IRVINE, Calif. - ReShape Lifesciences Inc. (NASDAQ:RSLS), a company specializing in weight loss and metabolic health solutions, has declared a reverse stock split of its common stock at a ratio of 1-for-58, set to take effect at the start of trading on September 23, 2024. This decision follows approval by the company's shareholders during the annual meeting held on February 23, 2024.
The reverse stock split will convert every 58 shares of issued and outstanding common stock and equivalents into one share of common stock. Proportional adjustments will also be applied to the company's outstanding warrants, stock options, and convertible preferred stock, including the exercise or conversion price, as per their respective terms.
Fractional shares resulting from the reverse stock split will be rounded up to the nearest whole share. However, the number of authorized shares of both common and preferred stock under the company's certificate of incorporation will remain unchanged.
Shareholders of ReShape Lifesciences will be contacted by the company's transfer agent, Equiniti Trust Company, LLC, with instructions on how to exchange their current stock certificates for new certificates or book-entry shares reflecting the reverse stock split. The common stock will also have a new CUSIP number, 76090R309, post-split.
ReShape Lifesciences is known for its FDA-approved products and services aimed at treating obesity and metabolic diseases, including the Lap-Band® System, a less invasive alternative to surgical procedures like gastric bypass. The company's investigational Diabetes Bloc-Stim Neuromodulation™ (DBSN™) system is being developed to treat type 2 diabetes and metabolic disorders. Additionally, ReShape offers the Obalon® balloon technology, a non-surgical, swallowable intra-gastric balloon designed for weight loss.
This announcement is based on a press release statement from ReShape Lifesciences Inc.
In other recent news, ReShape Lifesciences reported significant developments in its second quarter financials for 2024 and future plans. The company announced a 45% decrease in operating expenses and a rise in gross profit margin, despite a decrease in revenue. Additionally, ReShape Lifesciences outlined its merger with Vyome Therapeutics, resulting in the formation of Vyome Holdings, which will focus on immuno-inflammatory diseases.
This strategic merger aims to capitalize on the burgeoning healthcare market in India and the US. Krishna Gupta, set to become Chairman of Vyome Holdings, emphasized the potential for growth and value creation in these markets. ReShape Lifesciences also reported an adjusted EBITDA loss reduction and remains debt-free with $2.9 million in net working capital.
The company has paused clinical trials to conserve cash and is preparing for the commercial launch of LAP-Band 2.0 Flex (NASDAQ:FLEX). Furthermore, ReShape Lifesciences has commitments for additional capital and plans to self-fund into the second half of 2025. These are among the recent developments within the company.
InvestingPro Insights
Amidst the recent announcement of ReShape Lifesciences Inc.'s (NASDAQ:RSLS) reverse stock split, investors may be considering the financial health and market position of the company. According to InvestingPro data, ReShape Lifesciences holds a market capitalization of 4.59 million USD, which reflects the company's current valuation in the market. However, the company's revenue growth has been negative over the last twelve months as of Q2 2024, with a decrease of 23%. This contraction suggests challenges in expanding sales or possibly reflects a strategic pivot within the company's operations.
InvestingPro Tips highlight some critical aspects of ReShape Lifesciences' financials. The company is carrying more cash than debt, which is a positive sign of liquidity. Nevertheless, the company is rapidly depleting its cash reserves, which raises concerns about its long-term sustainability. Moreover, ReShape Lifesciences is trading at a low revenue valuation multiple, indicating that the market may be undervaluing the company's sales potential or that investors are cautious due to other financial metrics.
Investors should note that analysts do not expect the company to be profitable this year, and the valuation implies a poor free cash flow yield. Additionally, the stock price has experienced a significant decline over the last year, with a 76.07% drop in the one-year price total return as of the same timeframe. For those interested in a deeper dive, InvestingPro offers additional tips for ReShape Lifesciences, which can be found at https://www.investing.com/pro/RSLS. These insights can provide a more comprehensive understanding of the company's financial position and market performance.
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