IRVINE, Calif. and CAMBRIDGE, Mass. - ReShape Lifesciences (NASDAQ:RSLS), a company focused on weight loss and metabolic health solutions, and Vyome Therapeutics, Inc., a clinical-stage specialty pharmaceutical company, have announced an all-stock merger agreement.
Following the merger, the combined entity will be named Vyome Holdings, Inc. and is expected to trade on the Nasdaq under the ticker symbol HIND. ReShape stockholders will own approximately 11.1% of the combined company, with the exact percentage subject to net cash adjustments at closing.
Simultaneously, ReShape has agreed to sell substantially all of its assets, excluding cash, to Biorad Medisys, Pvt. Ltd. for $5.16 million in cash. This transaction is contingent on ReShape’s accounts receivable and payable at closing. The sale includes the Lap-Band and Obalon Gastric Balloon Systems, as well as the Diabetes Bloc-Stim Neuromodulation System. Biorad will also assume ReShape's liabilities.
Concurrent with the merger agreement, ReShape, Vyome, and Vyome’s subsidiary have secured commitments from certain investors to purchase at least $7.3 million in securities. Post-merger, investors have agreed to buy up to $5.8 million in common stock of the combined company at a 30% discount to its valuation at closing.
The merger and asset sale are subject to customary closing conditions, including ReShape stockholder approval, SEC registration statement effectiveness, and Nasdaq's approval for the combined company's listing.
Paul F. Hickey, President and CEO of ReShape, highlighted the deal as maximizing shareholder value after considering various strategic alternatives. Krishna K. Gupta, to be appointed Chairman of the combined company, emphasized Vyome's debt-free status and focus on addressing immuno-inflammatory diseases. Venkat Nelabhotla, President & CEO of Vyome, expressed confidence in building value with their pipeline and strategies.
Maxim Group LLC and Fox Rothschild LLP are advising ReShape, while Chardan and Sichenzia Ross Ference Carmel LLP are advising Vyome on the merger.
This news is based on a press release statement and does not constitute an offer to sell or a solicitation of an offer to buy any securities.
In other recent news, ReShape Lifesciences reported its Q1 2024 financial results, marking significant cost reductions and a strategic focus on profitability. Despite a 15% contraction in revenue due to competition from GLP-1 drugs, the company has increased its gross profit margin to 60% and cut operating expenses by over half. The company's CEO, Paul Hickey, underscored the limited launch of the Lap-Band 2.0 FLEX, with full U.S. launch anticipated to drive sales in 2024.
ReShape Lifesciences is also expanding its market into Canada and the EU, while exploring strategic mergers and acquisitions with the help of Maxim Group. The company expects revenue growth and continued reduction in operating expenses throughout 2024.
The company, which has a net working capital of $4.4 million and remains debt-free, is confident in the market potential of their Lap-Band products and is actively investing in commercial strategies.
These are just some of the recent developments at ReShape Lifesciences, a company that continues to navigate the competitive landscape of the weight loss market with a focus on cost efficiency and market expansion.
InvestingPro Insights
As ReShape Lifesciences (NASDAQ:RSLS) maneuvers through a significant merger and asset sale, investors are closely monitoring the financial health and market performance of the company. According to InvestingPro Tips, ReShape holds more cash than debt on its balance sheet, which could be a positive indicator for the company's financial stability post-merger. Moreover, while analysts do not expect the company to be profitable this year, the company's liquid assets surpass its short-term obligations, providing some cushion for near-term financial operations.
Examining the InvestingPro Data, ReShape's market capitalization stands at a modest $4.79 million USD. The company's revenue for the last twelve months as of Q1 2024 is reported at $8.34 million USD, though it is important to note a decline in revenue growth of -24.82% during the same period. Despite these challenges, the gross profit margin remains relatively high at 65.85%, indicating that the company retains a significant portion of its sales as gross profit.
Investors should be aware that ReShape's share price has experienced a significant downturn over the past year, with a -85.81% return, reflecting market skepticism. On a more positive note, the company has shown a strong return over the last three months, with a 17.71% price total return, which may interest those looking for recent positive momentum.
For those seeking a comprehensive analysis of ReShape Lifesciences, there are additional InvestingPro Tips available, which can provide deeper insights into the company's valuation, cash flow, and market performance. In total, there are 12 InvestingPro Tips that can help investors make more informed decisions. To access these valuable insights, use the promo code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription at InvestingPro.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.