ESTA - Earnings call transcript Q1 2022 | Establishment Labs Holdings Inc.

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Operator

Good afternoon. Welcome to Establishment Labs First Quarter 2022 Earnings Call. [Operator Instructions] As a reminder, today's call is being recorded. I will now turn the call over to Raj Denhoy, Chief Financial Officer. Thank you. ahead. go Please

Rajbir Denhoy

and me operator Chief everyone, joining for Officer. Thank is thank Juan With today our Jose us. you, you, Chacon Executive Quiros,

Following your we'll our questions. prepared remarks, take

you These plans I Establishment outlook like sales. during begin, development Labs' statements call forward-looking federal financial meaning include and and based product on within will made and include securities we Before laws. this to remind These timing by are that for would forward-looking current risks management the of company's and expectations statements the and comments statements on uncertainties. management's involve

For our website or factors other and cause establishmentlabs.com. most available quarterly reports recent a encourage XX-K from uncertainties performance to principal are on results our I our materially annual Form as differ and affect discussion well of Form XX-Q as actual these SEC on the review that and which to risk filings at statements, may you

turn or call. device to Implants product Please XXXX. Jose. to As my revise from information date of time-sensitive The to the support a reminder, the required as Except it by exemption events approved. content States. With the X, update this trial in is Juan a our regulatory accurate the our call no CEO, or that, for is and We law, conference authorities FDA to approval May to obligation local reflect to contains which this only Labs are the after products broadcast, the as clinical of of Establishment any date this over pleasure live circumstances geographies seek Establishment to undertakes statements the specific expand otherwise Labs call United regulatory undergoing received an check continually for investigational in of Motiva availability.

Juan Jose Chacon Quiros

over company. remain the million, continues quarter you, I increase and everyone XXXX. of This a totaled of first new XXXX $XX.X Raj in quarterly to is healthy afternoon, first good Revenue for XX% is safe. a our hope Thank and everyone. quarter the record

and developing design continue. with far technologies Our to for on new additional will categories market these see performance expect markets We a sustain far are help market the and aimed gains we importantly, options. growth empowered new detail the in know women focus continues innovations differentiated we moment. first our with key that science of current our on our on quarter based a and today. will singular Most our highly our share superior results be gains provide at abundant to future Raj clinical creating as it and patient-centric beyond outlook

Before highlight health. I several I the women's seen The company's X past seminal him, history weeks our of to over like improving call would several have events. in to recent events turn

augmentation presentation the was was primary data the this these Dr. of XX. X-year first of The data by Principal presented on April the our clinical in San at of the cohort U.S. Investigator IDE Diego Study in Meeting Aesthetics Glicksman, from The study. Caroline

the reconstruction. new surgeons in contracture Motiva the real-world in of data expect changed the results and are X studies market. Implants is over standard results have are we the Motiva from seen mirror a should rupture performance years another seen sub-X% have we confirmation women have Motiva breast what absolutely As Implants in XX impressive that implants. across creating with breast capsular The in the study, U.S. and numerous aesthetics at as years rates million X with they over and the past

been This XX% very about world have meaningful Estimates and has United have share premium data entered a pricing market. single more making in I we the be we than take markets. think now up geographies. the XX market other compared we in preliminary to the that of United the States with every cause for are market position States true to certainly optimism in should that are of a

success will our company. in So the U.S. obviously for important very very, our

to our optimism take share market the extend ability though. think I should past

again not We aesthetics XX before, are the itself. the on the think that their than United years, making research and grow can extensive market have past how before and abroad in question continued women reconstruction. we but now that choices own over States can in doing breast share and I much again the proven More market take we ever is

are mirror be it markedly may multiple results than improved possibility that with is safety of presented larger today. data and times believe goals, women market As their this the we

partner, event innovation-driven flow Oaktree business with growth know cash reach at over of invest strategy believe this and the we fully as is develop The business very XX. on the and With we our April us the on second can and the Oaktree is secured understanding innovation We've deep prospects our next financing of science breakeven markets months share few financing the our financial we in past and and funds over for team decade. our lending seminal in Capital to our investment, we have passion new new solid they a model This technologies. and front new even footing. gotten

we to in we with We and forward I'm module FDA discussion noted, with for submission remain data move second X-year to our submitted As active the you have from PMA the agency to with with study, review. our may continue have modular pleased FDA. the the our announce

during the in on of also trial the trial this implants schedule we have the May. reconstruction and cohort complete remain We month cohort expect to the remaining of complete to the final of

Motiva new will after coming technology and comfort belief of tissue used mastectomy. take have Flora adopting during help We with and in surface aesthetic is without advances nonmagnetic, this allows ongoing. By technology launching franchise, early recon RFID-enabled making will artifacts of a their that stage self-friendly options time towards efforts many and being we Adoption add been an but improved users into MRI with potentially including healthier smooth patient countries choice. oncology it breast for their of for other over their which progress on to available Implants has our radiation cell our are have formation first-of-its-kind the the port time this Flora women capsule encouraging reconstruction can the and also recovery. United Flora is early Surgeons our commercially features expander. expanders the patented treatment of in updates support Flora breast our tissue unique expander our journey. tissue Flora many imaging noted mark expander during launch over opens Non other expander States. months CE additional Motiva provide Europe

with completed these track future. aesthetic ideals win reconstructive achieve continue markets enhancement to recon Establishment expanding breast our in to in as well this work last April tender continue reconstruction Flora Motiva in In consumer surgeries XXX-patient democratize perform the step offer and our the in sharing is Mia, We are minimally franchise, will Labs Europe in tools worldwide. you aesthetic where to contracts cases as techniques We our they that X first year. cohort and and we aspire the receive the to we procedure, year. original that to women new on breast initiative, forward to efforts of breast more look new invasive which allow only

augmentation. that approach continue tools in a Regulatory support to this Mia We transform XXX% perform follow-up and our to the Europe our billion first of system market the for on with on clearance are considered update ongoing half globally this to breast than X new the of first plan outcomes a from and bring created and provide grow cases base approximately could to these category of the Mia to XXXX. plan half research, patients by the have more will previously patients that consumers. not are of that According group to new belief Motiva new had We we aesthetics of patients in continue opportunity an the soon. in our part breast

we China commercial in regulatory and clinical to make are efforts ongoing progress and the process. continue Our in

by end regulatory in the Our expectation for significant Motiva of year. market the approvals to remains this obtain

the we next now to be months. the continue few on to the which turn to in is from process work over device to a medical Finally, European medical will regulations, directive call transition over our results. cover finalized expected Raj new the Union I to the the device financial

Rajbir Denhoy

the $XX.X Reported Thank was first Total million. for revenue quarter growth in the you, quarter Juan Jose. revenue was XX%.

which currency of sales reorders, approximately sales. while by and sales made Foreign revenue approximately approximately regional based inventory this distributor reduced fluctuate a From our on total global up can quarter X changes changes in XX% Direct the first timing comprised sales XX% balance. perspective, the Europe points. levels percentage of of were in

which Brazil Pacific up XX% sales. and of Asia largest approximately for Middle is globally, single quarterly made balance. was accounted market Latin XX.X% the our America total East and

revenue end reported deemed distribution $XX.X given a to first of items The historic these year XX.X% these The million period profit $XX.X quarter at compared products. million appropriate. margin the same XXXX. of the inventory was gross products was for reserve or agreement reserving for this change for fully in gross Puregraft primarily for in of expires of the Our for in $X.X result sales increase the was the and rates revenue or million XX.X%

XXXX. of of quarter the in million ago first slightly in the approximately from in initiatives margin the continued higher Excluding our from points $XX.X normalization to prioritization up quarter increased expenses growth for compared investment XXXX. of SG&A the The and in this prices of new business million or resulted Mia. pandemic in to SG&A in fourth selling gross profit XX.X%. incremental inventory like quarter practices would X following the the from approximately been average have quarter $XX.X year the first first disruption quarter reserve, Overall first period the were global million $X.X increase

increase to these we in as personnel costs quarter increase resulted from in first headcount and The initiatives. part increased related SG&A support

in R&D medical operating quarter-to-quarter $X.X We operations declined a was Total for an from million relative spending based the year the the quarter of the period. on resumption $X.X for to of same ago quarter from of see to trials quarter increase well and continue to of expenses investments for other first $X.X a initiatives. approximately approximately primarily expenses. The the ago R&D the compared congresses. in-person million as Net again first to period. loss expenses ago meetings and fluctuate expenses due $X.X timing and this loss normalization will million activity period increase net quarter X-year first $XX.X the was million, the in million. million clinical year as growth $X.X the in ago of also was

our in compared million $X.X included of previous The Sulayom Our at Campus. cash cash end the $X.X $XX.X year. million in of approximately March was investment the first $XX.X to million This used as new quarter XX of million. position the Innovation of

the interest tranched, the On is first the of term X/X facility new a in pleased at our million option capital Oaktree life The is Oaktree us front, our partner interest science investing. X-year it X years, experience up term The at an to we capital April to XX. us loan pick fixed our have facility needs of rates lowering to new interest announced on rates extremely the gives our over $XXX to and of nondilutive loan. loan with with are over up the with manage capital to Capital X%. us cash provides excellent allowing deep payments

commercialization us will allow estimated U.S., that the half representing while position our to to first growth at previous basis construction of XXXX of million, our to more implants. approximately Campus like forecast, new funding development $XXX have $XXX Under term in growth and The technologies and accounting still XX% us $XXX drawn our million quarter the million Oaktree guidance launches been after and XX%. this Sulayom retiring our initiatives Mia. pro will than produce China with of to sales of support cash other $XXX expenses, With the for of loan financing cash and world's Innovation on of million. range reach new end like breakeven funding a allow current the our forma would in the flow for our annual also maintaining We're first will tranche a

our in As our considerable we saw first results, momentum in quarter there was business.

are and expect taking will globally environment. continue share the macro in this we We current even

markets from the in Ukraine X assuming percentage are These revenue balance points we or example, X of approximately of Russia year. For over the collectively were revenue XXXX. no

more become us hold, negatively year. also of this exchange current by Foreign approximately headwind reported for rates impact will has currency X.X%. a revenue If

situation year our far As and closely. we this monitor it minimal supply chain, have so continue relates to to we the seen impact our on results

look advancing we down technologies significant rest to growth programs commercialization prior a investment we with to drive we priority. and as number of and have markets of we As underway, pipeline see the levels prioritize our of to continue development a remains expect spending entering future P&L, the new to to top new increase

However, strong strong call sales we investments. as with I of will in line percentage our as And a down very Jose. a competitive company our that, expenses turn and We given even to top growth, should operating remains position. the believe increase financial trend Juan back over strategic

Juan Jose Chacon Quiros

you, commercial The foundations scientific, few last the Thank Raj. have and strengthened of Labs. weeks Establishment clinical

our our shown to become the next the company commitment the reconstruction. our to it chapter in in ready for with and recently story. financing breast women's global and at in Meeting completed, data and health is aesthetics the we solidly leading within the Aesthetics With well-being, reach Grounded growth we are

continue new categories I women will around call doing growth more turn will transform options your questions. to now operator create in our and create and to new will We the for the markets the for importantly, we so for world. over

Operator

[Operator Our Jennings first the with come line questions from of Cowen. Instructions] Josh

Joshua Jennings

in. -- versus differentiated to And seminal multiple was check was download rate that in rate States? and subpectoral capsular of team is, But big to then U.S. potentially And wanted CapCon just and the came bigger prepectorally approaches first. in is data to postpectorally. the of But wanted prepared low historical potentially that approach enrolled. seems you just on implants placement the prepectoral cases even open impressive kind placed Motiva's associated how the with like delta considering of more contracture, implant is achieving Because capsular the common versus the probably impressed and more the our prepectoral make a contracture than sanity how prepectoral perhaps, just up smooth mix the why it XQ even Motiva this up IDE it milestones United mix ask about a IV I better remarks. differentiate in will Motiva subpectoral? follow And trial. on to provided Congratulations trial

Juan Jose Chacon Quiros

do because being superior are Yes, implant one of think key can that design And who think U.S., Thank the based those can we the on is is the created what one is over the new do talking you, the able things subglandular in technology women you about physically Motiva the use for open we to about not this we options what years. of about are have I think plane, when Josh. have the we options the women when questions for the muscle. an active, importance behind of possibility are very to and

the contracture why a high Furthermore, the for place came of remember reason that the reason the just The second sub-muscular capsular the And breast in market. And very start proper able things, interesting were there see is there's a that muscle a anatomically textured muscle. is and it for putting plane, in rate. which behind was front contracture that. rate reduction those reduce for the smooth implants Let's subglandular the thing to contracture plane. X is rates capsular implants textured they implants. an is the called the There's implants with into between capsular surgeons did reason to

significant there the architecture capsular or has see difference due subglandular rates definitely response. we that our when smooth which we And see contracture have that seen SmoothSilk our to between implants of -- we that inflammatory no is what the that patented lowers is is surface, is an design Now the subpectoral.

that trials that have in you that is rate they're to that but compare can textured fundamental trials. a comparing also of X.X% implants people So, smooth and to pocket other those contracture it only I against combination not capsular it mainly understand for think sub-muscular

XX%, and we we we I it when of contracture subglandular So many our that have very smooth to in double course, that XX%, go solved something to with is cases, implant think the make XX% digits, going technology. is market, capsular rate that are visible

Joshua Jennings

to color before the on Can are needs model it in module. module and just how just about share be can the submission submitted? just now module? and thinking the second terms third submitted remind to can sounds just you that FDA with that the it’s be And follow-up, about What just And modular you can manufacturing you of completed -- be where any when submitted? us

Rajbir Denhoy

Josh, it's Raj.

to all We're for you just process be ready on the well. we've have the be said them, we the going process, kind along update to group we are of up As the third hope the FDA moving in when happy we holds module right, and here. where this very keeping submit submitted along and module the to right? the soon to not with modules is going that second are progress We're guys as to ready

Operator

from come Hazan the Sachs. Amit line questions of next Our with Goldman

Philip Coover

Phil on is just U.S. on side on first This and want thereafter. maybe follow the quickly China Josh's up to for Amit. there I then question on

guys just know the you past you for said that recently was So -- can comments. you track Can still on most you provided for? guys I us U.S. timeline what remind your

Rajbir Denhoy

Phil, Raj it's again.

move We around and this this ready are FDA as to a where primarily timeline receive information to do. not U.S. as difficult time very We, we a can. want this but when specific moving just specific because it. they're have again, is of purposely this endorsing approval, ready course, is a to review expeditious lot along for We line the of to is endorsed --

Philip Coover

appreciate the that totally additional makes sense. Yes, I color.

I been thought heard by been On the launched it though. year. was of the the and plan side, impression, this was in just out I the us an of idea year this going country? by Can the situation approval year that I under of that's forthcoming you've has give China this comment China. also more end the on approval you what kind visibility end given in of and

Rajbir Denhoy

we we clear think on regulatory proceed to get haven't I to Yes, need the moved approval that position. launch. very so It's we can that that that

Philip Coover

Okay, going obviously great. on that's And any It's you on just color there? the situation can give very challenging. that

control of will of Just have things reaffirm able certainly in wondering visibility you kind time that what now? given that to being your confident are outside line to feel and right

Rajbir Denhoy

Yes.

year, have definitely, the second one situation. at that concern of the that and situation think in hope of would And looking are of the is situation itself. I there, this course, we we solved by half

thing, our are regulatory that important progress. China is making in with experts second we we in I to The communication note think, and are

So that it's files. feedback have received we the regarding our good from regulators

responding to their are We questions.

So can is we in ahead China. and moving important position be the happy be access able as a process we're to market a which in to as

Operator

questions Marie next line of Our BTIG. come with Thibault from the

Marie Thibault

We a hearing wanted a to there on survey from the of sort Congrats reactions nice certainly Meeting. on the cons first Aesthetics quarter. simple very to but we're own just X-year surgeons what heard our in the and question here pros ask some of you hand? data terms the curious I heard responses on good at you're

Juan Jose Chacon Quiros

Yes.

of definitely, think is U.S. done that us have market to time, not that have we companies data. other that bring I out the did against one things at the fact

think, data very data never They've I plastic for community. seen good. So the is important surgery definitely, this this

evidence. people be it FDA trial been able it's we'll never noticed. past, a told have I and So think were of you in can't to believe that reproduce real-world those now the the data, we course, U.S. that's numbers, And in many

for reassuring importantly is that we that the help evidence going and and taking created with most the outcomes. have patients think design and that's transforming notice definitely technology -- itself the speaks are people I plastics So to

Marie Thibault

of just could I but ask field just on seen standard from then hear sort to across here Mia I of on haven't process where we I economic here environment mention regions one for past good. to we hearing I hurt And what discretionary if on MDR very Motiva aesthetic an the with Okay, the your inflation. quick worries discretionary the are in in you're heard spend, sneak there. love the concerns about market one wanted tools? think the a would

Juan Jose Chacon Quiros

to is significant to that the process the I'll launch JOY of you remember, with in one. realize we you. choices. at what a implants. to happy environment, is And Thank those Europe, in an comes will start premium making women I see what be ergonomic opportunity to best-selling seems our we're that give are to JOY. we What are that tell a it's Yes. see of just And example. types you complex upgrade in that a JOY people that to And great even

the last a very always decade in situations the So in been it's difficult very of market at resilient recessions. over aesthetic different different lot countries The through to has come past, times.

we continue to So expect that that. like

Now...

Rajbir Denhoy

also can Marie, maybe just offer. I

we incorporated noticed the heavier our Russia as in that things I as rate. the script currency the did like that comments think despite guidance, have foreign in well you might maintain and we've Ukraine right, fact

in and So of that you market year. give should confidence ability sorts our the to again what we're seeing some growth in for rates the endorse those

Juan Jose Chacon Quiros

the of for Mia on Yes. hoping happens And steps soon. that notified the tools necessary with our final it and we're procedure, are approval regarding the we this body working

course, MDD one this the kept that extremely move busy. is from the MDR the has to bodies notified Of

for to hoping this we're soon. place take So approval

Operator

next question of with from Cooley Stephens. is Our the Chris line come

Chris Cooley

Glicksman ones the trial me. the manner transformative in the [indiscernible]. here, data which just from for And for echo quick potentially and Dr. maybe also congratulations and Two team Question let conducted Raj. her the me on they

about through You of that. the wanted clarify I you're incremental implicit back from think, in X.X% to year, approximately I X% Ukraine, guidance headwinds, X% the FX, maintain the hurdling Western from half just

have MRI to expander U.S. moving the that So in forward just seasonality those well. as maybe follow-up, seeing could you're end speak strength in you compatible do and trends of then curious, now And markets. tissue I'm maybe as we for buckets my all just

in thoughts the rethought Just new you if U.S. to curious well? as or any given Flora

Juan Jose Chacon Quiros

for the Chris. question, Yes. Thanks

market. what which strong does right? well we're growth the Your the headwinds endorsing are still despite point in mentioned. taken, very is you we to in rates speak year, seeing So It the

countries commented world a we're provides see we've a doing our the softer, some business. fact that little are in past, We some XX in to nice in balance over quarters the markets some As that around the better.

when a is very we're and nice in we've balance out numbers confident provided. half represents for that of the there what year, look So complexion we that the the over back generally, the of there

You mentioned pockets of strength.

has our for out year around more you instance, than it think that implants doing right to Brazil, I growth essentially doubled right? and some being XX% very over again XX% and seeing breast of year, revenue in last business we're in So of parse just ago, the comments of one that's closer now very, if strong a we're the was many well markets now.

Chris Cooley

a And on tissue then, the follow-up just expander.

Juan Jose Chacon Quiros

Just can understand so question we your again.

your So -- if Sorry, just you're benefit of asking could repeat MRI? just about maybe you the question.

Chris Cooley

was something in U.S.? U.S. just give in you want the approved to that as would if revisit whether once market thoughts you Or with a do on I Certainly. the in here the would your you the be Implants would Motiva standalone? curious concert

Juan Jose Chacon Quiros

Yes.

that them. plans and point, market, make this along we what commented the on our to when how stick as it and in to right? U.S. launch our we're progress, both Flora at we've things we launch And and decisions get closer is going I think for to all Chris, Implants, we'll remain

to encourage tuned everybody, just front. on so And that stay

Chris Cooley

record Congratulations on the quarter.

Operator

from Zach the come Weiner line questions next Jefferies. Our with of

Zach Weiner

quarter. great another on Congrats

material Any that we guidance expect? Motiva in for Just revenue China or Flora should from year. quickly contribution this the on

Juan Jose Chacon Quiros

over and initiatives the year. products so from Zach, number contributions, new balance we of the have of do right, a

do doing to. support that you we We those things X types though likely that count rates now haven't are historically can is several so out amongst us won't to the confidence guiding but it right? growth all it and initiatives we're that of of the others, to And continue broken we're that and what gives the

Zach Weiner

helpful. on That's broader I below fully see any hearing on to just it. the how color pressures normalize the that impact -- but P&L going give medtech? line? some that inflationary spending we're the And to And that's revenue XXXX, we across can color Got then you should understand

Juan Jose Chacon Quiros

immune course. are all like to companies, of not it, We, Yes.

but we're continue slightly the that front to about commented seeing as is least higher even some at are in the costs bottom But going are very spending, -- level. areas And shipping right? or income as of is, in quarter, highlighted. statement, want profitability the spending this we our the We don't areas gross we down book the to being to and areas, in rest aren't we you've end that. of higher, look at we good So in like to we that. Primarily, we post And of margin to to it's our in you have income right? to statement very that judicious which where invest going in overinvest new underinvest what's but also of you And the us. don't have seen

that people to given gets that your stewards the And be as of have know if so want we of I us. but capital don't question to we, course, it follow and good everybody does

Operator

the like further questions who at any Juan have to the closing someone do queue. There this for over would -- comments. call to I no I'm sorry, are back I time. rejoined now turn Jose just

Goldman the of Our next questions with Amit come line Hazan from Sachs.

Philip Coover

on for Phil It's Amit. back

Oaktree point. last on those kind make was you maybe were milestone-based there the parameters achievements you're hoping, that the touch you a little kind for I deal could any in guidepost I on about bit thinking more remaining breakeven guys key or tranches Raj, of that Just when announced. comment. some you of know

would helpful. to to So you'd just comment to, there breakeven comment that just or be to that for you'd what levels about like get what anything looking make you're like

Rajbir Denhoy

things of And yet targets United of than have look launch initiatives point we detail of being us, a that believe has doing it's kind front room aesthetic in sufficient the longer-term for the flow which positive question, have. with recon the I out breast the we not States, currently our Oaktree Phil. spend those breakeven we like more the we're in and start launch actually to you lay of China, No, Mia, us. of at terms there level facility, will fair in we ready that what then and tell Yes. we're of the of into the we But construction and when that growth us new what and to we capital all a what is against to get cash against financing we given to needed believe provide

again, give that of we probably very to doesn't for so you're feel but flow kind comfortable get where looking the we we that breakeven. And are cash realize you with I can detail

Operator

comments. further Jose time. Juan I back are turn this for to call like There no closing at the to would any over questions

Juan Jose Chacon Quiros

providing Thank in you wish forward on our continued good August everyone for update joining quarterly next us and We to today's look we health. call.

Operator

today's This appreciate does participation. conclude teleconference. your We

disconnect time. of this rest day. lines your your may Enjoy You the at

Establishment Labs (ESTA) 10 May 222022 Q1 Earnings call transcript