ReShape Lifesciences (RSLS) AI Stock Analysis

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ReShape Lifesciences

(NASDAQ:RSLS)

Rating:37Underperform

Price Target:―

ReShape Lifesciences is facing significant financial challenges, with persistent losses, negative equity, and cash flow issues. The technical indicators show a bearish trend with potential oversold conditions. Valuation is poor due to a negative P/E ratio. Despite some positive developments highlighted in the earnings call, such as revenue growth and cost reductions, the overall outlook remains concerning due to financial instability and competitive pressures. The recent board resignation further complicates the situation by potentially affecting compliance and investor confidence.

ReShape Lifesciences (RSLS) vs. SPDR S&P 500 ETF (SPY)

Market Cap

$4.37M

Dividend YieldN/A

Average Volume (3M)774.13K

Price to Earnings (P/E)―

Beta (1Y)1.44

Revenue Growth-7.74%

EPS Growth93.25%

CountryUS

Employees17

SectorHealthcare

Sector Strength44

IndustryMedical - Devices

Share Statistics

EPS (TTM)18.98

Shares Outstanding738,277

10 Day Avg. Volume117,905

30 Day Avg. Volume774,131

Financial Highlights & Ratios

PEG Ratio-0.03

Price to Book (P/B)-13.57

Price to Sales (P/S)0.00

P/FCF Ratio-16.96

Enterprise Value/Market Cap17.25

Enterprise Value/Revenue2.31

Enterprise Value/Gross Profit14.90

Enterprise Value/Ebitda-2.16

Forecast

1Y Price TargetN/A

Price Target UpsideN/A

Rating ConsensusN/A

Number of Analyst Covering0

ReShape Lifesciences Business Overview & Revenue Model

Company DescriptionReShape Lifesciences Inc., a medical device company, provides products and services that manages and treat obesity and metabolic diseases in the United States, Australia, Europe, and internationally. The company's product portfolio includes Lap-Band System, a minimally invasive long-term treatment of severe obesity and more invasive surgical stapling procedures, such as the gastric bypass or sleeve gastrectomy; and ReShape Vest system, an investigational, minimally invasive, laparoscopically implanted medical device that wraps around the stomach to enable weight loss in obese and morbidly obese patients without cutting or permanently removing portions of the stomach, or bypassing any portion of the gastrointestinal tract. It also offers ReShapeCare virtual health coaching program, a virtual telehealth weight management program that supports healthy lifestyle changes for all medically managed weight-loss patients; and ReShape Diabetes Bloc-Stim Neuromodulation, a technology that is in preclinical development for the treatment of type 2 diabetes mellitus. In addition, the company provides Obalon Balloon System, a swallowable capsule used to track and display the location of the balloon during placement. The company was formerly known as EnteroMedics Inc. and changed its name to ReShape Lifesciences Inc. in 2017. ReShape Lifesciences Inc. was incorporated in 2002 and is headquartered in San Clemente, California.

How the Company Makes MoneyReShape Lifesciences generates revenue through the sale of its medical device products, primarily the Lap-Band System, to healthcare providers and medical facilities. The company also offers related accessories and support services, which contribute to its revenue streams. Additionally, ReShape may engage in partnerships with healthcare organizations and leverage its intellectual property to enhance its market presence and financial performance. The company's earnings are influenced by factors such as market demand for obesity treatments, competitive positioning, and regulatory approvals.

ReShape Lifesciences Financial Statement Overview

Summary

ReShape Lifesciences is facing significant financial challenges. Persistent losses, negative equity, and negative cash flows highlight severe operational and financial distress. The company needs substantial improvement in revenue generation, cost management, and financial stability to ensure long-term viability.

Income Statement

Negative

ReShape Lifesciences has faced declining revenue, with a 7.76% decrease from 2022 to 2023 and a further 7.75% drop from 2023 to 2024. The company has consistently reported negative EBIT and net income, indicating profitability challenges. Gross profit margin has remained relatively stable but at low levels. Overall, the income statement reflects ongoing financial difficulties and negative growth trends.

Balance Sheet

Very Negative

The balance sheet reveals significant financial distress. The company has a negative stockholders' equity in 2024, highlighting potential solvency issues. The debt-to-equity ratio is not calculable due to negative equity, and the equity ratio shows a negative value, further indicating financial instability. Liabilities exceed assets, showcasing a precarious financial position.

Cash Flow

Negative

ReShape Lifesciences has consistently reported negative free cash flow, with no significant improvement over the years. The operating cash flow to net income ratio reflects ongoing operational challenges. Cash flows from operations are negative, and financing activities have been the primary source of cash, which may not be sustainable long-term.

Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
8.01M	8.68M	11.24M	13.60M	11.30M
	Gross Profit
5.06M	5.55M	6.80M	8.35M	6.26M
	EBIT
-6.67M	-14.64M	-27.08M	-27.75M	-12.46M
	EBITDA
-6.67M	-14.48M	-24.93M	-60.62M	-18.09M
	Net Income Common Stockholders
-7.13M	-11.39M	-46.21M	-61.93M	-21.63M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
693.00K	4.46M	3.85M	22.77M	2.96M
	Total Assets
4.79M	10.66M	11.14M	54.26M	37.06M
	Total Debt
967.00K	262.00K	171.00K	279.00K	477.00K
	Net Debt
274.00K	-4.20M	-3.68M	-22.49M	-2.48M
	Total Liabilities
5.05M	4.00M	7.48M	8.19M	22.57M
	Stockholders Equity
-253.00K	6.66M	3.66M	46.07M	14.49M
Cash Flow		Free Cash Flow
-4.43M	-17.00M	-22.03M	-15.73M	-8.94M
	Operating Cash Flow
-4.43M	-16.96M	-21.90M	-15.38M	-8.55M
	Investing Cash Flow
0.00	-10.00K	-92.00K	1.85M	-2.39M
	Financing Cash Flow
677.00K	17.57M	3.13M	33.30M	11.07M

ReShape Lifesciences Technical Analysis

Technical Analysis Sentiment

Negative

Last Price5.12

Price Trends

50DMA

11.00

Negative

100DMA

43.96

Negative

200DMA

106.84

Negative

Market Momentum

MACD

-2.09

Negative

RSI

36.15

Neutral

STOCH

14.17

Positive

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For RSLS, the sentiment is Negative. The current price of 5.12 is below the 20-day moving average (MA) of 7.86, below the 50-day MA of 11.00, and below the 200-day MA of 106.84, indicating a bearish trend. The MACD of -2.09 indicates Negative momentum. The RSI at 36.15 is Neutral, neither overbought nor oversold. The STOCH value of 14.17 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for RSLS.

ReShape Lifesciences Risk Analysis

ReShape Lifesciences disclosed 42 risk factors in its most recent earnings report. ReShape Lifesciences reported the most risks in the “Finance & Corporate” category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 3 New Risks

The Asset Purchase may not be consummated unless important conditions are satisfied or waived and there can be no assurance that the Asset Sale will be consummated. Q3, 2024

The Merger may not be consummated unless important conditions are satisfied or waived and there can be no assurance that the Merger will be consummated. Q3, 2024

Failure to consummate the Merger could negatively impact our future operations and financial results and our future stock price. Q3, 2024

ReShape Lifesciences Peers Comparison

Overall Rating

UnderperformOutperform

Sector (53)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
Sector *	53 Neutral	$5.24B	3.07	-43.58%	2.80%	16.87%	-0.11%
IVF	41 Neutral	$4.69M	―	-679.99%	―	55.17%	40.47%
ISPC	39 Underperform	$2.93M	―	-265.37%	―	-13.05%	49.76%
RSLS	37 Underperform	$4.37M	―	-120.16%	―	-7.74%	93.25%
ONCO	33 Underperform	$3.90M	―	-233.77%	―	―	-97.16%
YCBD	30 Underperform	$8.33M	―	-8.46%	―	-9.22%	89.90%
WINT	28 Underperform	$3.00M	―	-120.01%	―	―	97.84%

* Healthcare Sector Average

Performance Comparison

RSLS

ReShape Lifesciences

4.94

-256.06

-98.11%

WINT

Windtree Therapeutics

0.79

-180.21

-99.56%

YCBD

cbdMD

0.91

-4.44

-82.99%

IVF

INVO Fertility

1.96

-8.48

-81.23%

ISPC

iSpecimen

1.14

-4.58

-80.07%

ONCO

Onconetix

0.08

-5.58

-98.59%

ReShape Lifesciences Earnings Call Summary

Earnings Call Date:May 21, 2025

(Q3-2024)

% Change Since: -13.51%|

Next Earnings Date:Aug 18, 2025

Earnings Call Sentiment Positive

The earnings call highlighted several positive achievements, such as revenue growth, cost reductions, improved profit margins, and strategic agreements aimed at enhancing shareholder value. However, it also acknowledged challenges, such as the contraction in revenue over the nine-month period and competition from GLP-1 pharmaceuticals. Overall, the positive aspects slightly outweigh the negative trends.

Q3-2024 Updates

Positive Updates

Revenue Growth

Revenue increased by 16.6% in the third quarter over the second quarter and 6.4% over the third quarter of last year.

Cost Reduction Achievements

Achieved over 40% reduction in operating expenses for the first 9 months of the year compared to last year.

Gross Profit Margin Improvement

Gross profit margin increased to 62.8% for the quarter and 60.3% for the first 9 months.

Lap-Band 2.0 FLEX Approval

Received approval for the Lap-Band 2.0 FLEX from Health Canada, supporting global regulatory efforts.

NIH Grant Award

Awarded a $241,000 supplementary grant from NIH, bringing total awards to $1.15 million.

Merger and Asset Sale Agreements

Coordinated merger agreement with Vyome Therapeutics and asset purchase agreement with Biorad, expected to maximize stockholder value.

Negative Updates

Revenue Contraction

Revenue for the 9 months ended September 30, 2024, contracted by 7% or $500,000 compared to the same period in 2023, primarily due to GLP-1 pharmaceutical weight loss alternatives.

GLP-1 Pharmaceutical Competition

Continued pressure on sales volume primarily due to competition from GLP-1 pharmaceutical weight loss alternatives.

Company Guidance

During the third quarter of 2024, ReShape Lifesciences demonstrated significant financial and operational improvements. Revenue increased by 16.6% compared to the previous quarter and 6.4% year-over-year, marking the third consecutive quarter of growth. The company achieved a gross profit margin of 62.8% for the quarter, with a cumulative margin of 60.3% for the first nine months. Operating expenses were reduced by over 40% compared to the same period last year, and total operating costs for the first nine months were down by 41%. ReShape also reported a non-GAAP adjusted EBITDA of $1.6 million for the quarter, an improvement from a $2.9 million loss in the prior year. In addition, the company secured a supplementary NIH grant of approximately $241,000, bringing total NIH funding to $1.15 million. The company also received approval for its Lap-Band 2.0 FLEX from Health Canada, further expanding its market opportunities.

ReShape Lifesciences Corporate Events

Executive/Board ChangesRegulatory Filings and Compliance

ReShape Lifesciences Faces Board Resignation Challenge

Negative

Mar 20, 2025

On March 14, 2025, Gary Blackford announced his resignation from the Board of Directors and all related committees of ReShape Lifesciences Inc., effective March 15, 2025. His departure leaves the company’s Audit Committee with only two independent directors, thereby temporarily breaching Nasdaq’s listing requirements, though the company plans to use the allowed cure period to address this issue.

Private Placements and FinancingM&A Transactions

ReShape Lifesciences Announces Securities Purchase Agreement

Neutral

Feb 20, 2025

On February 15, 2025, ReShape Lifesciences announced a Securities Purchase Agreement to issue and sell 2,575,107 shares of common stock and accompanying warrants to investors at a price of $2.33 per unit, resulting in gross proceeds of approximately $6.0 million. The proceeds will be used for general corporate purposes, including the company’s proposed merger with Vyome Therapeutics and asset sale to Ninjour Health. The offering, managed by Maxim Group LLC as the exclusive placement agent, closed on February 18, 2025, and involves warrants with various exercise conditions and adjustments based on future shareholder approvals.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.