ReShape Lifesciences Q4 2022 Earnings Call Transcript

Quartr
Provided by Quartr
April 25, 2023

Key Takeaways

  • Management has right-sized investments and cut operating expenses by 27.9% in H2 versus H1 2022, aiming for cash-flow positivity and profitability within the next 18 months.
  • Full-year 2022 revenue totaled $11.2 million, down 17.4% year-over-year due to COVID-related disruptions, although U.S. revenue grew sequentially in the second half of the year.
  • Key product initiatives include the full launch of a redesigned calibration tube, a PMA supplement submission for LAP-BAND 2.0 to reduce post-op adjustments, and advancement of the DBSN vagus‐nerve neuromodulation device with NIH grant support.
  • Enhanced direct-to-consumer marketing and lead-nurturing automation—featuring a revamped patient-centric website and in-house call center—are expected to boost lead conversion and drive more LAP-BAND surgeries.
  • ReShape filed a patent infringement lawsuit against Allurion Technologies over its Obalon balloon system to defend its portfolio of more than 155 patents.
AI Generated. May Contain Errors.
Earnings Conference Call
ReShape Lifesciences Q4 2022
00:00 / 00:00

There are 5 speakers on the call.

Operator

Good afternoon and thank you for joining the ReShape Lifesciences Year and 2022 Conference Call. I would like to turn the call over to Michael Miller from Rx Communications. Please go ahead.

Speaker 1

Thank you. Good afternoon and thank you for joining ReShape Lifesciences year end 2022 earnings call. I'm pleased to be joined by Paul Hickey, President and Chief Executive Officer and Tom Stankovich, Chief Financial Officer. Paul will provide an overview and update on the company's activities And Tom will review the financial results for the year. He will then turn the call back over to Paul for some closing remarks, after which we'll open the call to a question and answer session.

Speaker 1

As a reminder, this conference call as well as ReShape Lifesciences' SEC filings and website, including the Investor Information section of the website, contains forward looking statements within the meaning of Private Securities Litigation Reform Act of 1995. Actual results could differ materially from those discussed due to known and unknown risks, uncertainties and other factors. These and additional risks and uncertainties are described more fully the company's filings with the Securities and Exchange Commission, including those factors identified as risk factors in the company's most Recent Annual Report on Form 10 ks. As an additional reminder, ReShape stock is listed on the NASDAQ trading under the symbol RSLS. I'll now turn the call over to Paul Hickey, President and CEO of ReShape Lifesciences.

Speaker 1

Paul?

Speaker 2

Thank you, Mike. I'd like to thank you all for joining us this afternoon for our year end 2022 earnings call. We appreciate your patience while we completed our year end close. Since I joined ReShape last August, we have pivoted our business strategy with the intent of ensuring a Path of growth and profitability. With that said, I'd like to remind you of our 3 growth strategies or pillars for growth.

Speaker 2

The first is to operate our business with a disciplined metrics driven mindset to ensure we have predictable growth and profitability. The second is to continue to develop and launch new products and therapies to augment our best in class portfolio of proven products and services that treat obesity and metabolic disease. The last pillar is to continue to drive and gain surgeon efficacy for our product portfolio By ensuring that it's backed by compelling evidence showing effectiveness when addressing the continuum of care needed to fight obesity and related comorbidities, which is often a lifelong battle. I'm excited to say that we have continued to make significant progress in achieving our goals. We have meaningfully reduced operating expenses and right sized investments in quality, regulatory and finance, so we can Invest in our growth initiatives, including marketing and R and D.

Speaker 2

In addition, we are enthusiastic about working closely with our recently formed Global Scientific Advisory Board comprised of internationally recognized experts in the Obesity and Metabolic Disease Fields. I have worked with advisory boards in the past and I am extremely proud of the membership on ReShape's SAB. With our unrivaled credentials and vast experience gathered through their commitment to fighting obesity. We look forward to leveraging their expertise and feedback on our growth initiatives and expect that will be they will be an integral in helping us expand access for patients to safe and effective treatments for durable weight loss. Now before I delve into recent highlights and upcoming milestones, I'd like to mention the enormous market opportunity before us.

Speaker 2

Obesity is a disease that has been increasing at alarming rates With significant medical repercussions and associated economic costs, the World Health Organization currently estimates That more than 2,500,000,000 adults, approximately 30% of the global population are considered overweight or obese. This number is projected to increase to 50% by 2,030, just 7 years from now. The global economic impact of obesity is approximately $2,000,000,000,000 or approximately 2.8 percent of global GDP. We believe our products, programs and future product candidates could address the $1,640,000,000 annual Global Surgical Device market, which is projected to hit $2,800,000,000 worldwide and $1,800,000,000 in the U. S.

Speaker 2

Alone by 2025. The virtual healthcare delivery market is projected to be $95,000,000,000 worldwide by 2026 and the global weight loss and obesity management market is According to the FDA, approximately 70% of American adults are obese or overweight, resulting in serious health issues associated with some of the leading causes of death, including heart disease, stroke and diabetes and is linked to an increased risk of certain types of cancers. Now within the last 9 months, there's been an exciting shift in the treatment of obesity. While in the past obesity has been a sensitive topic And treatment had not been normalized, there is now a greater awareness and acceptance of how critical obesity care is for adults and children. Last October, the American Society of Metabolic and Bariatric Surgery or ASMBS and the International Federation For the Surgery of Obesity and Metabolic Disorders or if so, revised the outdated and overly restrictive guidelines treating obesity and related diseases.

Speaker 2

These update guidelines advocated for earlier intervention in medical care and bariatric surgery. Similarly, in January of this year, the American Academy of Pediatrics issued new, more aggressive guidelines to treat the over 14,000,000 U. S. Efforts have significantly increased the number of overweight and abused individuals who are seeking medically managed weight loss. Now given the known limitations of behavioral modifications, the inaccessibility, side effects and durability of pharmaceutical therapy And the anatomy altering and irreversible nature of other bariatric surgical approaches, we believe more than ever that there is a substantial need for the less invasive, Adjustable and reversible LAP BAND, our product has proven to be safe, effective and durable solution providing long term weight loss.

Speaker 2

Now with that as a backdrop, I'll turn back to a detailed view of our strategic strategies for growth. Our first growth pillar is paramount for ReShape in order to deliver shareholder value and ultimately profitability. The strategy for growth includes optimizing our operations and Taking a focused and measured approach to the business. For that end, we have dramatically changed our business model to become a sustainable and scalable organization. We are now on a path to profitability, which we expect to achieve by continuing to partner with our physician advocates and leveraging our portfolio of proven products that manage and treat obesity and metabolic disease.

Speaker 2

In fact, with the combination of our just completed $2,500,000 registered direct offering, Our upsized $10,200,000 public offering completed in February and the continued execution of our growth pillars, we believe we have sufficient cash on hand to complete our goal becoming profitable within the next 18 months. We are confident in this projection Because we know that the primary driver of LAP BAND surgeries are patient inquiries and this is directly supported by the significant shift in our direct to consumer marketing initiatives. With the support of experts in the weight loss surgery customer experience, we are strategically targeting key touch points in the patient's decision process for surgery. This includes developing an improved patient centric website experience, focused primarily on lead conversion, which we expect to launch in the Q3. As a part of our increased focus on lead conversion, we're also implementing marketing automation to improve this Processed with automated email, text, call and web retargeting to ensure that every patient inquiry has the highest possible chance of transferring to a surgeon.

Speaker 2

The automation system targeted for mid year launch will address prospective patient inquiries with the resources they need, when they need it, via the channels that best suit them. Finally, we're creating a new content based on feedback from LAP BAND advocates that focused On the Joy of LAP BAND, to capture brand awareness and lead conversion earlier in the patient's weight loss surgery research. This content is expected to better convert leads for ongoing LAP BAND specific nurturing, build brand awareness and perception in the market and result in more LAP BAND surgery requests to bariatric surgeons. In order to facilitate a quick launch of these resources, While staying disciplined on our spend, we are building core competencies in house, ensuring ongoing optimization and nimble marketing, While significantly cutting agency expenses, for starters, removing our call center in house to align with the marketing automation and lead nurture efforts. This change even with new technology, implementation and headcount cuts our spend considerably, all while Taking control of our leads, increasing our marketing outreach and reporting capabilities, as well as providing a near guaranteed increase and lead to surgery conversion.

Speaker 2

Additionally, as we develop the new patient focused website, we are Able to establish internal competencies for ongoing updates, tests and optimization. This will significantly reduce the ongoing outsource expense on web requests and LAP BAND physician site support needs, while making us more responsive to the market. Put simply, We're improving our marketing efforts to better address patient leads with the intent of increasing conversions on the website, driving more brand engagement and ultimately more LAP BAND surgeries, all while decreasing our external agency expenses while we build and drive these efforts internally. We also continue to focus on the development and commercialization of new products And therapies, which constitute our 2nd growth pillar. Last year, we completed the limited release of our disposable ReShape calibration tube line extension, which supports Veratric procedures across the spectrum.

Speaker 2

Based on surgeon feedback, we have made additional improvements and I'm pleased to report that we have fully launched The redesigned calibration tube used in a broad range of bariatric procedures such as laparoscopic sleeve, gastrectomy and gastric bypass. We expect our ReShape calibration tube to add incremental new customer revenue this year. And it's important to reiterate, this product is used in procedures other than the LAP BAND and therefore provides a great opportunity to increase future revenues. Further, we are looking to engage several large and Self insured employers to provide ReShape Care to their employees. The reception has been well received for this important program that can help impact Overall employee health and reduce employers' healthcare costs.

Speaker 2

As a reminder, ReShape Care is a HIPAA compliant novel weight management program that supports healthy lifestyle Employees and our LAP BAND patient leads to improve their health and achieve weight loss. Additionally, in the Q2, we expect to submit To the FDA, our next generation physician led redesigned LAP BAND 2.0 for a PMA supplement. The LAP BAND 2.0 is designed to reduce the required postoperative physician adjustments. Like the current LAP BAND, The LAP BAND 2.0 is adjustable post operatively to increase and decrease the opening of the band in order to optimize individuals' comfort and therapy effectiveness. Unique to the LAP BAND 2.0 is an enhanced band reservoir technology that serves as a relief valve designed to alleviate discomfort from We expect feedback from the FDA by year end And if approved, we believe the uptake by existing and new surgeons will be robust.

Speaker 2

As I noted last quarter, Surgeons I've spoken with about this new design believe the LAP BAND 2.0 will allow us to engage new surgeons and reengage many of those who have used LAP BAND historically. As excitingly, we have continued to advance the development of our diabetes blockstim neuromodulation or DBSN device, which uses a vagus nerve block technology platform combined with vagus nerve stimulation. This new dual vagus nerve neuromodulation device selectively modulates vagal block and stimulation to the liver and pancreas to manage blood glucose in treatment of diabetes and individualized 20 fourseven glucose control, which may be able to reduce patients' dependence on medications in a personalized manner. The preclinical evidence generated thus far Funded with a non dilutive NIH SBIR grant is compelling. In October, data on the device was published in the peer reviewed journal Frontiers in Neuroscience, Neurotechnology and was presented in an abstract during Obesity Week and the Society For Neuroscience Annual Conference.

Speaker 2

In fact, we think this technology may have the ability to address the clear unmet need for a non pharmacological and patient specific treatment, providing improved efficacy and durability for type 2 diabetes. We will continue to collaborate with leading researchers and industry leading strategic corporate partners, all while seeking additional NIH grant support. If approved for commercial use, The DBSN device will further enhance our differentiated medical device offerings. Finally, Our 3rd growth pillar for ReShape is to gain surgeon advocacy by ensuring products and therapies are supported by strong clinical evidence. In other words, We need to provide an evidence based care continuum to gain surgeon advocacy.

Speaker 2

As I mentioned earlier in our call, Our newly formed Scientific Advisory Board provides us access to an extensive and unparalleled knowledge base as well as relationships and insights that will be invaluable. This is critical as we continue to execute on our disciplined approach to drive revenue and expand our product pipeline. As I mentioned above, in October of last year, the ASMBS and Ipsos issued evidence based guidelines for metabolic and bariatric surgery. These updates were long overdue and were intended to replace the 30 year old guidelines issued by the NIH in 1991. The guidelines now recommend metabolic and bariatric surgery for individuals with a BMI of 35 or more regardless of the presence, Absence of severity of obesity related conditions and note that it'd be considered for adults with a BMI of 30 to 34.9 and metabolic disease.

Speaker 2

The guidelines further state that even without metabolic disease, weight loss surgery should be considered an option for people whose BMI is greater than 30 and who have not achieved substantial or durable weight loss or improvement in obesity related diseases using non surgical methods. Now this is important, since the LAP BAND system is FDA approved for adults with a BMI of over 30, With at least one obesity related comorbidity and any patient with a BMI over 40, it bears repeating that the LAP BAND is the only FDA device Aftercare management, which we were pleased to see supports ReShape's own evidence based best practice recommendations. The statement validated that the anatomy sparing Lantan is a safe and effective weight loss solution and concluded that proper aftercare related to behavioral health and nutrition It's critical to the success of the weight loss procedure. In conjunction with our Scientific Advisory Board, we will continue to partner with organizations such as ASMBS to identify and train surgeons on the benefits of our comprehensive LAP BAND program, so that together We can provide the long term care required for patients to achieve safe, durable weight loss results. As an aside, I want to also mention That I have recently had the honor of being included as a part of the ASMBS Access to Care Committee, whose mission is to assist Patients with obesity and metabolic disease obtain appropriate, safe and effective medical care and advocating for healthcare policy that ensures that access.

Speaker 2

I look forward to working with the committee, bringing my expertise to bear in order to continue to make a positive impact within the industry. One of ReShape's many assets is our strong intellectual property portfolio of 155 patents surrounding All of our products, including the LAP BAND, ReShape DBSN device and ReShape Obalon balloon system. As someone who came from the technical side of medical devices, this topic is close to my heart. As evidenced by the recent notice of allowance from the U. S.

Speaker 2

Patent Office for patent covering the ReShape Opelon Balloon System, we will continue to build a defensive note around our product portfolio and commercialization efforts and take offensive action when appropriate. To that end, on March 9, 2023, we filed a patent infringement against Allurion Technologies Inc. In the U. S. District Court for the District of Delaware.

Speaker 2

The complaint seeks, Among other relief, damages for Allergan's alleged infringement of our 520 patent in an amount not less than a reasonable royalty. This matter is in early stages and we are unable to predict its outcome at this time. However, we intend to continue to aggressively protect and enforce our intellectual property rights. Now before I turn the call over to Tom to recap our financial performance, I want to highlight some additional metrics that are not captured in our 10 ks. Specifically, since my appointment last August, our commitment to our first pillar has resulted in a dramatic shift in our business model.

Speaker 2

And as Tom will detail shortly, executing our strategy has resulted in a significant decrease in departmental expenses, including A 48.9% reduction in the sales and marketing expenses, 13.6% reduction in our G and A expenses And a 30% reduction in our R and D expenses, all comparing our 2022 first half spend versus our 2022 second half spend. In aggregate, this amounts to a 27.9 percent overall reduction in operational expenses before any significant one time adjustments. This dramatic shift was necessary and sets the stage for ReShape's path to winning. I'd like to turn over to Tom Stankovich. Now Tom is calling from a remote location with some spotty Internet.

Speaker 2

So if Tom is disrupted during the course of his update, I'll take over form. Tom, are you there?

Speaker 3

Yes, I am. And thanks, Paul. And once again, thank you all for joining our webcast this morning. As a reminder, a full discussion of our financials is available in our press release and 10 ks. As we transition to auditors In the middle of 2022 and during the course of our audit for 2022, we discovered a material misstatement, which occurred during related to our merger with Obalon in June 2021.

Speaker 3

The misstatement related to directors and officers of Insurance which was incorrectly classified as an asset. The amount which was incorrectly classified as an asset totaled $1,900,000 and we corrected the statement in our 2022 10 ks for all periods presented. Before I discuss some of our financial details, I want to share some perspective on the necessary transition we have done to become a more disciplined organization and Our path to becoming cash flow positive and profitable. Our discussion today will focus primarily on our full year 2022 financial results. Additionally, we will also highlight the great strides we have made during the second half of twenty twenty two as we focused our business strategy and significantly reduced costs, which will serve as both our munch pad for growth and path to profitability.

Speaker 3

As Paul mentioned earlier, we significantly changed our business model to become a more disciplined, sustainable and scalable organization. During the second half of twenty twenty two, we pivoted our marketing strategy, which has significantly reduced our sales and marketing expenses quarter over quarter. We also reduced our G and A and R and D expenses in order to operate more efficiently and reduce our cash burn. To give you more perspective and before any significant Our overall operating expenses for the first half of twenty twenty two were $18,100,000 compared to $13,000,000 For the second half of twenty twenty two, that's a reduction of $5,100,000 or 27.9 percent. This is a significant reduction in our cash burn, which will pave the way for ReShape to become profitable sooner.

Speaker 3

Following our 2 recent We believe we have sufficient cash on hand to achieve profitability within the next 18 months. Moving on to other key financial metrics for the year ended December 31, 2022. Our revenue totaled $11,200,000 for the year ended December 31, 2022, which represents a contraction of 17.4 percent or $2,400,000 compared to the same period in 2021. The decline was primarily attributable to the reemergence of COVID early in 2022. Nevertheless, we saw sequential growth in each quarter during 2022 in our U.

Speaker 3

S. Business. Our U. S. Revenue for the first half of twenty twenty two was $4,200,000 versus $4,100,000 For the second half of twenty twenty two, an increase of $900,000 or 22.3 percent.

Speaker 3

Gross profit for the year ended December 31, 2022 was $6,800,000 compared to $8,300,000 for the year ended December 31, 2021, a decrease of $1,500,000 or 18.5 percent. Gross profit as a percentage of revenue for the year ended December 31, 2022 was 60.5% compared to 61.4% for the same period in 2021. The decrease in gross profit margin is primarily due to a decrease in sales as revenue decreased by 17.% with the largest decrease in revenue in the U. S, which has a higher gross profit margin than our international sales. During the first half of twenty twenty two, our gross profit margins were 58.2% compared to 62.6% and the second half of twenty twenty two as our U.

Speaker 3

S. Revenue revenues began to increase. Sales and marketing For the year ended December 31, 2022, increased by $5,200,000 or 58.5 percent to $14,100,000 compared to $8,900,000 for the same period in 2021. The increase was primarily due to increase in advertising and marketing costs, An increase in payroll and related travel expenses and expenses related for the development of the V shaped care platform, all totaling an increase of $6,100,000 This increase offset by a decline in stock based compensation expense, commissions and other related costs of $900,000 During the first half of twenty twenty two, our sales and marketing expenses were $9,400,000 compared to $4,800,000 in the second half of twenty twenty two, a decrease of $4,600,000 or 48.9 percent. General and administrative expenses for the year ended December 31, 2022 decreased by $7,100,000 or 28.5 percent to $17,400,000 compared to $24,300,000 for the same period in 2021.

Speaker 3

The decrease is primarily due to a decrease in stock based compensation expense, a reduction in consulting and professional fees totaling $10,400,000 This decrease was primarily offset by accrued litigation expense and terms costs totaling $3,400,000 During the first half of 2022, our general and administrative expenses were $9,600,000 compared to $7,700,000 in the second half of 2022, a decrease of $1,900,000 or 19.4%. Research and development expense The year ended December 31, 2022 increased by $200,000 or 7.3 percent compared to $2,500,000 compared to $2,300,000 for 2020. The increase is primarily due to an increase in consulting and professional services related to the development of ReShape's Diabetes BlockStim Neuromodulation device and payroll related expenses. Our R and D expenses for the first half of twenty twenty two were $1,500,000 compared to $1,000,000 for the second half of twenty twenty two, a decrease of $500,000 or 30%. We ended the year 2022 with $3,900,000 of cash and cash equivalents and remained debt free on our balance sheet.

Speaker 3

Additionally, in February April of 2023, we completed 2 financings totaling $12,600,000 Based on our available cash resources and the 2 financing recently completed, we believe there is sufficient cash on hand to fund current operations into 2024. With that, I will now turn the call back over to Paul.

Speaker 2

Thanks, Tom. Before we open the call up for Q and A, it is important to reiterate That we will continue to develop and offer a portfolio that is differentiated from our competition by offering transformative technologies that consist of a selection of patient friendly, Non anatomy changing lifestyle enhancing products, programs and services that provide alternatives to more invasive bariatric surgeries and to help patients achieve healthy durable weight loss. We have made significant progress executing our growth pillars to drive revenue and That's a predictable path to profitability. We've reduced operating expenses and right sized investments in quality regulatory and finance, so we can invest in growth initiatives, including R and D and marketing. We are continuously improving our marketing systems and bringing critical Components in house to ensure optimal lead generation, lead nurturing and lead conversion, while further reducing lead generation costs.

Speaker 2

And finally, we will work closely with our world class Scientific Advisory Board to continue our plan for success In a global market that is changing in historic fashion to normalize safe and effective treatments for obesity. This concludes our prepared remarks. So now we'd like to open the call to your questions. Operator? Thank

Operator

The first question will come from Anthony Vendetti of Maximin. Your line is open.

Speaker 4

Thank you. Yes, Paul, I was wondering if you could Talk about 2 things for me. So the mandatory 6 month waiting period before getting Any type of gastric surgery, bariatric surgery or inserting through You're lapping through a minimally invasive procedure. What have been the trends over the last year? What's Your current conversion rate and has that changed at all recently?

Speaker 2

That's my question. Thanks, Anthony. Thanks for joining. It varies. The answer is it varies by account.

Speaker 2

And we have some accounts and based on The healthcare provider that is dominates or has the market share of Lodge covered in that area will require The 6 month lead time. We have others that require 3 months. So the trend has been and answer the second part of the question, the trend has been To require less and less time. I think that's partly the influence of ASMBS And other health professionals who know that whether or not you wait 6 months or not, people need the treatment. They need to advance their care path To get more aggressive care, whether it's a LAP BAND placements or other medically prescribed weight loss drugs or what have you.

Speaker 2

I know I think another anecdotal data point is Michigan. I think the For the Medicaid employees, I believe removed their weight loss, managed weight loss Waiting period entirely. So there's a number of individuals under that plan that can seek out bariatric surgery straight away and not wait.

Speaker 4

Okay, interesting.

Speaker 2

So I think that the other answer to, I think going forward, Anthony, I think if you ask that question in another year, we'll have another More detailed answer because I think by accounts, obviously, our goal is to understand and forecast our business and to do so every time we generate a lead and we get more Advancing our lead generation and nurturing systems that we have in place, we'll be able to be more predictive of when that lead may or may not be A candidate for surgery. So, we'll be improving over time.

Speaker 4

Okay, great. And then, you alluded to the weight loss drugs. Maybe Paul, if you could just go through the pros and cons of the weight loss drugs. I mean it's been on the front page of The Wall Street Journal, it's talked about on CNBC and social media. So Maybe just go through how you see that playing out, how you see that either Helping or hurting reshape here in the near term and then over the next couple of years?

Speaker 2

Sure, sure. Another great question. It started back last November when I attended a weekend meeting For ASMBS in San Antonio and the discussion section that I attended was specifically on prescription drugs for weight loss. And the speakers that were taking questions from the audience really had an answer that was not surprising. They felt like the weight loss drugs were going to bring more people that are obese to the table to discuss Their weight loss options.

Speaker 2

So in other words, we're reaching the drugs are a less invasive way, not as scary as surgery and therefore, More patients will get off the sidelines and seek out medical help, medical intervention. And they also felt like it would take It's not a 1 year answer, it's a 5 year answer. Like over the next 3 to 5 years, they'll start to see a normalization of the new weight loss drugs and other drugs that may be on the market. Weight loss drugs are not new to this industry. They have come out in the past and some have been highly touted initially and then have other drawbacks As the usage becomes widespread, what we've done internally is actually ask our top accounts, The surgeons in the practices, what they thought the impact was to their practices.

Speaker 2

And of, say, roughly 25 Accounts that we spoke with, all but one thought that the weight loss drugs were not impacting their accounts and felt long term it was going to do More for them in a positive way than a negative way by way of what I've just mentioned earlier with bringing more people off the sidelines. And which makes sense to me as only 1% of those who qualify for surgery in this country alone and I am certain abroad is Same statistic, but only 1% are seeking out surgery. And when you put drugs and you put big pharma marketing dollars in front of Behind those drugs to give them more exposure, you'll have more people contemplating the weight loss. And I'm sure, Anthony, you and others who listen to this will I have friends who are on these drugs who don't necessarily come across as obese or maybe slightly overweight, but they're still looking at these drugs as A short term fix. So it will be interesting, but we'll keep the pulse on the effect of these drugs with our customers and We hope for the better side of their influence.

Speaker 4

Thanks. That's helpful, Paul. And then just one last question on ReShape Care, Because that's like you said, that's not just for patients that have left the LAP BAND, What can be for anyone looking for weight loss options as well as aftercare, right? So if you as a physician think a patient can benefit from ReShape Care, That's something that the physician can recommend and it's currently reimbursable. Maybe just go through the economics behind that?

Speaker 2

Yes, sure. Well, the reimbursement side in terms of healthcare coaching, health coaching, which we have sort of a health coaches with ReShape Care was pulled back Late last year, I believe. So that is something that is pending. And if it's put back on the reversible list, then it changes Again, considerably for ReShape Care. So the proposition with ReShape Care to anyone who's interested is a cash pay proposition.

Speaker 2

How we've approached it and how we partner with our physicians is many physicians have, as you'd expect, Coaches, but most have dietitians, if not coaches. Dietitians are used throughout the practice to Begin to manage weight loss program before the surgery and then after surgery to counsel and coach the patients. Dietitians are reimbursable. What we found is that we have surgeons who see this as an added service that ReShape offers them in terms of ReShape Care. And there are others who have everything in house they need.

Speaker 2

So we really don't need to provide any value add to their existing resources, including dietitians and or coaches they have on staff. So it's going to be a mix of acceptance and adoption by our physician partners. And ultimately, depending on the reimbursement side of the healthcare coaching, We'll have a growth curve representative of whether it's cash pay or reimbursable. On the employer side, a different scenario. The employers who are self insured, as I mentioned on the call today, we've had some great Feedback.

Speaker 2

What we found is that the larger the employer, the more time as you'd expect with Yes, a large number of employees and with sometimes the, I'll say politics, but just the slowness of larger employees, it takes a longer time to get them to the finish line. But nonetheless, they've had positive feedback and we expect that program to work as an upfront Costs covered by the employer plus some subscription costs per employee that the employer would cover. So the cash pay part of this equation is burdened by the employer. And then the ROI is there for them as you'd expect when you start getting people on programs and you incentivize them as an employer, it drops Other comorbidities related to obesity and as I think you've heard on previous calls, at least in this industry, it doesn't take much weight loss to see benefit To that weight loss, I guess, 5% of total body weight. So, employers understand that and that's why they're excited about ReShape Care with all the things that it brings to them.

Speaker 4

Okay, great. Thanks, Paul. I appreciate it. I'll hop back in the queue. Great.

Speaker 4

Thank you.

Operator

Thank Okay, that does conclude today's Q and A session. I would like to turn the conference back over to Paul Higgins for closing remarks. Please go ahead.

Speaker 2

Well, thank you. I hope you recognize our enthusiasm and share our excitement for the road ahead given the substantial growth opportunities we have before us and the progress we've made developing And executing our strategies. We believe wholeheartedly that the benefits offered by the EPI approved minimally invasive safe and effective LAP BAND And our current suite of weight loss solutions will support our growth and most importantly help those who are fighting obesity. In closing, I want to thank our employees, Board members, customers, consultant advisors, suppliers, existing and new shareholders for your continued support I'll reshape as we progress on our mission to become the premier physician led weight loss company. I look forward to continuing to engage with our stakeholders, Healthcare Partners and Shareholders.

Powered by Quartr