ESTA - Earnings call 4 2023 | Establishment Labs Holdings Inc.

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Operator

Good afternoon. Welcome to Establishment Labs' Fourth Quarter 2023 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. Please go ahead.

Rajbir Denhoy

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

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

is also materially limited include to that and actual most may measures the to certain of you but discussion financial the on differ these For non-GAAP adjusted comparable GAAP constant currency for to other approved. results availability. this which Establishment broadcast, which a available, which available affect cause trial financial like of your to device after and over as update measures, geographies undertakes the the performance FDA or turn We the recent date performance, basis call products it only press in statement The check Labs on my is SEC any factors encourage from uncertainties otherwise clinical principal including, exemption call.With for our measures Reconciliations of I are for can States. as remind call required XX-K accurate our seek regulatory February on Jose. may also no reflect Please and product stated authority law, CEO, by release our stated investigational of this to a live conference circumstances to the events to the as to and the our our Labs establishmentlabs.com.I'd that information company's you expand are content XXXX. day to Quarterly to from pleasure obligation which available or non-GAAP note is Implants that today's statements, Except an to website. our results, regulatory may time-sensitive review on revise website well local with as our XX, FormXX-Q, filings, Form continually risk to that, this Reports Annual approval in at United undergoing with be sales or Juan our of be if specific receive comments contains respect earnings, which EBITDA. or found Establishment be can Motiva as not Please in support

Juan Jose Quiros

pre-announced line the afternoon, and the range Raj, in we January. you, XXXX with good quarter in Thank million, of $XX.X fourth early in everyone.Revenue totaled

demand our our half seeing globally, from demand, and results While including distributors. are stabilizing lower second reflected our markets improving for breast we procedures are

XXXX. suggest throughout Our will global we market that have checks improvement continued

Given million, year XXth to growth the which United are This revenue include our does Labs. this, X% improve the a of launch not the anniversary both setting is range for guidance $XXX of founding, to States, we would representing and million of guidance our Motiva Establishment $XXX in growth.XXXX, of a XX%. pivotal Implants in significantly

approval in pending United in becoming With player true the a the global our in industry. China we implants approval States, our and of are our

achieve dynamics and significant with in model year are for business in has XXXX EBITDA to to low We we XX that most ASPs cash meaningful healthy we flow we necessary path become gross price-sensitive markets not been into industry the a brought ago, launched have positive, provide clear poised China and growth, a the in leadership entries decades. scale United with to margins.Our in Since the growth. the Motiva States positive. to an innovation also the years for take with is necessary market global well-positioned market multiyear market any than and which more will X

a focused take million. of achieving we XXXX. to cash remain We cash number cash is flow that positive this than use It less to taken $XX reiterating and and reduce in on end positive to worth steps and turning continue expect EBITDA be burn have the year of by

for position tangible steps ahead, taken our growth spending. under reduced which we can to $XX amendment areas on amendment have million we have financing. process, $XX global and week, by and returns.In business forma As The we an this focus million.Last early a highest prepare facility XX%, January, headcount to have approximately we our in cash The core to additional management terms we the cash this budgeting our million be to private operating of pro million. with use impact cash our reduction we quarter This $XX existing a can how on $XX.X initiatives was in of approximately focus credit of these the of Capital. will is less and part to XXXX. with our X/X our This be sheet third to is second compensated non-dilutive placement, updated announced improved the quarters our seen added our use Oaktree cash fourth significant the use and In bringing in process efficiency in year. reprioritized balance an the than draw of in

The first in in FDA $XX of million the States. approval United available is Motiva

on the Houston, to the was our in of surgical Texas. team of Femtech.In the MD by initiatives; Texas at in initially a the of December flow full capital, the cash helps further with made Raj in late strategy. most some moment, the execution the number Flora excellence While fourth U.S. provide tissue Anderson Mark provide this performed Center Cancer led States, the detail additional to with performance University Dr. our we of by a case first our and in expander China, centers additional Clemens committed breakeven details United cash States, it, will would of near-term should have, important I we limited availability are on our launch Motiva to like quarter but need available States. is Flora Mia the United derisk achieving and we outlook being a United

through list working excellence with the a first centers for back across the are country. XX process of We

which clear are reconstruction.Flora surface making RFID-enabled, there an this as cause as As Flora, these can includes Flora, advantage by breast PMA FDA. further cancer port tissue Motiva new the improve reconstruction, under magnet-free, our and a treatments. being can include during new recover.For MRI adopt fully breast era interference technology, by the By precision benefits well into SmoothSilk to FDA. is available remains breast a radiation a expander from that premier and breast a Implants, avoids centers patented the our magnets non-magnetic is treatable all commercially This that other of as Flora transform Conditional will in cancer oncology magnets. is defines expanders unique help our for distinct it standard labeled of review imaging and as MR Flora women disease the the

make yet and notification Our very continue do interactions expect for the agency, to with soon. to a Motiva progress. the with We given not positive we very GMP interactions receive we remain date inspection, but have agency on our regular

ready of team from Our for and inspections, have the authorities. decade is we over vigilance audits experience high in a

available and medical latest quality MDR European Rica.We United MDSAP had States, we includes Canada, inclusion our is Mia Brazil, renewal Australia list three system year, our manufacturing the at our is minimally Costa These countries Japan of devices medical Surveillance where surveillance for and continues with also of certifications invasive grow. in recommendation compliance have which in entirely this sites regulations the our manufacturing device for resulted had of the Audit, the management the latest audits our Mia creating aesthetics unit new, Femtech from category far Europe, the within So regulations. audit an breast true for Sulayom. and to

XX partner United France, and sites in Kingdom, experience Middle with have cities offer and Germany East Turkey, XXXX.We Switzerland, XX have in Japan, begin sites Spain, the have Rica performing those in plastic Sweden, and Poland France, Mia and certified We we regions Sweden, in distributors to surgeons centers opening the certified to Japan, Spain, in partnered Costa the XX Germany with Switzerland, Mia. now across

with across additional the the an XX XX We process centers surgeons. plastic are onboarding in new and Middle of Europe East additional

events women based aesthetics. place creating from partner. proof the held aesthetic consideration China gaining was first average time the X partner, signed have and the Guangzhou, more to continue breast negotiations into new and Shanghai, reinforced category surgery interest from appeal of among also this versus our new with in not a business Mia than education average and has testimonials women opportunity of Mia, world. ASPs are with XX proposition among in women to China the is events X who second during excellent who with clinics, that breast launch special quick the recovery augmentation, experience new lot a additional higher but week invasive and the plastic seeing consumer. formally new outcomes. we're or in is process XX half the onboarding capturing we our to year.On will clinics. were demand augmentation launch procedure.Moreover, the year. in breast so these Of We points breast aesthetics, of of the cities Motiva we advanced centers, X price was this the for medical Hainan.Supported the which distribution early The market minimally for is begin Mia held and still augmentation a the years for years taking Mia, Mia. the in series first It traditional consumer by expansion the traditional highest and the been months exclusive with the in paid than less best in see on prior In January in in XX% XX% top of breast we such value that, are throughout have we convenience, We Shenzhen will events of of and different far largest have China, considering

quality significantly is segment Chinese a market Our value to the in research pay that large higher highest of confirms there for prices the the perceived products. willing

markets market seen the the Japan, Singapore, turn Hong #X over will Asia. over Thailand, and success share to share we we market our We now surrounding Vietnam, Chinese South in call should Taiwan, position, hold this time.I will Korea, expect and in mirror Kong success of markets the match have the China Raj. In like

Rajbir Denhoy

or from in while a fourth the decline XX% Currency were up quarter. perspective, ago implant was you, XX% XX.X% sales, globally XX% quarter Europe, to Juan approximately for million, the a America XX.X% profit fourth Direct this of Pacific which XX% total our is impact or year fourth Africa accounted period. East in million, the and in sales.Our Jose.Total total, Asia in market Middle for of X% of From sales same global of had XX% Brazil, the Thank for positive of regional quarter made revenue were quarterly XXXX. of XX%. sales a approximately revenue and distributors gross compared Latin approximately quarter approximately the million, revenue, for was the of fourth $XX.X $XX.X largest balance. $XX.X period

without fourth approximately been gross have would Our the negatively in XX%. an quarter impacted which profit gross margins by obsolescence was charge,

margin Costa Rican colon. was labor Our exchange from between and gross higher by in higher dollar were rates costs. Costs in foreign also the the part U.S. impacted changes overhead and

the from and for increased As report initiatives were increase fourth the $X of the in like by offset million the dollars, fourth U.S. last of in new $X.X approximately XXXX fourth Average the up selling investment for loss over in quarter.Net The for in reported expenses operations the fourth from were in strengthening to million of declined quarter increase were in declined quarter sequentially Mia U.S. approximately $XX.X million, to was the to initiatives SG&A expenses same XXXX. million our we expenses from fourth for approximately compared million a These initiatives resulted higher quarter million from down in million million in $X.X due expenses were the declined a preparations an to Operating quarter the third approximately $XX.X cost fourth quarter $XX.X compared quarter XXXX. growth from prices we $X.X reduction year launch and $XXX,XXX to million, period. sequentially. the colon in the fourth significant quarter costs. the quarter.R&D resulted the $X.X Total the million period the ago $X.X the of from year same loss third quarter the year-over-year.SG&A in in $XX.X our SG&A the primarily part year of operating and $XX.X net ago reduction undertook in in quarter. million quarter third quarter cost for the from

compared million Our end as XX was cash $XX XXXX. December $XX.X to of of million position at the

to quarter. the in use million cash million, Our $XX.X the compared in was fourth previous $XX which quarter

With us the our forma facility, million.Last to the which our achieving access allow first our X and million cash milestones $XXX Oaktree, tranches sales.For remaining million XX-month of the our U.S. which approval week, also FDA totaled pro contribution facility can to to million trailing increased the States. under were milestone in January, of position the private million, access additional approval with of second XXXX, the on the United guidance Implants, $XX amended Motiva $XX credit placement amended we on in the $XX with we debt Motiva Implant $XX excludes in

XX%. to representing to of $XXX We $XXX X% to a revenue range million of guiding are million, growth

minimal have currency to expect sales a impact this results our on We year.

a XXX have to range number steps in operating of XXXX. and be of in to XXXX the expect to basis lower inventory reduction XXXX a points taken These include XX.X% approximately global margins We of higher personnel than cash levels. XX%, by XX%.We expenses use efforts reductions of targeted in to gross approximately management

As a before in to cash financing we XXXX use $XX be result, than less million. expect

to expect turn now flow EBITDA positive and call the back XXXX.I we in actions, to Juan positive adjusted achieve will these cash XXXX Jose. in With

Juan Jose Quiros

competitors, and was Labs clearly parallel products technology Thank seen innovation, have little industry. Unlike innovation you, and scientific clinical this decades. our to Raj.Establishment industry we and an has in bringing no data our demonstrate founded on science for in true our grounded technologies the have differentiated that

and China an new Flora constructing are creating is gross now new and into higher largest markets standard is category breast our highest and value technologies reconstruction, world.In States, the United X aesthetics. the in our priced the highest launching current We entirely in and in margin Mia breast markets, a

as acutely is flow creating piece and of shareholder positive possible. a cash this focused We soon get on value, to significant to are as

cash confident ability accordingly. this in next our do our are spend year, and We to early have modeled

while hand on the to cash credit fund in important our initiatives position we With our targets. XX-year excellent facility, profitability be meeting in of most to amendment have are we and our will one growth the history. an XXXX the our

clear this your the are operator company aesthetics path We year breast questions. solid and a global become will call with foundation, in entering and with turn to the for over now leading reconstruction.I the the to

Operator

from with Allen J.P. Instructions] first Our is [Operator question Gong Morgan.

K. Gong

were a China. the one little on quick than expected, a contribution expecting had a off I to previously start the bit later The teens approval in you but came low in fourth quarter.

we that's China of should underlying But about all not of for not Now, contribution some year stocking, quarterly you're from demand. U.S.? fact any that this assuming assumptions how light the the contribution your think in

Rajbir Denhoy

Yes. Thanks, Allen.

the roughly guidance we XXXX. quarter of when third we the for XXXX, $XX million lowered think about the I out coming China being talked reduction of in

out of should As expect the will a quarter. for We we the be to for think a to I this in in year. about as that's year, going to spread come contribute think point the that's what first don't place the It start, first over I right? XXXX, that's contribution X But good place think China or a X starting start. us good quarters all

Juan Jose Quiros

Yes.

it's And more the half China. take of I in reordering about for across we will increase. mirror cities Tier of recognize those are in And now in half is demand to place important the this you place and Additionally, the to in what think year, starting procedures should shipments taking holding Tier doing first our X these year as educational X that think stocking the of cities. second events some

K. Gong

set think early assumption about have broader January, do us market When recovered, how half necessarily that then of there? your What the level improvement think help underpinning the we half to we haven't And the you assumptions talked bottom guidance, underlying your assumes kind to you Just previous get range have markets more expectations of to question looks about your assumes for dynamics. but Got minimal improvement? the range? the Should weakness on market it. that and top in a stabilized.

Juan Jose Quiros

I right. Yes, Things the to not seeing these mean, about you're think the back We're in way we I seeing are I markets. is, normal. think stabilizing. market it recovery think we no, are fully

we is the of even the the things feedback some out are picking as we're from of think I look and improving. that already getting year course the are things over market up,

it, think I And so hold we do see if at will end. I stronger range, bit mean, described this terms year, right, perhaps take little over as the a towards we top us upper of the expect push to you things see the recovery, that us a stabilization bottom, longer, the to probably If to it year.In the recovery, take the end. lower a quicker for

this think, a things again, there, conservative take improve So I And but out it's kind we're year, of going from seeing point. starting to we're starting a time. some

Operator

from is Joanne question next Our Wuensch Citi. with

Joanne Wuensch

which curious I certain in of I'm And is demand, year second interesting, your it do regions? How with little my hope, facility and/or be is will the question seeing you're growth? pocketed, more higher your you? stabilization towards of instead demand this it new is then transitioning CapEx bit stabilization mechanical. behind we you in One spend think is, majority what think if about a

Juan Jose Quiros

that. for you Thank Yes.

place, different regions. and this I we this around to recovering at markets takes see the some what comments speed of us different us stabilization happening think seeing taking in

For instance, Brazil.

in but the I picking think place, we not see Asia it's right still again. up

our well. Europe, markets in demand in direct as up also We picking see

happen think includes, company seeing breast all that in course, aesthetics recovery not the and it's we're only at aesthetics, not the of and to I reconstruction. going So, but once,

Rajbir Denhoy

stronger see to. new years facility Rica, heavier did couple we were question the Costa of or we've on in on as last the we which been And Yes. your completing over CapEx, CapEx

to is work in on there As done still be XXXX, out we that some facility. look

as are noted, also, the United investing We States. we've in we

be captured we've And the being $XX I That's us given guidance for will less million of the so of this think in cash in overall year. CapEx about something use still million. than order $XX the

Operator

Our Group. from Petrone question with Anthony is Mizuho next

with Our next Cowen. TD question Jennings is Josh from

Joshua Jennings

to hoping the your implant get of from just was I the market. some on state comments U.S. breast Jose on views

for months. to but like announced coming the competitor or You for Labs launched yet, guys seems haven't Establishment filed an and time launch in Motiva future opportune bankruptcy,

think the U.S. I strategy So, maybe this strong affairs does recon change just relatively the of franchise. And state launch? had there. Flora a on your Sientra

Juan Jose Quiros

Thanks, Yes. Josh.

is U.S. implants on XX% round, very procedures of the of have with market, technology. separate what see between take the competition merits of not in is you difference So nothing about offerings And place little the to in the basis the market, smooth that with them.

So situation, slowdown overall procedures it's in of eventually, to exacerbated other I past, any the that like not back. back eventually, surprising seen around have that XX% company 'XX-'XX, that was able company. think it In we probably and higher. affected it overall, just not came of came in X slowdown But that I smallest probably But that was aesthetics the think the the that survive. it for years. But about back in goes of demise

starting of to an as fully U.S. this for of differentiated think what of the our for excellence. the Flora, hear we to opportunity U.S. And, market bring course, tissue yes, expander centers I we look again indicators. different to provides pick into up able is us from be to from expansion

Joshua Jennings

share you U.S. are the just bit investments the detailed launch -- know spend, just been closer in considering and have then that in a haven't the and the made balance you months be commercial of to your launch? sheet. of required investments detail just the But then in is coming that investments already premature updated to versus status strategy. of terms as Anything And of to and the Great. initial made execute in the move front made versus terms investments launch I launch just little can you the

Rajbir Denhoy

Yes. Sure.

investing We been U.S. the in have

be building commercial. logistics, finance, a think as be commercial if organization, I need you think to about here infrastructure been to the we've you things the

that of States I has fund spending the that we in the Flora taking U.S. infrastructure think outside spending to now starting here, will in higher of United we've United fully actually well we pickup But commercial place, States, the get loss-making the prepared launched in leveraging that So, the gives ASPs given the the activity. as in ability already we have to in implants time period the U.S. the approval U.S., it as to And product.When the higher also a we're United the we we us as to see and which closer the and we've traction capital States, the margin done, to strategy. have are in relative amendment the relatively with facility the been additional start need as the see launch spending were be the leverage, Oaktree should to noted short. we remarks, should to

ready pretty we commercial So, U.S. the where we're with being our for feeling are in terms good about getting in portfolio of entire

Operator

Our from Stephens Incorporated. with George next question is Sellers

George Sellers

X-parter Flora. on here A

could first in process of Flora for what And Just commercial XXXX? speak hospital also you compared to Flora augmentation breast assumes, any, curious, as market? in breast and reconstruction in then for the all, the the guidance commercialization to if your just contribution

Juan Jose Quiros

George. you the of heard qualitative our at differentiation, lot beginning on When is parts. Thanks, especially such have that the your Still, numbers. products, products you focus Yes. launch a

But We process. early continue seeing half what you're to this us for on getting the precision time, it's we you have process of into able VAC in the That to first through expect adding are XX centers to hospitals but takes a and that. that Flora. be already these we'll working give year, on

we expander Now overall, our are market, and million it at selling tissue is a premium. $XXX

to So, our has any ASPs be tissue contributor the next And and world for the the this we gross do market growth. for the in highest years highest eventually expect margins it expanders. an definitely, important over to few

George Sellers

expectations And said to so may XX you color the really some believe the or Mia curious you But shifting potential helpful. your add then to also I clinics then And well. your clinics. additional that Okay. Could give expectations, maybe progression there's quarter? just XXXX That's you've in on as in for what another that Mia. contributed Mia

Juan Jose Quiros

we excited Mia. launching results before, daily number like with that's we're on XX be when Look, of that minus provided, same lives, least. we just amazing are it the are just qualitative. women I first you you But experience. and see. because this we is so why fact of exercise confident seems like centers.So the should see you're back just the thing these going super said to focus the though, on And give about these we we amazing a an everyone, their Mia, did lot it's growth the today, products, The type What in to day, year list the the the of differentiated color with at particularly that just centers just of on

the And capillarity centers increasing every more So see we are half the to year, that second demand. first certified cities of there, we seeing increasing. launched we're what seeing then is Mia we the network centers group demand last And in going through more in month. are is as of the getting in these clinics get of with

ahead what ramps terms but idea do So an in future today and a top in how eventually, of to try on that. also number all give think the in is I up number the do centers we still gave that that information of procedures, on to go of of we the is will bit of early little the you

Operator

Thibault question next BTIG. is Marie Our with from

Sam Eiber

maybe Raj, all is just Eiber I that behind Marie. on be last of Or if QX? start, year, Maybe expense in anything us for can these question the left made thoughts that Sam for in on your half point? is is this at you back recognized to on operating cuts there XXXX. And of and any This

Rajbir Denhoy

Yes.

be And relative think terms efficiencies fourth lot continue the usually the in in also efficient.We across it's note to again look costs to there of we to cash will important right? I that position, business So the use, more the to year. first base. to for do think a in getting to our out So, ways severance quarter there of some a again, and spending heavier have we're beginning in additional costs, I will look cost of take And continuing yet. around we're the business, of not make at stable terms did of the we quarter

versus we $XX if million operating year where look you will were So be something at year, million or in from XXXX. they this around expenses $XX last down

don't that answers the year, overall restructuring question. tick terms up could course to the little then So, over of severance it the use, your the a quarter was is But than I But costs we've last undertaken. base know of bit costs and of if on lower see the cash in first we some the where significantly a again of expense going be in year.

Sam Eiber

get guys to from we maybe present? getting present maybe you when back is we'd know forth Yes, you you're of looking know now, the a no, maybe don't close have -- that and that's super right FDA if Or approval? we're know saying you data trial. on until that's lot X-year helpful. Maybe I can should just I off the I something maybe expect my considering to guys hold with follow-up the something pivotal I here. to

Juan Jose Quiros

important is the on remember it So document, guidance to per requires we which provided. that FDA, have breast the X-year implant data,

first a on to company, And super so. been as were the do ever trial. we with the company transparent data. to we've health will continue data provide women's We always However, pre-approval

superior shown the that it the that has with idea interactions. yes, safety has for in past think we received FDA periodic and to to market the technology after is the have yes, data And show data X-year amazing our the this provide as I an results. So, data will

Operator

is Anthony [Operator Group. Instructions] from Mizuho Our Petrone next question with

Anthony Petrone

Apologies.

calls between hopping here. Just

more green perhaps re-upping first maybe of any the split stocking? be where regions shoots question So, would geographic are Are distributors where that activity starting there you're on seeing to and one. aesthetics market. on see are inventory the the sort ground for just on So

ahead the middle playing the Just Motiva a of in thoughts any out?And I'll States market one Raj on second on follow-up the just for where aesthetic is on then maybe then the the And half? have geographically, is P&L. the market into launch underlying United potential how of

Juan Jose Quiros

Yes.

Latin to a So most other want that if probably quickly think full -- about have that's regions, Asia, to and we're not you markets America in I it as like distributor think back. Europe time. starting see markets, by the we to especially that recovered see importantly, as real seeing starting we're the us, of and see But our region some for across coming that in also we by Brazil, activity direct in where are way. And

But to situation But might position take place up the this indicators, know should by to opportunity. we'll one go think over year. global we year, I to this we time to what at to think this when improving. slowdown adds about And actually continue conditions competitor, these you the is market, good go we And regions. demand. expect I this by U.S. from think we And in that hit strongly of is aesthetics. taking quite we fact with course, of the be a that different in think less market for throughout different the in improving So, guidance speeds was

Anthony Petrone

you it cost is I think FDA eventually you Raj, And mean, of the No, just post outlook. ahead a will now about itself? on Motiva what trial about Or the on when burden rolling the dollars, reinvesting When happen the launch? clearance? is trial then absolutely. then, off, happening And expense those that think

Rajbir Denhoy

fair it's question. Yes, a

it. relative still stop were FDA to Once getting but there's States. to costs costs we're the close we don't that with incurring in the the approval happens, as are to clinical trial We the our approval, process. We still moving United activity associated

United important the ErgomonixX products have that. come platform. States, is an the that coming will after to We Mia one

So, general, as States.But in still bit of be our in United of with taken the noted out to associated there our we've XXXX. I will costs regulatory continue in think activity quite we here earlier, cost base a

of so, operating take some efficient opportunities to if more move the we're a it does these through we And again, can. flexibility much as we And some us advantage on year give basis. of

is So, our expect approval of U.S. really here going down that to that, I too wouldn't dramatically. the spending step event

Operator

turn now remarks. questions have the that over call back time for the all Jose will is to I That Juan we for today. closing

Juan Jose Quiros

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

Operator

Thank you. today's conclude will This conference.

lines at thank time, participation. may for and your disconnect you You this your

Establishment Labs (ESTA) 28 Feb 242023 Q4 Earnings call transcript