ReShape Lifesciences® Reports First Quarter Ended March 31, 2024 Financial Results and Provides Corporate Update
ReShape Lifesciences (Nasdaq: RSLS) announced its first-quarter financial results for 2024, highlighting a commercial launch of the Lap-Band® 2.0 FLEX and a significant reduction in operating expenses by 51% compared to Q1 2023. The company anticipates further expense reductions by 55.4% for the entire year.
Revenue for Q1 2024 was $1.9 million, a 15% decrease from the same period in 2023, mainly due to reduced sales volume from GLP-1 pharmaceuticals. However, the gross profit remained steady at $1.2 million, with an improved gross profit percentage of 59.9% compared to 53.5% in 2023.
ReShape also reported a decrease in sales and marketing expenses by 53.3% to $1.0 million, and a 55.6% reduction in general and administrative expenses to $1.9 million. The company has a net working capital of $4.4 million as of March 31, 2024.
Additionally, ReShape strengthened its intellectual property portfolio with a new patent for an intragastric balloon system valid until 2031 and continued its efforts to find synergistic M&A opportunities.
- Commercial launch of Lap-Band® 2.0 FLEX.
- Significant reduction in operating expenses by 51% in Q1 2024 compared to Q1 2023.
- Cost reduction plan expected to lower operating expenses by 55.4% for the entire year.
- Gross profit percentage improved to 59.9% in Q1 2024, up from 53.5% in Q1 2023.
- Sales and marketing expenses reduced by 53.3% to $1.0 million.
- General and administrative expenses reduced by 55.6% to $1.9 million.
- Issued new patent for an intragastric balloon system, valid until 2031.
- Net working capital of $4.4 million as of March 31, 2024.
- Revenue decreased by 15% to $1.9 million in Q1 2024, primarily due to reduced sales volume as a result of GLP-1 pharmaceuticals.
- Reduction in sales volume.
Insights
The 50% reduction in operating expenses for the first quarter of 2024 compared to the same period in 2023 is noteworthy. This significant cost-saving measure, driven by reductions in advertising, marketing and administrative expenses, positions ReShape Lifesciences to potentially improve its margins moving forward. The shift to a more targeted digital marketing campaign and cuts in payroll-related expenses demonstrate strategic moves to optimize spending.
Additionally, the increase in gross profit percentage to 59.9% from 53.5% year-over-year, despite a reduction in revenue, indicates effective cost management. However, the 15% revenue drop highlights the challenging environment caused by the rise in GLP-1 prescriptions, a competing weight-loss solution.
Having cash and cash equivalents of
The introduction and initial surgeries of the Lap-Band® 2.0 FLEX represent a significant development. This next-generation product aims to enhance the patient experience, which could increase its adoption among bariatric surgeons. The success of these surgeries, along with positive feedback from surgeons, suggests a promising market opportunity. The continued training of bariatric fellows indicates a commitment to ensuring widespread competency in using the new system, which is a positive sign for its long-term adoption.
However, the competition from GLP-1 receptor agonists for weight loss remains a significant challenge. The company's ability to differentiate the Lap-Band® 2.0 FLEX in terms of efficacy, patient outcomes and overall experience will be critical in battling this competitive pressure.
The strengthening of ReShape Lifesciences' intellectual property (IP) portfolio with the issuance of a new patent for their intragastric balloon system is a critical development. This patent, providing protection until at least January 2031, enhances the company's ability to defend its technological innovations. A robust IP portfolio is a valuable asset that can safeguard against competitors and potentially provide leverage in future licensing or partnership negotiations.
Moreover, the company's willingness to take 'offensive action' to defend its position using non-dilutive funding highlights their proactive stance in protecting market share. Ensuring legal safeguards for their innovations could enable ReShape Lifesciences to maintain a competitive edge and potentially secure additional revenue streams through licensing or litigation settlements.
Commercial Launch of Next-Generation Lap-Band® 2.0 FLEX Continues
Significant Reduction in Overall Operating Expenses of
Implementation of 2024 Cost Reduction Plan Continues, Expected to Reduce Operating Expenses by
Conference Call to be Held at 4:30 pm ET Today
IRVINE, Calif., May 15, 2024 (GLOBE NEWSWIRE) -- ReShape Lifesciences Inc. (Nasdaq: RSLS), the premier physician-led weight loss and metabolic health-solutions company, today reported financial results for the first quarter ended March 31, 2024 and provided a corporate strategic update.
First Quarter 2024 and Subsequent Highlights
- March 2024: Significantly strengthened the company’s intellectual property portfolio related to an intragastric balloon system. Specifically, received a Notice of Allowance from the U.S. Patent and Trademark Office (USPTO) for patent application 18/370,819. The patent, number 11974934, was issued on May 7, 2024 and provides protection into at least January 2031, without accounting for a potential Patent Term Extension (PTE).
- March 2024: Due to the continued impact on the company’s revenue caused by the rise in glucagon-like peptide 1 (GLP-1) receptor agonist prescriptions for weight loss, ReShape provided an update on its 2024 cost reduction plan, including a further Reduction in Force (RIF). Full implementation of the plan is expected to result in further lowering operating expenses of approximately
$8.0 million in 2024, or more than a50% reduction compared to 2023, excluding one-time costs. - February 2024: Announced that the first surgeries utilizing the company’s next generation, enhanced Lap-Band® 2.0 FLEX, were successfully performed by Adam Smith, D.O., Bariatric Surgery Specialist and Chief Executive Officer of Ultimate Bariatrics in Dallas, Fort Worth, TX, and Christine Ren-Fielding, M.D., Professor of Surgery at NYU Grossman School of Medicine, Director of NYU Langone Health’s Weight Management Program and Chief of the Division of Bariatric Surgery.
- January 2024: Conducted bariatric fellows training for their Lap-Band® System, highlighting the Lap-Band® 2.0 FLEX.
“During the first quarter and subsequent period, we have remained focused on delivering shareholder value and are on a path to profitability, executing the 2024 cost reductions we outlined in March. To that end, we continue to fine-tune our lead generation activities and invest in our growth drivers, including the commercial launch of the Lap-Band® 2.0 FLEX,” stated Paul F. Hickey, President and Chief Executive Officer of ReShape Lifesciences®. “With the adoption of GLP-1s, the stigma around obesity treatment is being replaced with medical intervention and we are steadfast in our confidence that the number of people seeking medical professionals, especially bariatric surgeons, will continue to increase. The first surgeries utilizing ReShape’s next generation, enhanced Lap-Band® 2.0 FLEX, designed to improve the patient experience, were successfully performed in February and additional surgeries have already taken place. Based on surgeon feedback, including those who have used the Lap-Band® 2.0 FLEX, we believe the market opportunity for the Lap-Band® franchise will increase, over time.
“In March, we significantly strengthened ReShape’s intellectual property portfolio surrounding the intragastric balloon system, having received a Notice of Allowance from the USPTO, and last week, had the patent issued. We will continue to build a defensive ‘moat’ around our product portfolio, innovation and commercialization efforts and, when necessary, we will take offensive action to defend our position utilizing non-dilutive funding. That said, as we continue through 2024, we are making significant progress implementing our 2024 cost reduction plan, which has included a further reduction in staff, expected to lower operating expenses by roughly
First Quarter Ended March 31, 2024, Financial and Operating Results
Revenue totaled
Gross Profit for both three months ended March 31, 2023 and 2024, was
Sales and Marketing Expenses for the three months ended March 31, 2024, decreased by
General and Administrative Expenses for the three months ended March 31, 2024, decreased by
Research and Development Expenses Research and development expenses were approximately
Cash and Cash Equivalents As of March 31, 2024, the Company had net working capital of approximately
A full discussion of the company’s financials is available in our Annual Report on Form 10-Q, filed with the Securities and Exchange Commission.
Conference Call Information
Management will host a conference call to discuss ReShape’s financial and operational results today at 4:30 pm ET. To participate in the conference call please register with the following Registration Link, and dial-in details will be provided. Participants using this feature are requested to dial into the conference call fifteen minutes ahead of time to avoid delays.
An archived replay will also be available on the “Events and Presentations” section of ReShape’s website at: https://ir.reshapelifesciences.com/events-and-presentations.
About ReShape Lifesciences®
ReShape Lifesciences® is America’s premier weight loss and metabolic health-solutions company, offering an integrated portfolio of proven products and services that manage and treat obesity and metabolic disease. The FDA-approved Lap-Band® System 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 investigational Diabetes Bloc-Stim Neuromodulation™ (DBSN™) system utilizes a proprietary vagus nerve block and stimulation technology platform for the treatment of type 2 diabetes and metabolic disorders. The Obalon® balloon technology is a non-surgical, swallowable, gas-filled intra-gastric balloon that is designed to provide long-lasting weight loss. For more information, please visit www.reshapelifesciences.com.
Forward-Looking Safe Harbor Statement
This press release may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Actual results could differ materially from those discussed due to known and unknown risks, uncertainties, and other factors. 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. Forward-looking statements in this press release include statements about the company’s projected decrease in operating expenses for 2024, its belief that it is on a path to profitability, and its expectation that the market opportunity for Lap-Band will increase. These and additional risks and uncertainties are described more fully in the company's filings with the Securities and Exchange Commission, including those factors identified as "risk factors" in our most recent Annual Report on Form 10-K and subsequent Quarterly Reports on Form 10-Q. 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.
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, 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 release 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, 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.
CONTACTS:
ReShape Lifesciences Contact:
Paul F. Hickey
President and Chief Executive Officer
949-276-7223
ir@ReShapeLifesci.com
Investor Relations Contact:
Rx Communications Group
Michael Miller
(917)-633-6086
mmiller@rxir.com
RESHAPE LIFESCIENCES INC.
Consolidated Balance Sheets
(dollars in thousands; unaudited)
| March 31, | December 31, | |||||||
| 2024 | 2023 | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 2,379 | $ | 4,459 | ||||
| Restricted cash | 100 | 100 | ||||||
| Accounts and other receivables | 1,566 | 1,659 | ||||||
| Inventory | 3,467 | 3,741 | ||||||
| Prepaid expenses and other current assets | 383 | 337 | ||||||
| Total current assets | 7,895 | 10,296 | ||||||
| Property and equipment, net | 54 | 60 | ||||||
| Operating lease right-of-use assets | 226 | 250 | ||||||
| Deferred tax asset, net | 27 | 28 | ||||||
| Other intangible assets, net | — | — | ||||||
| Other assets | 29 | 29 | ||||||
| Total assets | $ | 8,231 | $ | 10,663 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 1,314 | $ | 1,689 | ||||
| Accrued and other liabilities | 1,930 | 1,814 | ||||||
| Warranty liability, current | 163 | 163 | ||||||
| Operating lease liabilities, current | 112 | 111 | ||||||
| Total current liabilities | 3,519 | 3,777 | ||||||
| Operating lease liabilities, noncurrent | 127 | 151 | ||||||
| Common stock warrant liability | 51 | 72 | ||||||
| Total liabilities | 3,697 | 4,000 | ||||||
| Commitments and contingencies (Note 14) | ||||||||
| Stockholders’ equity: | ||||||||
| Preferred stock | ||||||||
| Series C convertible preferred stock | — | — | ||||||
| Common stock | 23 | 23 | ||||||
| Additional paid-in capital | 642,374 | 642,302 | ||||||
| Accumulated deficit | (637,727 | ) | (635,574 | ) | ||||
| Accumulated other comprehensive loss | (96 | ) | (88 | ) | ||||
| Total stockholders’ equity | 4,534 | 6,663 | ||||||
| Total liabilities and stockholders’ equity | $ | 8,231 | $ | 10,663 | ||||
RESHAPE LIFESCIENCES INC.
Consolidated Statements of Operations
(dollars in thousands; unaudited)
| Three Months Ended March 31, | ||||||||
| 2024 | 2023 | |||||||
| Revenue | $ | 1,944 | $ | 2,287 | ||||
| Cost of revenue | 779 | 1,063 | ||||||
| Gross profit | 1,165 | 1,224 | ||||||
| Operating expenses: | ||||||||
| Sales and marketing | 1,019 | 2,182 | ||||||
| General and administrative | 1,872 | 4,220 | ||||||
| Research and development | 484 | 453 | ||||||
| Total operating expenses | 3,375 | 6,855 | ||||||
| Operating loss | (2,210 | ) | (5,631 | ) | ||||
| Other expense (income), net: | ||||||||
| Interest (income) expense, net | (9 | ) | 5 | |||||
| Gain on changes in fair value of liability warrants | (21 | ) | (2,965 | ) | ||||
| (Gain) loss on foreign currency exchange, net | 24 | (21 | ) | |||||
| Other | (25 | ) | (2 | ) | ||||
| Loss before income tax provision | (2,179 | ) | (2,648 | ) | ||||
| Income tax expense (benefit) | 14 | 14 | ||||||
| Net loss | $ | (2,193 | ) | $ | (2,662 | ) | ||
The following table contains a reconciliation of GAAP net loss to non-GAAP net loss Adjusted EBITDA attributable to common stockholders for the months ended March 31, 2024 and 2023 (in thousands):
| Three Months Ended March 31, | |||||||
| 2024 | 2023 | ||||||
| GAAP net loss | $ | (2,193 | ) | $ | (2,662 | ) | |
| Adjustments: | |||||||
| Interest (income) expense, net | (9 | ) | 5 | ||||
| Income tax expense (benefit) | 14 | 14 | |||||
| Depreciation and amortization | 6 | 48 | |||||
| Stock-based compensation expense | 72 | 222 | |||||
| Gain on changes in fair value of liability warrants | (21 | ) | (2,965 | ) | |||
| Adjusted EBITDA | $ | (2,131 | ) | $ | (5,338 | ) | |
FAQ
What were ReShape Lifesciences' first-quarter 2024 financial results?
What is the commercial launch mentioned in ReShape Lifesciences' Q1 2024 report?
How much did ReShape Lifesciences reduce its operating expenses in the first quarter of 2024?
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What new patent did ReShape Lifesciences receive in Q1 2024?
