SIEN - Earnings call transcript Q3 2017

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Operator

Good day, ladies and gentlemen. And welcome to the Q3 2017 Sientra, Inc. Earnings Conference Call. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session, and instructions will follow at that time. reminder, is a recorded. As Instructions] this being conference [Operator for introduce Zack I to host today’s Group. would like Ruth your conference, The Kubow with

begin. may You

Zack Kubow

statements statements Thanks are United In our today, laws. will Operator. remarks States securities considered the within include forward-looking meaning of we that

management questions. make to may addition, forward-looking statements In response in additional your

discussion trends, and with or on the company company’s affect from Actual may of company to will that provide based or projection statements. are to factor and Chairman statement. disclosures XXXX financial Sientra. with review statements XX, faces in may A expressed the those current The assumptions over is company’s obligation and estimate, risk risks that Nugent, quarterly hand the on expectations filed its on by SEC strategy, which filed operations of company differ of the results company Forward-looking the the CEO annual the materially March management’s the report update future and uncertainties Form performance. call detailed any Jeff or XX-Q events With I’ll the in and implied on contained business, no forward-looking that XX-K said, updated report forward-looking undertakes shortly. or Form

Jeff Nugent

and afternoon, Thanks, Zack, good everyone.

Chief Senior President Vice Joining and me and Williams, of our and Officer today Corporate are Vice Financial President Senior Strategy. Huiner, Officer, Operating Patrick Treasurer; and Chief Development Charlie

portfolio. the continued strategic reference combine on good opportunity our new the progress objectives make includes which of We breast our on This best-in-class market million our throughout Sientra to support to have implant for in the continue $XXX vision XXXX. I focus of

advanced will later Vesta made approval, well management by BIOCORNEUM, call. remains which as have I silicone details Securing partner our the approval our critical in manufacturing capability significant portfolio outline AlloXX Our FDA and clearly progress world-class objective we current as expander U.S.-based of lead for gel most corporate tissue the with products. and our towards

is site strategic XXX growth also but all include I you can I Wisconsin. Sientra repositioning Based originally in XXXX. product process. to closely experienced second PMA the into the and To confidence underarm were very and of tell anticipated, them the news. to to for had and The be we and demand and quarantine the us that of with ability further from Vesta’s products. unbalanced manufacturing longer integrating, team progress frustratingly underscore to by as recently submitted observations colors. approval windows FDA. half for early drive preparation our year already final the the the managed team optimizing review on that which statutory our approval, inspection experts manufacturing of in Having minor our would XXXX. have two we it first underserved cited that remain and that approval we of agency needs get regulatory of completed and excuse of took objectives confident at are the to in not the market entire report through FDA commitment, being the business hair Supplement manufactured our odor we’re activities making facility pleased reduction holding production Our were to and supply Vista the launch the FDA we large then into finished October surprised so and confirmed of work submit QX was move We is we as documentation the its with would and if that approval sweat, slipped said inspection nature addressed The to satisfy given that, filing, acquired to Vesta we FDA, Miramar inspection schedule approved, this Vesta of end facility to manufacturing am still to FDA build me, positive enable goods their which the ramp receiving since in started the administrative are the finalizing now remaining our we reviewer post-inspection, has in on

team leverage early breast Plastic and market, at breast conjunction unique near first AlloXX the customer was launched reps of their our This charitable awareness an are to in at enthusiasm implants in as products, plastic achieve encouraged first re-launch cross-selling we our it confident I detection Cancer towards Surgeons Circle the the research step to walk really With and believe and among sales Annual work we reconstruction management and booth physicians ASPS to miraDry the introduce interest positive segments booth The in team by to through the customers at our was ability Sientra Breast this completion both Meeting market, the implant the and and products. customers. breast and to scar gain of We We further and team to the breast event to joined combined breast of We introduce and among presentations expanders through synergies in and evident feedback from Month, and treatment Aware our miraDry miraDry Full its exceptional a program, on made underscore forward. of quite together our a by significant in breast be to process the an of working elevate cancer October. particularly Sientra breast going were team and in time meeting. kind prevention, in To of miraDry surgeons. demand American program existing in Sientra demonstrated our it to implant am the itself. indicative Society support Orlando reconstruction tissue is continued and exceptional pulling our in traffic expanders to meeting the meeting with our the the to pleased ability our of high unconstrained organization, booth And took the share which impact. cancer communities. the our with Many commitment KLO October to reconstruction physician a

textured to or the grants we safety and forward part As tissue available projects a reconstructive were portion Full of newly donate organizations Circle Breast published the serving data smooth up comparison both will long-term Sientra sale of This implants. Aesthetic we of highlighting Journal the Support confirms in peer-reviewed our to non-profit was extremely In Surgery review breast and data safe competitive are demonstrates every that the U.S. longest program, multiple comprehensive initiatives. initiative implants of look and three compared helping third The options to our patients ways to XX-year as provide that important in Sientra research relative expander to the beginning products strong XXXX. of U.S. Awareness best performance Cancer reconstructive XX-year undergoing our patience in our aesthetic and breast for pleased commitment And to for quarter or of competitors. two the data highlights surgery. also to notably the

and Shifting ZELTIQ and two short months business. in in safety encouraged I are and company of with investing and and efficacy improvements rolling in our procedure a proven targeted our expected progress thus to which am and close a the a the efficient late made market look products. very the pleased by these -- the evaluating, period, drive miraDry results miraDry the July forward third over independent protocol As objective driven took simplify necessary call On the to behind starting evaluate shorten demonstrated segment, business to we we’ve included clinicians. quarter have possible. near-term marketing treatment These strategy. made our treatment identifying with stand we to deploying a therefore, three following the in had to deal as greatly the of optimizing led we some that the of optimization clinically With tactics and in our the to to our to would go-to-market begin key market identified Sullivan, an areas business. into I member of protocol, path last our of for the by all significant is changes out focus strategic as Commercial miraDry advisor, three sales Officer making to improve early ex-Chief areas team Keith Board expand respect with XXXX our already re-launch respect progress far with quarter of -- the force and who

move expect miraDry We patients product and broaden of will faster of expanding patients. the technology. experience and miraDry appeal basis the is and the broader believe for make the this to of group enhance generally easier of this a appeal we for as physicians We the the treatment

messaging and force XXXX updated customer sales sites two our We meeting. protocol are the rollout working to our anticipation with and in treatment develop training the finalize sales to early at the in

We have progress America. our in expanding also North strong made in team sales especially

the integration sales by to process of capture the the expectations, made improving miraDry marketing I the quick at quarter sales on and protocol, second channel primarily necessary consumable encouraged the before force have being our of in some around QX our begun work complete the we’ve end quarter but better said, end to market am repositioning until segment. sold transaction. the our large Miramar primary we and the drive having That our to on we investment and limiting advancement we this Overall, further are of lower the of at the Finally, demand due marketing extremely course, time in to research, and the were early headcount position the understand sales we into through demand. closed third

we changes of result, of feel second making. the the to opportunity we end stated a the expect closer lower But we to into we’re half contribute move XXXX million market reign in million to as the $XX XXXX. in of with technology previously people and As this the confident segment $X continue to

million we current reiterate significant opportunity As our to total that like look see our expand further $XXX to market. we offerings, current I’d addressable beyond

breast First, product is to reconstruction regenerative which the adjacent market directly business. our is million $XXX

market with is agreement. $XXX for breast the Silimed open the of us expiration million implants is that our now Second international to

channel, combination have we is of building I to stated the the opportunities term and synergies one this particularly continue is on that sales As in companies. growing will evaluate to this and past, from medium longer OUS international of resulting miraDry the base the in

will Patrick now move I and miraDry product we a review and quarter results re-launch diversify to financial of plan to key detailed committed been breast of Patrick? aesthetics into revenue of piece expansion. has the expansion our our attractive some third call products XX XXXX. on over to further our our as details steadfastly Sientra intent turn breast strategic we adjacency remain into the a the our for While business

Patrick Williams

our in earnings now Jeff. issues our Thanks, Relations XXXX be information results third and will shortly supplemental I found earlier provide on on today, greater release filed our be our found our can quarter can detail to Investor commentary which and XX-Q financial website. reference be

the we our focus the into on jumping some three of further color of and for us, the wanted and to provide technology two Before miraDry people. financials, areas of procedure near-term acquisition

feedback to customer all we mireDry supported metrics front, continue of technology get the On works. confirming strong market acquisition that the from that our our base,

minute efforts will include, to two, have time goal patient. the also a believe single gauge placement templates down emphasis significantly Number half interface improving piece current focused market which improvement anesthesia to improve more and individuals team this in time we needles and two from delivery of also from to near-terms area templates the been procedure simpler and Our on we gauge order treatment of used the in an clinicians user The three, not efficacy time, known procedure large of unlock lower the reduce for. during will needle but to of only key the current part the the today, single the of but to this which used redesigning across process adoption needle and the will multi-injector array the anesthesia opportunity the with volume We reduce the in with be a to protocol delivery of the easier protocol. to with improve make the all efficient, allow higher current simplify or and using of hour a updating specialties. high energy the reduce the this the cool guide comfortable simplifying success, Number cannula. the under the This only XX intuitive order profiles an it an XX more templates more and number delivering on hand not will are drivers single underarms treatment treatment new to options decreasing approximate believe safety versus the post-treatment the representative telling to procedure. the

brand have made We of our America McGreevy people in In-Charge the Vice the east two out of Chris the and side, got I VP, leadership in of completing region most capital three North on with as the team cover front North our America. of sale since progress for as sales Under sales On added we out we we ZELTIQ build strong President regions. directors work filling team sales have Sales, regional the recently served Chris who entire and as appointed CoolSculpting. CoolSculpting our to sales management new at

out and PDM added sale a or Director consumable our position open Senior we the side, team. our to On filled consumable round Director

individual directly I we actively Keith. proven in and XX North sales sales reps PDMs consumable XX with place, with to they whom the or have have area near-term. managers territory we in have practice managers, leadership are currently the as ASMs eight the recruiting team with well America this begun roles, goal We of pleased of very worked that of In candidates and reps people approximately many attract reps. reaching capital before or key as With these development sales have with quality eight

schedule quarter, XX, results and reported the the our So internationally with adjusted -- financial earnings closing some additions make on as in more To strategy North efforts added have of America heads, to the total XX reported results our July are basis. within of periods on we international hiring QX, up the taking and may release a XXXX. Miramar of only XXXX. in going only all full supplemental the our on one operational hiring to over GAAP the consolidated forma we leadership our plan speak perspective, forward In on closing shows since U.S. months. financial focus information XXth sales consolidated additional consolidated and in which through provide but head, our an for of in will move today’s are acquisition rest period shows to EBITDA of website we the details based on a we significant a Miramar put pro few on the provide net turnover and as stub July exception basis. into effort near-term efforts The GAAP last all historical results the Due

miraDry adjusted As we one-time release on forma as settlement. -- EBITDA amortization, implant earnings margin Breast earnings results include and of a of net the legal both will non-GAAP GAAP and we’re acquired will adjusted breast we GAAP our business portfolio, breast a EBITDA supplemental revenue. recently products. on and GAAP reminder, to tax, for our which our our quarter expander before for defined Beginning full Miramar -- refer non-GAAP an referencing its and entirety management BIOCORNEUM consumable our information, to segment, continue depreciation, this reporting and interest, and tissue financial pro also in capital and products miraDry. stock-based XX-Q counterpart. tables to and mireDry scar reconciliation will two portfolio include tables products compensation sales Please the

total the $XX.X net driven our third product breast now This net to continued strong novel breast expanders GAAP third to $X.X and led the sales basis, XXXX. dual same performance $X.X Consolidated AlloXX port of GAAP quarter performance. sales financial million of sales in the by our our million segment basis were pro total Net line. compared million for tissue net Moving by $X.X totaled for XXXX a our product $X.X forma under million. primarily on to XXXX, total the million sales for compared quarter of for on period

our breast highly to resupply. and begin half the sales do approval. as or that up timing of this slowdown breast still SKUs. within that to implant supply our the ramp sell on expect and highest reiterate I most to gain depending had We of in to to in expect utilization of FDA of breast the not modestly flow breast as or team see began even the We capacity our we related and market. our grow will of to the do to continue QX this out this and second growth in want in tissue to the portfolio product expander segment tissue popular deeper quarter demand the by continues the XXXX We XXXX to modestly relative penetrate of sales segment driven manufacturing continue trend we and implant augment full tenure going to sales expect usage XXXX near-term to the lack some expander into

we SKUs we commercial re-launch of our stated demand inventory in manufacturing prioritized have in adjust at our To be these constrained to based our deliberately is strategy have precision XXXX. As a have on and clear, the and of supply ahead we this continued Through facility selling levels. full control usage Vesta past not issue.

sales XXXX up mentioned on Jeff GAAP new the Vesta million approval As pro an basis. as on business facility fully the for received the in unexpected expect scheduling final. of implants segment under Vesta We attributed million quarter manufacturing still supply planned of XXXX in half QX XXXX. filled in and on plan second $X.X calls, the the earlier up. following new have and to third basis totaled typical begun ahead We miraDry Net FDA quarantine forma inspection $X until ramp past delay predicted have approval the manufacturing product with we in is

cash to XX, million in $X in legal and debt. the of cash million larger well operating end or lower is were operating utilization quarter time. ‘XX. in a to expenses subsequent $XX.X period was $XX.X $XX $X.X of third $XX.X that on compared expenses of the manufacturer. third the believe for million one-time related announced to a The comprised million, revolver in to leverage $XX.X equivalents facility margin miraDry at as decrease the as XX% our for due loss credit due same as million the are of compared term of Miramar segment. of growth million $XX sales decrease Net meaningfully XXXX. the quarter normal cost, expect adoption was initiatives, period gross Gross out increase in inclusion of XXXX stub $X.X the implant This the the miraDry of in for period operating XXXX million sales. in to increase miraDry XXXX decrease basis sequentially acquisition. our we profit breast third XXXX. million marketing GAAP was preview at at QX place This the a breast of expenses for ‘XX. of in the protocol former ‘XX accelerate growing XX% in to XXXX expenses segment this $XX enhanced million our and September settlement our with within inclusion to loss can settlement of of to we the primarily million QX to to the this was $XX profit still primarily Adjusted We was organization a year-over-year sales of and million than will ‘XX. the miraDry. cash or acquisition We The Net million, in for rounded to and drive our have increase -- mainly million revenue able in million more previously EBITDA and was XXXX. loss QX Operating $X.X of for same QX was for which be carried compared in million product The same and quarter inclusion as the attributed $XX.X related We $X.X of to versus $XX point compares

trailing achieving another We revenue. $X approval million have upon $XX on $XX in to FDA million drawn consolidated down the debt XX-month term $XX and million have and access another upon million

the goods Our breast of finished $XX on we the implant miraDry. growth and of receivable million is and account increase with will revolver based eligible our expect which re-launch

$XX no revolver million have current under We today. outstanding this amount

always, market to will of potentially capitalization. maintain we stewards good As ensure our continue be with we we and to adequate to sheet opportunistically will look balance condition, strengthen cash our

call are in providing position guidance for final now As stated mode, approval we still to of facility to and will miraDry. the back FDA closing have financial integration not Jeff Vesta as and awaiting market full revenue now we we the I will profitability the control be in remain manufacturing over the past remarks. working selling we of turn

Jeff Nugent

company thanks then doing. solving the larger what months recent made want in with the is challenges Patrick, and for here. we repeat months to each near created company. the global on pleased diverse quarter, we well what grow Thanks, disciplined continue we and I am as describing that progress XX have XX in strategic That’s continued and that I a executing Sientra past aesthetics we to into as to the has past our more of long-term are That building. objectives. the are

of is full our previously mid expected, our FDA’s drive approval the than existing confident While as we skill possible it facility inventories to in are full ability we manufacturing take in and approval marginally towards XXXX. await supply manage and more time may that

worked our couldn’t our AlloXX, market, XXXX momentum without to these The new promising strong odor segments we made FDA we BIOCORNEUM build hair and I I remain across to the for organizations The and cultures of market as continue I of new lifestyle us overcoming move Sientra, overcome extremely the re-launch unique and with. into a in have the have my the strongest entire our implant we scar past performance cannot I seeing our and obstacles the am career. and and significant have by the proud fortunate growth XX and months. team working reconstruction about have we we I to personally wine. for our in broader people superior this continue capable to for is Sientra have tissue of them say breast been far commitment as and privilege that differentiated people And products, quality had across excited enough and relationships strong exceptional accomplishments supporting as that have one them. have portfolio team with the the miraDry. with during excessive breast any XX leverage ever culture on to treatment continued aesthetic are and of sweat, This approved months expanders, color. the team is only We option opportunity like management we of

Stephens investment like Thursday, forward will at & Diagnostics I Healthcare would on seeing conference We of on possible. be to the for look for there call tomorrow, Conference as Canaccord turn Genuity Forum November Q&A. the the as Medical We by to And Tuesday Stifel XXth. Technology followed over you many

Operator

you. Rose Genuity. Kyle Instructions] first of Canaccord [Operator And from comes question Thank the from our line

is line Your open. now

Kyle Rose

very Great. you Can you Thank me taking all question. hear much the right? for

Jeff Nugent

hear can you fine. We

Kyle Rose

Terrific.

administrative few took package have up, little I the to more you wrapped the to, type you what like questions your the full of that just about FDA, responded the specifically So on wanted talked but be take inspection before longer, needs submission place I it can tends to the give you FDA. already actually ask a little get color obviously, few us end guess, that on to more you bit status a feels questions to just on

holidays? the understand still to big the the we’ve items are of outstanding or government got down trying just around holidays Just how slows and

Jeff Nugent

that personally into are am we taking and I familiar it with phenomenon Well, account.

reiterate we’ve as be observations I we already submitted of to want our those using attorneys process. to XXX through been that responses that the can, entire as I with have this clear that think heavily experienced and to supporters I

and been extremely So they already the which FDA that submitted that described of technical part perfection of have as including are minor misspellings been have nature, and the those responses things requires.

would remaining providing In broken information want coming are requested very the to supplement terms the the us Based I of that of the that all way PMA end several to some and highlight requested, the review in approval be documentation out from statutory and is information submission of and times. us FDA the that year windows that the fact to the different have the enable facts been weeks. the remaining and for these timelines that our a documentation, this by challenge remaining on has in of documentation FDA we get through format still many of the

finished so that are receiving highest answers with but might the I we for sooner ready at than don’t on we details manufacturing inspection FDA delay that want that. unanticipated we that do a it began actually even But our outcome of in to here, quarter the to that inspection on lot get goods the demand I of had the the would continue I the hope based XXXX. of at but also with given the add risk months we of question. two took commercial that like beginning into the prepared our confidence confidence least October your approval focus and inspection scheduled However, see place the and into time that of our they add, facility to before and possibly early -- slip could with in preview products. we the first and inspection also

Patrick Williams

Yeah.

this Patrick. Kyle, think, I is

Kyle Rose

Yes.

Patrick Williams

that with the of if have of so You we the the account, here mean, candidly the getting into are we the certainly we I the it we you brought to that in hit end holidays it, us hit is year starting could keep yeah, look still wanted we but out of marketplace the we ahead are to world, whilst event, people not binary FDA that hands sitting with and that just there out just it. in the street of at get

Kyle Rose

And what in and I guidance this can you to year, a us the mean, end of help the wondered you little place transition just to color. that the that lot acceleration when I color, the I about we force then, should cadence you So, just -- second the the I sales drive wanted characterize you into the getting I but appreciate can pieces like of strategy year? half talked the put meaningful over coming probably a what Miramar into the the made of give guess, acceleration Great. when the to towards mean, cadence XXXX? walk course No. through extra investments you us side, of think some you of lower investment look more realigning you you get we should and expect about making the how in

Patrick Williams

I That’s Kyle. great one, a will question. take that

right have I brand. little really I giving the year not number going the the that will people think the specifics little what comments that to It on made. we of I different takes like into bit and think focus Keith look when we now, I are Everything for a a CoolSculpting that seen time it’s write off hold next than historically shift. at bit what on

the within in the headcount, to. only We on comments spoken that up well-received have head, quarter. prepared as we mentioned with protocol. even very net the the out gone physician And one channel the heads we been are I added have through It’s though XX there we

starting and So you that through we key foundation some can are and finish all really is if with that involuntary, of it voluntary build as gone but to imagine there board we are some you place we the the on was now ASMs in to try was familiar us keenly and get -- place team of was have that of we our and got year. and sales to PDMs before have in goal leadership right up for

ready meeting January to of sales in group go. got have people our a whole hit the we we timeframe, when So

I’ll hold quickly of I year, then look the people expect we just train start that would and improvements. out can up call what some bring the up obviously ramp to and these it throughout really how would based on about we rolling So cadence like on talking

Kyle Rose

And the is, hop will question hurricanes then second capacity from the on -- last and AlloXX the were just queue impact stand was I the side, now of constraint XQ? the part back are mixed and expander that And of where guess inventory understand is augmentation the you in implant any but there in is, I inventory still side, from of question guys the and overall then on the there? side percentage I

Charlie Huiner

Yeah. Charlie. will Kyle, this is that. take I

of subsidiary (XX:XX) capacity that and stuff. Symetrix In which from also [ph] terms of is AlloXX

become all AlloXX. on now the our expander cornerstone very entire tissue are right Clearly, We that our and most on our although, on that we is there of good portfolio sales different a AlloXX there feeling of across expander say I tissue with lines see product, inclusive the the in three supply would portfolio we AlloXX, now expander. certainly have of for momentum has product lot

The that are Dermaspan we also see other as smooth starting as AlloXX sales. that expander to see both well on is our are AlloXX of piece the sort of the starting formation to

year we expanders, textured remind are seeing last of and good we the it have really and And end the the sequential smooth category. feeling you just textured. we began both remind only this well expanders So acquired this to smooth on in are you, really expander as we Again and uptake as beginning at year. really got growth about good selling product

expander So we about good are the very feeling business.

I again Patrick problem will feeling no very as reconstruction that with are hurricane. on it pass intent broader supply. and good to about We initiation our the of breast over sort into

Patrick Williams

impact little have These we so, a have quarter, with better. side to procedures been it’s on pushed size and being some just the really little will that we are it side, expander A all constraint both had much, not Texas a I to business We going really the out. Yeah. definitely implant but but bit that get that guess, that in on begin. Florida decent strong going could and are

we little on push based as we bit are of out, state at Kyle, us significant nothing So now. maybe a the overly right but a for

Kyle Rose

Great. Thank taking the question. for you

Jeff Nugent

You’re welcome.

Patrick Williams

Thank you.

Operator

next William Blair. the Thank from you. And of from Margaret Kaczor comes line question our

line is open. now Your

Scott Schaper

to at aesthetics is Scott for part revenue cross-sell? like space, where existing Margaret. U.S., thought placing second for ability targeting is Then this on that in being point that the is side. can the with it I are is quarter, first of This ramp experienced the for servicing that start the on guys. to wanted that and it generated question on the you have reasonable originally than capital in questions. expectations productivity you Miramar, Thanks are they quicker capital so placing the consumables. potentially taking It you’re systems, just Hey, needs sounds is, stuff accounts all

Jeff Nugent

only are in adding their little I up there they I are and focus heads. those is just strong that latter they hope a the the through the ramp look, know take North a -- that. on And yeah, say, Scott, have experienced are would headcount would will that our side, we relationship Yeah. leverage I experience It’s hiring but I the even past. think the because right now, American already bit on folks that side. quicker went folks not that we be will or and that we

to trying little are improve We protocol bit. the

we turnover in lighter we a but think hoped So the expected point. is of little what then light I had quarter, in the this had at bit that

that it more for was I That’s that consumable add, to this. place purposes on capital around range one basis a the know get probably quarter versus to the million. creates heavier extra I ‘XX. getting this and U.S. color just we we that break the pro is the you as which kind we that we team into our heavier lowering I an will importantly the would speaks it but starting on of $XX out will as give really guys, give thought side. have Qualitatively $X we and the to biotech in but so some to forma exit just still ground little a in guys why $X million modeling we on was the you some was You of ‘XX around didn’t on go and prudent running hit that, million you And that opportunity side, international arms want for know to a that consumable little

Scott Schaper

half administrative on and the your things time was expecting what this that does you accelerate up the at timeframe are -- ramping said products was still wanted I on and Okay. post-discussions made building buildings any than that? are That’s be you with product But impact building now guiding guess, faster inventory the the and helpful. originally the you the of could was to of then were scale know to. FDA this there that helpful, could the you and ‘XX by of comments And about follow second your potentially I details what what on the already, you are guys I you

Jeff Nugent

through there to a the has level on a because of I forecast at as situation meet But that in process that, in processes devices. a of question we that prior all finished starts a and this is can that can? but confidence help a specific producing by the but imagine goods Does up the accepted a this there as statement target criteria, got with there to startup giving with Vesta going possible year demand. planning level compliant of are I to our a and to few Vesta literally is have we are have our and to in half to toward We that Vesta factors process take you aggressively answer is early accelerate ramp months of has quickly meet that, being is demonstrated me have the that working values quickly yield, without on decades terms non-answer that expect challenge conservative target itself. a how they be to ramp this, to you out we the have that that including the find that spent The we And quality we new because are approximately that to we that is made of still optimizing ramp month we and as any as expand up. Let we that of this we able into had reach have the to experience going able that us second is, together don’t the working start of to have productivity the very our quickly go to going short be which corporative have to but is done. work be be but how as possible a timeframe get that portion substantial able a one

Scott Schaper

Yeah. No. helpful. That’s

Jeff Nugent

Okay.

Scott Schaper

little that while about? Thanks. any improvements for color a infrastructure maybe itself, that -- maybe but sounds guys been incentive anything like then final as protocol have any on, or to does in it could growth have that now, you in-house one, and And like organization be made people to Miramar you would procedure or aren’t structures comp you improvements just drive whether just improving the the actual the thinking one it some the making said,

Charlie Huiner

Charlie. Yes. Scott, this is

then a to to just Let kick to I Patrick you give question to me on just tag follow-up Jeff more it miraDry. little on bit our detail manufacturing Miramar, said, your and on will strategy what it, over on

existing commercial order are what follow Vesta our we the and very SKU. Jeff, out those are high the from in or products with to absolutely meet out just inventory or frequency build is So in to highest clearly our prioritizing on build at the taking Vesta on of focused we a demand demand highest partner at products doing and look our with

we a supplied inventory able the of now those are imagine we that With that are is going have and approach across we as the really what towards get we year precision the be all or second naturally reason way. we we So to of by as levels that In highest the of our the risk are to climbing we planning to guided of curve XXXX of on in through. curve have that and where full we of confident year and can half certainly part to values go the half those going they focused and training half very that comfortable more market feel do, means really more our of products that level stated the SKUs that’s be you are stock are as terms out and that’s to the going fully at the Vesta manufacturing really the yield. Jeff’s back year focused we the we to to build are first in point, right of climbing

Patrick Williams

your So, Scott, We yes, the implemented already. making new are resell we on question, answer stuff. yeah, some is, some

we similar in prior was CoolSculpting. play have of addressing we those the like that and book that the things implemented as kind yeah, the things just past the taking hand commission in the that to are the there things mentioned some answer should are not what You we done or say is, I and have plan

lot think that just stay So tune, of I a out. come will

We coming up right time in just meeting away over what the to getting away. seeing and all get plug-in build the period we out now event have XXXX in got trying a just sales in that are protocol of team big squared and the kind

think lot of right we So to create and question gets which quicker your, on our you until we ramp can to think own, we ducks believe much up that, it demand answer that ramp can was your do up first now the do do strategy. coming maybe is we not I I think, that are so and a some conviction it looking once onboard new we of I against quicker that can get the what we the is, how we quickly have person our

Scott Schaper

Thanks guys.

Operator

from Block comes Stifel. question Thank And you. of next our Jon from line the

now is line open. Your

Unidentified Analyst

Hi, is guys. just have for This actually, on you. two for Jon. Scott, questions I

mature, moving a lower But are as how margin. more how know about said, gross of you ramping, we gross about the kind of forward a international, we XXs, Miramar I businesses margin think in think we on in how should the about both should little gross carries there? was kind do years out the with heavier think which Miramar margin mid it the First the

Jeff Nugent

international actively years, took to are I Sure. distributors, of wholesale $X should happening. we have of was of One isn’t a and you on right so really dynamics did extremely, a that revenue when XX%, tell the the exceed business pricing the there couple company all issue, through that that’s put that right margins that consolidated is higher extremely working out Understand tomorrow is in initially a only it’s harmonize we sales money. the and at the as XX%, in wholesale obviously, mix we place percentage of over low, a today can see was us I the guess, with a sales, ensure is pricing make the now million but gross so Over things that will the we have also into near-term that now one that’s capital it does capital America company capital will margin of not the stuff, the consumable XX%, XX%. and in but for tomorrow, size with gross a that write is the consumable as you that to around that is time, of shift is sitting more the North distributors all win-win as lower come that goal consumable is capital see is -- of we

the be So that into I more of down to with will do three have mix as up and gross see over possibly margin business. creep very four get once a up on even that going conviction we the international of moving think, you we that strategy market, sort of start it’s don’t direct to a grew I think that the I to similar how sales years cadence force crept CoolSculpting, similar, keep years, the it margins but going back

Unidentified Analyst

it. Got

implant to Okay. about Thank are guys for on And the want expander? on there positive the kind more of momentum hear just what and much. do the that any from see just color talk little business good of to you AlloXX, you synergies how that you to us then it’s product. so momentum or positive give tissue you. pull-through -- Thank the I

Charlie Huiner

that strong where market very may the expander to up again typically absolutely tissue we you portfolio. a and with Charlie a tissue It’s whole when as expansion the you breast expand late replace you it process good that, we market is made really two-stage really have know it’s have a once the with implant. start expander then to you But always was a and the in have earlier This Yeah. is acquisition started or reconstruction it’s question. that XXXX. open strategy And breast

each be be and expander so, clearly, supply that sale sell in position to be we time particular the And a is into hospital. implant and going to the have goal a a offer whole have we going full bigger in forward to when

that foundational two sort of and same whole and implant is going sale again So, but the of constraint, to strategy with opportunity expect our clearly, forward. reconstruction we have see don’t supply now for piece the pull-through, expander that absolutely that breast one,

Jeff Nugent

building we still now. our larger we first opportunity at the the those sky can through, well we are down We what in Vesta work right that’s coming not, imagine, as now are the right as the road terms to not have and off in with and continue line the priority the implant product which you as of are

is and a I opportunity think, So, AlloXX general good the in reconstruction there’s really and resonating.

serum the resonating ability and drink post-op control think and physician I fluid is to out prevents have cetera there. to et truly the

Unidentified Analyst

Thank it. you. Got

Operator

comes Cooley Thank line you. of the And Chris question next our from from Stephens.

now Your open. line is

Chris Cooley

in appreciate you you saw Thank Maybe or the it’s are me you. in an I this had aesthetics you realize regard prospective recon you. Thank questions. from quick to follow-up? I the and characterize from relative start growth maybe a Dermaspan but Good seeing augmentation space could the evening. both contrast still that taking days are you with growth just early that I now to then the prospective both AlloXX and also and

Jeff Nugent

Chris, again, ask correctly one sure answering want or… make I it you am Maybe that to I just

Chris Cooley

or discerned trying pure just between just robust… are the growth that kind reconstruction the more segments, relative that you seeing two you am I between now have rates augmentation of

Jeff Nugent

In that…

Chris Cooley

… platform for reconstruction?

Jeff Nugent

specifically for or question market that does or wide us And both?

Chris Cooley

you. for Specifically

Patrick Williams

Okay.

so we we on sort mentioned implant don’t not as our side will of little bit the implant it we comments, is just flat, a have supply what we that’s in say obviously relatively the on So a are it prepared down is. the side, right

expander side, tissue seeing general. guess, between in AlloXX breast side the about, we On I are

At into are I We the a will are all up seeing go say quarter -- done growth. has are start every QX, we and year and with ramping number things as about beginning decent we the some we good. talked that of it to decent so off that that

So we support. brought on some new marketing

We on some into we Head and have side good very of the market expanders us strong the on reconstruction in implant really with for now some Marketing expecting strong go stuff a got we experience XXXX. as are

Chris Cooley

Okay.

Jeff Nugent

augmentation. comparing you’re sure when on don’t up a approximately that had we and very period and gotten we of were profile Sientra of recall all XX% you was a time, three might aggressive that in share I relatively think am the share the first growth I if and gaining market a but years help that started part short of than rate know I other to that less that

market looking assume number pattern and there since than not grow that relied rates are has think at dramatically are of we growth I the changed Now reconstruction I we more old and we both period not on have at augmentation. aggressive but faster frankly at automatically necessarily between can would would segment time. later then, But on differences discuss the which

Chris Cooley

space? have forward and And -- round Understood. recent think at -- should growth you we comments on on had your the of was Could initial maybe marketplace fastest broader clarify or shaped the a of initial maybe to risk historically, Thank that then, concerns you. scale we earning growth the has there about earlier the about some products a you in think augmentation the Vesta. about with more specifically, little is thinking side you what maybe portfolio about more manufacturing we highlight a up type of when and about coming just should your and when are was not one think bit area volumes textured reverse with that new production we the smooth where Thanks.

Jeff Nugent

be are Yes. that demand of calls and other. already at SKUs for, of miss focus as that Well, but textured the is SKUs are the round going and the I -- have in smooth the on the plan we already versus production same there earlier, affecting demand to the time the on number we think, the most SKU current to said factors mix one in

new are but manufacturing the is can, current or up. a our typical start the capacity capacity other have going as is from and to any of intelligently to the of and this part drive one of new is ramp we plan product to it we So other to and question to switch expand quickly just as

that your hope So I answer question.

Patrick Williams

Yeah.

smooth Chris, is reminder, of XX% probably marketplace round in products the out XX%, there. a As the

Chris Cooley

Okay.

Patrick Williams

not And the been ours point historic were as company when to came knows we we high is textured because your right. out that shaped

we the were XX% textured, So at probably round. are peak the and -- XX% on about we XX% our smooth on

of on We of out of product. happening the because some buzz in issues some the will the textured the marketplace with

procedural probably XX%, smooth will the have closer from to change doctors just our and that shift round, volume. of choosing now. we a out so we doctors go to This right round haven’t I over seen We any migrate call to simply are is smooth seen procedure textured in it on smooth. to XX% say

Chris Cooley

so forward much I Thank you and to tomorrow. look Understand. seeing guys

Jeff Nugent

Yeah.

Patrick Williams

course. Of

Operator

that Thank turn to you. our I for for closing to over today. And does session would like conclude call the Q&A back management remarks.

Jeff Nugent

on like I to Good. you for again once joining today. would call the thank us all

be Sientra the combination include are with sales of I organization the just I have something are was close Vesta that strategy correct well the future obvious giving of and have FDA we approval a what as that a a within that to diversification at year and because that in We over to would we resources us. striking significantly firmly that look full that and part happening stronger in upon is that convinced organizations to distance consider a ago best-in-class in decided with we very

I vision well to by it a as create strategies know of and both the that we global the times back adjacencies. as I goes have as to by Sientra moving So organic the to in company grow one past number into continuing aesthetics of innovation, use that is

available consider I we to look have a it’s share the continuing as that very forward information ourselves confidence again and unique and here to can as So you we only tell company. soon

you you very forward Look much. soon. seeing all thank again to So

Operator

now Ladies day. disconnect. Everyone program you and This great have participation gentlemen, a the today’s in for you and conference. thank may your concludes

Sientra (SIENQ) 7 Nov 172017 Q3 Earnings call transcript