Quick Look at ReShape Lifesciences (RSLS)'s Margins

Shares of Small-cap Medical Instruments & Supplies company ReShape Lifesciences were up 40.9% during today's morning session, as the S&P 500 posted a -1.0% change. Today's upwards movement shows that investor interest in RSLS stock is strong -- but how closely have they studied the company's margins?

While ReShape Lifesciences's gross margins for the last year are positive, we are concerned that the company's operating margins are in the red. Gross margins take into account only the cost of revenue, or variable costs -- meaning the cost directly associated with producing the products or providing the service offered by the company.

Operating margins, on the other hand, take into account the company's overhead as well. Overhead, also called fixed costs, includes the company's rent, salaries for personnel not included in cost of revenue, equipment and supplies, amortization, and depreciation. Operating margins tell you about how efficiently ReShape Lifesciences is run, and gross margins tell you how profitable its product line is.

Date Reported Revenue ($ k) Cost of Revenue ($ k) Gross Margins (%) YoY Growth (%)
2023 10,449 44,720 59 -3.28
2022 11,240 53,153 61 0.0
2021 13,600 66,230 61 10.91
2020 11,299 18,719 55 450.0
2019 3,281 23,561 10 -75.0
2018 9,101 40,643 40
Date Reported Total Revenue ($ k) Operating Expenses ($ k) Operating Margins (%) YoY Growth (%)
2023 10,449 44,720 -337 18.2
2022 11,240 53,153 -412 3.29
2021 13,600 66,230 -426 -287.27
2020 11,299 18,719 -110 84.46
2019 3,281 23,561 -708 -74.81
2018 9,101 40,643 -405

The table above tells us that, on average, ReShape Lifesciences has not been profitable over the last four years, which should be a warning sign to prospective investors. One bright spot, however, is that the company's operating margins are growing at an average yearly rate of 3.0%.

The above analysis is intended for educational purposes only and was performed on the basis of publicly available data. It is not to be construed as a recommendation to buy or sell any security. Any buy, sell, or other recommendations mentioned in the article are direct quotations of consensus recommendations from the analysts covering the stock, and do not represent the opinions of Market Inference or its writers. Past performance, accounting data, and inferences about market position and corporate valuation are not reliable indicators of future price movements. Market Inference does not provide financial advice. Investors should conduct their own review and analysis of any company of interest before making an investment decision.

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