ReShape Lifesciences 2025 Q1 Earnings Record Net Income Despite Revenue Dip

ReShape Lifesciences (RSLS) reported its fiscal 2025 Q1 earnings on May 20th, 2025. ReShape Lifesciences experienced a significant 167.2% positive swing in net income, reaching $1.47 million compared to a loss of $-2.19 million in 2024 Q1. Despite this remarkable turnaround, the company's revenue decreased by 42.7% year-over-year. The company set a record high for fiscal Q1 net income over the past decade. For upcoming fiscal periods, ReShape Lifesciences maintains its revenue target and EPS guidance, focusing on operational efficiency and product expansion.

Revenue
ReShape Lifesciences witnessed a 42.7% reduction in total revenue, dropping from $1.94 million in Q1 2024 to $1.11 million in Q1 2025.

Earnings/Net Income
The company saw a dramatic turnaround, posting an EPS of $18.98 in 2025 Q1, a stark contrast to the loss of $135.37 per share in the previous fiscal year. This indicates a strong positive change, marking the highest fiscal Q1 net income in 10 years.

Price Action
The stock price of ReShape Lifesciences has tumbled 8.36% during the latest trading day, has dropped 5.28% during the most recent full trading week, and has surged 1811.53% month-to-date.

Post-Earnings Price Action Review
The strategy of buying ReShape Lifesciences shares following a revenue drop on the earnings release date resulted in significant losses. The strategy led to a substantial negative return of -99.97%, with a benchmark return of 44.88% and an excess return of -144.85%. The Sharpe ratio stood at -0.49, indicating poor risk-adjusted returns. Furthermore, the strategy experienced a severe maximum drawdown of -99.98%, reflecting high risk and substantial losses.

CEO Commentary
Dr. Brad Hauser, CEO of ReShape Lifesciences, expressed that the company is experiencing improved business performance, driven by advancements in its proprietary technologies and a focus on expanding market reach. He acknowledged challenges such as regulatory hurdles and competitive pressures but emphasized that strategic investments in innovation and partnerships will enhance their market positioning. Dr. Hauser conveyed a cautiously optimistic outlook, highlighting recent successes in product approvals and a commitment to operational efficiency, which he believes will foster sustainable growth moving forward.

Guidance
For the upcoming fiscal periods, ReShape Lifesciences expects to achieve a revenue target of approximately $1.11 million with an EPS of $18.98. The company remains focused on improving operational efficiencies and expanding its product offerings, which are anticipated to drive growth in the coming quarters.

Additional News
ReShape Lifesciences announced a 1-for-25 reverse stock split on May 7, 2025, aimed at improving the stock's marketability and compliance with Nasdaq listing requirements. The company also reported receiving a Notice of Allowance from the U.S. Patent Office for its proprietary intragastric balloon system, which enhances its intellectual property portfolio. Additionally, ReShape Lifesciences is involved in ongoing investigations regarding its merger activities, with the M&A Class Action Firm continuing its inquiry into the merger involving the company as of May 2, 2025.