ReShape Lifesciences (RSLS) 29 Feb 202019 Q4 Earnings call transcript

Good day, ladies and gentlemen. And welcome to the Obalon Therapeutics Fourth Quarter and Year-end 2019 Financial Results Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session and instructions will follow at that time.

As a reminder, this call is being recorded.

to Chief conference Executive like Plovanic, to now and President Officer would turn over the Bill I for Obalon. Mr. begin, may you sir. Plovanic,

the Thank responsible financial And quarter you, are the Bob me morning. Obalon Obalon Retail call future that's largest operator. fourth Officer, Loss site Nooshin Chief Therapeutics for retail Officer. who's on welcome surgery today's today's with and treatment similar function driving to Weight conference A played on results to a XXXX MacDonald, call. for for the With Center Sono year-end Hussainy, in Good expansion model. Bello, aesthetic chain Also Financial United he role center our States. Chief is call

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Before the I'd like Reform express everyone performance considered as today's forecast, made company's remind we future and get statements anticipation by Litigation the forward-looking conference that projection, expectation, be events belief, defined future started, intent that Private on regarding call Securities may any or Act. statements to

treatment this statements Forward-looking retail business, in and growth the the near including the centers. expectations long-term company-managed regarding release include Obalon's its potential of

of Form today, and And forward-looking only are Actual company disclosed XX, forward-looking are hereof. statements these future the may from statements. cautioned current to, as and and are on limited materially forward-looking the to projected in in by statements, ended Obalon XXXX. risks XX-K based differ as information reliance listeners which including involve to for undue statements on filed time, the of periodic not year those forward-looking of which to reports the These date factors the December time are from SEC performance. not place the the results Such include available guarantees speak uncertainties, risk the not with but management

any Obalon archived forward-looking intent will one as on obalon.com. these specifically obligation The site for be law. year required Web available or the update webcast to company's except disclaims statements, by

of webcast, was listening SEC recorded And may reference be since topics benefit this February the Obalon made to those most call XX, releases archived on discussed, and held announcements please the the to For press recent then, so and may have the company's related who filings. XXXX.

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both classes. program application, also to person of the and phone video at up part offered Obalon center unlimited being all counseling recipes the to an fitness months and nutritional registered is for As also meal and includes sessions center, and dietitian who's phone-based comprehensive XX through and a including treatment branded app at the virtual content, currently in with access plans, on-demand the through available

in full are Weight Center are the no that for six in initial results had a clinical with has months Obalon not and we patients what completed are currently of Loss. adverse single we the reported line was treatment. for yet While trending Safety in data, with at the patient device have Loss, and efficacy pleased the related event for our registry therapy Weight commercial Center at Obalon

approximately XX, that XX are FDA index, body in estimate between is XX We adults S. XX in that can there approximately are indication, pounds. reminder, the balloon a that system’s by care branded of for in the for improve operational. believe mass the have million center site of benefit losing BMI, to a I'm balloon our Obalon for candidates which we full model treatment treatment qualify those the to pleased range approved XXX the As the first the will to people second obesity we with results with retail center, for with first quarter system. Obalon now operations our Overall, and initial the Obalon access for U.

are into new treatment second With portable, competency be replicable gain center developing expanded the we the a continue markets. in that opening retail we to model center, can

are We believe have expansion, markets move we to analyzed and and potential quickly. positioned next that identified our for

center, initial trends are of look we and encouraged the forward commercialization open sites are center second results We initial stages additional and by this the that and the year. of first to in

our like Officer, XXst a quarter recap provide ended brief and now Chief financial Nooshin I'd have December to the Financial Hussainy, year. for

fourth the XXXX. fourth year to share I third the XX, Today, XXXX like details will results financial Bill. to I and would quarter ended quarter quarter on Thanks for December our compare XXXX.

the I financial quarter business interested XXXX investors versus our of pivot provide XXXX. the are second sequential I full of will the and given growth year XXXX of while is then As most in majority a model in comparison figure. believe

will Capital. equity line with I discuss recently Lastly, announced Park Lincoln our

from quarter was sales revenues of full center from our which operations. in compared and international Fourth compared center cash of we with sales treatment third fourth customers fourth at model, reported In the $XXX,XXX but treatment first quarter $XXX,XXX, in $XXX,XXX the included XXXX. as physician in of retail the collected quarter revenue from to the the on distributors Revenues as cash XXXX. quarter, new for the almost to S., U. XXXX quarter previous quarters ETU physician the reflected operations models. has approximately of of recognized $XXX,XXX revenue customer in fourth

revenue. the delivery payment often revenue by delivery services the three net from recognized in of be a over treatment to reminder, as is balance package is recognized recognized lag the during balloon majority center course result line cash in as is expected cash placements months recognized revenue future the the of there’s upfront a model first of collected of collection with quarters estimated a between while treatment treatment services, with and a As from

U. QX. $XX,XXX in of the quarter in compared to the improvement gross the international revenue QX was revenue S. was S. Cost in approximately fourth to overhead contributed and physician XXXX which revenue the $XXX,XXX, our same-store volume approximately gross of physician improvement This as profits. to $XXX,XXX. in an distributors in third $XXX,XXX Gross sequential quarter of contributed of quarter to and fourth revenue Increased quarter to compared profit sales U. of third from in a of QX XXXX. was absorption for only of sales XXXX. to was customers XXX,XXX to $XXX,XXX $XXX,XXX $XXX,XXX deficit

the $X,XXX,XXX study for compared our fourth XXXX at enrollment prior approximately quarter FDA Research of post to third and expense sequential XXXX. approval continued the development Dispenser approved our Touch in recently of quarter the to Navigation as improvements Increased original $X,XXX,XXX investments the of and product support System Obalon Obalon as Furthermore, pipeline. development we to make to drove increase. of new our approval of well continue and totaled

in QX general was the XXXX. the The Diego of increase Weight was loss Loss, $X,XXX,XXX fourth million, Obalon insurance quarter contributed quarter D&O in San approximately to $X,XXX,XXX $X,XXX,XXX, liability other and and totaled which the expense for up increase. sequential the quarter rates, in administration Center operating legal marketing up $X to XXXX. of the onetime Sales And the third from expenses for for expenses the

average for or common per shares common loss the Net of third of fourth XXXX. based of on for approximately average per to diluted outstanding approximately XXXX X,XXX,XXX or share net $X,XXX,XXX based as loss $X.XX $X,XXX,XXX the quarter compared outstanding weighted on share weighted diluted $X.XX quarter shares a was X,XXX,XXX

$X,XXX,XXX of from to approximately year $X,XXX,XXX XXXX Full the XXXX. year $X,XXX,XXX in XXXX U. to of revenue at million reported for XXXX. was S. revenues international as $X,XXX,XXX revenue of revenue compared of $X,XXX,XXX compared international $X first in increased

XXXX resulting quarter $XXX,XXX, to gross was to and development XXXX XXXX approximately and for the full year and of $XX,XXX,XXX year Research first margin the approximately $XX,XXX,XXX of XX% expense as for of approximately a to year administrative full full full to in of the XXXX. gross the for compared the XXXX. for XXXX profit decreased Gross full XX%. of expenses $XX,XXX,XXX a for year of of for compared $X,XXX,XXX as to as Selling, margin general year of $X,XXX,XXX compared the totaled

$XX.XX of share XXXX. as the net loss approximately $XX,XXX,XXX of of XXXX XXXX. $XX,XXX,XXX year compared compared loss of for $XX,XXX,XXX to XXXX Operating loss share of year full reported loss net of of the the $XX full XXXX compared year Net $X.XX loss a was an year the per The was million of of the XXXX. net the full full to year year for for for full at was for loss per to full for the operating

to which to Lastly, next with treatment like The to million financing model. Capital, to intention our fund agreement us this could of the Park recent center over touch expansion I $XX help our agreement access enable is on XX for retail Lincoln would up months.

equity is We based capital various agreement to our provide purchase next effective to market Most of stock not not to on the the part shares go derivatives, have and to of line us to discretion to common business financials, sell Obalon Lincoln include filed prevailing cost the opportunistically obligated month. to ability our note provide flexibility subject but price ability and shares It's would expected effectively. covenants S-X at base. sell the are Park as that It important us warrants, importantly, with this at Park Lincoln an to does this or has and conditions. that

investments As cash which term XXXX a no short debt. QX, equivalents and $XX,XXX,XXX reminder, we cash and with ended and

comments turn that, with back complete. call my Bill. the will I are And And to

we would internally. I better a understanding share to business how now to provide goals of our like with you the measure

between As plans current for we Obalon a two branded the have of the treatment our targeting and next have sites this goal for We currently for four months. eight five sites number an signed year. operational which the have centers, are operational of within expansion and to additional by lease retail to operational have end is site,

a our to The average up ramp XX goal patients In performance is an terms that patients new of month of few after center, was accounts, per per state months. top sites average XX XX at sold patient month our last flow new initial month. XX experienced is to period top the at of steady equivalent to

term For patient the is which to patient recognized net to over a in the pricing, average our of per current X,XXX XX revenue goal achieve of treatment, currently $X,XXX range months. patient is

focused from full quarter that Diego sales dedicated important package balloon a collected recognized new noted with we the continue with the delivery for solely model model in first the quarter first of a between and The company Obalon. to It retail treatment full XXXX treatment the our operation create are Nooshin an treatment in be initial delivery from services, managed and our able a may of facility of revenue recognize patient to S. our center that San experience for is was service leverage and fourth her loss belief As weight site two support was U. prior the in program services, commercial years quarter while treatment creating of business system. comments, Obalon plus results on for in the to revenue. center lag line payment

obesity a believe access California standardized the forward States center look care this treatment we has been We month, an laid retail million Orange repeatable United system. improve additional model. foundation second XX and treatment in Obalon County, candidates with with for are to estimated that of the sites the With opening opening for location for to balloon the in adults

please complete. for are our With now will you Operator, prepared comments the line open that, questions?

your with the from line And comes of question Instructions] Kyle [Operator Rose Canaccord. first

to just get experience regarding now I overall to the from marketing you the two, whole, seen far. then that five see centers, conversion And three improvements information eventually maybe control rates first if delivery. the seeing conversion patient the experience How just the improve were particularly in change far that wanted thus can insights I eight? guess, at then the So treatment as you you more the as learned expecting? are what a Have at rates centers productivity the you we that any going just to to you've potential actual and center patient little or are

taking as call center. are appointments the center marketing and booked And including generation. marketing, and or mentioned, the advertising leads we our those that those lead at leveraging treatment the we with abilities of that capabilities center, and call our we're appointments converts create our terms booked and then generate In had the we to transfers into

-- that show our we’re through and patient once if treatment a person the then salesperson So and opportunity up centers, convert into to has to to the then treatment. they go sole somebody

So that's of go generation all ability analyzing the that lead initial to to and the have back the and measuring utilized and drive to layers we the granularity way lead. that are all advertising funnel, the

show them, at lead are all that the measure that. different to levers been look that which then sale, to very So improve up to and into consoles, to funnel. a and out from generation, analyze We reaching of with at looking people to as we convert that, pleased booking we've that pull it to areas

or been throughout our our in metrics, that to those looking of meeting process. in pleased and very goals We several have the exceeding all optimize

results second what up this and obviously operational then center, started that and the we learnings learnings, are the at end the of very, we we those and experience and standpoint. apply nothing patient minor but across took to first the and got to that with I from it going And the also very second our doing, we're those an of center terms are. September, In model, by the we have significant and on that execute what standpoint, in just center that terms say center encouraged and second point. at encouraged test driving the pleased from out with standpoint a marketing results come conversion leads continue at the of at turning initial of think and model and the would very not from to very on changes I to

quarter international the -- this you revenues And clear Can your your that you then first in is reengaged just States. the pretty from maybe United the goals markets. are

help that Just Or Was as we line forward? should back? we us should and go of kind understand a a think that is moving how an about order steady consistent number goes she on it should OUS initial to stocking that basis. forward pull that contemplate then expect we

distributor to in had a generation distributor that said, As our This Center the the you balloon provide was our in product. continue international high is very system key also few do now Weight for focus the S. international the and S. U. supply distributing that in a the U. us think Qatar. new primary I and to physicians Loss it a of volume as our balloon to demand was the familiar Obalon of We been and Obalon distributors, to had with in country, for systems continue

revenue it be one, agreement. quarter little should business, significantly I one similar as a think maybe a I we mean, we’ve current very the a the won't different. that a It's signed less quarter each but on be but of from think straightforward pretty go as year agreement. it we

Zimmerman comes from with Your next BTIG. question Ryan

you in think those there heard think I to of but total want of revenue, revenue I volume apologize. was from distributor. So I international Nooshin, this accounts, the $XXX,XXX $XXX,XXX said high physician kind correctly, about ask, and your and I I just

that do we the how yet this today understand ultimately quarter, a just as back message is more that capacity it out and think gave from Can what I Bill. And feel to saw the puts question But plus if centers similar productivity imply about would out you us so at? you still and you and recognized. center translate that revenue standpoint could so the overtime So help the is be you the bigger to where of the that you what scale? to

to me for clearly? repeat part So do question the the it didn’t mind you because last of I hear

a that different the was for does patients components my volume specifically just with it can expect based kind What And where revenue you -- the you you like out look line in would seems a go, So over net much that provided just go? that the of capacity feeling like physician high as you from standpoint, about capacity think on to in you revenue. of it Are metrics when question accounts? but incentive more time where do be have you center? that

time, current -- the answer goals new first of see medical provided. this at our the really is delivery monthly it's a capacity to But and second current staffing part for -- XX minutes about our capacity approximately Remember part. balloon, peak beyond for model the and with then question is way we Nooshin it's we delivery. believe I'll variable patient of is of think that you're handed there's Ryan, part -- question the to if over second question, the the asking and a the in capacity then

hours we're not day days demand, office So are maximizing basically. the do optimize a we're the hours, office medical we of able have to a to staffing but week, And titrate the only eight or meet hours. five currently currently

could So that to demand we if needed. adjust able be to additional support

over because terms recognized, flow I that cash services time, the and Nooshin revenue delivery about operations from $XXX,XXX. of or there had of and recognized the a approximately and think of was the from between upfront lag was is net revenue you're mentioned asking, in collected XXX,XXX the the revenue stated recognized the revenue

of collected the delivery overtime net be would as the So revenue services.

think to to the higher have is, that a pricing, kind to doing as think you back and it? in balloons $X,XXX direct a end when it impact that physician price little the now And pricing about What the range. selling, I the $X,XXX you if any of you're way seen then you and was when right were pricing consumer what from say just to patient

In an terms $X,XXX average $X,XXX about average U. or S. and patient seen physician between of customers I of $X,XXX to $X,XXX price the we've our pricing, mean on $X,XXX with across

physician midpoint towards high of to towards bottom below customers volume tended the that and price more Our the end range.

So to our when they goals exceed --- we our are the of at high months, monthly were were volume meet doing basis a their what best or on said customers volumes best sites.

And drive so that level, so is. we're volume to our looking goal that's what

question from Ben Haynor And your with Partners. Alliance next comes Global

front? to me you It that, attract kind do anything started of to you've that it’d share terms that you be like locked to of weight share Is and hard anything and or you of certain for of marketing something offering anything different looks couple far. that's on such or on can can in do you've patients people that now you better like loss that feel have strategies to there than in learned amount so rebates

looking and September. to optimize. points of looking patient been at incentive the that in funnel Remember now. when providing programs those There and programs we're as promotional to into overall flow their and were physician learnings different these our physician customers, different interest doing were since drive physician we it. our they is available lead practices. programs of We we're into to treatment The outlines have were for We've different driving leveraged programs utilized the conversion conversion, patient customers, there intent

and those program. from take the are the learnings to continue into programs next those we learnings leverage So run different that

And as what population you’ve in then out the of are terms just you or anything stores centers, is now opened two share front? terms kind of can we that you future expect that at in kind in looking located, of there of the on that is branch

the predicated the is one growth fact between So XX and third population strategy of our that XX U. S. approximately is on BMI.

Bill mentioned, market out first to Obviously, there. then a locally. had now center it San made thought our And being we here center Diego, have So as Orange a open there's open located huge in in we sense County. second

want So addressing not too need are. we where with markets far travel people of most out, we the as spread balance large to those along the to

a that big, proceed we'll and optimistic there's huge very we're accordingly. a So out opportunity there

it's far S being out So burger get curves? and not of from in model, kind like too

could phrase way, You it that yes.

Ben, And down at as approach, we geographies, I at up space that there's it. data. the population out approach. and a similar well. filter But different you We've you that if different take look examples a in through it analyze players there, at the look we bottoms looked a top can then other the of income think, We layers lot several

first into. city larger together physician the assets leveraging corporation where obesity sense and as the we can have target believe I You lot those put sight well. in bodily it and thing, at clear at have populations can go, of an looking looking that look of really the move at at is of is strategy we choices City and it’s place restoration But And NFL hair you market other that think that for, at a indicated Ben, idea. really the point, prevalence gives makes the Sono you Bello, just the this all still to the way the given were we for

closing have questions no We Instructions] have in Do queue. [Operator remarks? you any

Just like good our to thank a call. everybody for next much. forward to call the very today. Thank day. you we look joining Have And

call. conference today's conclude does This

disconnect. now may You