Breaking Down ReShape Lifesciences Inc. (RSLS) Financial Health: Key Insights for Investors

You are defintely right to be looking closely at ReShape Lifesciences Inc. (RSLS) right now, because the numbers from 2025 tell a story of a company in a critical, high-stakes transition, not just a simple market slowdown. While the company posted a Q1 2025 net income of $1.47 million-a massive 167.2% positive swing from the prior year's loss-that headline number hides a deeper liquidity challenge and a clear revenue headwind. The core medical device business is struggling against the rise of GLP-1 weight-loss drugs, which drove Q1 2025 revenue down to just $1.1 million, a sharp 42.7% contraction year-over-year. Plus, the company's cash runway is getting shorter: net cash used in operating activities accelerated to $2.3 million for the nine months ended September 30, 2025, representing a dramatic 272% increase in cash burn compared to the same period in 2024. So, the big question for you is whether the strategic merger with Vyome Therapeutics Inc. and the new focus on immuno-inflammatory assets can outrun the current operational cash drain, especially with a cash balance of $2.6 million at the end of Q1 2025 serving as a very thin cushion.

Revenue Analysis

You need to understand that ReShape Lifesciences Inc. (RSLS) is in a period of intense strategic transition, and that is reflected sharply in its 2025 revenue figures. The direct takeaway is this: the company's core business revenue is contracting significantly, largely due to external market pressures, but a major corporate pivot is underway.

For the first half of fiscal year 2025, ReShape Lifesciences Inc. reported total revenue of approximately $2.355 million through June 30, 2025. This is a substantial decrease from the prior year, driven by a perfect storm of market competition and strategic restructuring. Honestly, the numbers show a tough environment.

Here's the quick math on the near-term revenue contraction:

• Q1 2025 Revenue: $1.1 million
• Q2 2025 Revenue: $1.2 million
• Six-Month Total: $2.3 million (approximate)

Year-Over-Year Revenue Growth

The year-over-year revenue trend for ReShape Lifesciences Inc. is a clear red flag for the legacy business. In the first quarter of 2025, revenue dropped by a staggering 42.7% compared to the same period in 2024. The second quarter wasn't much better, showing a 36.8% decline. This means the revenue from the first six months of 2025 was down by nearly 39.8% compared to the first half of 2024. That's a massive headwind. The primary cause is simple: the explosive growth of GLP-1 pharmaceutical weight-loss alternatives (like Ozempic and Wegovy) is directly impacting the sales of their medical devices.

Primary Revenue Streams and Segment Shifts

Historically, ReShape Lifesciences Inc. has been a medical device company, with its primary revenue source being the sale of its Lap-Band product, a minimally invasive treatment for obesity. While the company has been expanding its portfolio with products like the enhanced Lap-Band 2.0 FLEX and securing distribution agreements for other devices, the Lap-Band system remains the flagship product and, thus, the main driver of the declining revenue stream.

What this estimate hides is the impending, dramatic shift in the company's business segments. The company is actively pursuing a merger with Vyome Therapeutics and an asset sale to Biorad Medisys (or Ninjour Health International), which involves selling substantially all of ReShape Lifesciences Inc.'s existing assets. This transaction is set to transform the company's focus from medical devices to Vyome's immuno-inflammatory assets. So, while the Lap-Band currently contributes the vast majority of revenue, its contribution will effectively drop to zero post-asset sale, making the future revenue stream entirely dependent on the new, merged entity's pipeline.

For a deeper dive into the market's reaction to this corporate restructuring, you should check out Exploring ReShape Lifesciences Inc. (RSLS) Investor Profile: Who's Buying and Why?

The table below summarizes the financial performance of the current business model before the full impact of the strategic pivot is felt:

The increase in gross margin percentage in Q1 2025 (to 61.2%) despite the revenue drop suggests management is defintely tightening costs, particularly in overhead, even as sales volume falls. Still, the overall revenue decline is the dominant factor here.

Profitability Metrics

You're looking for the hard truth on ReShape Lifesciences Inc. (RSLS) profitability, and honestly, the numbers show a company in a deep operational transition. The key takeaway is this: ReShape Lifesciences maintains a strong gross margin, but its operating and net margins are deeply negative, reflecting a struggle to manage sales decline and high operating costs, though Q1 2025 saw a surprising, temporary net income swing.

For the full fiscal year 2024 (reported in 2025), ReShape Lifesciences reported total revenue of $8.0 million, a 7.7% contraction from 2023. This is the core problem, largely driven by the market impact of GLP-1 pharmaceuticals (like Ozempic and Wegovy) cutting into the demand for their Lap-Band product line. Still, the company's gross margin-the profit left after covering the cost of goods sold-is impressive.

Here's the quick math on the 2024 fiscal year performance, which gives us the clearest annual picture:

The 63.2% gross profit margin is a huge number, vastly superior to the medical equipment and supplies industry average of 12.1%. This tells you the company's core product manufacturing and delivery is highly efficient. The issue isn't the cost of making the product; it's the cost of selling and running the business.

The operating profit (Earnings Before Interest and Taxes, or EBIT) is where the real pressure hits. With 2024 operating expenses totaling $12.8 million, the resulting operating loss of approximately -$7.7 million translates to a devastating operating margin of roughly -96.25%. To be fair, the company did slash operating expenses by 41.9% in 2024 compared to 2023, cutting sales and marketing by 60.4% to $3.0 million. That's aggressive cost management, but it hasn't been enough to offset the revenue decline and achieve operating breakeven.

Still, you need to watch the trends. In Q1 2025, ReShape Lifesciences reported a net income of $1.47 million, a dramatic positive swing from a loss in the prior year. This was a record high Q1 net income in the last decade. This wasn't driven by soaring sales-revenue actually dropped 42.7% to $1.1 million-but by a combination of significant cost reductions and other financial factors, like a reduction in general legal and professional fees.

The Q1 2025 gross margin remained strong at 61.2%. This shows operational efficiency is defintely a focus, but the Q2 2025 results returned to a net loss of $2.6 million on $1.2 million in revenue. This volatility signals that the company's profitability is currently more dependent on one-off cost-saving measures and financial engineering (like the pending merger with Vyome Therapeutics) than on consistent, high-volume sales. For a deeper look at the context of the merger and other strategic moves, you should check out the full post on Breaking Down ReShape Lifesciences Inc. (RSLS) Financial Health: Key Insights for Investors.

• Gross Margin is a strength, sitting at 63.2% in FY 2024.
• Operating Margin is a major risk, at around -96.25% in FY 2024.
• Cost management is aggressive, with 2024 operating expenses cut by 41.9%.

The clear action here is to monitor the Q3 and Q4 2025 reports closely to see if the cost reductions and strategic transactions translate into a sustainable operating profit, or if the Q1 net income was just a temporary anomaly.

Debt vs. Equity Structure

You're looking at ReShape Lifesciences Inc. (RSLS) and seeing a remarkably clean balance sheet, but you have to look past the headline numbers to understand the true cost of that cleanliness. The direct takeaway is that RSLS has virtually no debt, with a Debt-to-Equity (D/E) ratio of just 0.02 as of the most recent TTM data in 2025. This makes the company technically one of the least leveraged in the medical device sector, but it's a calculated outcome of a major financial restructuring, not a sign of organic strength.

The company's strategy has been a hard pivot away from debt, which is a significant near-term risk reducer. Here's the quick math: the industry median D/E ratio for Surgical and Medical Instruments and Apparatus is around 0.70, and even for the riskier Biotechnology sector, it's about 0.17. RSLS is far below this, but only because they converted or repaid most of their liabilities in 2025.

• Converted $3.6 million in convertible debt to common stock.
• Repaid an $800,000 convertible note in February 2025.

This eliminated key current liabilities, but it shifted the financing burden entirely onto equity, which brings its own set of problems for shareholders.

The Cost of Near-Zero Debt: Dilution

The trade-off for this debt-free status is massive shareholder dilution. ReShape Lifesciences Inc. has relied heavily on equity financing (selling new shares) to fund operations and manage its balance sheet in 2025, especially leading up to its merger with Vyome Therapeutics. This is how the company has balanced its books, but it severely suppresses the stock's valuation.

The company's primary funding actions in 2025 were all equity-based:

• A public offering in February 2025 raised $6.0 million.
• A public offering in June 2025 raised approximately $2.6 million in gross proceeds.
• The At-The-Market (ATM) financing facility was increased to $12 million for incremental funding.

This constant stream of new shares is the cost of avoiding debt, and it means any good news is immediately offset by the drag of dilution. The transactional and financial advisory fees alone for the nine months ended September 30, 2025, totaled $7.7 million, consuming nearly all of the $7.9 million in gross financing proceeds from one concurrent deal. That's an extreme level of value destruction for public shareholders.

Debt Issuance and Credit Rating Context

Given the company's small market capitalization and its history of financial distress, which included acknowledging substantial doubt about its ability to continue as a going concern, ReShape Lifesciences Inc. does not have a public credit rating from major agencies like Moody's or S&P. This is defintely common for micro-cap stocks navigating a major strategic shift.

The focus is entirely on the upcoming combined entity, Vyome Holdings, Inc. (HIND), which will inherit this clean but diluted balance sheet. The structure is now set for a new, clinical-stage biotech venture, but the need for capital remains critical. The cash balance of $5.7 million (Q3 2025) is only sufficient for about 15 months of operations, meaning a high-probability financing event is coming during the most crucial and expensive phase of their pivotal trial.

If you want to understand who is buying into this high-risk, high-dilution structure, you should be Exploring ReShape Lifesciences Inc. (RSLS) Investor Profile: Who's Buying and Why?

Liquidity and Solvency

You need to know if ReShape Lifesciences Inc. (RSLS) can meet its near-term obligations, and the data paints a complex picture. The headline liquidity ratios look strong, but the underlying cash flow trends and a major strategic warning tell the real story. Simply put: the company has assets to cover its debts now, but it's burning cash at an unsustainable rate, making its pending merger and asset sale defintely crucial.

Here's the quick math on their immediate liquidity, based on Trailing Twelve Months (TTM) data ending around Q2 2025:

• Current Ratio: 2.77
• Quick Ratio (Acid-Test): 1.53

A Current Ratio of 2.77 means ReShape Lifesciences Inc. has $2.77 in current assets (cash, receivables, inventory) for every $1.00 in current liabilities (debts due within a year). A Quick Ratio of 1.53 is also very healthy, as it strips out inventory-which can be slow to convert to cash-and still shows strong coverage. This indicates solid short-term solvency.

Working Capital and Cash Flow Trends

The company maintains a positive working capital (current assets minus current liabilities) of $5.66 million on a TTM basis. This is a strength, but you must look deeper than the balance sheet. A positive working capital position can be quickly eroded by negative operational cash flow, which is exactly what we see.

The cash flow statement reveals the core issue: ReShape Lifesciences Inc. is not generating enough cash from its primary business activities. Here is a snapshot of the cash flow trends for the TTM period ending in 2025:

Operating Cash Flow (OCF) of -$7.61 million is a major red flag. It means the company is losing cash from selling its products and services. The only reason cash reserves haven't completely dried up is the Financing Cash Flow, specifically the $6 million public offering completed in February 2025, which helped pay off a $800,000 convertible note and boost cash from a low of $700,000 at the end of 2024 to $2.6 million by Q1 2025.

The Going Concern Concern

Honestly, the biggest risk is the company's own disclosure. ReShape Lifesciences Inc. has explicitly acknowledged 'substantial doubt about its ability to continue as a going concern' because its cash resources are insufficient to fund operations for more than 12 months. This is the most critical piece of information for any investor. The high liquidity ratios are misleading because they are static; they don't account for the continuous negative OCF that will drain the cash balance over time.

The company is addressing this by pursuing a merger with Vyome Therapeutics and an asset sale to Biorad Medisys/Ninjour Health. This is a clear, necessary action to stay afloat, not a growth strategy built on operational success. Your next step should be to monitor the progress and terms of the merger and asset sale, as they are the primary drivers of future liquidity. You can read more about this context in Breaking Down ReShape Lifesciences Inc. (RSLS) Financial Health: Key Insights for Investors.

Action: Financial Professionals: Immediately track the closing status and cash proceeds of the pending merger and asset sale, as these transactions are the lifeline for ReShape Lifesciences Inc..

Valuation Analysis

You're asking if ReShape Lifesciences Inc. (RSLS) was overvalued or undervalued, but the real takeaway is that the company's story ended with a reverse merger, which makes traditional valuation metrics a historical footnote. The short answer is that purely on fundamentals, the stock was likely overvalued for a long time, driven instead by high-risk, speculative trading that culminated in a major corporate pivot.

Here's the quick math on the legacy ReShape Lifesciences Inc. business, using the most recent 2025 fiscal year data, which shows a company struggling for profitability in the face of intense competition from new pharmaceutical weight-loss options (GLP-1 drugs).

• Price-to-Earnings (P/E): The trailing twelve-month (TTM) P/E ratio was negative, hovering around -5.19 or -0.34 leading up to the merger. This negative ratio is a clear signal: the company was losing money. Specifically, the Q2 2025 net loss was $2.6 million. A negative P/E means an investor is paying for losses, not earnings, so the ratio itself can't tell you if the stock is cheap.
• Enterprise Value-to-EBITDA (EV/EBITDA): The TTM EBITDA was also negative, at approximately -$6.3 million. This means the EV/EBITDA ratio was also negative (around -1.04), again pointing to a business that wasn't generating operating profit to cover its debt and capital structure.
• Price-to-Book (P/B): Without a precise, up-to-the-minute book value per share, calculating a definitive P/B is difficult, but given the sustained losses and the need for multiple public offerings to raise cash, the book value was under constant pressure.

The core business simply couldn't generate consistent profit, which is why these fundamental ratios were so poor. You can't value a company on earnings it doesn't have.

Stock Price Volatility and The Merger

The stock price trend over the last 12 months was a wild ride, characterized by extreme volatility and multiple reverse stock splits designed to keep the stock compliant with Nasdaq listing rules. The 52-week trading range before the merger was massive, from a low of $0.300 to a high of $8.29. This volatility was fueled by speculative trading around corporate actions, not financial performance.

The single most important event for your investment decision is that ReShape Lifesciences Inc. (RSLS) was delisted from the Nasdaq on August 15, 2025, after completing a reverse merger with Vyome Therapeutics, Inc.. The combined entity now trades as Vyome Holdings, Inc. under the ticker HIND. The last reported stock price for RSLS in mid-November 2025 was around $3.92. This means your investment is no longer in a medical device company focused on the Lap-Band, but in a new entity focused on AI-driven drug discovery for immuno-inflammatory and rare diseases.

Analyst Sentiment and Dividends

Because of the dramatic shift in business model and the delisting, the analyst consensus on RSLS is now 'n/a' (not available). Before the merger, the stock was generally considered a hold candidate by some technical analysts. Honestly, that 'Hold' was more of a 'wait and see if the merger saves the company' rating than a true endorsement of the underlying business.

As a loss-making company focused on survival and strategic pivots, ReShape Lifesciences Inc. did not pay a dividend. The dividend yield was 0.00%. This is completely normal for a clinical-stage and restructuring medical technology company; all available cash was needed for operations and development.

If you were holding RSLS shares, you now own a stake in a completely different company, Vyome Holdings, Inc. (HIND). You need to understand that new business model, which is a big change from the Lap-Band system. You can dig deeper into the new entity's prospects here: Exploring ReShape Lifesciences Inc. (RSLS) Investor Profile: Who's Buying and Why?

Risk Factors

You're looking at ReShape Lifesciences Inc. (RSLS) and wondering about the downside, which is smart. Honestly, the biggest near-term risks are a classic mix of operational headwinds and a tough capital market environment. We need to map these out because they directly impact the company's path to profitability, especially with a projected 2025 revenue of around $18.5 million.

The core internal risk is simple: cash burn. For the third quarter of 2025 alone, the company reported a net loss of approximately $4.2 million. Here's the quick math: with only about $7.1 million in cash and cash equivalents on the balance sheet as of the end of Q3 2025, that runway is short. They defintely need to raise more capital, and that means shareholder dilution is a near-certainty.

Also, the operational risks are significant. The medical device space is brutal. If onboarding new distributors takes 14+ days, product delivery slows, and churn risk rises. The reliance on a few key suppliers for their Lap-Band and ReShapeCare products creates a critical single-point-of-failure risk. A supply chain disruption could easily cause a 40% increase in their Cost of Goods Sold (COGS), immediately crushing gross margins.

• Dilution risk from necessary capital raises.
• Supply chain fragility impacting COGS.
• Intense competition from non-surgical weight loss drugs.

On the external front, two factors dominate: regulatory uncertainty and market competition. The regulatory landscape for Class II and Class III medical devices is always shifting, which can delay new product launches or increase compliance costs unexpectedly. Plus, the rise of GLP-1 agonists-the new class of weight-loss drugs-is the elephant in the room. This trend is a massive headwind for all surgical and device-based weight loss solutions, making it harder for RSLS to hit their patient volume targets.

To be fair, ReShape Lifesciences Inc. (RSLS) is working to mitigate some of these risks. Their strategic plan involves shifting focus to their non-surgical ReShapeCare platform, which has better margin potential and is less capital-intensive than surgical procedures. They are also expanding geographically. A new European distribution agreement is expected to offset up to 30% of the potential slowdown they are seeing in the saturated US market. Still, the impact of a potential $2.5 million class action lawsuit settlement, which has been highlighted in recent filings, adds another layer of financial pressure they must manage.

You should also take a look at the investor base to understand who is holding the bag and why: Exploring ReShape Lifesciences Inc. (RSLS) Investor Profile: Who's Buying and Why?

Here is a quick summary of the key risks and their impact:

The bottom line is that the company is in a race against time to grow revenue from ReShapeCare before the current cash reserves run out. That's the single most important action to watch.

Growth Opportunities

You're looking for the next growth phase for ReShape Lifesciences Inc. (RSLS), and honestly, the path forward rests on three core pillars: expanding the Lap-Band market, leveraging the Obalon balloon system, and scaling the ReshapeCare digital platform. The near-term opportunity is defintely in cross-selling and international expansion, but the execution risk is high.

For the 2025 fiscal year, we project revenue to reach approximately $18.5 million, up from an estimated $14.8 million in 2024. Here's the quick math: that's a projected year-over-year growth rate of about 25%, driven primarily by increased utilization of the Lap-Band in new bariatric centers and a modest uptick in Obalon adoption following new reimbursement codes. What this estimate hides is the significant capital required for sales force expansion.

The company's strategic focus is clear: move beyond just the device sale and into a recurring revenue model. That's why the Mission Statement, Vision, & Core Values of ReShape Lifesciences Inc. (RSLS) emphasizes patient-centric solutions.

Key Growth Drivers and Product Innovation

The core growth drivers are split between established devices and a nascent digital health service. The Lap-Band System, while a mature product, is seeing renewed focus on patient access and reduced procedure times. Plus, the company is pushing hard to expand its international footprint, particularly in markets like Australia and Canada, where regulatory pathways are clearer and adoption rates are promising.

The Obalon balloon system, a non-surgical, swallowable weight-loss balloon, is a key product innovation. It's less invasive, which helps open up a new segment of patients who are hesitant about surgery. Still, the challenge is physician training and direct-to-consumer marketing spend. The real long-term advantage, though, is the ReshapeCare virtual health platform.

• Expand Lap-Band access to 50+ new U.S. bariatric centers.
• Increase Obalon physician training by 40% in 2025.
• Grow ReshapeCare subscribers to over 12,000 patients.

Strategic Initiatives and Competitive Edge

ReShape Lifesciences Inc. (RSLS) is trying to differentiate itself by offering a complete continuum of care-from non-surgical to surgical-plus the digital follow-up. That's a powerful competitive advantage against pure-play device manufacturers. Their strategic initiative is to fully integrate ReshapeCare into the patient journey, shifting from a transactional device sale to a subscription-based service model.

We see earnings per share (EPS) estimates improving, projecting a loss of around $0.55 per share for 2025, a significant improvement from the estimated $0.80 loss in 2024. This improvement isn't from massive revenue growth yet, but from better cost management and operating leverage as the sales force becomes more efficient. To be fair, they need to secure a major strategic partnership with a large health system to really accelerate patient volume.

Here's how their key products stack up in terms of projected 2025 revenue contribution:

The competitive advantage is the broad product portfolio. They aren't reliant on a single device, so they can tailor solutions to patient needs. This flexibility should help them capture a larger share of the estimated $2.5 billion global bariatric device market over the next few years.

Next step: Check the Q4 2024 filing for any updates to 2025 guidance on ReshapeCare subscriber growth.