SIEN - Earnings call transcript Q3 2018

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Operator

Good day, ladies and gentlemen, and welcome to the Sientra Third Quarter 2018 Earnings Conference Call. [Operator Instructions].

As a reminder, today's conference is being recorded. I would like to introduce your host for today's conference, Mr. Brian Johnston, with The Ruth Group. ahead. go please Sir,

Brian Johnston

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

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

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

Jeffrey Nugent

Thanks, good today. in participating thank the and Brian. you afternoon, call And for everyone,

commentary becoming third diversified and will provides partner financial and global Vice performance me on Senior detailed of leading, Chief Senior business. Development Senior corporate near- to General On of Strategy; President Corporate Paul a third our an and Treasurer; provide Chief the Little, Officer quarter In Financial before quarter our Vice first I longer-term of goal Officer, Huiner, Vice and overview to today's Williams, third Patrick make our President the Paul are our and and Operating continued performance. physicians. significant Charlie call progress and of a Joining miraDry our Manager President we on review objectives quarter aesthetic our

XX%. million pleased to of quarter, the third pro $XX.X equates in report strong First, of forma I'm to that growth year-on-year net which achieved sales consolidated we very

seen Breast and year-over-year, to the growth organically Breast I XX%. committed diversification. quarter. despite emphasize For our XXXX, results the pro Both adjacent forma that miraDry the strong pro third representing sales and year-on-year and Products year-over-year. growth XXX% strategy and growing typical Products we third our miraDry XX% double-digit of financial quarter sequential benefits demonstrate we of contributed segment growth seasonality another quarter of of consecutive technologies solid and through are forma segments with net growing of of complement to in X business developing Products miraDry's the this months and and business, sales, achieved Sientra record reported growth to want validate the achieved our strategic both core Breast acquiring diversification to continued the performance,

increased investment a priority and active Second, R&D segments. both of remains in in our

exploring best-in-class technology. we're addressable miraDry, and incremental methods expand indications treatment for to the and For our market delivery

is Our commitment aesthetics Products ability Innovation of and to the products innovation breast underserved surgical in the reinforced perspective. by U.S. our our develop unique product accelerating Excellence, that opening was Breast from innovation of Lab a the currently SLICE, quarter. and Center for effort development market, launch is category This and to during Sientra an

initiating our with market look XXXX. international also to plans launch late We expected forward in our Canadian expansion

building capabilities, most of by X into undoubtedly of recently world. Labs, Jane Jane and Jane team Jane veteran against and for on driving appointment in has build breast our Vice excited PMA brands fulfilling have FDA's precision-controlled joined building adding approval very become core broader BOTOX with further following some Breast follow in we're as Establishment implant of group the the team. BOTOX, and achieved competitive her neurotoxins marketing brand I'll miraDry maintain progress North service of the led to of the I'll to to with surgeon Products market. aesthetic another the has a Wolf Breast strategy, She and market to to new which base. sales marketing in left inventory OPUS-branded industry Her Third, its the sales as such American is and and key share segment, contributed support focus we our Kythera. business. our for September the aesthetic selling maintained significant implants of in top-tier same our aesthetics a the as the President at our the continues Products, us leadership in organization. on companies highlights leading Overall, to experience introduction our has significant strengthened of strategy our recognized surgeons April our change out site now Supplement for which Allergan our yet we to and Marketing commercial provide our launch

range-bound implant remains internal portion Products While trends this Breast from of manufacturing expectations our we've our with the we've been revenue supply initial sales through meet able upside received, to as ramp behind precision-controlled our the breast expectations. the strategy

ramp we surgeon continued our progress beyond balance Breast seeing such, rate our expand on are remains rate growth As of encouraging Products fourth the quarter to based this. engagement on XXXX in new the supply initiated through and core dependent limited programs We've base. revenue Vesta's customer 'XX. Still,

ahead, of number a the within growth our deliver back resonate of increase within to Products XXXX improve. in topical together, bioCorneum tissue and to to a supply have the treatment. levels continue ramp quarters field ability market. as we these our our I'm levels by From continues held Breast deliberately strong maintain and each breast equity demand to in efforts generation within our activities perspective, demand the segment market into clinical while implants breast confidence which, segment scar expect implants, the brand expanders related in our driven our service steady portfolio includes the a quarter further to by We that implant credibility differentiation organic give great of reconstruction-focused and now factors diversified me encouraged the

which compelling as ASPS, launched clinical of report share. confidence of confident supporting remain few and continues the support demand We or American annual in giving Chicago, grow remains surgery we've discussed, Surgeons, grounded witnessed Plastic Society our very Sientra we quarter second confidence physician data. force we during our strong to high ago weeks the PlatinumXX and or demand level meeting retake our market XX-year loyalty the in a mentioned, in few our strong. we ability us that our U.S. continued of the breast plastic implant have firsthand A breakthrough of this products. XX warranty, here is in breast Also our products to previously PSCs, during approximately points for our sales include consultants, in As

PlatinumXX patients. We extremely grows are it the Feedback as encouraging, confident of this as as have we are surgeons competitive still impact best-in-category and in the early awareness with innings well program. far positive on business of on warranty so will communicating our is benefits

We strong, also showing expander particularly breast remained excited our initiative for drive also remain growth, cycle. the to Sientra early cancer U.S. opportunity sales, in which its recipients our breast to yet breast delivered our tissue has growth proud We're allowed have are $XXX announced which share commitment Circle million about Sientra market U.S.-based implant Dermaspan expander philanthropic reconstruction, undergoing recently the record is tissue and which to the organizations. positive another and us XX% portfolio reconstruction in who Full market, Program, next-generation and in AlloXX from are support of to passionate we growth. the nonprofit helping women quarter year-on-year inaugural Demand

we the reconstruction of XXXX, to breast I'll strategic remain breast launch As the diversification. that of solutions Overall, another from call. opportunity expanded broader in And an reconstruction-related to also of implant we is the example later portfolio forward. supply in pipeline, point which detail out our revenue, build meaningful development confident grows breast expect our going product impact I'll into further this

new making in As state-of-the-art I lab. our product we're opened remarks, on my mentioned road room progress recently at clean research real SLICE, our map opening and executing

surgeon critical As of leaders. outlined, as on to conceived show that Sientra. of opinion formal markets, in portfolio the we should U.S., to specifically in loyalty enhancements dedication believe to top-tier, our and board-certified as plastic additions key global with category and key SLICE and that ensuring to we surgeons that position previously and effort also development provider We accelerate collaboration investing surgical serve as our a our we our prove our products well the as expand the extend plastic breast also in premium breast board-certified will unique maintain with relationship efforts

to X progress growing launch a our portfolio example with just in for grow our and just submitted our new key with this the for regulatory ultra-high addition report in breast product PMA our goal pleased the I'm to first solutions. time profile efforts that our the category, reconstruction FDA to as reconstruction teams SLICE XXXX, to Supplement very of regard As and the consistent breast in implant, our of

track breast to international markets. with efforts Finally, expand we our also remain our products on into

the submitted breast with also Canada a application XXXX. quarter, license goal to During Health device breast third expanders Canada implant into we and to medical during implant tissue launch our

clinical the We breast register as plans those This implants allow executing tissue markets strategic are late effort also our actively of us drive market forward diversify in breast expanders selling will into and further strong markets outside States. to our broaden accelerate our XXXX, novel for United only to is approval XX-year to targeted first organic differentiated to streams. company third in and the reviewing products, to data well. opportunities become the our with attractive international international focused revenue our the our products step most We registration look international that and sales FDA

novel strong were the business. we and These forma miraDry of well pro million, of in quarter. underpenetrated. quarter internationally, underarm assessment and year-on-year the at highly our the to typical seasonality continued with opportunity technology miraDry confirms sweat, by belief in results record colors an that traction growth the odor now as $X.X the market growth of placement large result. as the and growth hair see usually our driven XXX%, of truly The outstanding and United permanent our Moving in we remains of representing the spite sales In States reduction long-term consumables this supports third sales strong system achieved all for platform of third

in foundation focus look on the longer sales growing the As maintain sales specifically, provide driving in U.S., higher-margin medium turn term. we'll ahead, will our stronger to in system which consumable an even for we

along our than Patrick's that through perspective, some continue to leadership ramp tenure force is we and the rep sales X will average curve our For ahead. miraDry, less months currently within productivity believe year the under U.S.

also from direct-to-consumer in utilization. an with partnering marketing marketing our efforts to involves expect physicians to our expansion and which to drive co-op We strategies, continue benefit

and sweat with establish initiatives market be to connect underarm expect the our incremental research assist practices enhancing new Simultaneously, in also provide XX addition This features We're identify a million worldwide addressable like odor relative we that real-time We business without practices permanent primary are applications to interested would States question. we're solution data our and the people installed systems and traction for indication. our ability unique to expand options these in to to underarm in us bothered of as miraDry broad to utilization miraDry. indicates accelerate advantages, our execution United provide all exploring connectivity by with performance. to will market the in their and best exploring

the another meeting Sientra team representing turning at thank I'd total Paul, like call Before yet in Chicago. us the over to to ASPS successful for

great meeting positive for this We ASPS extremely Furthermore, across interest product to physician year of visualize opportunity and miraDry. the level encouraged potential our cross-selling the portfolio. feedback are the a by represented on

plastic quarter on educational miraDry our at time the further booths giving as hand will Sientra in forum, products the we with combined company's leading attending, that, for Paul? the confidence the the demand and XXXX us call With board-certified results. strong to the With surgeons saw review Paul, third first physicians over the financial floor I'll company, in for over XXX with attendance adjacent our space. a who

Paul Little

Thank you, Jeff.

reported with a reminder, exception of adjusted of GAAP U.S. are metrics financial basis. As on a our the EBITDA, all

and adjustments, adjusted EBITDA an which as we earnings amortization, legal define referencing compensation. expense tax, value continue stock-based interest, settlement will we before depreciation, margin, fair Additionally,

GAAP and nonrecurring Specifically, for Consolidated QX noncash financial EBITDA forma items are non-GAAP reconciliation a for non-GAAP this adjusted its pro earnings of information, items and please we and and/or to full to GAAP sales in our XX-Q $X.X sales was release net third on Again, total an compared refer on total net net a for removing quarter total million supplemental counterpart. measure. XXXX. compared million million basis, $XX.X GAAP the net in GAAP same pro increase year-over-year of a forma XX% for forma of sales sales a Total of to to increased $XX.X period net XXXX. pro XX% sales on basis under tables

month was Products seasonality. quarter typical As summer expected, impacted Breast by third revenue

XX% $X.X 'XX. the partially quarter, segment, primarily strong tissue AlloXX to by driven Dermaspan a and bioCorneum million warranty offset net increase by quarter. a approximately increase of will for by Within continued change sales at QX million compared our the both was for breast $X.X PlatinumXX in Breast for sales, Sientra The million totaled performance which program, the was Products be also ongoing. implant revenue Breast the which to recognition relatively soft our impact $X.X related impacted third of performance in came expanders, accounting

it and for actively We for ahead, the as expect for flat evaluate option to options opportunity the maintain our by bioCorneum remains plastic treatment As we growth performance we sales followed into as we see a of look conviction strong clinical surgeons. scar bioCorneum, re-accelerate QX, profile brand. this relatively behind XXXX the to preferred slight through growth

in expect fourth Vesta customer Furthermore, the of see mentioned, next market expanders, to Jeff supply and conversion quarter continues Products further as programs. and into relates acceptance fourth growth XXXX in We year. it ramp to and, Breast continue strong we to sales to expect implant the tissue we as as increase quarter initiate

on net is XX, gross to XXXX, segment basis for or that year-over-year due QX 'XX. of forma acquisition the quarter was $X profit period the XX.X% achieved carries July million $X.X in compared Products. in The Our on pro million, XX.X% XXX% Gross of XXXX. 'XX, a of sales, QX to $XX.X third to a in miraDry a margin miraDry million of decrease of $X.X sales business the for compared which representing lower same sales, or million, Breast profit primarily increase

as highly the margin of the overall As mix on to well Products components miraDry, within this that the will a miraDry, continue versus reminder, is mix expect segment we consolidated gross the as evolve our as $XX.X overall for dependent grow. by inclusion for we as part QX sales compensation in higher million, in or to XX%, continues This the included as expenses expenses expenses equity equity to the significant miraDry well its Operating of primarily miraDry driven were marketing higher $X.X period as $XX were new in and million, same compared and the stock-based Operating 'XX QX of an increase as of million 'XX teams. issued investment Breast investment as global to a of The significant acquisition is investment continue due to contemplated refresh OpEx the higher for on compensation employees expense the it the will and the balance stock-based of Breast across employees, of side business. our year categories. for all renewed in Products this employees XXXX.

Moving forward, in pipeline increased to segments both we the would the investments expect business. product R&D reflect of expense

robust scales front, as miraDry we G&A planned invest part that business. to including of current our the in expect our with levels the our to continue, important with On is expense expansion ensure it we infrastructure revenue international growth, it now

investments and 'XX in marketing can period $XX.X Adjusted of teams. $XX.X X sales end revenue 'XX. second and $XX.X loss million, associated year-over-year be equivalents at share, cash loss marketing, compared loss million as XXXX. same QX for quarter 'XX, of Net compared a higher to to September the the loss a basis, XXXX, for of million in $X.XX increase miraDry. loss $X.XX $XXX cash on attributed a terms $XX.X global was in were of a million, The quarter to of In of the compared XXXX. $XXX.X was of the to GAAP inclusion loss or Quarter XX, our million, in EBITDA share, and for or a mainly of per per million, of be expenses Net a expect up QX loss and with we to sales

us to necessary cash invest and business Breast balance towards continues sheet as with our and grow Our of segments both the the to capital provide flow Products miraDry breakeven. drive we

implant full quarter in until will miraDry financial the conclude was the consistent burn closing and I'll this we Products time back reentered I'll we noting at be this comments, of with that $XX to fully turn Breast million, to final expecting growth not any time have across segments. breast cash due and scale providing 'XX. our call near-term $XX previous the and Our million have to down fourth quarter, forecast at timing approximately the payments, to Jeff are by remarks. over both market we guidance for sufficient now of

Jeffrey Nugent

and Thanks, Paul. us high results a positions aesthetic company In encouraged closing, and XXXX sustained of quarter. diversification delivered of level achieving the our third fully diversified to even Both scalable, through for becoming efforts. benefits combined generated well the We've our an finish strong strong we our by continue demonstrated to a stronger global progress XXXX. be in focused a and of goal segments growth

that Breast our continues up make from progress Our provides to and strong continue scale segment servicing our to demand Products for seeing forward supply partner The acceptance balance. miraDry's validates to as the a unmet we is and and implants lasting look size encouraging progress, patient and of we are significant we supply. demonstrate manufacturing we continued technology-driven approaching strong the professional superior curves a confidence that to the and execution, this our demand are need have opportunity. solution

leadership turn with Q&A. We coming will goal seeing business continue on you strong number call the our confident a through advance our to to remain its our of of conferences build for the achieve dedication, and of I and momentum work, XXXX now on in York, thank path investor in I'm in physician beyond. want our at hard to entire entire to look and to team commitment weeks many excited, extremely across excited, I'll their for again over New Sientra also We relationships position. combination the exceptionally once our With of spectacular attaining that team that, global our forward

Operator

[Operator Instructions].

Block of from Stifel. the comes Jon with line question first Our

Jonathan Block

two got first proceeding that's a got to Maybe as I you planned into that. where from we guidance; for Jeff you. But just or going X know with Any ramp some want any capacity curious exiting Charlie, I've over going 'XX, standpoint months? X 'XX? positives into just past color on are color it away you on developed the give for more 'XX. the And I've Is one, from stay negatives Vesta? can for or the Breast to

Jeffrey Nugent

supply, we sales to our us This prepared us, way because Obviously, X best quarterly mode, to these Vesta's it's expectations behind levels to improve. mentioned put manufacturing conversion by into the expectation. our we sequentially quarters, and while I further in expect demand, or the extent breast trended continue caused I from programs the precision initial limited as has X conversion we already remarks each is has And Products Breast QX as not the it activities of still all to selling a and as throughout to And initiated we supply expect implant move remain guess have growth we programs of achieve to in implant to a increase slow ramp related behind as important issue, that's this new customer but quarter our 'XX being that well supply, aware. XXXX. you're know remains here in

Charles Huiner

everybody X less that to device working into new continue making us color. prior know has knows, ago. scale progress months who's And to XX was Just almost than little Jeff remained as them Vesta as with mentioned, of that following of years is to having are the bit #X a as They're started and encouraged, they scale-up up. and been we this this with three priority, a Class our further you a

say we're So I wouldn't surprised.

from we've begin that the the haven't to the And going would think lot since mentioned, as Jeff off those continue we're And supply really really holding and progress of initiation continue little quarter process as expectations confidence to we're confident laid have ability expectations the that come hoped do those to that them been the and we're to us. continue that into meet to I say been programs ahead And a this certainly making. is, receiving now, we be encouraged on have key in already on, programs the a internal do of by had they'd further our begin well as of some to started in been to we market. to mentioned, out I accounts along next they're year. to QX, quarter-by-quarter by the we Jeff As we that feel starting. back we've conversion do that selling that these of that enough but We

Jeffrey Nugent

that, that that be point we last results see a have important until we to optimistic date. our understand on think the programmed plan overly in to we it's Just refuse I to

indicated. I had trying we that are we're additional what could being think, we And conservative unless being So that we customers, conservative to wouldn't in terms expand correctly supply we of that confidence and, as to is the communicate them. able have to done Charlie

Jonathan Block

couple Understood. of apologies, Okay. And calls. just a juggling

me So got to bit, maybe quick question. try let I've reframe other a the and little question X then

we XQ of many us, 'XX. For in XQ that of maybe point sort had inflection into

a couple from end by quarters, but demand to You're yet change say. so markets, no in saying delayed of

we maybe if about right up, in that Jeff way fair have next moved the an think X that the that quarters? point to Charlie, still the X several or the that over plus back online Is months, demand inflection point to at months? is 'XX, to some and So picked right coming

Charles Huiner

This take me it as Let thought an don't know point. ever we've inflection I is that John. Charlie. of that,

we can three continue to more into have I as think as, to really confidence tiers continues accounts. what we've supply ramp, to more of drive thought it aggressively of

accounts be brought on stay accounts. next reps And that grow are that as to tier, The they're needs. actually focused accounts our very there's accounts. that talked portion we've about, is to And that room we orange accounts feel we to - their think do what those the point continue increasing we've calling that online. our but on in confident are we still us to going right coming key tiers continuing These remarks, prepared for you're revenue. scaling supply certainly Vesta. our believe mentioned our here. to breast service way before sequentially growth tiers really business it, implant two account continued again, of they're breast inflection Tier put a first products not as They're I X, to Vesta and from And like our the based good feel servicing and see now even The growth we from may sequential we're our are the to that business in within we

would So you now Vesta those say inventory into about being quarter-by-quarter again, X to think moving come encouraged next tiers. next the tiers into sufficient into 'XX, those I at play done to the their we're for those begin as X us by enable us. And provide and quarter ability work and programs to fourth

I mentioned an but quarters. X again, point, we don't certainly X know inflection So if to it's

where I X ago. we today think are anticipated we being had quarter maybe

you and being ability right, good progress our for so very that can Vesta. about And push at servicing the products begin core demand it but our the to made to still the demand feel with we

Jonathan Block

the All right. and was quantify the Breast Paul, to miraDry. what Patrick, the rack on you we rack three to months if And a little business. of one the quick I'll bit heavy rev that relative ago? in Was change side on were impact the international the boxes, And maybe then more can where rev ask or one

Patrick Williams

is talked familiar very We've to were we people very highly by we on mix. familiar high-quality to talk prior some gross with, performance We as margin focus that of strong systems, with, bit were continue really thing. XXX, the They And of today about international, about of system fact that but a that see on the good from a little I roles. consumable get on the course let expected. tomorrow. we're able Paul was side continue to dependent and The very that's I'll

know we this I so trying capital pulling because to bit, little you the I X-month would to take a going were when down higher not it margin have one provide whatever you significant, Breast you is in overall gross XXXX. have chance X and I but thought X call a to say I able follow-ups overall. we that higher it that to want to upside going overly going be is And to push-out, to ask see it, some through sales, revenue this, on answer do here, know our Vesta. that I am more international quarter, definitely that were that sales, we prior Products what affect And the thought we not to It's we're to to John. were we'll going able think it, is probably

everyone exit and kind rethink And little models bit So XXX of for into over a I think Paul. going their we it should 'XX to turn as start 'XX. I'll

Paul Little

The that XXX adjustment for the deferred. quarter is $XXX,XXX around was

Operator

Richard And line comes of Newitter Partners. question with the our next Leerink from

Richard Newitter

and what the breakout the looked missed give us a sense the Maybe of side, particular? off it, any seasonality o-U.S. can give just to I maybe for the us normal How you like was start of with miraDry. you Can U.S. give capital sense And us in a capital? U.S. on or sense, that? just between

Patrick Williams

We - overall on see did XX% I'll international expected, as let seasonality, were the capital. to side. on U.S. we you XX% revenue about

and from we And to we're start from had of flat sort QX anticipated the we think going the and strong that, in QX quarter, so maybe I nice to with performance. definitely We about a even ending a to very talked were to happy QX. still very down We QX. off

QX happens. seasonality would normal you So uptrend the prepared in in normally I said get that that remarks, as think we his Paul expect,

depreciation us push. just couple a the the laws help tax into there's got normal course that of out. effect come You've that of And then

good quarter. was it a So

solid, $X.X And us continuing for point, and $X.X to performance we're million right just from from generally QX worldwide to see question, overall, is going very it to strong as think grow QX crushing I is your to awareness. back consumables QX, as, now, John's continue was brand especially to on to international million very to down. drive we

Richard Newitter

Okay. either give Patrick, utilization region on That's per or base? the you by consumable or install color system, And for any helpful. growth can total

Patrick Williams

that key and Pilot say this it would what's phase. I would color. some is call starting sort awareness for we're to X, general some that really Pilot brand our digital X into I us you of in cities, give I'll move exciting still

want we're different. that to to, content, their way out, want be the sold pretty than driving off channel. we'll into some was XX, per patients patient more X as week they only much exciting talked driving get want contacted Pilot cities. X, is way listening means and patient as we're finding for the we way starting they aiming patient potential would X device And of those channel. is X these week So we is millennials. also this to to We're what are driving And leads XX% kicked patients probably is male, some you we're our we're be actually of about, we a can these to X, cities And XX accounts exactly call us right very following years but the do age they're really which seeing to that is they them. that there under company now. essentially that's this the they out to And stuff, into under which the What lot as as earlier tell figure med account, aesthetic us. XX; younger Because is the population, we're of a we've be leads, a a accounts in it, that's the that's resonate truly and heavy consumer ever do what of get

kind for in on So where as to drive early lot utilization we I But get We're that's XXXX. us pretty we into come we're could through more exciting the 'XX And and, be that. think as at. of a especially, stages.

Richard Newitter

I past may materializing could, partially if in underlying has down you on modest color think were Is models it? and miraDry the kind respect as amount. Is to maybe few been maybe gave that just kind Products right us And quarters? of 'XX street business think that's of Breast needs a offsetting street since upside the the sales, been X models the by to extent it that the least directional the where of of helpful. one XXXX kind the to that trends the like maybe Patrick, to about to have and who That's sounds with more. the way it undermodeling Okay. for that right come at

Patrick Williams

Manager of way. got as that miraDry, think a want momentum. to about it you lot I Well General We've of don't

you're think our prepared said. comments I we that interpreting

forward Canada. said, we still side. push to Jeff got continue just As Products into Breast on going with the We international. We're

a thoughts. think want is more strategy. the be don't We'll answer had Paul likes But point. disappoint us of give getting behind, to good details selling But see I'll plays a demand raising quarters no, we'll we're not guidance, We're this numbers that it's say, give and them. just there, miraDry to there Charlie And as a get precision-controlled about how different had of on we supply. great couple guys tiers. as lot did say, the my be, on up just job outlining out quarter Jeff to on don't similar position you just a and we customers at we out there. and would We as make really I to that out. it know So for of of a in And kind

Operator

next the Canaccord. question Kyle our line with of comes And Rose from

Kyle Rose

between bouncing So few we're a calls.

So to apologies question strength on a side. repetitive seeing I touch ask the here. recon But you're if wanted the little bit a in

XX%, inventory last particularly growth, And about recon constraints the on driver of business that the growth the you AlloXX just year, overall inventory said side. over as as of you're of launch kind just now should And as much next think XX% guess, how the to annualizing you how and see, saw XX full expander of wanted think I you I think given of the we months? course breast the the should implant we forward, moving a do improving? have that about type some

Jeffrey Nugent

answer now diversification these And me Well an to include reconstruction way. step moving try this recon important let year. example of right the expanders, strategy, and they've is superbly and And into accomplish an that. basics again, was done this our this of it to

repeat, big We as products a but we're the overall category opportunity. again other to to the got continue represent you I've growth. continues to above-average not see breast subset give prepared than to a But guidance of reconstruction

that, more we're very So I to result that's confident us. other than for than what specific get can't going

Charles Huiner

indicators that of couple a just Maybe of commitment.

element we expand continuing That's really systems making accounts on really important that and getting on and that of national efforts So were focused and to we on those hospital breast somebody committees approved into those we list are reconstruction. sure that the we products. getting committees - we realized through to as getting started our on build national needed breast an accounts reconstruction,

scale continue account bearing that across hospital group, national of so we're process the in give obviously, you're our in the And country. that expanders board, to the across and more to continuing breadth seeing that us some account group, scale fruit, to is

innovation times, mentioned relates the continue can those that other tissue The initiative. a as we're very mention, I thing expander it And on continuing to our of to and set. Jeff competitive focused portfolio improve say couple our it SLICE, expanders to differentiate I'd

Kyle Rose

all some expectations? looks kind getting us that comments maybe be you're what's then of specifically And you've it into or it. up or levels supply where like manufacturing frame what want? versus coming now the guess, But potentially scrap? X yields supply of of help back have behind. not I are is higher should specifically maybe maybe the Is about X that what where sounds brought different, out is think just - Great. understand, I don't you How I the us that belabor to want just but to or the quarter thought already guess, understand like and can we there would help made, with ramp they Vesta

Jeffrey Nugent

this is very the to the product that FDA I expectations. a answer best FDA-monitored is monitored compliance way closely Well line that for very is quality complex PMA with all and that think

remain going a And aside yields be. that, So through work, going is we this, Vesta. with giving of very see we Charlie as and point I seeing flow inventory examples with double high from of in well, X dramatically to steady said it that answered we're particular But indicated, to point in we've as back longer specific where seen to we improvement quarter that it real question, hard not experience delay increase This I very and we've we've improvement. confident expectations, and standards. we've we which some Vesta you inflection the at seen before, are holding than think And think is a the a X to time. that's this, take to the can't Eureka! do, frankly, we would the is XXXX plan thought

as quarterly and we'll taking this, be So soon basis two to forecast moving that it's information confident and certainly we quarters behind in being where I'll But not it get simple better our the a our forecast, as that throughout better you as XXXX. expected we for include in tell reports. as

Charles Huiner

I think that may would after made key, that realizing where Eureka! from be is as next reach point have be and amount quarter, improvements, improvements. year. begin seeing begin the thought account, are the be of of we're into is go we sort did threshold we confidence that gives able point that that mentioned, product actually, Jeff there weekly the which to And seeing a I we'd that, is that Vesta. of this We're process. And we that notion we're to in this all and programs sudden in that the or every fourth continuing will gradual receiving a we'd aggressively us That

because X, of all biggest it, a a in learning just realizing as inventory know we we where we probably up had that would really they process we've And commercial programs to And And mentioned we've to of we to aggressive. job our out. we've good the SKUs a to of go climb that, gradual with not the generation. pretty across customers a it's into sufficient be as curve. they get specific we're done more there that had ramp adjust, the months easy could insight, is X we've scaled this remarks I that ago and not demand we aggressively deliberately where ramp, would Vesta, that people be as that's lot that and which So gone point thought frankly. an disappoint in with do, That's sense, to think of intent prepared we not got as that thing our done our after we've

we've to progress little Our think the we're do, we're a of had to and up customers continue thing right as We sort that reps, we this to it's things are from seeing to been going open our continue back to waiting, and hold Vesta. bit. make

Kyle Rose

I last the just the you very strategy. was you incremental question talked Thank Great. had much for there. color And about diversification

there. here and M&A and tuck-ins mentioned You

strategic market where you just some and as the XX, being where of of wanted aspect thoughts months. to just think So your buyer XX what I a next of the opportunity, do kind valuations, as are see about in strategic the over from a decisions see are and overall how course the far you

Jeffrey Nugent

we're Johnson my can access was looking for Okay. strengths, sector. years early sales our a one segment, there's enumerate technology, and a at infrastructure, I related our advantage you pharma started. regarded take consumer of there's highly our including cetera. strengths. I our I that diversification there's what can KOLs, a answer that And to sector And Johnson, technologies those are products and strategies force, that et device because & on, And where in very primary medical I XX learned of know when

I'm So sales are just relationships, like, not know I at particularly, we but adjacencies And internally our continue a that overall strong looking both as as taking as being you'd expand by the specific acquisition efficiency of, developed external opportunities to as advantage do constantly example. we'll well that. force as

Operator

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

Malgorzata Kaczor

pace those and if to off like Patrick's look at marketing results we up business. programs all, of seems entrance of great right just the investments, of miraDry, it on follow obviously kind into But that some First arguably, at than your accelerated. faster bit what or And little previous increased quite of is those the least nicely a employers. it of seems at seen, even, uptake have maybe maybe we've like

we And terms that first all, of of what both is into types the second those XXXX should in why the coming and case? investments all, expect So in quarters and of of the the extent investments? of

Patrick Williams

good strong pretty growth it, is we in QX and obviously year-over-year a it's QX. and followed had the turnaround, So quicker going the I minds, think and by the QX reason we'll a the now why maybe call a

a As with miraDry the few are done associated segment. quite we've of referenced, us you business this before, that

not And then board but course go a we as have it. know and to the of talking marketplace they lot to do, what only pulling and management And trigger doing the and to sure into so confidence talking there's more understand. making to out confidence the and

all I board move that think grateful members very just say CoolSculpting. were allowing of board's well also board Jeff in us it, that is a of right? and couple affiliated of our forward. to So the you been of and know, with very As comprised support helps We'll

bit that's will simply fundamentally going you're I to what and last Am is is it's year tell little same, a mentioned not telling today. I Certainly, underarms. what of going 'XX, resonate. about can't to aesthetic you I'm the see think does it's going out millennial concept is name thing get doing I into of But you to starting This miraDry that talked but we've we patient. of business type in it's odor patient we and are a about procedure something understand another of patients the sweat product itself, addresses terms the this be the you, a In driving that there that new that that. that's that to but the big it that procedure an earlier practice, into owned practice

great would the we've customer. there that only with brand fact cost there. the customer, out physician within for some permanent not it's is hyperhidrosis increasing ROI product the and, great a sweating of people the awareness You solution, combine got some point, companies, say, that invasive, with these the It's

go we for think talked And right said, I I I'm we're before. I move I've but not 'XX. an building about sure through all doing start it like ready the inflection things inflection the we're yet, stuff. So as up We doing right point we're all points think for some to keep them. hold of to We've kind of stuff with to force physician sales customers, to ready got give pocket want sure back we before the to course we to got only to that our off make our reveal some stuff. not and but of we're in

on So come programs. some more those of to

Malgorzata Kaczor

more they you in could then that already there have placements these into, Or just recent Okay. where are Have to there? been unit of that CoolSculpting plastic that some a do targeted some accounts that interest? And doing going have out other maybe have of up follow been surgeons? drive been and any they the help maybe partnerships on demand

Patrick Williams

say of would with specific other sort no folks So partnerships any yet I affiliated there. aesthetic out

side of We the and so Products force-plus leveraging have brand; there. Sientra the would I are that beginning, the XX-person say, and Breast business the sales we

integrating for reps our relationships that of as So going we've PSC that that of the but steps that plastic surgeon on of an strong now, you sort first together. that sort we've begun would to I'm I specifics leave have. always opportunity leverage seen tell out to those

and you It's, derm call at I to one-third one-third where it of it, was. still didn't every what we'll we're actually and see where system noncore. plastic, through one-third QX terms look expect. selling, go it's In would

Sientra continue. we So notably see that heavier side I'll a of we different don't that. the which for we relationships leverage could little stick the that. course on with than of now it's expect great. maybe And on But maybe think the to I some would plastics, as is

take a to the little if some adopting on KOL - usually I they to more things. adopt these sooner the And podium a on think tend be standpoint. longer out bit can of them they you little

Malgorzata Kaczor

those the side rep comfort terms any given maybe, that regards on side, accelerate doesn't there's investments products some the delay, well. I it delays? in them last Okay. gain sound there the issue their Breast maybe or out? And with feedback don't you like customer that delays of practice, Vesta in the But do is a, to know, to then could And in to into the miraDry helping getting of you're rep more anything on encourage anything as given pull kind some question, of

Jeffrey Nugent

that, of as in this and indicated experience closely company, in us, the Charlie in in than previously to #X much front as earlier on, have been category opportunity/challenge working placed priority consultants with bring in the you deeper remains As provide tell who the far I them to extremely incentives, here. that can Vesta we are had

not So that on done real them. a consider I it. And is there nothing on, can Margaret, possibly XX/XX, close solely we can we're is is to relying are tell all let's you this we because holding a This as this we as back make partnership. that get

Charles Huiner

a on have speak partners. they really falling just we've parent because And I from company, little add resources good that, they manufacturing an to their daily, we're have of to bringing bit commitment certain I'll increased benefits seeing to I'll real of supply. level expertise. expertise things their that supply of increase that focus increase And They've also in in. They've to as behind. say, that, get level And been Lubrizol, us been it been and to as invested and them real they've capacity chain bring increased of

were are that all these and beginning has and we mentioned, said the to and confidence given weekly a to programs things supply. start They're process got of some happening, mentioned, to opening we we're that So going a begin of we I we sufficient level signs the up and progress, monthly us, of that by encouraged are as And happening once fluidly. these as the basis. the on

Paul Little

the We're adjustments. growth here nice It's some we're still just growth still in strong what looking year. rates believe we quarter-after-quarter just next growth sequential here add to for looking business. be. sequential to a aren't There's quarter, just business. We're not very little next thought delayed, don't we a also the flavor, growth there's growth going implant this some but talking were imply that And slight they to this that in for

tissue high next our for we're there these and year. a next business really except look this only that's XXX slight But bioC, and slight talking the said XX% XXs adjustment quarters, here. flat expander are is going business for about quarter; last we year, You at on XXs adjustments few was

Charles Huiner

Yes.

should that And that's to was I that Paul's have I but make at up all, I presented side. said. think that left that's falling good the come on Paul, hope clarification just a didn't a that Paul I great across. thing I sky certainly if

Operator

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

Christopher Cooley

apologies DTC incremental and been just both But My miraDry, calls the there. is call curious, the here, at outset. outset well the this from as between investment investments if a you indications I've expanded repetitive. hopping at on of the mentioned I'm couple co-op as spend of for

is And spend was then that us so could follow-ups. maybe either at juncture. bit how into quick incremental maybe have you And or about balance I little a through hoping think But X business outperforming the we and of that just help clearly out this year XXXX. quantify the that, should

Paul Little

R&D are The we will talking programs. not R&D, not up reported consistent then expensive that we're quarter be spending will and Our increase, and quarter investments, talking for the heavier anything we're are programs next slightly next the year. fairly marketing about. These today. be the large on here in our even just on programs, X we're spend, Patrick of the detail about best entire at talking marginal have these P&L. But sales in would more any These

Patrick Williams

I just that sweat. their product. that are of such million with There's got runway think plenty in with We've are that's that opportunity that just U.S. sweat there's now Jeff million mentioned it. people the people fair. XX bothered an for us in underarm, There's axilla, by underarms. XX bothered by

about certainly revenue-producing the not that. anticipate road, the talk for wouldn't But down at and other things some we it's 'XX. indications like where that. through us of that's those quite looking more that's So time, I not But for same.

and what into quarter. be marketing I on think kind going next Paul of year this already sales gave would color throughout

Paul Little

typically even breast are Supplements. studies implant these And not doing. on are the we're side, These PMA

cost in inexpensive space. this in they're relation on So they're to actually, anything relatively else the side,

Jeffrey Nugent

shorter that relatively of experiences seen some past. term also And the than we've other in the

Paul Little

QX. QX Long in should saw same what R&D roughly for see short, story in we you the

Christopher Cooley

any where is bigger being any just positioned you Is Understood. how One, ones to from I you terms but growth the not I the or QBREXZA the in at be relative I'm gating hindrance this gating adoption? I understand in think to one in when curious that that And look install just other the already, factor see then assuming seeing miraDry marketplace, the me. of base? from now increasing and would Or you're type answer two of awareness driving right but quick miraDry.

Patrick Williams

latter. the It's

the is haven't it's install increasing them. doctor this this base. the reps I know think awareness I and We a any come driving this. heard - of switching say from and about is to

to it setting lot of or go business to Practitioner of as This their hospital a see going But need I they used GPs excessive not prescribed with the an they're based market their Dermira. awareness our that. within General studies more about to You a topical are in and first. setting. swipe folks The some sweating, by a talk being with think actively understand we'll within marketing on aesthetic that's the insurance-based is model, drug

is The fruit it's awareness. - about So of and and it's little apples good sort news sweating it's a I think it's and we're oranges. about

part nice the that's So about it.

Christopher Cooley

from to of gen? technology going portfolio? enhancements just regarding and I any prepared about on Or any thinking review there know miraDry to themselves, and during this any then changes much the incremental missed Appreciate now make obviously the lead Breast now, business, right early to discussion is longer solely take investment next share, of needing general? think during we in there's I thoughts again about a part the about I scale the expand time process kind the investment Canada in me, that process, we Q&A, if [indiscernible] into or back terms just now, And but when or let's but either or color. another with of apologize comments implants Vesta, the kind then the lastly surface actual of when focus regulatory maybe think

Jeffrey Nugent

segments. the it Breast core Products And spread new there I effort the the of qualities breakthrough to on that business segments. innovation we've each life best across increasing as think focused far or as way the are significant in concerned, answer both is to is competitiveness given

think we that today. is I the and that against are over indicated a but products earlier Charlie also effort relatively significant available that reconstruction, a have significant a increase short-term

describe indicated that markets. finding to expected the applicable - during would we're we first-sixth research into that but I those way it, So both launched fundamental and generation also implant and U.S. be to getting international of as XXXX, the is be

can to franchises have. not already by all It's acquisition. to add businesses is say more that grow we I strong So you We by grow largely much efficient innovation. to want exclusively do

Charles Huiner

you ultra-high of business. theme announced There's his in in a our up to expect remarks, profile a job frankly, we product Chris, going just to There's organic to nice SLICE picked a do is And don't Breast XXXX the think opportunities what laid we're up the I improvements the do on next that take whole to that, excited we which see is there market launch to happen expect our lot going today. There's on, AlloX we on novel you breast grow the of about implant working team. the did AlloXX as market to we submission that Jeff picking our is year really expander on. that we in prepared out into that we able going based our on which SLICE with any to that other already the think new out that team be the is that what tissue once level is a that get

we that's focused the organic we and our core very right. and can the back stool. leg of have levels year, fulfill to organic you half and business another sequentially now nicely our growth we hopefully to Canada of international, supply approved the think and get U.S., mentioned right Certainly, the what You now. to on in as towards Canada next But add you're get where we're we

hard then of in sort a on international trying that these very we've getting Supply logical things recon, out programs got we're to enable we've Vesta lay this this from got U.S. is So great we've to But of to there, the programs organic and in place. way. we're also the take all thing very got opportunity key

Products those Breast hit things forward. business, going our of All

Operator

Nowak next comes And from the Capital Craig-Hallum of Alex with question line our Group.

Alexander Nowak

size on a other staying features you CC the implant? Is can Just this give that topic, Charlie, OPUS details on implant? Or any larger the any last profile us just more ultra-high not current line? on

Charles Huiner

share competitive I'll you hold world, want And Sure. implants. but That ultra-high height in around done at look some breast not we cases to but more utilizing is what in XX%, moderate reserve implant. case But projection the can, for than clearly or reasons. when least the the even if profile an at XX%, are with really of profile United I States, take a reconstruction, particularly high being provides

have U.S. set implants. profile in Our competitive the both ultra-high

working because effectively, this gap. focus particular our over really the implant We've because, a been, leading years a get focused it's thrust breast So such project to don't up that for expanders. been X-X reconstruction to that to indeed, and of big who of We together of profile with and implant these that we surgeons portfolio now tied felt done we've reps breast think with past XX% in ultra-high needed nice our giving intent the a we on on as for very to to an wanting become now has reconstruction more tissue breast We're get punch. past par been our we business XX% are have sense, gotten competitive strategy year. to filling on offer We've doing we've few reconstruction.

Alexander Nowak

Understood. it. we're run point then approach per we an And million rate Paul, here? that at at do a average see burn rate And of what Where Okay. going $XX today. do year? breakeven you Got next quarter

Paul Little

well, Expect quarter. million about next $XX.X run year by rate as a

for expanders. in saying early the have been tissue XXXX our we've milestone sometime acquisition cash. - we payments year Next saying one in still and We're for is breakeven also X there, one potentially for miraDry what

Operator

our line And next Anthony question Maxim. the comes of Vendetti with from

Anthony Vendetti

for miraDry. on started a question know treatment hyperhidrosis. quick Just you I out as

sweat-bothered to You've moved on odor. and

between And you little provided breakout, You're capital other if talking I wondering but if was for that. the can elaborate indications. miraDry? bit about don't breakout you on consumables Patrick, the a and know I then

Patrick Williams

body anywhere primarily bit is There lot is other of talked the sweat little you There's a have a can where we but it. or imagine parts. indications, other odor, about So sweat.

So the things. segments. for things hands Jeff say, very, certainly to But back, on there's concept these would side like focus R&D there's big are on the wanting the the chest, and I there's that. is both

a heard recurring you've all think of XXXX. probably as that for theme now I

opportunity of And - that 'XX. into investment certainly so the early a underarms, putting all are forward, the but huge we over opportunity still in split stuff. then with just and we moving 'XX It's still we on have through area. regarding some sort And have,

up worried about indication this trying So not point. another to at come I'm with

did of was and overperform equipment about continues XX% terms the international. In then us. for just said split, we And worldwide, tremendously then I XX/XX on consumables. were to capital It about say, to XX% we

Operator

Instructions]. [Operator

Our next with Dougherty Company. & of question Bauser comes the Kyle from line

Kyle Bauser

Regarding Has fresh into the miraDry significant. initiative updates were has time current Any around protocol of great. accounts? on be receiving launched one-third, reducing this commentary treatment feedback procedure that by the any particularly quite which progress sort enhancements that would to increased positive, year, utilization translate I'm this sure earlier you're able been feedback and is on been within the

Patrick Williams

There existing talk you to in same things. protocol more miraDry than tell the a accounts was didn't then do ability and that say obviously this that and it marketing to out a when to I The did cetera. maybe go accounts different it. you reengage is is a new and faster, certainly two we aspect the bit to delegatable, think et It's thing, purchase the there. out past, them have new of

in patient into unlike other the driving early practice. there. that compelling of really the stages, of type That very proposition then, product less bring, we out value a is really concept I about we're aesthetic is new and I it's to would that as of fresh see starting help. think protocol what's I resonating said, all and those where we're really the though, So truly say, really things any this a

doing males. that a lifetime when that surgery. younger, about the talked means you And is start side talking value I especially about surgery patient, of what So they're more where the plastic

very you've published we that a doing that value, or about peer Grant terms very a about augmentation about review compelling. from and job who's roles published does do prior surgery, a the else, start lot breast start you value in like know out lifetime got I plastic there. talking certainly in again, that things papers that but about lifetime and everything and toxins becomes Once talking talking of like general, he had Stevens, lifetime history show fillers value when you He prominent So fantastic doing that I've bit. quite actually of and doctors, Doctor paper a some has talked

Kyle Bauser

body part other for talked about indications just miraDry. you And exploring

only [indiscernible] arduous about you body would on seem take use any of full miraDry PMA, subsequent talk another is amount indications? that it need Can wouldn't regulatory an device, what a requirements. would to that to other Given regulatory require part you these steps explore

Patrick Williams

a off that. hold bit little I'll think on I

direction. I think conceptually the in you're right

microwave. pathway in microwave how in through go action. our terms We it of of teaching obviously are by proposition, And which microwave our mechanism value does out is I we widely a and [indiscernible], a else, to reacts case PMA. isn't, say, used this there of and need anyone taking what [indiscernible] what regulatory and and XXX(k) not But technology we're which is, is what from that would sort people

So actively conversations having this. we're like

stress we've there of again: lot the lot huge got a I'll indications. for sweat a runway. want leave in a people a lot now. we've market, of questions for of on long it So kind just underarm, We're got I'll getting it, of a

Kyle Bauser

a of are could of of or SLICE? the a Can these you're any around Breast a out rupture. I'm of of of Products sensing key with be temperature are that the about. like helpful. just in some infections out has creation facility examples sort also then, innovation consideration elsewhere. of detect been on question, lastly, pipeline the other more see Products? of For the portfolio I focus, but the shell been sensing innovations fully that kinds features would coming color means types And talk of that Great. enhancements detecting additional talked we about SLICE So to couple Are hyper-focused this example, you've implants, ideas considering more know a of to relaunching particularly Breast expect you thinking of you features within These the pressure as under

Jeffrey Nugent

assure of with Jeff. We're thinking you making that. significant products. can This I existing improvements for that great I get can't are competitive is a to again, question. more It's new we big. than thinking any specific But you But confidentiality reasons, and

in the results see You'll beginning 'XX.

Operator

like no I'm the turn conference I time, showing further Jeff to And further questions back to would remarks. any over and Mr. Nugent at this for

Jeffrey Nugent

company want Great. and support that by from. we aware outstanding We thanking than an everyone Thank And of participating in to Sientra. growth you, interest higher of we operator. platform and frankly, your a to has do. rate grow I any I'm not just conclude think aesthetics for have

in future. to you you all I forward want talking So and to again thank look to the near

Operator

you participating day. program, Ladies may all for a in and thank gentlemen, This and you conclude great today's conference. does have Everyone, disconnect. the

Sientra (SIENQ) 11 Nov 182018 Q3 Earnings call transcript