ReShape Lifesciences (RSLS) 15 May 242024 Q1 Earnings call transcript

Good afternoon, and thank you for joining the ReShape Lifesciences First Quarter 2024 Conference Call. I would like to turn the call over to Michael Miller from Rx Communications.

Good afternoon, and thank you for joining the First Quarter 2024 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, and Tom will review the financial results for the period.

We will then turn the call back over to Paul for some closing remarks, after which, we will open up the call to a question-and-answer session.

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

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

us quarter for the Thank call for XXXX. this of earnings you, and for afternoon to Mike, our first thanks all of joining you

costs During lead as of long-term invest Lap-Band activities reducing our high-priority subsequently, FLEX. At in the and focused to as to resources disciplined M&A approach we our shareholder value on have strategic a end, and to commercial synergistic continually in generation the drivers, the opportunities. growth have efforts including and time, our leveraging to fine-tune physician-led To as on our stabilize we sustainability. Key continue profitability our our delivering we launch remained path first reshaped that include continue to on focus and and outlined redesigned same our and X.X well March. search for we quarter revenues success

As Group process. to the in on Maxim we an have basis mentioned assist engaged have exclusive this we before,

to us to individuals the our and we've of imagine, mission at partner worldwide. to for had join level can in activity, As right we'll quality-of-life obesity effort continue this the high find fighting ReShape improve one a

being on reductions, impact will in to the for professionals, in compared people made to market the GLP-X's are as projected staff, it strategic increase. us bariatric operating With surgeons year the normalized a cost necessary around reduction of confidence receptor including agonist intervention a last we continue in year. our for additional especially of seeking medical decrease the XXXX surge medical to short-term steadfast further usage, GLP-X by that XX.X% obesity expenses and stigma to numbers The undertake last leading

and to to and continuing during Tom focus further in I provide details to Lap-Band call. the this our improve current this will X.X. experience optimize patient commercialization and allow the will while Lap-Band FLEX but market of created us on X.X reorganization expenses decrease our

progress to FLEX of I'm the has this, centers limited report patient-friendly Added initial and to revamped co-op positive. involving X.X Lap-Band that launch sharing program continues marketing Now with the our happy surgeon key Lap-Band cost meaningful receiving effective has scalable. traffic, our while is the to well, proved feedback website and been

Before we quarter events first today. important highlights, occurring like within and listeners cap the obesity I'd our subsequent about to the market remind

weight GLP-X diabetes disease that goals weight often that type agonists the occurs is with lifelong obesity the help treatment those As adoption from of ensure I'm reducing have alarming that vastly intervention, and stigma bariatric and market obesity. We significant costs. Obesity surgery. medical you and benefits requires have suffering obesity brought global believe expanding carries sure an loss receptor who the that are personalized medical is GLP-X of rate including to of and associated already aware remains X those a medical long-term economic repercussions growing market achieved. it you're loss most by population at that also around growing significant the understand, complex to

months. limitations, to that GLP-X XX XX weight the especially weight by loss drug usage cost, that clear to very fact accessibility, plateaus becoming it's related due has to However, loss and

XX% only real-world the were is Additionally, long-term one after prescribed year. analysis, tolerability GLP-X In adherent receptor agonists of large X patients low.

have and over continuum likely with FLEX. From the We the on GLP-X only surgery, weight bariatric the believe, GLP-X are patients Lap-Band evidence taste and the GLP-X market potential drugs. as drug's anatomies is of especially reversible therapy adjustable contemplate on perspective, the bariatric individuals specific opportunity bariatric they childbearing candidates will In for Lap-Band minimally-invasive are preserving of women weight to and Lap-Band a accessibility, as of durability that patients, the especially care viable like obesity for X.X this the once Lap-Band time, who a procedure other get years other types the will newly with safest continue based you next treatment. loss, and not able issues tolerance, increase or to like surgery, words, launched ideal next-generation simple loss with for utilize surgery Lap-Band. Furthermore,

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

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

industry, of impact we as the on growth substantial the promising critical P&L loss same imperative our the for within and put our Specifically, and organization. treatment, of maintain operations, measures. we into the time, At receptor cost-cutting were most investments part of implement agonist strategy was pressure to to metrics GLP-X adherence it bariatric our has swiftly channeling a drive to conduct prescriptions which weight consider thorough evaluation

planning onetime the to expenses approximately XXXX, additional $X operating expense Now than detail implemented In and savings lower have in we we Tom result million have cost reductions reduction identified more XXXX, identified costs. of over realized will for. excluding summary, in expected a in XX% our

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

decided work in achieve a Care ReShape pause and to million a to temporarily Care employer force ReShape to and reduction while provide employees. program have executed Care our approximately savings platform also $X.X to $X.X equating ReShape of the We estimated augment million. We've self-insured of secure we

all a other of part our affecting but amounts, also $X.X team incentive pay-related revenue. We planned compensation for have of significantly for reductions million streamlining and without

of established in invest first allow pillar, XXXX fact, at late and while focus XX%. XXXX core reductions, and between bold, our commitment XXXX, will million cash reduced Taken in our to these runway. together, are drivers growth changes same our which these the indicative These the extend our time, to necessary reductions point company's an In or with of and estimated operating XXXX. expenses I $XX us

with through digital are addition initiatives software necessary engagement growth to to partnership we marketing related In that the campaign book cost and reduction generation patient engagement to to progress pillar, Hive with with us to direct-to-consumer targeted reduction Medical. platform utilizes and increase software led our increases AI lead individuals technology, needs medical quality easily lead cost in an patient help our volume. The the patient This enhances of along campaign and make This appointments with in patient optimization first markets. allows our has SMS professionals. continuing advanced platform our access to cost-effective

growth experience performed. discuss our has improving initial FLEX second for surgeries to portfolio distribution. represents now launch then, Since executing have our our progress advancement a enhanced Let's and Lap-Band This taken the were using Lap-Band February, X.X pillar patients. in gained launch overall limited significant In place expand the the additional momentum. successfully surgeries ReShape's first and

pieces alleviating to to swallowing emergent need designed both approvals original approved new serves the as before market of comfort obtain we're technology large its the food EU. The the in to and not relief this band Canada only regulatory in caused adjustments temporarily to as FLEX eliminate U.S., are in-office for by While and out, we the working a relaxes band returning diameter.

showcase event we on surgeons, who have X.X Lap-Band, surgeons had an including of who Now surgical increasing us at and technology to for engage Surgery year's exciting more FLEX. the fellows largest already by and the the its adoption X.X American catalyst believe train FLEX or enable attract Flex next relies in in and feedback & the the current from surgeons it are Lap-Band used surgeons June, surgery. was on technology we to excited whole. a earlier Lap-Band future are and combined, the professionals. meeting, opportunity integrated building Metabolic there growth we those the FLEX health also Lap-Band FLEX. the fellows this for because to the franchise the as them of and true X.X existing We Making and Diego is this and ASMBS demand Lap-Band to San to bariatric on momentum year, company Society that the Bariatric we surgical of introduced meeting, continued a new for All will gathering new generation feel patients. In surgeons. Based Lap-Band Lap-Band This

Allowance and portfolio week to important note balloon intellectual ReShape's Notice March, also system. last a received Patent property office surrounding from the patent it's and that strengthened had the the issue. U.S. in we Office, significantly Having Now intragastric of Trademark in

nondilutive our portfolio, product our action around moat efforts funding. defensive a take defend and build to utilizing and to offensive continue will We innovation commercialization position,

remain aversion Before loss with that to X.X have with are for the that want those Tom, medically weight had confident our most over we positioned we weight I and patients to durable legacy Lap-Band the I organ-sparing uniquely FLEX, Lap-Band, turn call safest reversible and loss and and option reiterate to that managed historically an surgery.

like loss accessibility, we growing the to bariatric financial surgery these usage to perspective, Lap-Band turn comorbidities X.X now GLP-X of our next fact as continuum provide related for the the Lap-Band and that to agonist over Tom candidates market increase a weight-loss weight receptor patients care Tom? the to potential believe FLEX the body of has the due Stankovich evidence and performance. limitations viable Given pointing to of opportunity From recap that treatment. I'd a time. to likely for call are over

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

cost short-term adoption we an earlier, mentioned alone. reductions company identified that to for and have of in Paul response and As of or the reorganized XX% the XXXX in approximately have GLP-Xs, update we provided million March $X impact

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

reducing expenses, actions cutting have XX% or together made operating far, Taken XXXX. and XXXX core million with between $XX significant we thus progress approximately our

first the of expenses and fact, today's XX-Q. I In first compared this operating a XX, metrics review financials will XXXX. had reduction to significant quarter overall ended in A actual release XX% to quarter discussion full press in of key a moment the financial just of quarter March for first is of XXXX. our the during we year, available take

revenue decrease The period represents or reason months to $X.X ended million the X for totaled XXXX, in March Our $XXX,XXX primary in of drugs. is compared XXXX. a XX, XX% the contraction same which volume, GLP-X sales primarily due a to

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

these continue We efforts to expect XXXX. will throughout come fruition that to

same U.S. million to stock or commissions, the XXXX, sales. General and of the anticipate a contribute have for sales and million increase lower XXXX, $XXX,XXX slight marketing months remaining year, the a for million the XXXX $X.X compensation reduction and should XX, and due XXXX, that The compensation primarily employees $X.X the million, equivalents payroll-related in total services approximately March Public accounts marketing the occurred and Gross such marketing our the ended company advertising receivable rent changes costs, also of the XXXX X personnel in a to audit in last primarily of in targeted a ended reductions primarily facility direct ended same percentage reduction million. full approximately period for million, March as for reduction and The profit had $X.X with legal The marketing and of to March its capital approximately and personnel. compensation. Non-GAAP for due it during same we period changes compared ended ended as decrease moved continued $X.X to XXXX. million XXXX, within as X compared during expenses was forward overhead-related is a profit March There gross XX% Additionally, a XXXX X of loss March quarter professional during XX% costs XXXX, quarter $X.X XXXX. the months the million percentage due XX, EBITDA $X.X or remain to for the million our year headquarters Lap-Band the the primarily in and XXXX, X travel of and second months and X X to working offering March moved compared compared ended stock-based of going due payroll-related smaller of $X.X decreased $X.X in late digital million XXXX. Sales cash million operating $X.X a to approach $X.X reduce due as primarily decrease free expenses to balance reduction of in reduce the sales a quarter $XXX,XXX for XXXX, loss XX, by adjusted $X.X in of first in months company for decrease the the months million the revenue efforts and a was in for to in in XXXX. in period XX% in expense, were million $XXX,XXX sheet. were XXXX. fees primarily of and we to net that to in expenses, and including to of decrease to XX% launch the with same $XXX,XXX $X.X XX, was in expenses $X.X and reduction There also due to the including a debt for into increased XXX,XXX due XXXX. Gross stock-based XXXX of XXXX was X.X both cash XX, costs. Research restatement FLEX payroll on a of ended campaign. has administrative and was costs. We of to profit decreased reduction same had $X a a to $XXX,XXX months XX, consistent expenditures, overall fiscal with development AI-supported expenses to our insurance to period reevaluated stock period by to million,

anticipate back is turn Paul. I we operating XXXX, reduction that, of the our increasing in will over remainder our the a to now For revenue continued and expenses. With call

Thanks, Tom.

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

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

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

products competition portfolio our are to and pharmacological that will or aggressively the transformative with intentions with therapy lifestyle-enhancing a We Maxim selection from work We continue therapies. invasive Group alternative non-anatomy-changing of evaluate with to and expanding technologies. search M&A of our the more safe, is opportunities provide differentiated that attractive

Advisory changing continue will Scientific execute global safe we success our to work our obesity. with a historic normalize to market a Board in to fashion for that in treatments and Lastly, for effective continue plan to is world-class

This prepared remarks. concludes our

now to Operator? So the we'd to like your call open questions.

ahead. over no any I for Instructions] to questions, closing remarks. to Please turn [Operator would the back conference Paul go Hickey Seeing like

you. Thank

the and adoption high-priority synergistic path to scalable focusing for opportunities a FLEX be for growth company. project a the the shareholder on a Lap-Band continue X.X the and of are restructuring and We on establishing M&A is while profitability, organization, increased we'll catalyst search value having continuing business, sustainable to our

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

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

disconnect. now may You