Good afternoon, and thank you for joining us on today's call. I'm pleased to be joined by Bart Bandy, Chief Executive Officer of ReShape Lifesciences Inc., who'll provide the overview of the company's recent activities and business highlights.

Tom Stankovich, Chief Financial Officer of ReShape, will then review the financial results for the fourth quarter and full year 2020 and then turn the call back over to Bart to finish..

As a reminder, this conference call as well as ReShape Lifesciences' SEC filings and website at www.reshapelifesciences.com, including the Investor Information section of the website, contain 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 our annual report on Form 10-K and in our quarterly report on 10 -- Form 10-Q that was filed today..

As an additional reminder, our stock is listed OTC, trading under the ticker RSLS..

I will now turn the call over to CEO, Bart Bandy.

Bart?.

Thanks, James. Good afternoon, everyone, and thank you for joining us today. I would like to begin by first acknowledging the tireless work of our employees and staff as we navigate through these unprecedented times.

Thanks to their tremendous efforts, ReShape has been able to adapt to the challenges posed by COVID-19 and stands positioned to emerge from the pandemic stronger than ever..

This past year proved to be a pivotal time for our team at ReShape as we continued to grow our internal portfolio, including LAP-BAND account development; continued to develop and launch of our ReShapeCare program; and progressed the diligence efforts in the last quarter of the year towards expanding our weight loss solutions platform through a merger with Obalon Therapeutics, which led to the definitive agreement we announced in January 2021..

In providing patients with safe, effective and proven medical solutions to treat obesity, we understand that every patient is unique and, therefore, may require a tailored treatment plan. This fueled our decision to merge with Obalon and add their FDA-approved Balloon System to ReShape's line of innovative weight loss solutions.

The Obalon Balloon System, which is the first-and-only swallowable gas-build balloon system for weight loss, has demonstrated strong efficacy and a best-in-class safety profile for weight loss with lasting results and minimal side effects.

In addition to weight loss, patients showed improvement in cardiometabolic risk factors, including fasting glucose, systolic blood pressure, cholesterol and triglycerides..

While the merger is exciting news for our stakeholders, we continue to monitor the impact of COVID-19 on our business, recognizing the important role our products and services play in protecting the public health..

COVID-19 has heightened the public's awareness of the personal health risk and economic costs associated with the pandemic and individuals who are obese.

Recently published data indicates that next to age, the underlying health conditions of obesity and obesity-related comorbidities, including hypertension and diabetes, are the greatest predictors of COVID-19 hospitalizations and mortality.

There are more than 70 million adults in the United States who are obese and over 11 million adults in the United States who have type 2 diabetes and are obese.

This heightened risk of COVID-related complications further motivates us every day, and we are driven to continue providing and expanding our portfolio of critical weight loss solutions to those who need it most..

During the fourth quarter of 2020, ReShape Lifesciences generated total revenues of $3.2 million compared to revenues of $4.1 million for the prior year period. Full year sales came in at $11.3 million, approximately 25% down compared to $15.1 million for the full year of 2019.

Our year-over-year decrease in sales was a result of the impact of the COVID-19 pandemic on elective surgeries. However, we observed positive momentum during the second half of the year as revenues accelerated from $4.5 million in the first half of the year to $6.8 million during the second half of 2020..

Throughout 2020, our company established and executed upon numerous cost savings initiatives and expense controls in line with this anticipated revenue decrease. And Tom will provide more details on those efforts and results in the financial section of this presentation..

We remain very encouraged by the progress made on generating increased interest for the LAP-BAND with clinicians and potential patients.

Through online webinars and increased social media, highlighting of ambulatory surgery center access for the procedure and support of local advertising efforts, we have continued to educate intended audiences and promote the safety and efficacy of the LAP-BAND for weight loss and metabolic health procedures..

With numerous peer-reviewed publications and extensive real-world experience, we are proud to recognize that over the past 2 decades, 1 million people around the globe have chosen LAP-BAND as a weight loss solution..

We are also very pleased with the continued progress and market response to our ReShapeCare service, which had its controlled launch in June of 2020 in response to the growing need for virtual health care services given the current climate associated with the pandemic.

As a reminder, ReShapeCare is a telehealth-enabled customizable platform that provides physicians with reimbursed treatment for enhanced patient engagement and success.

This unique patient aftercare model provides live and virtual support for clinicians and their patients regardless of the patient's type of medically supervised therapy or surgical weight loss procedure.

ReShapeCare has since been well received by physicians and patients as it allows patients to support their weight loss goals in a safe and accessible virtual environment. This program is a testament to the innovation, ability and commitment from our company to help as many people as possible with their weight loss journeys..

The evaluation of the ReShape Vest has continued in European pivotal clinical investigation with a planned enrollment of 95 patients.

While we've made some progress, the pandemic has impacted the ability for our Spanish site to follow up and engage with patients who had the procedure prior to medical center closures and our ability to initiate enrollment in our other European sites.

However, we have continued to communicate with these clinical sites while also maintaining the necessary preparations to ensure that patients and facilities are available as soon as we can move forward with the study..

Our efforts to withdraw the PMA for the vBloc weight loss indication over the past year were accepted by the FDA this quarter, allowing us to reallocate investment and resources to the commercialization and development of strategically relevant technologies.

While this indication has been closed, this platform has created a pathway to future shareholder value with ReShape's Dual Block Stimulation Neuromodulation technology currently in development for the treatment of type 2 diabetes.

With funding received from the National Institutes of Health Small Business Innovation Research grant, we were able to identify and successfully meet the necessary endpoints for preclinical study.

This achievement allowed us to submit for a second grant to further investigate the promise of the Dual Block Stimulation Neuromodulation technology and pursue this opportunity to further expand our portfolio focused on the innovative treatment of obesity and metabolic diseases..

The obstacles presented by COVID-19 have demonstrated our team's resiliency and ability to adapt to challenges. We remain highly optimistic and confident in our company as we enter a new year.

As a result of our efforts in growing our portfolio as well as the merger with Obalon, we believe we are strongly positioned to emerge in 2020 in a thriving manner..

I'd now like to turn the call over to Tom for a detailed financial results. .

Thanks, Bart, and good afternoon, everyone. First, I will provide some overall financial highlights and then discuss our quarterly results and annual results. We finished 2020 with significant accomplishments. And I would like to provide an outline of what we have done..

We expanded our ReShape portfolio by entering into a definitive merger agreement with Obalon Therapeutics, a company focused on developing and commercializing novel technologies for weight loss. Also, our merger provides the opportunity for ReShape the trade on NASDAQ Stock Exchange.

We began enrolling health care professionals in ReShapeCare, the company's first-in-class reimbursed telehealth-based coaching program, providing patients a tailored, high-touch and personalized virtual treatment..

We reduced total operating expenses by $15.1 million or 44.6% year-over-year. We improved non-GAAP EBITDA loss by $2.6 million or 22.1% year-over-year. And we lowered net cash used in operating activities by $5.6 million.

Additionally, we secured $15 million line of credit on January 19, 2021, and, thus, removed our going concern issue related to our financial statements. Lastly, our PPP loan of $1 million as part of the CARES Act was fully forgiven on March 1, 2021..

For the 3 months ended December 31, 2020, we reported sales of $3.2 million as compared to revenues of $4.1 million in the 3 months ended December 31, 2019, representing a decrease of $900,000 as a result of the COVID-19 pandemic. Our fourth quarter revenue numbers reflect $2.3 million in U.S. shipments and $900,000 from OUS shipments.

As a reminder, our OUS revenue now includes European revenues from distributors and direct customers as part of our overall OUS sales..

We reported gross profit of $1.6 million in the fourth quarter of 2020, representing a gross margin of 51.2% compared to $2.1 million in the 3 months ended December 31, 2019, at a gross margin of 52.2%. Lower gross profit margin is primarily the result of the impact of the COVID-19 pandemic, offset by improved domestic pricing..

Total operating expenses for the 3 months ended December 31, 2020, decreased by $400,000 from $5.2 million to $4.8 million as compared with the 3 months ended December 31, 2019. Sales and marketing expenses for the fourth quarter of 2020 were $1.2 million as compared to $1.5 million for the fourth quarter of 2019.

COVID-19 pandemic contributed to lower sales and marketing expenses, which consisted of reduced payroll-related expenses and commissions, and we had lower stock-based compensation expenses. As we move forward in 2021, we expect to invest more in sales and marketing..

General and administrative expenses were $2.7 million for the 3 months ended December 31, 2020, compared with $3 million for the 3 months ended December 31, 2019. The $300,000 decrease was primarily related to reduced stock-based compensation expense and bad debt expenses, offset by an increase in legal fees related to the proposed Obalon merger..

Research and development expenses were $900,000 for the 3 months ended December 31, 2020, compared with $200,000 for the fourth quarter of 2019. The increase is due to committed efforts with the ReShape Vest clinical study and control development within our line of products and services..

On a non-GAAP adjusted EBITDA basis, including addition of stock-based compensation expense, depreciation, amortization, warrant expense, amongst other items, the loss was $2.2 million for the 3 months ended December 31, 2020, compared to an adjusted EBITDA loss of $1.4 million for the 3 months ended December 31, 2019.

The $800,000 increase is primarily due to lower revenue and reduced stock compensation-based expense..

Turning to our annual financial results. Revenue for 2020 was $11.3 million compared to $15.1 million in revenues for 2019. The primary reason for the overall decrease in net revenue is due to the reduction in sales from COVID-19 pandemic, offset by an almost 200% increase in revenue for Europe.

Gross profit for 2020 was $6.3 million or 55.4% compared to $9.3 million or 61.6% for 2019. The decrease in gross profit margin is primarily due to reduced overall sales from the COVID-19 pandemic, coupled with an increase in international sales, which have a lower gross profit margin than domestic sales..

During 2020, we fully realized many of the cost-cutting measures we have implemented, which included changing multiple professional service providers, consolidating operations into a single facility in San Clemente, California and settling all current litigation matters.

This resulted in a $15.1 million reduction in operating expenses from $33.8 to $18.7 million..

For the year ended December 31, 2020, sales and marketing expenses were $4.7 million compared to $4.8 million for the same period last year. The primary reason for the decrease is the reduction in travel and entertainment expenses and stock-based compensation expense, offset by an increase in consulting fees and commissions..

General and administrative expenses were $10.5 million compared to $17.2 million for the same period last year. The decrease is primarily due to decreases in audit, consulting and other professional service provider expenses and legal fees..

For the year ended December 31, 2020, our R&D expense was $3.5 million as compared to $3.1 million for the full year 2019. The primary reason is due to an increase in payroll-related expenses and consulting fees due to committed efforts with the ReShape Vest clinical study and control development within our line of products and services..

On a non-GAAP adjusted EBITDA basis, the loss was $9.1 million for the year ended 2020 compared to an adjusted EBITDA loss of $11.6 million for the year ended 2019, an improvement of $2.6 million..

Turning to the balance sheet. As of December 31, 2020, the company's cash and cash equivalents totaled $3 million. Our cash and cash equivalents balance is net of our scheduled payment of $2 million for the LAP-BAND purchase, which was made in December 2020.

Additionally, we have been notified that our PPP loan in the amount of $1 million has been fully forgiven by the SBA, and we have no further obligations with regard to this loan..

We continue to focus on increasing revenue and decreasing our cash burn as we monitor our monthly spend and operations for potential cost reductions.

Looking back at 2020, we successfully strengthened our balance sheet, resolved litigation matters, consolidated facilities and adjusted professional service provider relationships, all of which generated significant cost savings while positioning the company for future savings.

In 2021, we expect to reduce our total operating spend and cash burn to extend our cash runway. We also continue to prioritize growing revenues while maintaining operating expenses to improve profitability..

With that, I would like to turn the call back over to Bart. .

Thanks, Tom. While we are excited about the merger with Obalon and progress we've made in the past year, we understand the COVID-19 pandemic will continue to impact our business operations in the year ahead.

As we continue to emerge from this pandemic, we believe the transition to a more open and interactive society will help expedite the return of elective procedures in most states. Although we remain optimistic, it is important that we proceed with caution and vigilance and monitor the situation carefully to make strategic, informed decisions..

We see this unprecedented environment as an opportunity to strengthen professional relationships and continue our efforts to develop marketing and program support resources intended to accelerate the return of weight loss therapies, which are accessible and critical for the bone well patient population affected by numerous comorbid health conditions.

I am very pleased with where we have taken this company in a particularly challenging environment over the course of the past year and excited as to what lies ahead for ReShape Lifesciences going forward..

Thank you to our investors, employees and customers for your continued support of our vision to make ReShape the premier weight loss and metabolic health company for patients and health care providers..