ReShape Lifesciences Inc. (RSLS) : 2.4600+0.0800 (+3.36%)
52 Week Range 2.2100 - 52.5000
Shares Outstanding : 2.94M
Float : 2.54M
Book Value Per Share (mrq) 7.05
Achieved Continued Improvement in Operational Effectiveness With First Quarter 2023 Operating Expenses Down 42.9% Compared to the First Quarter of 2022
Executing a Plan For Growth and Profitability With a Balance Sheet Bolstered By Approximately $12.7 Million Raised in 2023
SAN CLEMENTE, Calif., May 15, 2023 (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, 2023 and provided a corporate strategic update.
First Quarter 2023 and Subsequent Highlights
In May, presented preclinical data on its proprietary Diabetes Bloc-Stim Neuromodulation™ (DBSN™) device in a poster at the Keystone Symposia on Type 2 Diabetes (T2D) in Palm Springs, CA, further validating the potential of this technology to treat T2D and reduce patients’ dependence on medication.
In April, completed a $2.5 million registered direct offering with a single institutional investor, extending the company's cash runway into 2024, creating a sustainable path to profitability.
In April, received a Notice of Allowance from the U.S. Patent and Trademark Office (USPTO) for patent application 16/792,094, entitled, “Systems and Methods for Determining Failure of Intragastric Devices,” related to the company’s Obalon® Balloon System, expected to provide protection into at least January 2031, excluding any potential Patent Term Extension (PTE).
In March, formed a Scientific Advisory Board (SAB) comprised of internationally recognized experts and surgeons in the obesity and metabolic disease fields. The newly created SAB will provide management with strategic input and external scientific review of the company’s development activities and product pipeline.
In February, raised $10.2 million in an upsized underwritten public offering.
“In 2023, we have continued to leverage operational efficiencies, optimize our lead generation programs, and invest in our growth drivers. Our achievement of a 42.9% reduction in operating expenses, excluding one-time charges, during the first quarter, as compared to the same period last year, is a direct result of the execution of our growth pillars. We will continue to drive revenue by expanding our product offering to treat obesity and metabolic disease across the entire care continuum and strengthen our position to exceed our goals,” stated Paul F. Hickey, President and Chief Executive Officer of ReShape Lifesciences®. “We remain focused, not only on growth, but also our future profitability and delivering predictable shareholder value. Our balance sheet was bolstered by two capital raises this year, totaling $12.7 million in gross proceeds. These funds will allow us the continued ability to generate awareness of our evidence-based and differentiated product portfolio that spans the entire care continuum.”
“Additionally, I am particularly enthusiastic about working with our recently formed, global SAB, whose members will provide invaluable insights on our market, our key strategic initiatives including our now fully launched ReShape Calibration Tubes and our Lap-Band® 2.0 System, which we expect to submit to the U.S. Food and Drug Administration (FDA) in the next few weeks for PMA Supplement approval. We expect feedback from the FDA by year end. If approved, we expect adoption of the Lap-Band® 2.0 to be widespread among existing and new Lap-Band surgeons, alike.
At the same time, we continue to engage healthcare professionals, employers and individuals to expand awareness and use of ReShape’s personalized HIPAA-compliant, weight management program, ReShapeCare™, with resources including personalized health coaching that helps individuals achieve durable long-term weight loss goals, improvements in obesity related comorbidities and quality of life. Of note, we remain committed to working with large, self-insured employers to provide ReShapeCare™ to their employees in order to positively impact overall employee health and, thus, reduce employers’ health care costs.”
Mr. Hickey concluded, “Today, medical weight loss is gaining historic levels of awareness and ReShape’s Lap-Band system is well positioned as a long-term weight loss solution that is non-pharmacological, minimally invasive, adjustable and broadly reimbursed. I am more enthusiastic about the future of ReShape than ever before, as we continued to execute on our growth pillars to solidify our position as the premier physician-led weight loss and metabolic health-solutions company.”
Tom Stankovich, Chief Financial Officer of ReShape Lifesciences®, added, “The significant 42.9% reduction in operating expenses achieved in the first quarter of 2023, compared to the same period in 2022, before one-time charges, were consistent across all expense categories and is evidence of our strategic focus on achieving greater operating efficiencies. These reductions, combined with our expectation for increased revenue resulting from our targeted digital media campaign focused on geographies near bariatric surgery centers that sell the Lap-Band® system, and the recently launched and re-designed ReShape Calibration Tubes, are expected to positively impact revenue for the remainder of 2023 and move ReShape closer to cash flow breakeven.”
First Quarter Ended March 31, 2023, Financial and Operating Results
Revenue totaled $2.3 million for the three months ended March 31, 2023, which represents a contraction of 6.3%, or $0.2 million compared to the same period in 2022. The primary reason for the decrease is a decrease in sales throughout Europe. During the three months ended March 31, 2023, the company placed more focus on domestic sales, resulting in lower international sales. The company’s expectation is that revenue will continue to increase through the remainder of 2023, as the company is focusing on a targeted digital media campaign near bariatric surgical centers that sell the Lap-Band® system and have fully launched the three new sizes of calibration tubes.
Gross Profit for both the three months ended March 31, 2023, and 2022, was $1.2 million. Gross profit as a percentage of total revenue for the three months ended March 31, 2023, was 53.5% compared to 49.9% for the same period in 2022. The increase in gross profit percentage is due to the company becoming more efficient and looking for cost reductions within the company’s manufacturing processes.
Sales and Marketing Expenses for the three months ended March 31, 2023, decreased by $2.5 million, or 53.5%, to $2.2 million, compared to $4.7 million for the same period in 2022. The decrease is primarily due to a decrease of $2.4 million in advertising and marketing expenses, as the company has reevaluated its marketing approach and has moved to a targeted digital marketing campaign, resulting in a reduction of costs. The company also had a reduction in payroll expenditure, including commissions of $0.2 million, due to changes in sales personnel and lower sales. There was also a reduction in stock-based compensation expenses of $0.1 million. This was offset by an increase in consulting and professional services of $0.2 million, as the company is working on developing the ReShapeCare™ platform.
General and Administrative Expenses for the three months ended March 31, 2023, increase by $0.3 million, or 8.4%, to $4.2 million, compared to $3.9 million for the same period in 2022. The increase is due to one-time adjustments for professional services of $1.7 million primarily related to the February public offering. This was offset by a decrease of $0.4 million in stock-based compensation expense and $0.4 million in payroll related expenditure due to changes in personnel. Additionally, we had a decrease in amortization cost of $0.4 million as we impaired our finite lived intangible assets during the fourth quarter of 2022. We also had a decrease in rent of $0.1 million as the lease in Carlsbad, California terminated during June 2022. We had many miscellaneous reductions in general and administrative expenses, as we are continuously working on efficiencies and cost reduction efforts.
Research and Development Expenses for the three months ended March 31, 2023, decreased by $0.3 million, or 39.2%, to $0.5 million, compared to $0.8 million for the same period in 2022. The decrease is primarily due to a reduction of $0.2 million in payroll expenses and a reduction of $0.1 million in consulting and clinical related expenses.
Cash and Cash Equivalents as of March 31, 2023, were $9.1 million and the company remains debt free on its balance sheet, which the company believes is sufficient to fund current operations into 2024.
A full discussion of our financials is available in our Annual Report on Form 10-Q, filed with the Securities and Exchange Commission.
