unknown risks and uncertainties that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Such risks and uncertainties include, among others: risks and uncertainties related to our acquisition of the LAP-BAND system; our ability to continue as a going concern if we are unable to improve our operating results or obtain additional financing; risks related to ownership of our securities as a result of our delisting from the Nasdaq Capital Market; our proposed ReShape Vest product may not be successfully developed and commercialized; our limited history of operations; our losses since inception and for the foreseeable future; our limited commercial sales experience; the competitive industry in which we operate; our dependence on third parties to initiate and perform our clinical trials; the need to obtain regulatory approval for our ReShape Vest and any modifications to our vBloc system and LAP-BAND system; physician adoption of our products; our ability to obtain third party coding, coverage or payment levels; ongoing regulatory compliance; our dependence on third party manufacturers and suppliers; the successful development of our sales and marketing capabilities; our ability to raise additional capital when needed; international commercialization and operation; our ability to attract and retain management and other personnel and to manage our growth effectively; potential product liability claims; the cost and management time of operating a public company; potential healthcare fraud and abuse claims; healthcare legislative reform; and our ability to obtain and maintain intellectual property protection for our technology and products. These and additional risks and uncertainties are described more fully in the Company's filings with the Securities and Exchange Commission, particularly those factors identified as "risk factors" in our annual report on Form 10-K filed April 30, 2020. We are providing this information as of the date of this press release and do not undertake any obligation to update any forward-looking statements contained in this document as a result of new information, future events or otherwise, except as required by law.
Non-GAAP Disclosures
In addition to the financial information prepared in conformity with GAAP, we provide certain historical non-GAAP financial information. Management believes that these non-GAAP financial measures assist investors in making comparisons of period-to-period operating results and that, in some respects, these non-GAAP financial measures are more indicative of the Company's ongoing core operating performance than their GAAP equivalents.
Management believes that the presentation of this non-GAAP financial information provides investors with greater transparency and facilitates comparison of operating results across a broad spectrum of companies with varying capital structures, compensation strategies, derivative instruments, and amortization methods, which provides a more complete understanding of our financial performance, competitive position, and prospects for the future. However, the non-GAAP financial measures presented in this Form 10-K have certain limitations in that they do not reflect all of the costs associated with the operations of our business as determined in accordance with GAAP. Therefore, investors should consider non-GAAP financial measures in addition to, and not as a substitute for, or as superior to, measures of financial performance prepared in accordance with GAAP. Further, the non-GAAP financial measures presented by the Company may be different from similarly named non-GAAP financial measures used by other companies.
Adjusted EBITDA
Management uses Adjusted EBITDA in its evaluation of the Company's core results of operations and trends between fiscal periods and believes that these measures are important components of its internal performance measurement process. Adjusted EBITDA is defined as net loss before interest, taxes, depreciation and amortization, stock-based compensation, changes in fair value of liability warrants and other one-time costs. Management uses Adjusted EBITDA in its evaluation of the Company's core results of operations and trends between fiscal periods and believes that these measures are important components of its internal performance measurement process. Therefore, investors should consider non-GAAP financial measures in addition to, and not as a substitute for, or as superior to, measures of financial performance prepared in accordance with GAAP. Further, the non-GAAP financial measures presented by the Company may be different from similarly named non-GAAP financial measures used by other companies.
Company Contact:
Thomas Stankovich
Chief Financial Officer
ReShape Lifesciences Inc.
949-276-6042
tstankovich@ReShapeLifesci.com
Investor Contacts:
James Salierno/Daniel Kontoh-Boateng
The Ruth Group
646-536-7028/7019
jsalierno@theruthgroup.com
dboateng@theruthgroup.com
ReShape Lifesciences Inc.
Condensed Consolidated Balance Sheets
(dollars in thousands, except per share amounts; unaudited)
| March 31, | December 31, | |||||||
| 2021 | 2020 | |||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 896 | $ | 2,957 | ||||
Restricted cash | 1,050 | 50 | ||||||
Accounts and other receivables | 3,373 | 2,620 | ||||||
Inventory | 2,095 | 2,244 | ||||||
Prepaid expenses and other current assets | 836 | 1,073 | ||||||
Total current assets | 8,250 | 8,944 | ||||||
Property and equipment, net | 718 | 584 | ||||||
Operating lease right-of-use assets | 390 | 465 | ||||||
Other intangible assets, net | 26,612 | 27,022 | ||||||
Other assets | 46 | 46 | ||||||
Total assets | $ | 36,016 | $ | 37,061 | ||||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 3,637 | $ | 3,655 | ||||
Accrued and other liabilities | 4,017 | 3,630 | ||||||
Warranty liability, current | 390 | 397 | ||||||
Debt, current portion, net of deferred financing costs | 13,268 | 3,609 | ||||||
Operating lease liabilities, current | 320 | 314 | ||||||
Total current liabilities | 21,632 | 11,605 | ||||||
Debt, noncurrent portion | - | 9,168 | ||||||
Operating lease liabilities, noncurrent | 82 | 163 | ||||||
Warranty liability, noncurrent | 979 | 1,022 | ||||||
Deferred income taxes | 615 | 615 | ||||||
Total liabilities | 23,308 | 22,573 | ||||||
Commitments, contingencies and subsequent events | ||||||||
Stockholders' equity: | ||||||||
Preferred stock: | ||||||||
Series B convertible preferred stock | - | - | ||||||
Series C convertible preferred stock | 1 | 1 | ||||||
Common stock | 6 | 6 | ||||||
Additional paid-in capital | 532,504 | 529,429 | ||||||
Accumulated deficit | (519,701) | (514,827) | ||||||
Accumulated other comprehensive loss | (102) | (121) | ||||||
Total stockholders' equity | 12,708 | 14,488 | ||||||
Total liabilities and stockholders' equity | $ | 36,016 | $ | 37,061 | ||||
ReShape Lifesciences Inc.
Condensed Consolidated Statements of Operations
(dollars in thousands, except per share amounts; unaudited)
| Three Months Ended March 31, | ||||||||
| 2021 | 2020 | |||||||
Revenue | $ | 3,221 | $ | 2,789 | ||||
Cost of revenue | 937 | 1,285 | ||||||
Gross profit | 2,284 | 1,504 | ||||||
Operating expenses: | ||||||||
Sales and marketing | 1,250 | 1,454 | ||||||
General and administrative | 2,720 | 2,836 | ||||||
Research and development | 571 | 1,295 | ||||||
Total operating expenses | 4,541 | 5,585 | ||||||
Operating loss | (2,257) | (4,081) | ||||||
Other expense (income), net: | ||||||||
Interest expense, net | 599 | 104 | ||||||
Loss on extinguishment of debt, net | 1,960 | - | ||||||
Loss on foreign currency exchange | 33 | 144 | ||||||
Loss before income tax provision | (4,849) | (4,329) | ||||||
Income tax expense (benefit) | 25 | (18) | ||||||
Net loss | $ | (4,874) | $ | (4,311) | ||||
Net loss per share - basic and diluted: | ||||||||
Net loss per share - basic and diluted | $ | (0.70) | $ | (0.63) | ||||
Shares used to compute basic and diluted net loss per share | 6,968,221 | 6,859,240 | ||||||
The following table contains a reconciliation of non-GAAP net loss to GAAP net loss attributable to common stockholders for the three months ended March 31, 2021 and 2020 (in thousands):
| Three Months Ended March 31, | ||||||||
| 2021 | 2020 | |||||||
GAAP net loss | $ | (4,874) | $ | (4,311) | ||||
Adjustments: | ||||||||
Interest expense, net | 599 | 104 | ||||||
Income tax expense (benefit) | 25 | (18) | ||||||
Depreciation and amortization | 418 | 421 | ||||||
Stock-based compensation expense | 101 | 427 | ||||||
Loss on extinguishment of debt, net | 1,960 | - | ||||||
Non-GAAP loss | $ | (1,771) | $ | (3,377) | ||||
SOURCE: ReShape Lifesciences Inc.
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