ReShape Lifesciences (RSLS) 14 Nov 242024 Q3 Earnings call transcript

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

Good afternoon, everyone, and thank you for joining the third 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. Management will also be joined by Krishna Gupta, a current Director of Vyome Therapeutics will be appointed Chairman of the combined company upon the completion of the previously announced merger agreement between the 2 companies.

after quarter, company's provide review activities, results the each update overview the do introduce for the will on and period, we Paul his an will and financial Krishna As for Paul remarks. which, Tom will

this forward-looking reminder, well as meaning Securities the statements and within call SEC section of Litigation as Investor Private of including the the conference information Lifesciences' XXXX. Reform the filings a As ReShape website website, Act contains of

those uncertainties discussed Securities uncertainties the on Report from company's to more Actual known These factors risks, results materially XX-K. with and Form could in unknown due and those the including most and identified and differ recent the fully Commission, filings company's additional are as Annual factors. Exchange in other Risk risks and described Factors

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

Mike, and Thank you us thanks joining of you, afternoon. this to all for

provide exciting after to financial ReShape's our on and Mike will activities Vyome noted, of on update and reviews an Krishna background the a some overview few Tom share Gupta take moments vision Holdings. performance As I

third overview our an with begin Let's subsequent activities quarter during of period. the and

During year. quarter growth, the and last over XX.X% over quarter, X.X% third of increasing our quarter third revenue revenue of continues third the the the in to rebound, sequential second quarter, the quarter

to operating XXXX the in led reduction focused year. X has on expenses to plan remain highly disciplined lower our year of to the first over leveraging While our cost XX% for to compared months order we last approach continually execute on maintaining resources which

in for months. increased gross and this our call. for first later these profit Tom X result, the XX.X% cost quarter to reductions detail a As margin the will XX.X%

FLEX. In physician-led invest continue commercial Lap-Band our X.X of lead the and our launch reductions, cost redesigned activities including in to drivers, addition we our generation fine-tune growth the to

phase launch that to early and We and used completed our our will metrics our be launch. data support commercial analyzing widespread

week, from received for the this gain growth which announced we FLEX catalyst approval as represents Lap-Band X.X as worldwide. the approvals franchise Canada, to Additionally, look Lap-Band we regulatory yet another for important Health

for week, awarded of announced California's Autonomic grant Nerve Center consumption contact will DBSN over delivering the from X can studies Neuromodulation the to test of and Also and ReShape This grant year, power safety were $XXX,XXX with fund Bloc-Stim which approximately the the we NIH electrodes area, nondilutive the awarded proprietary supplementary Southern reduce Recording device, this effectiveness Stimulation increase and nerve the of Systems. course double or University Diabetes signals. efficacy of next-generation supplemental for potentially for DBSN

total fourth the funding our our novel keen in grant and from to our viability global market. awards interest This strategy, brings received diabetes the nondilutive potential the of technology demonstrating DBSN and million, $X.XX the NIH NIH in

in Series July, we negotiated Therapeutics the to liquidation merger and C concurrent agreement notably, successfully purchase shareholders substantially with preference. Most asset with with we the agreement the Biorad and our coordinated lower both Vyome

stockholder maximize will shed and on why light with bullish transactions. on Gupta little some detail merger very this deals concurrent will value these in the these will strongly a we which potential. feel we later considered, call, earnings things are All Krishna Vyome,

loss. treatment Before sustainable complex lifelong the I like that weight is do disease that, achieve touch a strategies on to Obesity market. individualized I'd obesity to requires

and promotion has GLP-X stigma As aware, of normalize medical receptor has lessened you intervention obesity the treatment. and of started are to the around most agonist

advantages considerable with with provided have type has and X agonists for receptor individuals obesity. also dealing benefited diabetes GLP-X individuals

surgeons the medical that economic over our as well especially we FLEX. the especially believe increase. our cost minimally opportunity with related market the adoption of widespread people the as X.X launched Lap-Band GLP-Xs bariatric seeking newly believe professionals of the real-world We Lap-Band for low health to increase, that burden Further, continue invasive tolerability of to will the time number help with long-term

X.X In improve commercialization patient the was interim, Lap-Band the our created which cost reductions have FLEX, the allowed and experience. focus us to the of to optimize

on with release successfully went centers we meaningful pleased nationwide. completed co-op is and this, marketing As I'm proven has I to and that the earlier, of patient-centric touched has Lap-Band the receiving positive. market Added surgeon programs feedback our while to traffic, key report our Lap-Band limited initial effective well. exceptionally scalable very website FLEX, it been

about let's Vyome. talk of with the shareholders Now ReShape future

the in and know of merger Group we process. you most assist opportunities. exclusively search engaging Maxim to synergistic for acquisition this As last year, high-priority conducted a

multiple with the the merger discussions Biorad. with recommended of After and with strategic Board unanimously merger potential candidates, concurrent in extensively evaluating along to other sale Directors asset options acquisition Vyome, and our engaging

We captured presents shareholders combined in Vyome's portion newly meaningful of a of a vision a believe our for which opportunity the company. this capitalize tangible encompasses on merger and assets significant a owning big to potential business, go-forward

transaction $X.XX shareholders. and down cash, purchase and to this partner for us Balloon been will granted exclusive for Obalon subcontinent. Gastric the agreement assets, System Gastric is synergistic has million Biorad deliver to Biorad reported, costs with maximum the an pay our purchase associated the asset the previously including As license to our in system the the allow believe value most Obalon Balloon Indian System Vyome in our We Lap-Band

was provide financial is regained very growth X-for-XX over in Stankovich component from resulting like Tom? excited for of performance. now about with And also that to the transactions. with merger Tom our split I Vyome. call potential which October, remain and value turn recap I'd September, the these a effecting shareholder the to stock we reverse compliance NASDAQ after a worth noting critical in a It to

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

third continue has increased year. As Paul quarter quarter, sequential third during for stabilize quarter -- mentioned the earlier, grow and and the to revenues third our this

plan disciplined in approach to and the our adoption executing of maintained short-term reorganized GLP-Xs, have and to reduction response Additionally, our the and XXXX. cost impact we company for

operating operating expenses a overall are gross first months comparable in achieved our expense the same year. XXXX or in X reductions, increases our within period With All costs the reduction a profit margin. year. result, to the XX% the of compared period same last items saw lower we also as we than in And prior the for various cost have

our A is full discussion XX-Q. press actual in our of financials release and

So I will to for key financial just metrics quarter months review the X XXXX. take September a and moment XX, third ended

X% weight GLP-X alternatives. higher Our loss XXXX. primarily offset was to primarily $XXX,XXX of pressure the sales months for by compared XXXX. $X.X revenue XXXX, volume, resulted September increase or ended to second X revenue million of totaled quarter same in $XXX,XXX XX% period increase an Quarterly continued This in XX, an or from pharmaceutical compared due to the the

contraction was months the XXXX. ended was September XX, for XXXX, XXXX, pharmaceutical primarily percentage in XX, the Revenue totaled alternatives. Gross was period for due for the as $X.X $X.X $X.X compared to GLP-X months decrease of ended primarily profit same ended XX% in $XXX,XXX or slightly same which XX% period for X a profit XXXX. to above XXXX, September of X% period for sales million, a X million from in XXXX. weight same Gross to volume, the September a in resulted the the X XX, compared revenue This loss million months total

company $X.X X a X revenue total unchanged gross percentage to had XX, payroll -- Gross costs, compared in a million. the Gross in XX% profit was for is in the the primarily in as reduction has XX, period The XXXX months overhead-related for as XXXX. the the for due as XX% same September increase profit September and of profit total of ended months a XXXX XXXX, at to ended late reduction was employees margin of XXXX.

to by XX% million compared to XXXX, same Sales to the months September period $X.X and XX% marketing months and XXXX. X expenses ended $X.X million or million million for X of for marketing the $XXX,XXX a has marketing expenses decreased by $X.X approach compared to ended and a XX, the in resulting XX, in $X.X XXXX, decrease or Sales the marketing for the marketing September period including decreased the to digital advertising as reduction costs. and in $X.X decrease marketing XXXX, expenses, moved million services primarily a and company for has to professional same consulting campaign, reevaluated its due is targeted in

payroll-related a the stock-based administrative expenditures travel. X September including ended or expenses months XX, $X.X there same in to X% same to commissions, approximately General compensation for XXXX, XXXX. compared decrease million million $XX,XXX in by expense for and the the $X.X Additionally, was slightly increased amount period

the transaction to reductions primarily services, The related increase entered purchase that July expenses into asset in expense. offset by nominal in merger primarily increase debt to bad and in and is due employee-related XXXX, an professional was

for million million the as decrease reduction expenses administrative for primarily X in and public the decreased incurring to XXXX. of the ended million, in million $X.X and audit period legal due General $X.X to to XXXX, for is such due fees September compared $X.X to to and related onetime XX, $X.X or offering. XX% professional company XXXX services same our February a adjustments The services approximately months professional primarily

end of including in reduce at rent of moved quarter staffing reduction reduction expense. headquarters costs second XXXX reduction expenses, decline expense in levels, the its to bad the a in payroll-related A a company due debt facility a in stock-based compensation smaller to a expense to the and as

the to to $X.X $XXX,XXX by by clinical $XXX,XXX reduction expenses the for $XXX,XXX consulting the ended million is September prior same to period ended compared XXXX, X primary period in the -- or year. approximately decreased decreased and months decrease in million Research for the $X.X The and for a expenses XX% year. prior to reason development the in the trials. Research the reduction months development same XXXX, XX, for payroll, and for XX, XX% September or $XXX,XXX X

the an last million, the of compared for an the XX, to September adjusted loss to X Non-GAAP improvement $X.X as was adjusted XXXX, of $XX the improvement the period same loss X $X.X for million of million. EBITDA period same September was $X.X ended compared $X.X a $X.X ended in for months EBITDA XXXX, year, million months last million million XX, year,

We million, net to overall continued over and quarter cash call turn including are to cash and $XXX,XXX. restricted of with back reductions primarily ended due Paul. Both cash of that, capital the our operating $X.X working now I'll to the equivalents with efforts reduce And costs.

Tom. Thanks,

merger and the combined happy to post by once I'm Krishna of Gupta, for Chairman further be Vyome joined the company future. outline vision the be who strategy While to will again

last apart I've am the and for shareholders opportunity Krishna? alike over about any working from other of with that had shareholders Vyome new and excited ReShape truthfully stands the our part year, very of opportunity. the Krishna, investment I become pleasure Now to

to to which deck a you shortly, forward out having shareholders. looking Thanks, the more putting you be We'll interim, the meaningful dialogue Vyome available. revolves take in publicly Paul is on around done. innovation has I'm also I I'd kick in vision read on all encourage Vyome ReShape's which ReShape off through a opportunity to as along like journey, Tom. much to this and the filed care, health but S-X, the and with

note assets. upside positive combined significant is ownership of by $XXX the that the ReShape and valuation our the X transaction We valued go-forward current if for there S-X in well sides existing both massively shareholders We a Vyome have well as between in underpinned purposes million entity as this for beyond shareholders, team at executes XXXX. allocating this view the about and of believe Vyome the the company ReShape

do? Vyome does what So

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Vyome shareholder you on Vyome Our Board for value investors. are and in focused XXX% creating and

about the turn us. creation value U.S. ideas back Paul. to capital If I'd care and opportunity you're transaction India, exchange and excited that, talent, offer like about join call innovation that With the please the health between may this of about you, and to the

Krishna. Thanks,

shareholders by in of which details outlined shareholders, To with statement You asset includes registration can agreement. statement. proposed the just are shared proxy a a of very be compelling shared approval part the merger remind that their and opportunity purchase believable the Krishna and S-X the

the Board to unanimously and to sale a the Krishna's hold and plan declares our set the message Biorad. When part we with meeting concurrent the SEC will you, excite the Vyome of should transactions. S-X the shareholder is effective, it reason recommended and approve merger

can be Thank shareholders you to hands. discuss what you I'm future Krishna. anticipate call joining They'll Vyome great for today's again, in with grateful Therapeutics.

Additionally, to our new Therapeutics. future support I want members, support and shareholders all. for sincere customers, your employees, unwavering existing and you appreciation ReShape to consultant Board of my Vyome our Thank express and for advisers, suppliers as

from Before we McCarthy Jason question conclude, we Maxim have from Group. X

at Can pharmaceutical plans about a guys about it kind we start -- you what Can does as be think here. gel to just of the too company. fungating biotech malignant a Vyome, bit about of don't know opportunity investors think high level more talk a target XXXX a the inform to you some good a lot wounds, would to of from much something really your and maybe people and it I

Krishna? [indiscernible], Krishna's definitely is That

about I put it's an the out to our you therapy. on going malignant wounds deck. The what unmet Yes. a example can until fungating that, inflammation science is But point I'm of talking investor an an defer example disease. rare is to immuno of we

problems beset by So world an at frankly look immuno caused untreated if underlying are today, you [ that the inflammation and ] response. it's often niche by many

interact with It's do lens treating system Vyome's the been focused the body. a the root of has on from of scientific we And category that's and the them journey cause how always identifying immune hot.

smell well. X site that very of is a examples quite look at and multisensory. these this, very, a painful, it's suffer very So have then malignant disturbing there's fungating Obviously, to as wounds is but it that acute patients are where from symptoms strong

are can a can life. of And solution to way. and create working of that that can the come. believe of we believe on, to in we product we sort this shareholders lot people's quality of sort significant treat only that for value damage cause And And a systemic

molecules, to rare I so where just presentation. more, use we causes to put of love the towards how underlying use that's but inflammatory. of spaces of, unmet we example them want needs wait do And can in our sort out can share hey, X existing philosophy where and we investor immuno until are I'd this development target

I that ophthalmology take of the outline XXXX to of the busy a which the presentation what expect? strategy XX indication, Well, XXXX, assessment and the a XX to what of space could have, has forward, or guess, Is the we last high-level programs a of whether it's Okay. terms lot fair uveitis the been very very, in over that months.

will we have catalysts term value will in that unlocks we near to pursue follow. and of sort about that we the molecules you share Yes. the the would different Yes, are X a have, -- the intending bit

a to back the just X And quick ReShape Okay. Group.

You GLP-Xs that to are be as out things more GLP-X your agonist that of think after Do opposed break rebound, just going opportunity expand or right to in there that it. think people time I to that mentioned obesity, and gravitation will as general, the Lap-Band, as the be had you there's guess, that kind market you over you that pressured an dual platform. mentioned, agonists towards there's like phrase do stigma of maybe way

Yes. done been sort an Atlanta I a the been ASMBS question. weekend. the and market just in impact weekend what impact. great conference and was GLP-Xs adoption of the overall in talked on and do. of I and last U.S. bariatric about surgeries clearly, at has It's there's

the for least petering these getting get are that and other out discussions market gains fact kind based year to me and the got or on of weight invasive GLP-Xs of And they gains, the this more with sort loss have the and tapering looking -- so through obesity their of signaling into means our again, on sort quarter people or been option. we've that

GLP-Xs, that Even they obese clinically that obese overall -- not than think is accurate get it's showed adoption XXX% and Now or to the obesity of pie be clearly data, is about medical more attention. with the market to whether not -- interesting untapped. I XX% roughly it's that of needs

So as sidelines time start big societal pharma their it's of it's take still an of to to quality give and for primarily underserved then about sort improving talking physicians people going to well that's where life. and to influence as the help market, off

now and does today's for conference conference. Ladies attending has Thank call. you you. The gentlemen, Thank conclude the this concluded.

You may now disconnect. Speakers, standby.