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ReShape Lifesciences Announces Third Quarter 2019 Financial Results

November 14, 2019
SAN CLEMENTE, CA / ACCESSWIRE / November 14, 2019 / ReShape Lifesciences Inc. (OTCQB:RSLS), a leading developer and distributor of minimally invasive medical devices to treat obesity and metabolic diseases, today reported financial results for ...
SAN CLEMENTE, CA / ACCESSWIRE / November 14, 2019 / ReShape Lifesciences Inc. (OTCQB:RSLS), a leading developer and distributor of minimally invasive medical devices to treat obesity and metabolic diseases, today reported financial results for ...

SAN CLEMENTE, CA / ACCESSWIRE / November 14, 2019 / ReShape Lifesciences Inc. (OTCQB:RSLS), a leading developer and distributor of minimally invasive medical devices to treat obesity and metabolic diseases, today reported financial results for the three months ended September 30, 2019.

Recent Highlights and Accomplishments

“Our strong third quarter progress demonstrates the increasing resurgence of LAP-BAND and our organizational commitment to the market, physicians and patients,” said Bart Bandy, President and Chief Executive Officer at ReShape Lifesciences. “We are confident that through our demonstrated focus on this continuously evolving industry we can continue to deliver increased value as a leading obesity solution company.”

Third Quarter 2019 Financial Results

Revenue for the three months ended September 30, 2019, was $3.5 million compared to $4.4 million in revenues for the three months ended June 30, 2019.

Gross profit for the third quarter of 2019 was $2.1 million compared to $2.9 million for the three months ended June 30, 2019.

Selling, general and administrative expenses for the three months ended September 30, 2019 were $5.4 million compared to $6.8 million for the three months ended June 30, 2019.

Research and development expenses were $0.9 million for the third quarter of 2019 compared to $1.0 million for the three months ended June 30, 2019.

The Company recognized a contingent loss of $1.5 million relating to a patent infringement claim with Fulfillium who agreed to dismiss with prejudice the previously disclosed lawsuits filed on their behalf.

As of September 30, 2019, the Company had cash and cash equivalents totaling $7.7 million.

Conference Call

Management will host an investment community conference call today beginning at 1:30 p.m. Pacific Time 4:30 p.m. Eastern Time. Individuals interested in listening to the conference call may do so by dialing (877) 280-7473 for domestic callers or (707) 287-9370 for international callers, using Conference ID: 1679507. To listen to a live webcast or a replay, please visit the investor relations section of the Company website at: http://ir.reshapelifesciences.com/.

About ReShape Lifesciences Inc.

ReShape Lifesciences™ is a medical device company focused on technologies to treat obesity and metabolic diseases. The FDA-approved LAP-BAND® Adjustable Gastric Banding System is designed to provide minimally invasive long-term treatment of severe obesity and is an alternative to more invasive surgical stapling procedures such as the gastric bypass or sleeve gastrectomy. The ReShape Vest™ System is an investigational, minimally invasive, laparoscopically implanted medical device that wraps around the stomach, emulating the gastric volume reduction effect of conventional weight-loss surgery, and is intended to enable rapid weight loss in obese and morbidly obese patients without permanently changing patient anatomy.

Forward-Looking Safe Harbor Statement:

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements generally can be identified by the use of words such as “expect,” “plan,” “anticipate,” “could,” “may,” “intend,” “will,” “continue,” “future,” other words of similar meaning and the use of future dates. These forward-looking statements are based on the current expectations of our management and involve known and unknown risks and uncertainties that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Such risks and uncertainties include, among others: risks and uncertainties related to our acquisition of the LAP-BAND system; our ability to continue as a going concern if we are unable to improve our operating results or obtain additional financing; risks related to ownership of our securities as a result of our delisting from the Nasdaq Capital Market; our proposed ReShape Vest product may not be successfully developed and commercialized; our limited history of operations; our losses since inception and for the foreseeable future; our limited commercial sales experience; the competitive industry in which we operate; our dependence on third parties to initiate and perform our clinical trials; the need to obtain regulatory approval for our ReShape Vest and any modifications to our vBloc system and LAP-BAND system; physician adoption of our products; our ability to obtain third party coding, coverage or payment levels; ongoing regulatory compliance; our dependence on third party manufacturers and suppliers; the successful development of our sales and marketing capabilities; our ability to raise additional capital when needed; international commercialization and operation; our ability to attract and retain management and other personnel and to manage our growth effectively; potential product liability claims; the cost and management time of operating a public company; potential healthcare fraud and abuse claims; healthcare legislative reform; and our ability to obtain and maintain intellectual property protection for our technology and products. These and additional risks and uncertainties are described more fully in the Company’s filings with the Securities and Exchange Commission, particularly those factors identified as “risk factors” in our annual report on Form 10-K filed May 16, 2019 and subsequent quarterly reports on Form 10-Q. We are providing this information as of the date of this press release and do not undertake any obligation to update any forward-looking statements contained in this document as a result of new information, future events or otherwise, except as required by law.

Investor Contact:

Tom Stankovich

Chief Financial Officer

ReShape Lifesciences Inc.

949-276-6042

or

Debbie Kaster

Investor Relations

Gilmartin Group

415-937-5403

RESHAPE LIFESCIENCES INC. Condensed Consolidated Balance Sheets (dollars in thousands, except per share amounts; unaudited)

September 30,December 31,
20192018

ASSETS

Current assets:

Cash and cash equivalents

$7,717$5,548

Accounts and other receivables (net of allowance for bad debts of $558 at September 30, 2019 and $236 at December 31, 2018)

2,971917

Finished goods inventory

1,189985

Prepaid expenses and other current assets

1,7961,269

Total current assets

13,6798,719

Property and equipment, net

664

Operating lease right-of-use assets

828-

Other intangible assets, net

29,09036,927

Other assets

586563

Total assets

$44,183$46,273

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

Accounts payable

$3,851$6,456

Accrued and other liabilities

5,597

Asset purchase consideration payable, current

1,9801,907

Operating lease liabilities, current

285-

Total current liabilities

11,7078,363

Asset purchase consideration payable, noncurrent

4,5794,403

Operating lease liabilities, noncurrent

552-

Deferred income taxes

1,2581,844

Common stock warrant liability

41,749

Total liabilities

59,84514,610

Stockholders' (deficit) equity:

Preferred stock, 5,000,000 shares authorized:

Series B convertible preferred stock, $0.01 par value; 3 and 159 shares issued and outstanding at September 30, 2019 and December 31, 2018, respectively

--

Series C convertible preferred stock, $0.01 par value; 95,388 shares issued and outstanding at September 30, 2019 and December 31, 2018

11

Common stock, $0.001 par value; 275,000,000 shares authorized at September 30, 2019 and December 31, 2018; 353,794 and 73,092 shares issued and outstanding at September 30, 2019 and December 31, 2018, respectively

--

Additional paid-in capital

452,486450,561

Accumulated deficit

(468,140)(418,990)

Accumulated other comprehensive loss

(9)

Total stockholders' (deficit) equity

(15,662)31,662

Total liabilities and stockholder' equity

$44,183$46,273

RESHAPE LIFESCIENCES INC. Condensed Consolidated Statements of Operations (dollars in thousands, except per share amounts; unaudited)

Three Months Ended September 30,

Nine Months Ended

September 30,

2019201820192018

Revenue

$3,515$8$11,039$157

Cost of revenue

1,413233,84986

Gross profit

2,102(15)7,19071

Operating expenses:

Selling, general and administrative

5,3624,28817,57514,951

Research and development

8589922,8745,545

Impairment of intangible assets

--6,58814,005

Legal settlement

1,500-1,500-

Total operating expenses

7,7205,28028,53734,501

Operating loss

(5,618)(5,295)(21,347)(34,430)

Other expense (income), net:

Interest expense, net

74(1)3901

Loss on extinguishment of debt

--71-

Warrant expense

22,564-26,821145

(Gain) loss on foreign currency transactions

(229)-(229)-

Other, net

727(7)1,336(9)

Loss from continuing operations before income taxes

(28,754)(5,287)(49,736)(34,567)

Income tax benefit

-5315863,122

Loss from continuing operations

(28,754)(4,756)(49,150)(31,445)

Loss from discontinued operations, net of tax

-(2,249)-(22,044)

Net loss

$(28,754)$(7,005)$(49,150)$(53,489)

Less: Down round adjustments for convertible preferred stock and warrants

-(132)-(3,974)

Net loss attributable to common shareholders

$(28,754)$(7,137)$(49,150)$(57,463)

Net loss per share - basic and diluted:

Continuing operations

(106.44)(2,256.69)$(235.42)$(43,036.45)

Discontinued operations

-(1,038.32)-(26,784.93)

Net loss per share - basic and diluted

$(106.44)$(3,295.01)$(235.42)$(69,821.38)

Shares used to compute basic and diluted net loss per share

270,1362,166208,777823

SOURCE: ReShape Lifesciences Inc.

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