Obalon (OBLN) caught in upsurge as earnings are reported

Shares of Obalon (OBLN) surged over 100% as the company reported it’s Third Quarter 2020 Financial Results. Obalon is a vertically integrated medical technology company with the first and only FDA-approved swallowable, gas-filled intragastric balloon system for the treatment of obesity.

Revenue for the third quarter of 2020 was $44,000, compared to $0.3 million for the third quarter of 2019, with the decrease primarily due to the suspension of operations in the second quarter of 2020. Net loss for the third quarter of 2020 was $1.6 million, compared to $3.7 million for the third quarter of 2019. Net loss per share for the third quarter of 2020 was $0.20, compared to $0.61 for the third quarter of 2019.

Cost of revenue was $41,000 for the third quarter of 2020, down from $0.4 million for the third quarter of 2019. Gross profit for the third quarter of 2020 was $3,000 compared to a gross deficit of $0.1 million for the third quarter of 2019.

Research and Development expense for the third quarter of 2020 totaled $0.3 million, down from $1.2 million for the third quarter of 2019. Selling, General and Administrative expense decreased to $1.3 million for the third quarter of 2020, compared to $2.5 million for the third quarter of 2019.

Operating loss for the third quarter of 2020 was $1.6 million, down from a loss of $3.7 million for the third quarter of 2019.

As of September 30, 2020, the Company had cash and cash equivalents of $5.5 million and $0.4 million of debt related to its Payroll Protection Program loan. The Company intends to continue exploring the potential for third-party reimbursement for the Obalon Balloon System, as well as exploring and evaluating financial alternatives to help meet its capital needs and strategic alternatives that might enhance stockholder value. There is no assurance that any financial or strategic alternative will be identified.

If the Company is not able to raise additional capital to meet its needs or to identify a suitable strategic alternative, it will have to discontinue all operations and may be required to declare bankruptcy or dissolve.

Why you should stay away from OBLN for now

Since the company is looking to raise additional capital to meet it’s needs, the company may dilute existing shareholders with capital offerings.

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Jay Lorrence
Investor of 12 years and Managing Editor of Money Midnight, a news outlet focused on highly profitable investment ideas and bold underground research.
Articles: 231

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