SIEN - Earnings call 3 2023

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Operator

Good afternoon, and welcome to the Sientra Third Quarter 2023 Financial Results Conference Call. My name is Dave. [Operator Instructions] After SientraÂ executives provide their business updates, we will open the floor for a question-and-answer session.Today's conference call is being recorded.I'd like to turn the conference call over to your host, Oliver Bennett, Sientra'sÂ Chief Legal, Compliance, and Corporate Development Officer. Mr. Bennett, you may begin.

Oliver Bennett

for quarter on XXXX you discuss call thank third Sientra's financial and joining today's us to Â Welcome, results. you Financial Officer; On Ron our I in forward-looking Andy must Technology will that to remarks and statements Menezes,Â Sientra'sÂ President have turn questions Schmidt,Â Sientra'sÂ Chief and include and Chief remind responseÂ to call call Executive may Officer;Â Denise Ron, today, over Officer.Before I we in ask. we prepared the everyone Dajles,Â Sientra'sÂ Chief any our of management's These and future forward-looking expectations based assumptions events on current statements trends. and are

Our may or materially undertakes those implied or or from by to company projection review obligation actual The forward-looking differ results expressed statements. any estimate, the in forward-looking no update statements.

the be company's website.With For month Form including comment uncertainties, risks the our and refer filed available third and on ask SEC I'll a on of results. I XX-Q Form later our filings, more quarter XX-K detailed this to company's to Ron you discussion that, would to our

Ron Menezes

Â Thank you, Oliver.

experienced quarter was most consumer than The we seasonality more impact to prior This third our months quarter years. impact we had in summer challenging was and prone in forÂ SientraÂ as pronounced spending. seasonality a the larger changes a business, during is which augmentation from in much

less is to less reconstruction Our which business, seasonality these impacted trends, this vulnerable was by quarter.

discussions unique Importantly, third the surgeons. during implants. There reflected these quarter. trend but with Sientra lower-than-expected ThisÂ has not trends volumes our procedural has in acrossÂ aestheticsÂ companies are toÂ breast to been reporting a been broad

to is there summer.We breast durable lower-than-average recently highlights those a plastic diversified increase over of Surgeons, reconstruction This the believe total of over and augmentation for our and competitive of QX an from surgeons, which are other are portfolio had by physician edge reconstruction. reported accounts half breast designed believe have of growth during increase third as launches macroeconomic a seeing encouraged as those allowing the such We're needs by recovery all Society term for of market of meet breast an levels, This pre-pandemic and so procedures and uncertainty short hospitals, Sientra's but source trends the portfolio fact seasonality reported breast diversification, travel early TheÂ American We surgeons cases strategy stages will having toÂ VialityÂ andÂ SimpliDermÂ as augmentationÂ proceduralÂ volumes procedures. response we're us.It well from in the products. consumer controlled give that encouraged breast both in during a and that while cyclical also patientÂ leisure of customer our procedures'Â products in the came QX, importance our as We're to seeing supports remains revenue driven strategy quarter, the we far. surgical in of in initial Plastic that some of products to procedures. us trends lifts. returned by also by in the we example,

of reminder, more of and that suite a products the reconstruction Sientra We're launch for X up its of set those with only the for products, now As offers the market addressable than growth. platform X procedures. companies doubled X total breast new full has

turn Surgery: to MeetingÂ in at will ourÂ VialityÂ fat Denise and the at guidance those to presented transfer to prudent theÂ Plastic meantime, steps we'll over this which it time. structure to Given the macroeconomic us more position the rebounds.I'll to focusing stages review continue aesthetics improve we're we felt economy launches, of to when data on month flow cash however, the and and withdrawÂ our now cost systemÂ that early last the our uncertainty, In The on broadly, impressive clinical call Texas. well Denise? specific Austin, we take demand profitability goals,

Denise Dajles

XXX patients fat standard in interim ongoing data retention were up X- and study X-, Meeting,Â we pleased of the from to study to is points. The transfer. breast. retention at fat This Ron.Â VialityÂ is are grafting our you, ever at The fat prospective XX-month a the to study Surgery: our the largest Thank setting retention. looking present time after results new showing study multicenter first-of-its-kind AtÂ Plastic fat unparalleled with

over at As degree fat retention reported ofÂ predictability. the XX% we meeting,Â VialityÂ is with high achieving a

like.This the what is surgeons is all fat they table that believe a unique changer procedures growing in look including rapidly a confidently transfer that the presents the patient's operating a this alone, other reconstruction end will Sientra fat across from the opportunity result the setsÂ VialityÂ apart incredible this on fat this alternatives. This all and with that We fat for Importantly, implants, for now, all autologous opening need for time, result, types, an what market, excuse making implant. relocate what to knowing and for see that patient increase that me, at fat, an points. what -- the time minimally augmentation technology as first way procedures, for offers transfer knowing in the first size reconstruction it sorry, invasive confidentially breast is can procedure up truly they -- opportunities even their patients game without

also We Pro. meeting our saw tissue new expander,Â AlloXX MRI-compatible the excitement great around at

innovative available labeling, and planning, conditional additional by peer-reviewed will new in MRI forward will includes technology We interference it the to expander updating options, first the publications. ports, of dual negligible are you up on over a this prepare with access port, to launch look As the as allow expanders.OurÂ AlloXX year, dual doseÂ disturbance. is Once radiotherapy dual-port a extremity MRI-compatible company I and only tissue and benefits, with single cleared supported next-generation expander And unique market to call less this suite revolutionary a dual our on results And on ProÂ uses including adds the this since most to to be next truly faster to the expander. expander expanders, tissue portÂ AlloXXÂ design the Xx the be turn AndyÂ to offer quarter. now, platform portfolio breast peeling. of it now reviewÂ Sientraâ€™sÂ financial the theÂ periprostheticÂ space. MRI-compatible we as to the States full was tissue to port, expander builds United XXXX.And reminder, this only comprehensive This tissue we in as MRI-compatible

Andy Schmidt

Â Thanks, Denise.

As QX seasonally included earlier, XXXX our Ron financial challenged mentioned results. results revenue

EBITDA free flow cash year-over-year continue results. and we to realize However, favorable

results as a flow as financial QX million million compared Our for to cash improvement. period, $X.X EBITDA million operating the was $XX.X million prior was free Non-GAAP compared of year the XX.X%. XX.X% the the $XX.X prior XX% $XX.X with as $X.X compared expense of as $X.X for million to loss an million for $XX.X of year period. a representing prior cash Free loss compared flow a period, year usage period, usage million $X.X include of to decrease prior year for Non-GAAP XXXX million revenue reduction. an

continues Our the space. favor reconstruction sector to mix revenue

cash controlled current capital efficient contribution improved revenue continues ofÂ VialityÂ to and favorable quarter launch management the fromÂ SimpliDermÂ and is However, as period only operating and flow contribution performance we free the not free for a flow of our full a customers.Our working strong This cosmetic reflect continue results. fifth hospital discipline, combined does our cash expected fromÂ VialityÂ as includes our trend launch our provide with expense revenue consecutive small performance.

forma over we expect XX%. launch compares the million last X was for current year, decrease to XX.X%, our cash costs, usage a forward.Completing gross saw have past a past perspective, the period result street of hard to During work continued $XX.X QX includesÂ VialityÂ launch improvement margin $XX.X period's quarters, favorable the million the year. flow same $XX.X year-over-year we trend which free the as been communicating to we is the This flow going XX.X% for results performance which the or and free the decrease from 'XX pro will million The cash P&L view, from matures.

$X.X change liability period the to for and of margins of for 'XX 'XX XX.X% a million, amortization Additionally, derivative of to sheet compares charge loss in or key fixed to significantly primarily XX.X% periods includes in September period.Switching non-cash is depreciation sales. million of Cash Total it a year such $X.X in revenue previous This GAAP our charge GAAP decrease not negative by was as as in the fixed million fair from XX, margins a due QX and distribution running non-cash gross value is cost continue balance $XX.X million $XX.X continuing $XX operating and of the at effect nature; expense margins of amortization decrease. $X.X operations for This million, impact however, developed $XX.X hence certain million costs. QX cost negatively to charge increase.Total gross asÂ VialityÂ sales to affected our or $XX.X a in from QX previous quarter. 'XX, $X.X million was will know-how technology expenses, was million a current year-over-year million. for future compared was decline items. has loss XXXX, as ofÂ VialityÂ manufacturing it non-cash GAAP gross of inclusion in the on GAAP costs a center

XX, million, strong at efficiencies. down performance Accounts to AR We September million. working our up management XX, ending million from focus was on XX, at buildingÂ VialityÂ inventories. receivable continue in inventory consistent our XXXX, down December well. includes September $XX.X This is from XXXX, with also $XX.X XXXX, year-end At of We performing performance year-end million, capital see inventories $XX.X balance XXXX. $XX.X

our of a amended The with provider, excuse temporary which our received we provide breach. -- amendment, waiver recently debt revenue amended convertible September XXXX we Deerfield, me, agreement in effect finally to Finally, non-cash our -- a covenant convertible under to expense SEC a to with P&L, X-K revalue derivative change has charge been $X.X of value fair liability million. of the filed the Form us facility.The requires loan was XX,

derivative you sheet, back short-term $XX.X million to million as a reclassification debt the time, will of to balance turn liability call $X.X long-term I'll see charge to of well debt.At this the Regarding as Ron.

Ron Menezes

Andy. you, Â Thank

positive revenue the on well launches quarter results execute October performance. the early to flow While the trends on cash operating we we continued free QX feedback We're the control path from our our ofÂ VialityÂ andÂ SimpliDerm. early pleased in as disappointing, also performance improvement with as in as by are encouraged was

now will andÂ VialityÂ andÂ SimpliDermÂ reach breast launch, we for for that company.I'll turn be point the operator critical market Q&A. the a to As inflection believe call our procedures for XXXX full over normalizes the product

Operator

question-and-answer Our session We Stifel. comes [Operator Jonathan first Block question Instructions] from will now begin with the

Jordan Bernstein

questions. It's favorable hospital specific some then of there. process the some front, cash given them level say into free I you had by what How ongoing? goal hear can the there any flow in positivity And give next both been Jordan the trends year-end? that update retention on the forward And on of you Viality has that existing I have of on update there's maybe moving But of upfront. you've actually. is U.S. cash free flow current that positive then sustainability with positively did year. momentum for reaching confidence And process? on I X the us maybe ask your Jon been guess accounts? an I'll contracting

Ron Menezes

the in summer, I'll start we're nice Yes.Â I'll it's the XX somewhere the second Andy hospitals. then the does and months seeing move to over really We and of to timing some review launch It for to for RFPs. the started by right because it X question. adoption take not between controlled

sure make support to want sure you're submitting you from you the with So surgeons. the right happening also RFPs, it's make

of same those is their already rate, implants.So our this acceleration We're tissue than adoption and is seen or they the they're we same number by what at I've hospitals. implants. of par a X expanders of hospitals of last also So reorder longer percentage once very with and our expanders months had encouraged the the tissue X adopt takes anticipated. But rates little an aÂ Viality, in at some by by

going way It's to to to The our We full still accelerating be are long part access for to a of next plan ways have that's year. majority go. go, a hospitals. and of launch hospitals

continue access GPO as to more get We well.

this launch. we're of months the the encouraged X, beginning, first So Andy? controlled X by very

Andy Schmidt

Sure.

free consistent we cash in performance, of so operating non-GAAP again, a flow our expense exactly and GAAP We've structure and improvement where for And and QX our actually it. results us in have record terms shown Jordan, expense. our we place in of are, terms want

business, terms forward in dynamic performance as our here there's in that rebounds markets positive results. the Now myself terms cash whole targeting to uncertainty the timing expected as really revenue. And as how but back we we QX Ron, that QX, performance. both, going that we're in of to this seasonally recent going free just of industry.And forward, again, in the continue is look to is year-end seasonally to particular long throughout to that's affect commented and The said when challenged we looking before, challenged flow change not

in hard revenue push nature So the to going because cash of seeing It's seasonal we're we're it's but that, in flow performance again, just free QX -- right of of what to we out expect number quarters don't forecast that now. really any forward. going positive to

in The lenderÂ DeerfieldÂ as third-party a working is we'll we in forecast second on, at by the allow here nature really other element that's as terms that perfect we're think in have that's that we one-time covenant QX. use an going of dynamic our advisers going see key results over monitoring that our but first don't looking it the here going XXXX. be of expense in period don't work we're into start the time, in through significant QX with be company of QX but We in additional a QX here breach to we the is of to

Operator

[Operator Instructions] from Anthony Our comes Group. next Vendetti Maxim question with

Jeremy Pearlman

Jeremy actually Anthony. the for is on line This

questions X also from our So end.

have maybe changed all you environment, the also you'll adapt The current or theÂ VialityÂ and change the first that it in as And future, continue on business then have conditions strategy macro you is theÂ SimpliDermÂ rollout. to and just the one on at rollout then? that Based if the of usual?

Ron Menezes

Yes.

really side. summer the of What of saw the augmentation leisure the impact surgeons. and is the travel reconstruction impact potentially in surgeries also the in So before, on stated and delay macroeconomic in travel really just by the as more some by of we patients, reconstruction is

just impact seen GPOs. at andÂ SimpliDerm. VAC the through bothÂ Viality hospital, RX the of not any going have process process, for the the We committees, all It's

So controlled both falling -- launch that's brands. progressing right a within That's extremely of brands. current our both well strategy for really for it's

a nice seeing we're for So really both pace products.

Andy Schmidt

X% add, you of the year, still looking to new feel we to launches, in to at confident our we're from as We would these just both XX% earlier performance. Jeremy, And revenue these exit talked suggesting the that with year we coming that launches, when products. consider forward

quite performance. going forward it's so to look And well, we and this

Jeremy Pearlman

the because still you on was mentioned Yes, know I base, just calls. And question, then That's applied that. the reconstruction. augmentation my that up going business, to to back other follow with just I core earlier

is I know So great. that diversification it's really

a due really off the on fall seen haven't headwinds, macro reconstruction You to headwinds.

shift but there's focus don't if continue, that and the a sales have is focus could reps or Just try your strategy, ball, crystal business to we the more and if reconstruction way difference? there make do your on these of side headwinds to a obviously, maybe corporate up -- your strategy these more

Ron Menezes

We're quarters time, revenues, XX% early quarter came market that close saw Yes. grew the we And 'XX. We driven a half mostly couple breast -- and reconstruction right and the products. from well one the really products only I the portfolio forÂ VialityÂ and idea the adding adding withÂ SimpliDermÂ is stated there of an more are big have portfolio with companies for both And reconstruction. market and negotiate a makes of a fat with in that started actually, of in of over absolutely is do shift crazy. by in and At side. ADM that XXXX, to time cosmetic nice XX% other for interestingly are deal full The as the revenues from weird before, breast because add that prefer And GPOs, of us them, really of have reconstruction. that which reconstruction, enough, that What to to our to now institutions of to coming augmentation almost the past grafting augmentation as contracts vendor. that went X company. saw is one into we this we one, the it you last really strategy different not it hospitals, year, revenues they're

Operator

to Ron This Menezes any concludes turn I remarks. would to the session. closing for our like question-and-answer conference over

Ron Menezes

Thank into I look you extremely for you. 'XX has wonderful hope for great upcoming XXXX, for well. to -- everyone forward In and us. the look joining right. a very All an Thanksgiving. meantime, Well, thank everyone we We forward much finish start

Operator

Thank concluded. now today's has for conference you attending presentation. The

now disconnect. may You

Sientra (SIENQ) 9 Nov 232023 Q3 Earnings call transcript