ReShape Lifesciences (US:RSLS)2022-04-08 21:10Financial Performance - Revenue for the year ended December 31, 2021, was $13.6 million, a 20.4% increase from $11.3 million in 2020, primarily driven by a $2.0 million increase in U.S. sales [292]. - Gross profit increased to $8.3 million in 2021, up 33.3% from $6.3 million in 2020, with a gross profit margin of 61.4% compared to 55.4% in the prior year [295]. - The company reported a net loss of $61.9 million for 2021, compared to a net loss of $21.6 million in 2020, reflecting a significant increase in losses [284]. - Adjusted EBITDA for 2021 was reported as a non-GAAP loss of $10.6 million, compared to a non-GAAP loss of $9.1 million in 2020 [291]. - Comprehensive loss for 2021 was $61,904,000, up from $21,743,000 in 2020, indicating a significant increase in overall financial losses [354]. - The net loss for the year ended December 31, 2021, was $61,933,000, compared to a net loss of $21,630,000 for 2020, representing an increase of 186% [354]. Operating Expenses - Total operating expenses rose to $64.8 million in 2021, a 246.4% increase from $18.7 million in 2020, largely due to a $28.8 million impairment charge and increased stock-based compensation [296]. - Sales and marketing expenses surged to $9.2 million in 2021, a 95.2% increase from $4.7 million in 2020, as the company focused on brand recognition and marketing strategies [296]. - General and administrative expenses rose by $13.9 million, or 131.9%, to $24.4 million for the year ended December 31, 2021, driven by an $8.9 million increase in stock-based compensation [298]. - Research and development expenses decreased by $1.0 million, or 27.9%, to $2.5 million for the year ended December 31, 2021, mainly due to a $2.2 million reduction in consulting and clinical trial expenses [300]. Cash Flow and Liquidity - Net cash used in operating activities was $15.4 million for the year ended December 31, 2021, primarily resulting from a net loss of $61.9 million [310]. - Cash and cash equivalents increased to $22.77 million as of December 31, 2021, compared to $2.96 million at the end of 2020 [348]. - Total current assets rose to $30.26 million in 2021, up from $8.94 million in 2020, reflecting improved liquidity [348]. - The Company’s accumulated deficit increased to $576.76 million as of December 31, 2021, from $514.83 million in the prior year [348]. - Cash used in operating activities for 2021 was $15,375,000, compared to $8,550,000 in 2020, reflecting an 80% increase in cash outflow [360]. Mergers and Acquisitions - The merger with Obalon was completed on June 15, 2021, resulting in a name change and the company beginning to trade on Nasdaq [279]. - The acquisition of Obalon Therapeutics, Inc. was completed for a purchase price of $30.6 million, with a developed technology asset recorded at $2.73 million [339]. - The total purchase price for the acquisition was $30.562 million, net of cash acquired, resulting in a net purchase price of $25.355 million [468]. - Goodwill recorded from the acquisition amounted to $21.566 million, which includes expected synergies and benefits [470]. - For the period from June 16, 2021, to December 31, 2021, the acquired entity Obalon contributed no revenue and incurred a net loss of $2.0 million, alongside a $21.6 million loss on impairment of goodwill [471]. Future Plans and Strategy - Future plans include expanding sales domestically and internationally, ramping up marketing efforts, and continuing clinical trials for the ReShape Vest [317]. - The company plans to expand sales of the Lap-Band product line domestically and internationally and continue clinical testing of the ReShape Vest [428]. - The company expects to leverage its intellectual property portfolio for third-party sales and licensing opportunities [428]. Inventory and Assets - Total inventory increased to $3.003 million as of December 31, 2021, compared to $2.244 million in 2020, with finished goods rising to $1.492 million from $1.337 million [436]. - The allowance for excess and slow-moving inventory was $0.8 million at December 31, 2021, compared to $0.1 million in 2020, indicating a substantial increase in inventory reserves [382]. - The Company recorded advertising costs of $3.0 million for the year ended December 31, 2021, up from $0.5 million in 2020, reflecting increased marketing efforts [403]. Stockholder Equity and Debt - Stockholders' equity grew to $46.07 million in 2021, compared to $14.49 million in 2020, indicating a stronger capital position [348]. - As of December 31, 2021, total debt was reported as $13.322 million, with no asset purchase consideration payable remaining [447]. - The Company received a $1.0 million PPP loan under the CARES Act, which was fully forgiven as of March 1, 2021 [449]. Impairment Charges - The company incurred impairment charges totaling $28.8 million during the year ended December 31, 2021, including a goodwill impairment charge of $21.6 million [301]. - A one-time impairment charge of $7.2 million was recorded for IPR&D due to delays in clinical trials and revised revenue expectations for the ReShape Vest, with a discount rate of 21.7% used in the fair value estimation [442]. - The Company recognized an impairment charge of $7.2 million for in-process research and development (IPR&D) assets during the year [342].