| ● | October 2023: Completed a public offering, raising $2.8 million in net proceeds. |
“Although the headwinds caused by the adoption of GLP-1 prescriptions for weight loss treatment have put pressure on the bariatric market, we also recognize that this trend is increasing the medical weight loss market, overall. Specifically, the rise in GLP-1 usage has helped to normalize the stigma that often occurs around obesity and medical intervention and has increased the number of people seeking help from medical professionals, including bariatric surgeons,” stated Paul F. Hickey, President and Chief Executive Officer of ReShape Lifesciences®. “We believe that the market opportunity for the Lap-Band® will increase, over time, especially with the newly launched, next generation Lap-Band® 2.0 FLEX. Equally paramount to our long-term success is maintaining strategic discipline and adapting quickly to all market conditions. A testament to this is our recent announcement of significant cost reductions, including a further reduction in staff, leading to a projected more than 50% decrease in operating expenses for 2024, compared to last year. This reorganization and decrease in expenses will allow us to focus on and optimize the commercialization of our physician-led, redesigned Lap-Band® 2.0 FLEX, enhanced to improve the patient experience, while continuing to market our current Lap-Band®.
“ “Last month we announced that the first surgeries utilizing the Lap-Band® 2.0 FLEX were very successful and additional surgeries have already taken place. These first surgeries followed closely on the heels of gaining FDA PMA supplement approval for the Lap-Band 2.0 FLEX. As a reminder, the new FLEX technology acts as a relief valve to alleviate discomfort from swallowing large pieces of food, eliminating the need for in-office band adjustments, as the band momentarily relaxes before returning to its resting diameter. We believe, based on current surgeon feedback, including those who have already used the Lap-Band® 2.0 FLEX, that the new FLEX technology will allow us to engage more surgeons as well as new and existing Lap-Band patients, leading to increased demand for Lap-Band® surgery, ultimately becoming a true growth catalyst for the Lap-Band® franchise and the company.”
Year Ended December 31, 2023, Financial and Operating Results
Revenue totaled $8.7 million for the year ended December 31, 2023, which represents a contraction of 22.8%, or $2.6 million compared to the same period in 2022. The primary reason for the decrease is due to the introduction of GLP-1 pharmaceuticals within the U.S. This is also evidenced by a decrease of Lap-Band unit sales of approximately 26.8%.
Gross Profit for the year ended December 31, 2023, was $5.5 million, compared to $6.8 million for the year ended December 31, 2022, a decrease of $1.3 million or 18.4%. Gross profit as a percentage of revenue for the year ended December 31, 2023, was 63.9% compared to 60.5% for the same period in 2022. The increase in gross profit margin is primarily due to the Company allocating resources that were previously primarily focused on inventory to other projects and allocated a larger percentage of these costs to operating expenses in 2023.
Sales and Marketing Expenses for the year ended December 31, 2023, decreased by $6.6 million, or 46.8%, to approximately $7.5 million, compared to $14.1 million for the same period in 2022. The decrease is primarily due to a decrease of $5.2 million in advertising and marketing expenses, including consulting and professional marketing services, as the Company has reevaluated its marketing approach and has moved to a targeted digital marketing campaign, resulting in a significant reduction of costs. There were also $1.2 million in reductions in payroll related expenditures, including commissions, travel and stock-based compensation as part of the reduction in force and changes in sales personnel.
General and Administrative Expenses for the year ended December 31, 2023, decreased by approximately $7.0 million, or 40.2%, to approximately $10.3 million, compared to $17.3 million for the same period in 2022. The decrease is primarily due to a reduction in legal related expenses due to the Company recording $2.6 million in litigation losses during the year ended December 31, 2022. In addition, the Company had a reduction in payroll related expenses including stock-based compensation expense of $2.8 million, due to changes within personnel. The Company had a decrease in intangible asset amortization of $1.8 million, as it impaired its finite intangible assets during the fourth quarter of 2022. The Company also
