ReShape and Vyome to merge in all-stock deal

IRVINE, Calif. - ReShape Lifesciences Inc. (NASDAQ:RSLS), a company specializing in weight loss and metabolic health solutions currently valued at $3.2 million, and Vyome Therapeutics Inc., a clinical-stage company focusing on immuno-inflammatory and rare diseases, have announced updates on their merger proceedings. According to InvestingPro data, ReShape has been facing significant challenges, with its stock price declining nearly 70% over the past year. The all-stock transaction, previously disclosed in July 2024, is progressing as planned, with ReShape set to become Vyome Holdings, Inc. and expected to trade on the Nasdaq under the ticker symbol "HIND" after closing.

The board of the new entity will consist of six directors from Vyome and one from ReShape. Vyome's executive officers will lead the management team. This strategic move aims to advance Vyome's immuno-inflammatory assets and explore additional opportunities between the Indian innovation corridor and the U.S. market. The merger comes at a crucial time for ReShape, which InvestingPro analysis shows has been rapidly burning through cash, with an EBITDA of -$7.9 million in the last twelve months.

In parallel, ReShape has entered into an asset purchase agreement with Biorad Medisys, which will acquire ReShape's Lap-Band, Obalon Gastric Balloon, and Diabetes Bloc-Stim Neuromodulation systems, excluding cash, while assuming most liabilities. The cash purchase price will contribute to the net cash consideration for the merger's post-closing ownership allocation.

ReShape has been actively engaging with the SEC regarding the merger and has filed a Form S-4 registration statement, an amendment, and a Form S-1 registration statement for an Equity Line of Credit with Ascent Partners Fund LLC. These steps are essential for securing capital for general operations and expenses associated with closing the merger and asset purchase agreements.

Paul F. Hickey, President and CEO of ReShape, expressed confidence that the merger would create significant value for shareholders. Krishna K. Gupta, future Chairman of the combined company, emphasized the vision to build a world-class company leveraging U.S.-India synergies to develop new therapies for chronic immune-inflammatory conditions.

The announcement is based on a press release statement, and further details will be provided to ReShape's stockholders in a joint proxy statement/prospectus regarding the merger and asset sale. The company advises shareholders to read these materials thoroughly once available.

This merger represents a significant step for both companies in their pursuit of developing innovative healthcare solutions and expanding their market presence. While ReShape maintains a healthy current ratio of 1.33 and holds more cash than debt, detailed financial analysis available through InvestingPro's comprehensive research reports shows additional critical metrics and insights that could impact the merger's success. Subscribers can access over 10 additional ProTips and detailed valuation metrics for deeper analysis of this strategic combination.

In other recent news, ReShape Lifesciences, a pharmaceutical company based in California, has been notified of an equity shortfall by the Nasdaq Stock Market, putting its listing at risk. The company now has 45 days to submit a plan to regain compliance. In response, ReShape Lifesciences has indicated its intention to monitor its performance and consider available options to regain compliance.

In terms of financial performance, ReShape Lifesciences reported a 16.6% revenue increase in its third-quarter earnings for 2024, reaching a total of $2.3 million. This marks a 6.4% year-over-year growth. The company also managed to reduce operating expenses by over 40% from the previous year, resulting in a gross profit margin of 62.8%.

On the strategic front, ReShape Lifesciences announced mergers with Vyome Therapeutics and an asset sale to Biorad, valued at approximately $130 million. These moves are aimed at enhancing shareholder value. Additionally, the company received a $241,000 NIH grant for their Diabetes Bloc-Stim Neuromodulation device, bringing their total NIH funding to $1.15 million. These recent developments show the company's proactive approach towards growth and compliance.

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