ReShape Lifesciences [RSLS] Conference call transcript for 2022 q3
2022-11-14 12:52:03
Fiscal: 2022 q3
Operator: Good morning and thank you for joining the ReShape Lifesciences Third Quarter 2022 Conference Call. I would now like to turn the call over to Paula Schwartz from Rx Communications. Please go ahead.
Paula Schwartz: Good morning and thank you for joining the ReShape Lifesciences Third Quarter 2022 Earnings Call. I'm pleased to be joined by Paul Hickey, President and Chief Executive Officer of ReShape Life Sciences; and Thomas Stankovich, Chief Financial Officer. Paul will provide an overview and update on the company's activities, and Tom will review the final results for the quarter. He will then turn the call back over to Paul for some closing remarks, after which we will open up the call to a question-and-answer session. 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 the 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 in 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-K. As an additional reminder, ReShape stock is listed on the NASDAQ, trading under the symbol RSLS. I will now turn the call over to Paul Hickey, President and CEO of ReShape Lifesciences. Paul?
Paul Hickey: Thank you, Paula. I'd like to thank all of you for joining us this morning for our third quarter 2022 earnings call. For those of you who took part in our second quarter earnings call, you may recall that that was my first day of employment with ReShape. Well, today marks my 98th day with the company, and I'm excited to reconnect with you and share a more meaningful update on the current state of the business and exciting initiatives ongoing at ReShape. During the past three months, I've been working hard with my team to understand how the business has been progressed since I left the predecessor company Intermedix five years ago. Since the last call, I've gained valuable insights into the company's potential to address the large market opportunity helping to alleviate the obesity epidemic. And I'm thrilled about the enormous prospects that lay ahead of us. As I mentioned last quarter this is a significant reason that I chose to rejoin the company. I'm excited to say that there are great things going on here that support our mission to help improve the quality of life for those individuals who are fighting obesity and related comorbidities, which can often be a lifelong battle. This morning, I'd like to highlight some of the changes we've made in the last 98 days, what is working for us and what our plan is going forward. Specifically, I'd like to walk through the three strategies or what we referred to as our growth pillars that we are now executing. The first pillar 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. And the last is to continue to drive and gain surgeon advocacy for our product portfolio by ensuring that it is backed by compelling evidence showing effectiveness when addressing the continued care needed to fight obesity. Before I fully address these three growth pillars let me touch on the obesity market that we are working hard to address. The global multibillion dollar obese market opportunity before us is enormous and remains largely untapped. How large is the market? Currently, 2.5 billion people more than 30% of the global population is considered overweight or obese. Our figure that's expected to grow 50% by 2030. The global weight loss and obesity management market is expected to rise an estimated value of $300 billion with a substantial compound annual growth rate of 6.7% from 2019 through 2026. Drilling down a bit, the overall bariatric surgical device market alone is projected to reach $2.8 billion worldwide by 2025 with the US portion accounting for $1.8 billion in the same time frame. Additionally, with 50% of adults in the US trying to lose weight every year we believe our suite of weight loss and metabolic health solutions is positioned to address the entire weight loss continuum. But how do we get after it? The metabolic and bariatric surgery market is complex. There's no single panacea per weight loss and we must have a sound strategy to address the market needs and ensure our success. While as I mentioned a moment ago, our first growth pillar is to optimize our operations and have a disciplined measured approach to our business. From day one it was clear to me that the business model for ReShape needed to change dramatically, in order to become more disciplined, sustainable and scalable as an organization. We have made changes. We are now on a path to profitability, which we will achieve by continuing to partner with our physician advocates and leveraging our portfolio of proven products that manage in treat obesity and metabolic disease. To advance our sales efforts, in August, we appointed seasoned executive, Nick Ansari. I've had the pleasure of working with for several years. His leadership in conjunction with the implementation of the Salesforce platform is enabling us to track sales metrics and key performance indicators to predict and drive sales growth. We now track customer engagement, leads, warm transfers of qualified patients to practices with a much higher level of confidence. By tracking these metrics, we can adapt our marketing campaign to be more effective and efficient. Case in point, we have pivoted our media campaign to regional, multi-platform digital strategy, aligned with our surgeon advocates. This digital marketing approach has had an immediate impact and as a result, has reduced our cost per lead by over 50%. We have also taken other significant measures to right size the organization and reduce operating expenses, so we can preserve cash and invest in our future growth drivers to a greater degree, including sales and marketing, to drive revenue, both internationally and domestically. Our second strategy, our pillar for growth, is to develop and commercialize new products and therapies. It seems simple, but it takes experience to be good at it and I'm confident leading this team that we're going to be very successful. I'm pleased to report, having completed the limited release of our disposable ReShape calibration tubes, we have made additional improvements to the products and are planning a full rollout in the coming months. We expect this line extension of calibration tubes to be rapidly adopted by surgeons, given their ability to help better visualize the anatomy, making it easier to identify potential defects during a broad range of bariatric procedures, such as laparoscopic sleeve gastrectomy and gastric bypass. To be clear, this product is used in procedures other than the lap band and therefore provides a great opportunity to increase future revenues. The second product we are commercializing is reshapecare, our virtual weight management platform. When discussing reshapecare and how we will impact the entire weight loss continuum, it's imperative that we touch on the virtual health care delivery space, a market that is expected to reach $95 billion by 2026. We will win in this area by leveraging our telehealth counseling platform. Reshapecare supports and coaches patients throughout their weight loss journey, regardless of the treatment pathway. We are recently pleased with the reception we have received, as we spoke to large self-insured employers about reshapecare, and how this important program can help impact overall employee health and reduce employers' health care costs. Based on this positive feedback, we are expanding this program to support both our potential partners' employees and our Lap-Band patient leads to improve their health and achieve weight loss. Reshapecare and its extension ReShape Marketplace, that includes ReShape Optimize our advanced line of premium supplements, allows ReShape to distinguish itself with an incredibly valuable e-commerce platform with health care provider recommended competitively place, weight loss and wellness products, that address nutrition, exercise, sleep and stress. Both platforms are a key element to our patient engagement and retention strategy. On the horizon, is the launch of the next-generation physician-led redesign of Lap-Band Lap-Band2. This project was started with a goal to reduce patient discomfort and minimize postoperative adjustments by minimizing the potential for obstructions, while maintaining society. As you may recall from previous updates, these are commonly noted drawbacks of the Lap-Band. The Lap-Band tube incorporates an enhanced band reservoir technology that serves as a relief valve, designed to alleviate discomfort from swallowing too much food. We're excited about this next-gen device. Surgeons I've spoken with about this new design believe, the Lap-Band tube will allow us to engage new surgeons and reengage those who have used the Lap-Band in the past. I'm excited to report, that in the first part of 2023, we are expected to submit for clearance with the FDA. Stay tuned for future updates. As excitingly, we have also advanced the development of our diabetes block stem neuromodulation, our DBSN device, which is the potential to address the significant global type two diabetes market. Type two diabetes remains challenging to effectively treat for over 30 million Americans who suffer from the disease, especially considered an estimated 50% of type two diabetics do not take medications as prescribed. Data on the device was recently published in the peer-reviewed journal Frontiers in Neuroscience, and was presented in an abstract during ObesityWeek. Our innovative DBSN system may hold significant promise, as it's designed to address type 2 diabetes by electrically blocking the vagus nerve signals to deliver which has been shown to decrease insulin resistance, while concurrently stimulating the vagus nerves feeding into the pancreas, which has been shown to release insulin. The vagus nerve is involved in nearly every physiological action in the human body. It serves as a super highway, carrying information between the brain and the internal organs. The vagus nerve has unlocked incredible treatments for numerous diseases such as depression and prescription failed epilepsy. The compelling data generated on our DBSN thus far was funded by an NIH Small Business Innovation Research grant or SBIR Grant, and we have received subsequent SBIR grant funding to focus on the development of this technology to treat hypoglycemia. This strong SBIR support further validates our belief that addressing type 2 diabetes in this manner has tremendous potential advantages over current treatment options. We believe that, this device may have the ability to address the clear unmet need for a new non-pharmacological and patient-specific treatments providing improved efficacy and durability two diabetes. We are very excited about this technology and its future role in fighting obesity with personalized therapy, and we'll continue to collaborate with leading researchers and seek continued non-dilutive NIH grant support. The third and last growth pillar for ReShape is to gain search and efficacy by ensuring our products and therapies are supported by strong clinical evidence. In other words, we need to provide an evidence based care continuum. I'm pleased to say that, the last few months have been tremendous for Lap-Band. Specifically, the recent evidence-based guidelines for metabolic bariatric surgery issued by the American Society for Metabolic & Bariatric Surgery or ASMBS, and the International Federation for the Surgery of Obesity and Metabolic Disorders or IFSO bode well for ReShape. The updates were long overdue, replacing the 30-year-old guidelines issued by the NIH 1991. The guidelines now recommend metabolic and bariatric surgery for individuals, with a BMI of 35 or more, regardless of the presence, absence or severity of obesity-related conditions, and that will be considered for adults with a BMI of 30 to 34.9, and metabolic disease, and an appropriate selected children and adolescence. The guidelines further states that even without metabolic disease, weight loss surgery should be considered as 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 conditions using non-surgical methods. These new guidelines align well with Lap-Band, which is approved by the FDA for adult patients with a BMI over 30, with at least one obesity-related co-morbidity, as well as any patient with a BMI of over 40. Importantly, the Lap-Band backed by 25 years of clinical evidence is the only FDA-approved laparoscopic weight loss device on the market. As a result, if supported by payers these new guidelines can dramatically increase the number of patients eligible for bariatric surgery and it's our strong belief that among approved procedures, the personalized Lap-Band, will prevail as the least invasive surgical treatment option. In addition to the new guidelines issued in conjunction with IFSO, in October the ASMBS issued a consensus statement on Lap-Band use and aftercare management, validating that the anatomy sparing Lap-Band is a safe and effective weightless solution. We were pleased to see that many of the determinations reached in the statement aligned perfectly with ReShape's own evidence-based best practices recommendations. Additionally, the experts who issued the consensus statement also concluded that proper aftercare related to the behavioral health and nutrition is critical to the success of the weight loss procedure. I will say it, again, the consensus statement also concluded that proper aftercare related to behavioral health, and nutrition is critical for the success of the weight loss procedure. That is important, because we believe that our nationwide reshapecare program aligns with this key component of Lap-Band aftercare, through which we offer effective and convenient virtual health coaching for all weight loss patients, including pre and postsurgical bariatric patients. Our philosophy to partner with organizations such as the ASMBS to identify and train surgeons is a core piece of our strategy, and is critical to ensuring that, the surgeons and health care professionals on the front lines are fully educated 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 loss results. Taken together, the updated guidelines and the consensus statement provide a crucial component to driving future adoption and top line revenue for ReShape. 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-Q. As you can all appreciate, we have moved quickly to effect change, and I'm confident that our path will lead to predictable and scalable growth. Operationally, we have made tough, but necessary adjustments to right-size the organization and to shorten our path to profitability. When discussing our third quarter revenue, Tom will highlight the decline in our international sales, due primarily to the lack of resources and focus. This international business is an important part of our mission, and we will have resources now focused on reversing this trend. For our US sales, it has been previously discussed, how complex the weight loss journey is for individuals and it may take up to six months or even over a year to commit to bariatric surgery. It has also been pre-supported, how COVID's Omicron variant impacted our sales and lead generation program early in 2022. This setback was real, but temporary. Our commercialization team comprised of both sales and marketing are now aligned to support our surgeon partners and drive growth. There are some early indicators for success, including the number of surgeons we have engaged, trained and are now beginning to offer the Lap-Band. In 2022, we have 31% more surgeons offering Lap-Band. In October, alone, we had more than twice the number of surgeons used the Lap-Band than in October of 2021. This is clearly evidenced by October's 50% revenue growth compared to last year. As I've stated, we are optimistic about the metrics, we have established and we will continue to optimize our business model to drive top line revenue and profitability. I'd now like to turn the call over to Tom Stankovich to provide a recap of our financial performance. Tom?
Thomas Stankovich: 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-Q. I want to provide some perspective on the progress we have made thus far, rightsizing our organization and shifting our marketing effort to a targeted digital campaign thus reducing our operating expenses overall. As Paul mentioned, we have made some difficult but necessary adjustments to right-size the organization and shorten our path to becoming cash flow positive and profitable. We've made a hard pivot in our marketing strategy, which has significantly reduced our sales and marketing expenses quarter-over-quarter. As a result of this change, our sales and marketing costs have decreased sequentially from Q2 to Q3 approximately $2 million. Additionally, our G&A expenses have also improved sequentially quarter-over-quarter due to a reduction in headcount and other professional and consulting services. After excluding severance costs, our G&A costs have decreased by approximately $400,000 during the third quarter as compared to the second quarter. Taken together, these reductions in operating expenses have led to a notable improvement in our EBITDA loss. Our EBITDA loss for the third quarter was reduced by $3.5 million to $4.3 million compared to $7.8 million in the second quarter and $7.1 million in the first quarter. We expect this positive trend to continue for the rest of this year and into the future. Moving on to other key financial metrics for the third quarter ended September 30, 2022. Our revenue totaled $2.8 million for the three months ended September 30, 2022, which represents a contraction of 24%, or $900,000 for the same period in 2021. The decline is primarily due to a decrease in sales throughout Europe. During the first quarter of 2022, the emergence of the fast-spreading Omicron variant of COVID-19 severely impacted the company's ability to sell worldwide. We did see revenue begin to increase as the Omicron variant began to subside. During the three months ended September 30, 2022, we placed more focus on domestic sales resulting in lower international sales. We expect revenue will continue to increase through the remainder of 2022, as we focus on a targeted digital media campaign near bariatric surgical centers that sell the Lap-Band system. We also anticipate that the impact of the ASMBS consensus document on Lap-Band, as well as the ASMBS and IFSO's release of updated guidance will positively affect revenues throughout the remainder of 2022 and beyond. Gross profit for the three months ended September 30, 2022 and 2021 was $2.1 million. Gross profit as a percentage of total revenue for the three months ended September 30, 2022 was 75.1% compared to 57.6% in the same period in 2021. The increase in gross profit percentage is due to an increase in domestic sales, which have a higher gross margin than international sales. Additionally, as part of a rightsizing of our organization we had a reduction in payroll-related costs during the third quarter of 2022. We expect margins to continue to improve as a result of the recently instituted price increase for the Lap-Band. Sales and marketing expenses for the three months ended September 30, 2022 decreased by $900,000 to $2.6 million compared to $3.5 million for the same period in 2021. The decrease is primarily related to a decline of $1 million in stock-based compensation expense and overall marketing expense offset by a $300,000 increase in consulting and professional services for work on developing the ReShapeCare platform. General and administrative expenses for the three months ended September 30, 2022 decreased by $8.2 million to $3.9 million compared to $12.1 million for the same period in 2021. The decrease is primarily due to a decrease of $8.1 million in stock-based compensation expense and payroll-related expenses. Research and development expenses were $600,000 for the three months ended September 30, 2022 compared to $1.6 million for the same period in 2021. The decrease is due to previously mentioned decrease in stock-based compensation. This was offset by a small increase in consulting and professional services related to our DBSN device. We ended the quarter with $6.2 million of cash and cash equivalents and remain debt free on our balance sheet. We continue to evaluate our cash runway and our cash needs on a go-forward basis. Our go-forward plan includes scaling our business and investing in growth drivers, which include Lap-Band and ReShapeCare. We have made some significant steps in rightsizing our business through cost reductions and business strategies in order to achieve growth, which is more predictable and scalable. In order to achieve the expansion of our business strategies and continue our growth drivers, we may need to seek additional financing opportunities to support our expansion in order to shorten our time frame to sooner become cash flow positive and profitable. With that, I will now turn the call over back to Paul.
Paul Hickey: Thanks, Tom. On your point Tom, I want to emphasize to everyone on the call that any additional financing strategies that we have executed or will execute will support our growth pillars and will be used to accelerate our growth and path to profitability. Before we open up the call for Q&A, I'd like to recap what we have accomplished and our pillars for success over the next 90 days and beyond. As Tom detailed, we have significantly reduced operating expense and right-sized investments in quality regulatory and finance, so we can invest in growth initiatives. Our new targeted digital marketing strategy designed to align with our healthcare partners has already reduced our cost per patient lead by over 50%. We will leverage the available data we have to audit and verify our progress attaining the key performance indicators to both increase margins and drive revenues globally. We will also continue our engagement with organizations such as ASMBS, with the intent of forming a world-class advisory board of bariatric surgeons. With our guidance, we will continue to refine our business model and develop and execute a three to five-year strategic plan for success. This concludes our prepared remarks. So now, we'd like to open up the call. Operator?
Operator: Thank you. Our first question comes from Anthony Vendetti with Maxim. Your line is open.
Anthony Vendetti: Thank you. So just wanted to first focus on Lap-Band 2 and then just a couple of questions about the revenue. So Lap-Band 2 you pointed out Paul, the advantages when is that commercially going to be available?
Paul Hickey: Not known or disclosed yet. Our plans are to submit to the FDA in the first part of next year, and we'll keep you updated as we do that and progress in terms of discussing it with the FDA and getting a better target on when we can actually commercialize it.
Anthony Vendetti: Okay. Did you say first half first quarter?
Paul Hickey: First quarter.
Anthony Vendetti: First quarter, okay. And then I know part of the revenue drop-off was international. Was anything â would you attribute any of it to a reduction in sales and marketing, or is it just your â as you said your 98th day you've been sort of refocusing the company and determining how to best apply the funds that you have in sales and marketing, or how else would you gauge or how should we gauge the interest in the Lap-Band and in revenues as we move forward?
Paul Hickey: Yes. The international business, quite honestly, a bit disappointing for me to look at as I got on board. The appointment of Nick Ansari, which I mentioned, Nick has a lot of global experienced as sales executive, actually brought on a lot of distributors when he was last with ReShape a few years ago. I think reconnecting and keeping the marketing support and other support that we had in the past international is our major things that we need to do to reverse that trend but pretty confident with mixability and the receptiveness of Lap-Band internationally. I think it's been previously discussed that there's competition internationally with lower-priced sort of gastric bands, they don't have near the quality or reputation that the Lap-Band does in terms of success and certainly the volume of use over the years with over 1 million for Lap-Band and much, much less for any other competition that may be out there. So we're â I mean there's competition out there. And it's going to â if they're going to sort of battle us it's going to be on pricing. But as I said, our mission includes addressing global obesity and the business abroad, outside of the US, Europe and other areas of the world are important. So we're going to be aggressive to go after it but we'll be smart about it and making sure that it's a part of our path to profitability.
Anthony Vendetti: Okay. Great. And then just switching gears to reshapecare. So can you tell us the reception so far? I know it's early stage but how many patients have signed up? Where is that at this point?
Paul Hickey: Yes, early launch phase of just getting things started. The â honestly, what was a big surprise and pleasant surprise is receptiveness from one large employer in particular. And it's â it was completely new to us and it was our thought that employers that are self-insured are looking for ways to reduce their health costs overall. And any health and wellness coach Director, VP, whatever they may be titled in the company are looking for ways to get those individuals who are obese to get on the right path. So â that has been a pleasant surprise but also is requiring us to pivot a bit to make sure that we have resources aligned to hit the ground running with them and make sure that as we move that towards the finish line in terms of kicking off that program with this particular employer, which you'll hear more about when we can have everything finalized. But that has been something that's having us put more efforts into making sure the launch goes well. So to answer the question, early launch phase and a big focus for us now is getting ready for larger employers. And the one employer as we can tell more about that partnership we will. But for now it's work in progress.
Anthony Vendetti: Okay. Great. Thanks very much. Iâll hop back in queue.
Operator: Thank you. One moment. Our next question comes from Ben Haynor with AGP. Your line is open.
Ben Haynor: Good morning, gentlemen. Thanks for taking the questions. First off for me on Lap-Band2, the plan is early next year. Is that going to be a PMA supplement, or do you have a pathway to regulatory clearance itself lineup?
Paul Hickey: Yeah. Thanks Ben. It is -- would be a PMA supplement. I have had some discussions with the FDA. I'm old enough or maybe experienced enough to know that can always change. So to be clear on the call the plan is to submit to the FDA in the first quarter. And what happens after that is kind of in the FDA's hands. But I'll have to -- what I prefer to do is making sure we get that. We'll have more discussions with the FDA, before we submit. But as soon as we get some predictable time lines, I'll be sure to disclose those. But exciting everything that, I've seen about the products and the testing that's gone into it and additional testing yet to be done. But -- and there was probably moreover the receptiveness of the surgeons that I've spoken with, and shown the device to and their belief that it's going to be a very large door opener for them as well as physicians who've stepped away from the Lap-Band because of just not wanted to be burdened with the aftercare adjustments that the product requires today. And again, the design -- one of the design intentions is to minimize those after-surgery adjustments that a patient would need by kind of increasing the fluid volume given the surgeon a larger sweet spot to hit.
Ben Haynor: Okay. That makes sense. And do you think you'll need to do, any human trials on -- for the PMA supplement?
Paul Hickey: Yeah. You could speculate and say that the FDA may say do a post-market surveillance of the device once it's launched. It's -- and that's added investments would be needed to do that in terms of follow-up study. And I don't know FDA typically will do five years and at some level some number of patients. So that's something that is always in the mix when you go to the FDA with a PMA supplement.
Ben Haynor: So more likely than that it will be post-market in thing you don't expect anything that is to take place before the division? Right, exactly. I think what we'd end up doing is having the ability to release it commercially in the U.S. Again, I haven't mentioned anything about CE Mark but that's not going to be a first quarter of next year. But with the FDA the likely after we have the release and approval to sell the device will also be, required to study it to some level.
Ben Haynor: Okay. That makes sense. And then, just thinking about it you there -- on Lap-Band1 and Lap-Band2 presumably, there wouldn't be any Lap-Band1 inventory charges, because you sell those internationally but is there any worry that in talking about the Lap-Band2 that you might get patients or physicians kind of waiting on the Lap-Band2?
Paul Hickey: No. What's kind of really interesting? And again our launch plan hasn't been 100% finalized but you have to wrap-up inventory and ramp down inventory based on demand and receptivity. And again we have to get through the FDA as well. But what's interesting is the working part of this design for the Lap-Band2, can actually be retrofitted onto the Lap-Band1 as far as we can tell today. We'll have to again get through the FDA. But that's the case then you could potentially have surgeons who are struggling with adjustments or want to have a chance to go and they could actually go in and change out if you will the old parts of the Lap-Band1 with the new component on the left Lap-Band2. So we'll see what happens there, but that's -- that's one of the surprises are I guess good news things that we're talking about internally if we can have this sort of marketed as Lap-Band2 then for those patients with Lap-Band1 and the surgeons are finding themselves doing more adjustments than they want they could potentially do a retrofit.
Ben Haynor: Okay. Interesting. Looking forward to seeing more on that, and then on ReShapeCare with the self-insured employer opportunity I don't think you've got one on the hook already. But do you see -- do you have a sense of what the sales cycle is going to look like on maybe some of these larger employers or midsized employers who -- what your target?
Paul Hickey: Well, the -- as you speculate that if you get one notable employer to do this well. And it will lead to other doors that may open. And that's what I've seen happen in the past and I think could happen here. It's just a matter of doing it really, really well with out of the gate. And because of this being an early launch for us, it's easier to open up reshapecare to our marketing leads and not necessarily be flawless, but I think with large employers we're dialing it up a bit. So it's good timing for me to get on board and see what we're doing, have the positive feedback from this -- in particular this one larger employer and we'll see what happens as that goes well and how quickly we can open doors with other employers. And thatâs the time to something else -- and just to expand on it, there's -- because of the ASMBS and if so, guidelines that were released. There are surgeons I spoke with at the ASMBS's symposium this past weekend in San Antonio it was on Thursday, Friday and Saturday. They are pushing for advocacy for these guidelines to be adopted by their institutions. And so, you're finding a lot of smaller payers are now saying -- insurance companies are now saying these are new guidelines. If you're obesity is at -- BMI is at 30, you should seek out surgery and get approval for that. So the time is changing and I have more to share on that, but it's -- the employer side of this is just another piece of the puzzle. You can hit all the insurance companies with the guidelines. But a lot of the lives in the US are covered by the employer and as they're self-insured typically, over 100 or so employees can give me that traction.
Ben Haynor: Okay. And just on the reaction of the docs to the new guidelines. I mean, I would imagine that's awfully favorable, but any other color that you can add there?
Paul Hickey: Yes, it's -- in their minds a long time coming and it's over 30 years since it's been updated. And I think what I've seen over the last 98 days and I have been a part of this industry over five years ago. I've never seen the society stronger in terms of their -- how their unified voice, how they are more strategic. And one thing they told me at the conference and I've always sort of had this in my mind about this evidence-based care continuum as something that, this specialty, in terms of bariatric surgery really need, it is something that's been developed in orthopedics. It's developed in a lot of other specialties where there's evidence for this algorithm that physicians need to consider when looking at a care plan for an individual. What the society leaders told me in San Antonio is that, their entire focus going into next year and beyond is to treat obesity care plans as if they were treating cancer. So if you look at the approach ecologists will use, they have their entire toolbox, their armamentarium and they start with conservative treatment and try to move aggressively, but a lot of the individuals that have obesity, it's a lifelong disease. It will relapse. It's something they've got to have that support post-surgery if they do need surgery. And again, that's where we're uniquely positioned with reshapecare to support individuals both preoperatively, if they do end up getting surgery and postoperatively. So a very interesting sort of shift in the mindset of the leaders within the society. But I think that's going to bode well for -- just more people today that are obese are going to have a chance to hear from their primary care physicians or their employer or whoever, that your BMI may be 30, but it's -- you may be okay feeling like you don't need to seek treatment, but should probably go get help, or it's just going to get worse. So we'll see what happens. But it's exciting to see nonetheless.
Ben Haynor: Yes. It seems awfully favorable for you guys. And then, lastly for me. I appreciate the metrics and more surgeons offering Lap-Band in 2021 and the doubling of surgeons using Lap-Band in October versus October last year. Could you here remind us, was October a good month last year?
Paul Hickey: October of the last year number. Yes. October was -- I'm trying to recall October was a good number and my recollection Tom, do you have any?
Tom Stankovich: Yes. October, was absolutely a fair number. It wasn't -- certainly wasn't the lowest we had in 2021, but it wasn't the highest it been, a solid -- it was a solid month.
Paul Hickey: It's a fair comment, just the surgeons -- the revenue number, we did talk about give percentage, but the surgeon adoption piece was important for me to look at that, as we onboarded I think 45 surgeons prior to my arrival in the first part from October through the first or second quarter of last year. Of those 45 surgeons, I'm -- I'll throw a number up, but I'm -- I know I've got to be helped as well but I think it's just over 30 of those have reengaged and started using. The others are in the process of either newly trained or there something, as you're probably familiar with called the BAA, Business Associate Agreement that has to be signed before we start the process of providing them lead. So that -- that's one of the metrics I'm looking at is, how many surgeons new surges can we engage and then what is the time line for them to actually start seeing patients and doing the Lap-Band. And some of them happens right away in others it takes months depending on the institution and the paperwork, we have to put in place.
Q â Ben Haynor: Great. Well, thanks for taking the question, guys.
Paul Hickey: Thanks, Ben.
Tom Stankovich: Thanks.
Operator: Thank you. And we have a follow-up from Anthony Vendetti with Maxim. Your line is open.
Anthony Vendetti: Thank you. Just I was just wondering when the queue would be filed and if, we have the number of average shares outstanding and GAAP EPS for the quarter?
Tom Stankovich: Yes, sure. All that will be filed today probably towards the end of the day. But 10-Q will be on file later this afternoon.
Anthony Vendetti: Okay. Great. Thanks very much.
Tom Stankovich: Sure.
Operator: Thank you. And I'm showing no further questions in the queue. I'd like to turn the call back to Mr. Paul Hickey, for any closing remarks.
Paul Hickey: Great. Thanks, everyone. Thanks for the questions, Anthony and Ben. Yes, I think we've been successful underlying the progress, we have made rightsizing the organization to be more disciplined predictable. And I think sustainable and scalable. That's all language, I'm using internally. And just -- I think we've conveyed how excited we are. I know I am about the future. We'll continue to work diligently and build our commitments to provide, an evidence-based care continuum, as we described personalized devices and therapeutics including the FDA-approved Lap-Band. I need to thank our employees, for putting up with me probably for the last many days but the Board members, customers, vendors, existing and new shareholders where you continue to support of ReShape. I do believe it's truly, an exciting time as we continue to solidify our position as the premier physician led weight loss company. I look forward to engaging all of our stakeholders, our health care partners and shareholders.
Operator: This concludes today's conference call. Thank you for participating. You may now disconnect.
