Q4 2021 Establishment Labs Holdings Inc Earnings Call
Good morning welcome to.
Establishment labs fourth quarter 2021 earnings call.
At this time, all participants lines will be in listen only mode.
At the end of this call we will open the line for question and answer session and instructions will follow at that time.
As a reminder.
Today's call is being recorded.
I will now turn the call over to Raj <unk> interim Chief Financial Officer.
Please go ahead.
Thank you operator, and thank you everyone for joining US with me today is Juan Jose <unk>, our Chief Executive Officer.
Following our prepared remarks, we'll take your questions before we begin I would like to remind you that comments made by management. During this call will include forward looking statements within the meaning of federal Securities laws. These.
These include statements on establishment Labs' financial outlook, and the company's plans and timing for product development and sales.
These forward looking statements are based on management's current expectations and involve risks and uncertainties for a discussion of the principal risk factors and uncertainties that may affect our performance or cause actual results to differ materially from these statements I encourage you to review our most recent quarterly report on Form 10-Q , and other SEC filings, which are available on our website at establishment labs Dot com.
As a reminder, establishment labs received an investigational device exemption from the FDA for Motiva implants, and is undergoing a clinical trial to support regulatory approval in the United States, we continually seek to expand the geographies in which our products are a regulatory approved.
Please check with your local authorities specific product availability.
The contents of this conference call contains time sensitive information accurate only as of the date of this live broadcast.
<unk> 2022.
Except as required by law establishment labs undertakes no obligation to revise or otherwise update any statements to reflect events or circumstances. After the date of this call.
Is that it is my pleasure to turn the call over to our CEO Juan Jose.
Thank you Raj and good morning, everyone.
Hope everyone is healthy and continues to remain safe.
Revenue in the fourth quarter of 2021 totaled $35 3 million, 31% increase from the fourth quarter of 2020.
Full year 2021 revenue of $126 $7 million.
50% over 2020.
Our singular focus on women's health.
For innovation, we are bringing to our markets.
<unk> record.
11 years of excellent clinical anesthetic outcomes with Motiva implants continues to be the key for market share gains and we expect those gains to continue.
Most importantly <unk>.
Patient centered on women's health are aimed at creating new categories and markets into the future.
We're providing full year guidance for 2022 in the range of $155 million to $165 million.
This outlook represents estimated growth of 22% to 30% over 2021.
This guidance captures the high level of confidence we have in our ability to take share in our existing markets and the early contribution of new products and new geographies that we expect over the course of the year.
We continue to see healthy underlying end market demand and we're taking market share in geographies around the world where our products are sold.
The pandemic continues to create some volatility we are confident that our market share gains and strong results will continue to.
2022 looks to be another strong year for <unk>.
As our science based and consumer centric innovation strengths, one and expand the market for breast aesthetics and reconstruction.
Raj will provide additional detail on our fourth quarter performance in 2022 outlook in a moment.
Before I turn the call over to him I would like to highlight several recent events.
Earlier this year, we crossed a significant milestone in our journey of improving women's health with our two millionth motiva implant delivered to the market. It took nine years from when we first commercialized <unk> to deliver 1 million implants and now just two years later, we passed $2 million.
While crossing 2 million implants is a commercial accomplishment. We celebrate we are most proud that women around the world are placing their trust in us by choosing Motiva and this is not a trust we take lightly.
Our guiding principle from the day, we founded our company is to put women first in all of our efforts to this end, we constantly aimed to be closer to our ultimate consumers. The women who receive our products. So we can best understand their needs and to provide support on their journey in breast aesthetics and reconstruction.
Its embodiment of these efforts is the women's health hub, we recently established in Barcelona.
This hub will house, our direct to consumer marketing teams.
European sales leaders as well as our patient advocacy efforts all in one location.
Keeping these teams in the same office and having them in Europe , where we have direct selling efforts with joy in Sweden.
Allows us to develop programs and initiatives that best meet the needs of women.
And early example of what we can accomplish as a joy program, we launched last year.
This first of its kind program provides women with our latest generation Motiva ergonomics, two implants as well as several other unique features and benefits.
Yogurt omics to platform.
Prove mechanical and chemical properties with our unique super silicones, making them, 45% softer in 23% more adaptable all of which we believe will result in even greater patient satisfaction.
We believe they are the best implants, and designed and developed.
With improved ergonomic characteristics. These implants are changing the consumer experience by providing more comfort tissue like look and feel.
Joy also offers <unk> women's choice program.
This first of its kind program allows women with joy to receive financial support from establishment labs should they choose to have their influence will move for any reason subject to the program terms.
Part of this program participating surgeons may agreed not to charge any additional fees for this procedure.
Strong early interest we are seeing for joy is an indication of the value that women C. In the program and our early commercial efforts suggests that this can translate into higher realized value for surgeons and for our company.
Programs and offerings like Joy are a demonstration of what we can achieve by being close to the final consumer.
New hub, we have established in Barcelona, and will allow us to push these efforts even further when we launched the new category of minimally invasive augmentation with Motiva EMEA and as we expand into new markets and geographies.
On our last conference call, we updated everyone that we had submitted the first module of our PMA to the FDA.
This first module covers the chemical characterization and biocompatibility of Motiva implants.
The modular PMA submission that is still proceeding on track we remain in active discussion with the FDA and are ready to submit the second module in the second quarter.
Reminder, in August of last year, you study cohort passed the two year Mark and we continue to track these patients with excellent follow up.
We also closed a revision reconstruction cohort last year and are on schedule to complete the remaining reconstruction cohort of the trial in the next couple of months, we will provide additional updates over the coming months on our progress towards launching our motiva implants into the United States.
In September we held an event at the London breast meeting, marking the official launch of our Motiva flora tissue expander in Europe , and other CE Mark countries.
Flora has many advantages over other commercially available tissue expander, including a first of its kind RFID enabled port which allows for MRI imaging with our artefacts during the time and expand their is used after a mastectomy bye.
By being non magnetic Florida potentially opens new options for radiation oncology treatment during this stage of recovery.
Florida also features or self friendly smooth silk surface.
And early users have noted improved patient comfort and healthier capsule formation with this unique tissue expander.
Reconstruction surgeons understand the differentiation of the flora tissue expander.
Have already won several tenders in Europe .
Adoption of Florida will take time, but early efforts have been encouraging and that to our belief that we can help support women in their breast reconstruction journey.
While we have high expectations for this year, we can take with Florida in the existing reconstruction market, Florida is only the first step in our aesthetic breast Recon initiative, where establishment labs will offer tools and techniques that allow women to receive reconstructive surgeries that achieved the aesthetic ideals to which day spire and work.
To democratize breast reconstruction worldwide, we look forward to sharing more on these efforts in the future.
On Motiva Mia, our minimally invasive breast enhancement procedure, we continued to perform new cases.
Well as tracking the original 100 patient cohort we completed last April we have 100% follow up on this group of patients and the outcomes continue to support our belief that this approach will transform breast aesthetics and significantly expand the market occur.
According to our market research this new category could grow to 5 billion with approximately half of the opportunity coming from new patients that had not previously considered a breast augmentation.
Regulatory clearance in Europe for the tools that are part of the Motiva EMEA system are ongoing and should allow for a planned launch in the first half of 2022.
Our clinical and commercial efforts in China are ongoing and we continue to make progress in the regulatory process.
<unk> remains management team back in this fast growing market in the second half of 2022.
I will now turn the call over to Raj to cover our financial results.
Thank you Juan Jose.
Total revenue for the quarter was $35 3 million.
In line with our pre announced range of 35% to $35 5 million provided on January 10.
Reported revenue growth in the fourth quarter was 31%.
Foreign currency changes reduced our fourth quarter revenue growth by approximately three percentage points.
Direct sales were approximately 44% of this total while distributor sales, which.
Can fluctuate based on changes in inventory levels and the timing of Reorders made up the balance.
From a regional perspective sales in Europe comprised approximately 38% of global sales.
Pacific and Middle East was 24% and Latin American made up the balance.
Brazil, which is our single largest market globally accounted for approximately 14, 7% of total quarterly sales.
Our reported gross profit in the fourth quarter was $24 2 million or.
Or 68, 6% of revenue compared to $14 6 million or 54, 3% of revenue for the same period in 2020.
The change in gross margin was a result of the year ago period being impacted by timing of certain one time expenses.
Weighted to inventory obsolescence and scrap as.
As well as improvements in production volumes and a return to more normalized geographic mix this year.
Our gross profit this quarter improved from the 67, 6% reported in third quarter of 2021. However.
Average selling prices in the fourth quarter were down slightly from the third quarter of 2021.
SG&A expenses for the fourth quarter increased approximately $9 4 million.
Just $27 6 million compared to $18 2 million in the fourth quarter of 2020.
The increase in SG&A in the fourth quarter resulted from a normalization of business practices. Following the disruption from a global pandemic.
The fourth quarter also saw a resumption of some important medical meetings and Congresses.
We're also prioritizing marketing spending in new initiatives like Joey EMEA.
Our R&D expenses for the fourth quarter increased approximately $1 6 million in the same quarter, a year ago to $6 million.
<unk> expenses also returned to more normalized levels this quarter and will fluctuate quarter to quarter based on the timing of clinical trial and other expenses.
Total operating expenses in the fourth quarter were $33 6 million, an increase of approximately $10 9 million from the year ago period.
The increase this period was again due primarily to the normalization of activity and spending levels relative to a year ago as well as the aforementioned timing of research and development costs and investments in growth initiatives like join me.
Net loss from operations for the fourth quarter was $9 4 million compared to a net loss of $8 million in the year ago period our.
Our cash position remains strong at $53 4 million as of December 31 <unk>.
Compared to $84 $5 million at the end of the previous year cash.
Cash used in the fourth quarter included approximately $2 $9 million of investment in our new <unk>.
Innovation campus.
On the capital front, we have signed a non binding term sheet to refinance our existing credit facility.
The new loan, which is subject to negotiation of definitive documentation.
Would replace our current loan with a larger debt facility and what we anticipate will be improved terms.
This non dilutive financing should allow us to fund our growth initiatives, including a new innovation campus that will allow us to produce more than half the world's implants and provide growth capital well past our U S launch.
One as I noted earlier, we are providing sales guidance for 2022 of a range of $155 million to $165 million.
Representing estimated annual growth of 22% to 30%.
Overall, there was considerable momentum in our business, we are taking share globally and we expect this will continue.
In refining our outlook, we took several factors into consideration, including the uncertainty associated with the pandemic. The low end of our guidance range assumes COVID-19 pressures will continue while the high end assumes no significant new waves. After the current one.
In addition, this range does not contemplate any material supply chain disruptions throughout the year we.
We saw minimal impact on our results in 2021, as we manage our supply chain effectively and we continue to monitor this situation closely.
As you look down the rest of the P&L, we continue to expect to see spending levels increase as we prioritize investments and a significant number of development and commercialization programs we have underway.
Preparing for entry into new markets and advancing our pipeline of new technologies to drive future growth remains a top priority. However, our revenue growth and strong gross margin should result in our operating expenses as a percentage of sales.
Trend down even as we increased strategic investments.
Believe our company is in a very strong competitive and financial position.
That I will turn the call back over to Juan Jose.
Thank you Raj.
2021 was a foundational year for establishment labs.
Among our accomplishments last year that have set the stage for many years of strong growth ahead or.
The completion of our 100 patient IRB study from EMEA.
The publication of the landmark study by Dr. Robert Langer, and the group of researchers at MIP nature Biomedical engineering that provide strong scientific evidence of how our patented smooth silk surface is most biocompatible among existing surface technologies.
The groundbreaking on a new <unk> innovation center that will more than double our manufacturing capacity and allows us to serve half to current global market.
Ian Bailey of the ergonomics, two platform and the launch of the jewelry program.
Our entry into breast reconstruction with the launch of the Motiva flora tissue expander what.
What do we have accomplished already is significant.
But we are still at the beginning of our story we.
We are preparing for the next chapter in our growth story grounded solidly in our commitment to women's health and wellbeing. It is within our reach to become not only the leading global company in breast aesthetics and reconstruction, but more importantly over the next few years, we will continue to transform and expand our market and create new categories.
In our space, we will continue to innovate in our core markets by getting closer to women indoor aesthetic journey, we will enter the United States and China, the world's largest market, we will work to improve awareness access and outcomes worldwide in breast reconstruction with our static breast recon program and we will launch.
EMEA opening up a new category and new customer base in breast aesthetics.
I'll now turn the call over to the operator for your questions.
Thank you.
At this time, we will be conducting a question and answer session.
If you would like to ask a question. Please press star one on your telephone keypad.
A confirmation tone will indicate your line is in the question queue.
You May please start off if you would like to remove your question from the queue.
For participants using speaker equipment it.
It may be necessary to pick up your handset before pressing the star keys.
One moment, please while we poll for questions.
First question is from Chris Cooley with Stephens. Please go ahead.
Good morning, and thank you for taking my questions and congratulations on a super year in 2021.
Juan Jose if I may just as we start I'd like to focus on Motiva, Mia and with commercialization or I should say at the early stages of commercialization in Europe .
Upon us here this year in 2022.
Help us think a little bit more about the nuances of this market not only from the surgeon perspective, what skill set is required.
How theyre going to have to interact differently with the patient.
But also in terms of how the company would approach.
Doing this type of a missionary sale if you will.
This new market opportunity to bring these women into the pipeline.
And kind of how that marketing message has to defer and then I've got a quick follow up on operating expenses. Thank you.
Thank you, Chris and definitely Motiva EMEA is one of the most exciting things that is happening and aesthetics.
And we are happy to be leading this transformation of the landscape in breast aesthetics with Motiva EMEA and one of the most important things is what you had just mentioned.
We are bringing in a new customer base and that new customer base.
Requires different interactions is not the traditional breast augmentation patients.
And I think one of the most important things that we have done.
Lately is the opening of our women's health hub in Europe , and what that does is it creates a lot of internal capabilities to be able to create that funnel to bring in those new customers. So we have in Barcelona now the firepower that is needed.
To be able to deliver on that promise and that and we think that not only creating awareness, but having a.
Very clearly defined funnel is going to make this very effective because we will be watching or customer acquisition costs very carefully.
On the other hand, when it comes to surgeon education remember during the.
Last year, we trained several surgeons on how to do the procedure and one of the things. We found out is that actually it is much simpler surgery than traditional breast augmentation. It's a standardized procedure. It has standardized tools. So it actually makes it a lot easier for these surgeons to deliver.
On EMEA promise.
So of course, we will continue to expand our surgeon education.
Efforts. So that we are prepared not only for the targeted launch which will take place in a few cities in Europe .
In the SEC in the first half of this year and then in the second half of the year as we expanded to more clinics. We plan to have all the necessary surgeons trained on time.
Understood. Thank you so much that color and then if I could just for my follow up.
Raj you provided.
Impressive, 20% to 30% organic top line growth guidance for the year off a 50% comp in.
In 'twenty one.
Kind of along the same vein.
It's truly kind of a transformational year at least in our perspective for establishment labs with Motiva.
The launch of motif in the U S and in China. So.
As well as just continuing to to hopefully take share. So could you help us think a little bit about <unk>.
Timing of planned expenditures, how this may be a little bit different versus maybe prior years, just when we're thinking about the total opex spend maybe from.
It kind of first half second half perspective, thanks, so much.
Yes.
Yes sure.
Yes, it's good to talk to you Chris.
Your question is a good one certainly has won Jose was describing right. What we're doing with EMEA. The launch of Joy a lot of the new initiatives we have ongoing.
They do require investment.
As we noted in our prepared remarks, given the strong top line growth, we do expect that our our operating expenses as a percentage of revenue will trend down over time and even in this year in terms of the timing of expenses certainly we are mindful of when we're committing to these things and we will.
Look at our expenses at a very at a very tight level I would expect in the first part of the year. The expenses will be a little bit lower you will see them build as the year goes on.
But you should trust that we're very judicious about what we're spending on it we can do this in a very efficient way.
Thank you and congratulations.
Thank you. Our next question is from.
Marino with Jefferies. Please go ahead.
Hey, good morning, Thanks for taking the question and congrats on another good quarter.
Just wanted to focus on China, and then the launch coming at the end of this year can you just talk historically you sized the market $150 million to $200 million can you just talk about the commercial strategy there.
And what a successful launch looks like maybe in terms of share or two three years post launch.
Thank you <unk> and we're very excited about coming.
Coming into China, with our Motiva implants, because it is one of the fastest growing breast aesthetics markets in the world. It is the one with the highest average selling prices in the world. So that combination to US is one that we seek to exploit.
And one of the things that we talk about often is our success in Asia and how fast we were to take a leadership position in South Korea for instance.
The South Korean market kind of defines what happens in the Chinese market because they follow the same trends and the.
South Korea, and plastic surgeons are doing most of the medical training for the Chinese plastic surgeons and before the pandemic about 25% of the patients form of <unk> in South Korea came from China. So we already have some very good reference points of how well we can do in China, we have a strategy.
That is set with our.
Partner.
And our partner has been very good at you.
Using direct to market direct to consumer strategies.
In South Korea, and we plan to use a similar strategy in China.
We are planning for a launch by the end of the year end.
We are working with our partner to be able to make that a reality.
Okay.
Okay. That's helpful. Thanks.
Thank you. Our next question is from Josh Jennings with Cowen. Please go ahead.
Hi, Good morning, Juan Jose and Raj, Thanks for taking the questions.
Under the first start on the 2022.
And just thinking about the anniversary with allergan or abbvie pulling their smooth implants for most global markets.
It's been four months now that you have the share reports laggard paper out there and just with that jump ball share in every country has a different market, but do you feel that motiva is in 2022 is positioned to establish a position to capture even a higher percentage of that jump ball share Allergan.
Allergan left on the table and is that part of the assumption baked in within that one assumption baked into the to the strong guidance you guys provided.
Yes, I think that.
With Allergan pulled.
The implants from the world market.
Outside of the United States that was mostly a texture market. So many of those customers at first went to another textured.
Brand.
And what we've been doing since then is continuing to ramp our efforts in terms of medical education to be able to teach a generation of plastic surgeons on how to use our implants and this is something that we continue to do for instance in Q4.
You can see the results in Brazil, where we have.
Done extremely well with our medical education following the.
The pull out of the mentor implants from that market. So of course, we use that as an opportunity to teach all of these new accounts on how to use motiva implants, and that's why we continue to gain market share in Brazil, but we also continued to gain market share all over the world, but most importantly, what I think Josh.
2022 does is that we go from just taking market share to real market expansion initiatives and I think this is something that we will keep talking about more and more during the year.
Excellent and just one follow up on that on 2023 actually just quickly on 2022 again.
22% to 30% guidance.
Sure.
Inclusive of.
Currency headwind as our presumption, but can you talk about.
Raj the headwind is baked into that that youre, just absorbing within that 22% to 30% and I just have one follow up on the 2023.
Sure Yeah, when we look at the currency rates, we've assumed for 2022 relative to the average rates last year, we're absorbing about a one percentage point headwind because of currency this year.
In those numbers.
Great. Thanks for laying that out and then just think about 2023 as we're moving into 2022 I think.
With the China launch and potential U S launch whether it be in play just wanted to ask about.
Expectations, and how we should be thinking about the U S launch.
How can you prepare for that launch in front of approval and we've seen the Florida launch in Europe and EMEA launch.
And early limited stage and just wanted to kind of get a in front of.
Expectations setting for for how you see the rollout in the U S.
Ferring compared to some of the limited launch of the expansion in Europe , and just whether you can have a salesforce buildup in front of the launch and then go out pedal to the metal or is it going to just going to take some time as our assumption chips to work through a post approval getting a regional share so members in place and really attacking the plastic surgeon customer base.
Thanks for taking the questions.
Yes, when it comes to the U S launch of course this is <unk>.
<unk>.
Fundamental milestone for the company and one of the reasons, we took the company public and we have already begun preparing for our U S launch we hired Dr. Heather Brendan <unk>, our head of U S. Commercial operations, we're setting ourselves up for success by creating the infrastructure that is.
Necessary, both in terms of systems and logistics to be able to.
To do what is necessary in this market.
When it comes to hiring sales reps in.
Msl's and other type of personnel of course, we'll be very judicious in not doing it in a way that affects our spending levels ahead of the launch.
Great. Thanks again.
Thank you.
Our next question is from Matt Taylor with UBS. Please go ahead.
Okay.
Good morning, Thank you for taking the question.
<unk>.
First one I wanted to ask was just.
On the materiality of some of the new new product launches for <unk>.
China. This year is there a lot of revenue baked into the guidance could you just talk about how material.
Those revenues are our assumed or is this kind of a more gradual transition year and a ramp of those products in 2023.
Yes, I think it's.
It's more of a gradual transition because when it comes to breast reconstruction, we launched in the second half of last year and the.
The growth there is is basically done through the tender process in different regions in Europe and that takes time, sometimes these on these tenders take place only one.
A year or every two years. So the growth is is basically gradual because of that and when it comes to joy. We already launched we are <unk>.
Making sure that we get the program right remember these products are sold at a significant premium for the from the current ergonomics implant. So we want to defend that premium and want to be able to train. The surgeons on the features and benefits of these implants and also communicate to patients what those benefits are.
And finally, I think with me, it's more of a year of making sure that we prove the expansion that can take place by bringing new patients through these practices. So we're going to make sure that we get it right and Thats why in.
That guidance, what you see is a gradual growth of all of those new initiatives.
Great Great and then maybe I could just follow up with a question about U S timelines are hurt.
The prepared remarks, you said you are ready to submit the second module in the second quarter.
Maybe just talk about any any insights from back and forth that you've had with the FDA, so far and it.
That timeline holds.
You want to give us our best guess of when you could get approval is it reasonable to assume in the first half of 2023.
Yeah on that on your second question I think we have we purposely not kind of put a stake in the ground in terms of timing of approval just given the uncertainty around timelines that the FDA given everything that's going on.
As we have said, though we continue to make progress.
We are in discussions with the FDA.
The dialogue is.
As active.
<unk>.
As we mentioned in the prepared remarks, we are estimating the second module will go in in the second quarter that timing could change and we continue to be prepared to submit the module when the FDA is ready to review it.
So it is a fluid situation right, but we continue to to be ready to give the FDA any information that they need.
To allow the process to continue to move forward, but in terms of endorsing an absolute timeline, it's just difficult to do right now.
Okay, great. Thanks for the color.
Okay.
Okay.
Thank you. Our next question is from Bobby Diebold.
Please go ahead.
Good morning, and thank you for taking the questions.
I wanted to try to drill down a little bit more into the geographies as you've noted you're taking share across several geographies. So wanted to hear which countries I think youre seeing the most new uptake in and also wanted to check in on how the Brazil recovery is going it certainly sounds like it's recovered and also what impact we might expect from.
Russia this year given some of the.
Our attention is around the water there.
Yes in terms of.
You've kind of caught in the prepared remarks around the split between the various geographies Latin America has continued to do very good for us as a region. This year.
Frankly been driven a lot by Brazil, and some of the competitive changes in that market. So certainly Brazil has been a standout in terms of.
Growth for us this year, but generally as you saw in the numbers.
It was a good year overall.
Pretty much most of the markets that we compete and we continue to take share.
But if you wanted to call out one in particular I would focus on Brazil.
That's great and any impact that we should expect from Russia.
That's a key market.
We do sell into Russia and Ukraine.
Our smaller markets for us and of course, we're watching the situation closely there is everybody is in.
For a quick and peaceful resolution to what's happening there I think it's too early to really call out whether it's going to be.
Significant but I would tell you as an overall.
A piece of our revenue those markets are relatively small.
Sort of low low single digits.
Okay, very well understood.
If I could ask another here on on EMEA.
Wondering if you could get a little bit more granular with how many centers you might be expecting to start with and the launch and whether a lot of that training and sort of the focus might be happening.
In the area around Barcelona, or whether you can call out any particular countries Youre think about what that early launch and thank you for taking the question.
Thank you Mary we are still defining.
The the cities and the list of countries for for the launch in the European Union, but I can tell you, where we're going to make sure that we can prove into cities the market expansion capabilities of EMEA and to us that is the most important one.
What I can say as well is that this hub is about providing the capabilities to be able to measure how we can expand the market and this is very very important to us youll see us.
Talking more and more about a set of numbers that can help you understand how this market expansion takes place and.
After after we do that first phase we are going to expand to the main cities in Europe , and we do expect this to do this gradually but.
But if you think about the fact that a surgeon can do a procedure and less than 15 15 minutes and that the flow of patient is so efficient.
Then you don't really need that many centers to be able to get to numbers that are meaningful and revenue of course, we will continue to grow over the next few years, but I think that is one of the most important things you don't need.
And thousands of centers to be able to reach our revenue milestones.
Thank you so much.
Thank you.
Our next question is from Amit Hazan.
Goldman Sachs. Please go ahead.
Hi, Good morning. This is Phil on for Amit. Thanks for taking the questions. A couple of follow up items, if I could from from questions that have already been asked but first one on the comment just now Raj, Ukraine, and Russia, I think you said low single digits.
As a percentage of total sales.
Is that on a combined basis, just so we have an idea.
First for sizing the potential negative impact.
Yes.
It's low low single digits.
No.
Single digit.
Kind of numbers.
And that is on a combined basis between the two of them.
On a percentage of total sales, yes, exactly okay. Okay. That's clear thanks very much.
One follow up item on Matt's question.
I think the first module way than just before.
<unk> call. So I think if my math is right. We're already past kind of the traditional 90 day window I just wanted to clarify that.
I would assume.
On what we've heard over the last couple of years the FDA timelines.
Have been pushed out in a number of events into depending on which department youre dealing with is it fair to say that establishment is doing everything basically in a timely fashion and that nothing so far is concerning its just FDA.
Having a bit of kind of log jam on there and is that fair to say.
Yes, I think Thats a fair assumption.
To the earlier question about endorsing timelines right. So.
The FDA clearly theres, a lot going on right and so.
Dialogue remains active with them as I noted our expectation is that we will submit the next module in the second quarter rates. So that is based upon our interaction with them and how we're seeing things progressing but really nothing that I would call out that is concerning or anything thats disrupting the timeline. It's these things just take.
Take time and were again as you noted we're not.
We're we're providing the FDA with the information as they need it. So we don't want to be the party or any reason that this gets held up in terms of it progressing.
Very clear. Thank you again for that one just one more if I may I was interested if the I think the third module typically manufacturing module is there any implication around completion of your third facility in Costa Rica in conjunction with that submission or any potential.
How does that play out is there a relationship between completion of the third facility and the submission to the U S. Given the capacity thats going to be coming from that new facility. Thanks for taking the question yes.
Yes no.
They're not linked at all.
So the new facility that's under construction, we will have no bearing on the timing with the FDA.
Okay. Thanks again.
Thank you.
There are no more questions at this time and I will now turn the call back over to <unk>.
Juan Jose for closing remarks.
Thank you for joining us on today's call. We look forward to providing our next quarterly update in May and we wish everyone continued good health and we offer our prayers for peace in Ukraine.
Thank you. This concludes today's conference you may.
Now disconnect your lines.
Thank you for your participation.
Okay. Thank you operator, thank you Peter.
They are still there.
I guess not okay.
Okay.