ReShape Lifesciences (RSLS) 1 Apr 242023 Q4 Earnings call transcript

Good afternoon, and thank you for joining the ReShape Lifesciences Year-end 2023 Conference Call. I would like to turn the call over to Michael Miller from Rx Communications.

Good afternoon, and thank you for joining the year-end 2023 ReShape Lifesciences Earnings Call. I'm pleased to be joined today by Paul Hickey, President and Chief Executive Officer; and Tom Stankovich, Chief Financial Officer. Paul will provide an overview and update on the company's activities, which will include a discussion with Dr. Christine Ren-Fielding, a member of ReShape's Scientific Advisory Board. the for review period. will Tom financial the results Then a to call some will We'll to the over open session. Paul call we then turn which back for after closing the question-and-answer remarks,

to more filings from due risks, with the Act and this the the report discussed Factors conference Commission materially and Private known meaning uncertainties Risk could -- well the Lifesciences' the As and filings as a of Exchange forward-looking in results and other section statements unknown differ annual risks call including of on additional company's including reminder, Form uncertainties factors. These website identified Information of Reform recent those the XXXX. contains as Actual company's Securities as those fully ReShape Litigation XX-K. SEC and website, Investor Securities and the are factors information described in most within

is now to under reminder, trading listed ReShape NASDAQ, an President Hickey, Paul? Paul the As turn ReShape and CEO stock additional Lifesciences. on of RSLS. I'll call symbol the over

joining to Division experience Dr. and the enough Management new of of utilizing her Thank for all Ren-Fielding, of NYU update I Medicine, Board, Professor spoke an been Surgery. ReShape's by NYU X.X first one School joined Chief of call. She and our the and at once join to will Lap-Band Grossman the us afternoon FLEX, Christine Bariatric a XXXX XXXX this we this of the call. Director Langone Weight be of activities, thanks Scientific provide overview next-generation our you conference of second member performed After again to our on kind recently Mike, discuss earnings Program Dr. of for and you, realizing version on year-end Lap-Band. Ren-Fielding us has Advisory of Surgery the quarter surgeries

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cost continuing the growth invest on focus to company. steadfast while secure the long-term sustainability to of reductions in Our is intended drivers

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you minutes let a pillars. to on Now to update primary me related progress our our few take

mentioned provide first profitability. shareholder ultimately, early the help I our made and deliver will As more us progress pillar, I toward which value call, specifics in to on want

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We in spending consulting are $X.X making approximately billion. reductions marketing totaling services optimizing our additional while

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our or our executing discuss growth our expand distribution. second now progress pillar, portfolio Let's to

continue reported, for Maxim our basis previously M&A Group assist process. As strategic search having on opportunities exclusive we in engaged synergistic high-priority this and an the to

Lap-Band increased and who continued an This also to FLEX. the of is FLEX opportunity to of FLEX. And pieces alleviate patients, like an with first Ren-Fielding I'd closely ultimately heels effort the existing to we adjustments, before a and and of FLEX the food, band Chris as growth the surgical this Lap-Band find utilizing during from were place. focus had improving As diameter. In to leading high Lap-Band limited for minutes, on of the getting as demand X.X including train for a fellows development on January, valve allow based in-office surgeries adoption believe, to fellows we large we'll detail surgeries experience. who company. At patient that the we a report extremely a partner eliminating as which inextricably to need that gain therapies. continue FLEX one Lap-Band X.X the X.X Lap-Band used products Lap-Band the on for this of forward end, those system relaxes of have Dr. also discomfort the new level continue approval FLEX, surgeons month, Lap-Band To more for for Dr. successful leap and can feedback, will pleased represents the the traction next Ren-Fielding In imagine, technology its Lap-Band future overall a momentarily surgeons. We given on activity, already reminder, bariatric that her engage technology represent band the relief resting franchise we our and Lap-Band already have the These generation few and event catalyst as exciting and surgical introduced tied new its and us last becoming that to the long-term new to well the the the we by success announced a have commercialization swallowing Lifesciences. I'm PMA experience to Lap-Band had to surgeons taken as was acts returning true from supplement right time, the surgeries additional of surgery, the ReShape X.X and new FLEX. Initial the FDA the continues to will follow surgeon introduce current X.X Lap-Band in launch that first NYU.

the our and surgery has is field bariatric Dr. As opinion mentioned, Fielding expert in Board, previously decades. of been Advisory a key Scientific of for member leader a

Chris redesigned patient and FLEX the I'd give the like Lap-Band I of to improve earlier, everyone background performed X.X ask experience. Chris, your our the discuss your utilizing with mentioned first designed experience surgeries Lap-Band As you then physician-led to to FLEX. one X.X

Thanks, ladies afternoon, gentlemen. Paul. and Good

NYU training. of As Bariatric first was mentioned the Division of to and Medical surgeon Grossman of a at NYU at recruited fresh at City. I the of Center was York NYU in New Director bariatric Surgery Langone Langone in and Professor XXXX the of of School Weight the Program Chief Surgery Medicine, I'm earlier, division the Surgery Bariatric out NYU Management create

surgery Lap-Bands. most approved, FDA months In first the when became of the X international the one X,XXX of Lap-Band Advisory BioEnterics on and on proctor and at other I With continued was over decrease Clinical prominent that and workshops XXXX, in years, I've XX at I became Lap-Band subsequent their trained by surgery. implanted academic a approximately care research surgery be scientific I Board. companies outcomes institutions, trained and a other Lap-Band complications. running implant the and with the quality conferences. device. Within training sat year published consulting to my national how own XX I surgeons and and performing I as that surgeons surgeons at I to on Lap-Band. also workshops. I involving the approval, of first busiest to other improve roles for surgery one the consultant of the following the on Lap-Band became state manage Lap-Band in lectured articles

Allergan at then and Inamed, with First ReShape. now

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operations to will our to medical they to number connection or patients impact band of population other GLP-X of successful have offered in The increase loss accountability management long-term patients large loss that lose about allowed it be an also band X.X operations a personal the weight utilization inquiring than can like surgery. for day, Lap-Band recovery came positive adjusted remarkably of uptake an revisions more then ultimately them the to primary gave bariatric be band are have after in time invasive years weight which Lap-Band FLEX. The them. as have the especially XXX still loss is them more options In XX% in before more the is Childbearing women outpatient people and the Patients ever this to more weight is afterwards. tightened. It will by help corrective lose with who practice, because option actually mentioning complication. It use with pregnancy and believe words, weight now options, and including tremendously every to I been during or who of weight over which their delivery. To for surgery them, band bariatric retightened of their the the about which motivated and treat consider XX and than procedure worth was would initial they minimally having long-term However, weight pounds This are are regain Lap-Band love GLP-X that loss patients community, had hundreds in during I was with rapid XXXXs. using tolerable other those procedures experience. have for that the of weight the mindset be that and because the accessible, of the contemplate it quick time, pregnancy safest can loosened weight have weight maintained pregnancy studies or durable GLP-Xs, them and proven after Lap-Band intact Lap-Band vast open loss. surgery multiple surgery, the reason

with with some particularly the required and long when scenarios, will thus surgeons need the relieve ability in it forward will were However, over food related Lap-Band caused an internal due device. I've to band time, more and launch potentially remedy looked therapy this the patients urgent FLEX the levels, to for became consume it to of food management system by issue manual reservoir In eventually the than became these as patient's and its there adjustments and attempt of utilizing the band frustrated band patients allow. issues the to self-correction, these the obstructions instances. loosening adjustments for limiting X.X discontent

new to narrowed back with to complement usage can these now resting forward the passage ability pass a food diameter. What's the FLEX clinicians of to after allows bariatric used the technology I a later stomach into through band momentarily were forces Paul. and forward more through large normal weight patients, hope me agonist to the and under or can becoming that call is the therapy GLP-X now the of pass combination once since we adoption its meaning of pass and agonist even This X.X too the relax FLEX pieces to it because long-term other loss better for Specifically, in gain. and then the practice look increasing I surgery its what in exciting mainstay my return field, that been multimodal is I answering have to during questions to look will ability my insights loss partner going helpful. forward. I Lap-Band call. solution call surgery to to its augment for this along prevent self-correction weight be weight GLP-X help with makes for swallowing

Chris. you, Thank

option surgery. uniquely a the As with appreciate historically opinions with our invasive, to patients safest we we most and loss that your and weight that are X.X in legacy We Lap-Band least FLEX remain aversion confident and leader experiences. an positioned durable these Lap-Band, the first-hand loss for field, had weight medically-managed and have

related usage X.X likely due From Given and comorbidities that Lap-Band patients as care these potential body the we FLEX weight next the treatment. for limitations has increase the bariatric marketing surgery that to will the GLP-X continuum growing the pointing evidence loss time. weight accessibility, fact for believe perspective, over opportunity loss of Lap-Band candidates to viable a to are and

notice an of Before by most strengthen the Tom, allowance turn additional call have Office to covering position, worked system. recently I remind IP U.S. I the an everyone intrinsic the that to Patent our to diligently evidenced want we from balloon for over patent

would like continue to all is to and over to actions now performance. a forward future important in commercialization moat in As Tom? our the providing turn I this efforts of appropriate. updates always, to portfolio take provide offensive around call we a to area updates. I Tom you when our build will Stankovich recap to it product defensive and look financial

our Thanks, webcast once again, afternoon. thank And Paul. you joining for all this

As and reorganizing million November the we Paul XXXX revenue XX% response are for by on in GLP-Xs, more the company cost earlier, of and $X continued pressure or mentioned the reductions of to identified approximately than company's adoption alone. caused have in

$XXX,XXX, pause our reductions and reduced, related in implemented insurance $XXX,XXX spend R&D primarily million of the expenses reduced totaling operating and fees other categories. Other costs; core incentive began our ReShapeCare expenses Specifically, costs have continued expense are of fees $XXX,XXX; without and million, patent affecting marketing professional to payroll-related totaling amounts costs of November consulting compensation costs across consulting in $X.X program include optimization; have in and and totaling marketing selling which reduction includes million, of and costs. which to G&A which which Force a December, total and all been related primarily in in Reduction $X.X been $X.X approximately in and

Taken operating our XX% XX-K. $XX million in have made actual significant expenses, we far, discussion is full today's financials of XXXX or cutting between press and core together thus our A actions progress and with available reducing XXXX. approximately release

So December metrics I financial year will key review just take XX, a moment XXXX. for to the ended

Our totaled XXXX, compared million to decrease $X.X decrease in The million introduction Lap-Band due evidenced of this contraction which sales the approximately prescriptions represents the $X.X for of of XXXX. by ended same also U.S. of is XX, XX%. for This to the reason December a GLP-X year the revenue a is unit period within primary

focus bariatric costs digital AI-supported around through media targeted near marketing We and our reducing surgical new increasing campaigns the continue efficiencies. and to strategies our centers U.S. on while

We in expect fruition XXXX. efforts that to these will come

expenditures in of expenses primarily or as is same to our $XX.X reevaluated $X.X margin decreased XXXX. XXXX, increase reductions marketing compared ended resources U.S. was the for a in stock-based to beyond. Gross revenue $X.X including the the $XX.X of allocating and year XX% XXXX, percentage and Reduction $XX.X we December to approximately part was Lap-Band in for of focused launch decreased year XX% that digital XXXX, year XX% December in have There XXXX. Sales $X.X a same costs in going and of and period December Additionally, moved million as by due XXXX projects period profit for ended ended decrease the million we profit compensation the The advertising XXXX. and XXXX, also as for commissions, million sales the by and losses XX, compared contribute XXXX, and company There X.X in million million. is ended was million million of to the $X.X $X.X $X.X to XXXX. XX, targeted December to a in XXXX administrative allocate and million expenses full percentage larger a travel million the due for $X.X payroll-related for XXXX. FLEX or into XX, increased primarily The decrease in anticipate previously a compared of to to on AI-supported a of marketing marketing $X primarily in profit million XX, gross XX, Force. General million campaign. to for $X.X for should expenses incurred we compared litigation expenses decrease forward same December in to inventory to other the that to Gross million and marketing were were ended period approach the XX% year in operating the year

million during decrease California for X% asset cost the year by decreased and had the expenses, former XX, equivalents company and XXXX, of December includes of balance cash intangible company and EBITDA in the ended million reduction compared $X.X remain the which a included ended In insurance reduction $XX.X or to to year Carlsbad, $X.X decrease, consulting million expenses due XX, December was year. and $XXX,XXX the of cash XXXX, compensation for year assets depreciation, on the expired in debt our sheet. the the in for in free $X.X lease million ended a finite XXXX, and rent amortization a payroll compared development We adjusted quarter clinical-related and to expenses. Non-GAAP as for for intangible our with fourth including in the location. Research XXXX, million same a last of impaired loss slight this expenses, stock-based period reduction addition, $X.X payroll-related $XX period efforts. Other primarily expense our to million same

XXXX, a to into in revenues turn Paul. the anticipate we continued I move operating our now and call As our that, over increasing forward expenses. With back will we reduction

Tom. Thanks,

full important adjust we that have reiterate, detailed, to Before I The across and for our categories have the continue as and sustainability can open scalability. invest taken Lap-Band our call Tom in to both to bold have will and to and the our swift the X.X we we restructure help so Q&A, will growth we all operating steps launch company ensure it's initiatives including of expenses FLEX.

customer-centric a including improved reducing an system providers marketing engagement, frictionless We further costs. automation acquisition, generation scalable messaging booking segmented to continue for updated investments, lead support while to prioritize via with and qualified website patient

procedures Taken together, to expect we Lap-Band and ultimately, revenue. increase

the work safe Board with to our market that to We for in lifestyle-enhancing portfolio will will loss. At continue to continue execute we Advisory invasive achieve alternatives a non-anatomy-changing continue changing selection same weight to surgeries is remarks. Scientific to effective differentiated healthy concludes plan from for that a develop obesity. This technologies that to of bariatric and and patient-friendly, to fashion offer durable is global in world-class treatments normalize the transformative prepared with historic our patients of products consist our that the success competition help more provide time,

So Operator? now questions. open like I would for the call your to

Paul [Operator closing for concludes Please conference question-and-answer session. to Instructions] ahead. over our the turn Hickey This go like back would to remarks. I

continue of I commitment appreciate to to our sustainable, quest enhancing hope organization, the shareholder as value you. scalable for efficiency our Thank of through a our that company you company. steadfast revamping the the

to provide participating personalized Ren-Fielding call. special commitment to to today's to on continue evidence-based in diligently for will thanks build We Dr. work devices. A our

with suppliers, physician-led to customers, existing loss on engage the I support shareholders. our of stakeholders, our as premier progress members, weight forward we become I always, care thank partners and consultant for look to want their and shareholders continuing new mission As ReShape health employees, company. our to continued Board advisers, to

now Thank has attending concluded. you for today's conference call. The

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