Q4 2023 Establishment Labs Holdings Inc Earnings Call
Operator: www.establishmentlabs.com Good afternoon. Welcome to Establishment Labs' fourth quarter 2023 earnings call. At this time, all participants will be in a listen only mode.
Okay.
Good afternoon, welcome to establishment Labs' fourth quarter 'twenty to 'twenty three earnings call. At this time, all participants will be in a listen only mode. At the end of this call me about opening the lines for a question and answer session and instructions will follow at that time as a reminder, today's call is being recorded.
Operator: At the end of this call, we will open the line for a question and answer session. Instructions will follow at that time. As a reminder, today's call is being recorded. I will now turn the call over to Raj Denhoy, Chief Financial Officer.
Good.
Now I'll turn the call over to Raj Dunaway, Chief Financial Officer. Please go ahead.
Rajbir Singh Denhoy: Thank you, Operator, and thank you, everyone, for joining us. With me today is Juan Jose Chacon Quiros, 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 law. 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.
Okay.
Okay.
Thank you operator, and thank you everyone for joining US with me today is one of the age of cone care as our Chief Executive Officer.
Following our prepared remarks, we'll take your questions before.
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 include statements on establish a lapse 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.
Rajbir Singh Denhoy: 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 annual and quarterly reports on Form 10-K and Form 10-Q, as well as other SEC filings, which are available on our website at establishmentlabs.com. I'd also like to remind you that our comments may include certain non-GAAP financial measures with respect to our performance, including but not limited to sales results, which can be stated on a constant currency basis, or the company's earnings, which can be stated as adjusted EBITDA. Reconciliations to comparable GAAP financial measures or non-GAAP measures, if available, may be found in today's press release, which is available on our website.
I heard you to review our most recent annual and quarterly reports on Form 10-K, and Form 10-Q, as well as other SEC filings, which are available on our website at establish a lapsed dot com.
I'd also like to remind you that our comments may include certain non-GAAP financial measures with respect to our performance, including but not limited to sales results, which can be stated on a constant currency basis, where the company's earnings which can be stated as adjusted EBITDA.
Reconciliations to comparable GAAP financial measures are non-GAAP measures is available maybe found in today's press release, which is available on our website.
Rajbir Singh Denhoy: Please also note that 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 regulatory approved; please check with your local authority for specific product availability. The content of this conference call contains time-sensitive information, accurate only as of the date of this live broadcast, February 28, 2024.
Please also note that establish a 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 can see.
We seek to expand the geographies in which our products are regulatory approved please check with your local authority for specific product availability.
The content of this conference call contains time sensitive information accurate only as of the date of this live broadcast February 28 2024.
Rajbir Singh Denhoy: Except as required by law, Establishment Labs undertakes no obligation to revise or otherwise update any statement to reflect events or circumstances after the date of this call. With that, it is my pleasure to turn the call over to our CEO, Juan Jose. Thank you, Raj, and good afternoon, everyone.
Except as required by law established labs undertakes no obligation to revise or otherwise update any statement to reflect events or circumstances. After the date of this call.
With that it's my pleasure to turn the call over to our CEO Juan Jose.
Thank you Raj and good afternoon, everyone read.
Juan Jose Chacon Quiros: Revenue in the fourth quarter of 2023 totaled $31.6 million, in line with the range we pre-announced in early January. While our second half results reflected lower demand for breast procedures globally, our markets are stabilizing, and we are seeing improving demand, including from our distributors. Our global market checks suggest that we will have continued improvement throughout 2024. Given this, we are setting guidance in a range of $174 to $184 million, representing growth of 5 to 11 percent. This guidance does not include the launch of Motiva implants in the United States, which would significantly improve both our revenue and growth. 2024, the 20th anniversary of our founding, is a pivotal year for Establishment Labs.
Revenue in the fourth quarter of 2023 totaled $31 $6 million in line with the range, we pre announced in early January.
While our second half results reflected lower demand for breast procedures globally. Our markets are stabilizing and we are seeing improving demand, including from our distributors are global market checks suggest that we will have continued improvement throughout 'twenty 'twenty four.
Given this we are setting guidance in a range of $174 million to $184 million representing growth of 5% to 11%. This guidance does not include the launch of Motiva implants in the United States, which would significantly improve both our revenue and growth.
'twenty 'twenty for the 20th anniversary of our founding is a pivotal year for establishment labs with the approval of our implants in China and are pending approval in the United States, We are becoming a true global player in our industry, we are well positioned for multiyear growth and poised to take global market leadership in an industry.
Juan Jose Chacon Quiros: With the approval of our implants in China and our pending approval in the United States, we are becoming a true global player in our industry. We are well-positioned for multi-year growth and poised to take global market leadership in an industry that has not brought any meaningful innovation to market in more than two decades. 2024 is also the year in which we will achieve the necessary scale to become Embedded Positive, with a clear path to cash flow positive. Since we launched Motiva 14 years ago, we have been in the most price-sensitive markets with low ASPs and gross margins. Our entries into China and the United States provide the necessary market dynamics for a healthy business model with significant growth. We have taken and continue to take a number of steps to reduce cash burn and expect cash use to be less than $48 million.
That has not brought any meaningful innovation to market and more than two decades 'twenty 'twenty. Four is also the year in which we will achieve the necessary scale to become EBITDA positive with a clear path to cash flow positive.
Since we launched <unk> about 14 years ago, we have been in the most price sensitive markets with low asps and gross margins are increasing to China and the United States provide the necessary market dynamics for a healthy business model with significant growth.
We have taken and continue to take a number of steps to reduce cash burn and expect cash used to be less than $48 million. It is worth reiterating that we remain focused on achieving positive EBITDA by the end of this year and turning cash flow positive in 2025.
Juan Jose Chacon Quiros: It is worth reiterating that we remain focused on achieving positive EBITDA by the end of this year and turning cash flow positive in 2025. As we prepare for growth ahead, we have taken tangible steps to focus our business on the areas of highest returns. In this process, we have reduced global headcount by approximately 28% and have reprioritized our operating spending. The impact of these initiatives can be seen in the reduction in cash use in the fourth quarter to $12.2 million.
As we prepare for our growth ahead, we have taken tangible steps to focus our business on the areas of highest returns in this process, we have reduced global headcount by approximately 28% and have we prioritized our operating spending the impact of these initiatives can be seen in the reduction in cash used in the <unk>.
Fourth quarter to $12.2 million.
Juan Jose Chacon Quiros: This was less than one-third of our cash use in the second and third quarters of 2023. This focus on improved efficiency and cash use is core to our budgeting process and is a significant part of how management will be compensated this year. In early January, we added to our balance sheet with a $50 million private placement, bringing our pro forma cash position to approximately $90 million. Last week, we announced an amendment to our existing credit facility with Oak Tree Capital. The amendment updated the terms under which we can draw an additional $50 million in non-dilutive finance.
This was less than one third of our cashes into second and third quarters of 2023.
This focus on improve efficiency and cashews is core to our budgeting process and is a significant part of how management will be compensated this year.
In early January we added to our balance sheet with a 50 million dollar private placement, bringing our pro forma cash position to approximately $90 million.
Last week, we announced an amendment to our existing credit facility, we don't pre capital. The amendment updated the terms under which we can draw an additional $50 million and non dilutive financing.
Juan Jose Chacon Quiros: The first $25 million is available for FDA approval of Motiva in the United States. While we are committed to achieving cash flow breakeven with the cash we have, the availability of this capital, should we need it, helps further de-risk the full execution of our U.S. launch strategy. Raj will provide additional details on our fourth quarter performance and our outlook in a moment, but I would like to provide some additional detail on our most important near-term initiatives – the United States, China, and MIA FEMTEC. In the United States, the first case with the Armotiva Flora Tissue Expander was performed in late December by a surgical team led by Dr. Mark Clemens at the University of Texas MD Anderson Cancer Center in Houston, Texas.
The first $25 million is available and the FDA approval of Motiva in the United States. While we are committed to achieving cash flow breakeven with the cash we have the availability of this capital should we need it helps further derisked the full execution of our U S launch strategy Raj.
Raj will provide additional details on our fourth quarter performance and our outlook in a moment, but I would like to provide some additional detail on our most important near term initiatives, the United States, China and me F N deck.
In the United States. The first case with our Motiva flora tissue expander, what's perform in late December by a surgical team led by Dr. Mark Clemens at the University of Texas, MD Anderson Cancer Center in Houston, Texas.
Juan Jose Chacon Quiros: Flora is initially being made available to a limited number of centers of excellence in the United States. We are working through the approval process with a first list of 15 centers of excellence across the country. At these premier cancer centers using Flora, the benefits of this unique expander are making clear that there is a new standard in breast reconstruction. Flora includes our patented smooth silk surface technology, as well as an RFID-enabled non-magnetic port and is labeled as MR conditional by the FDA. By being magnet-free, FLORA avoids the interference that magnets cause during MR imaging and can improve the precision of radiation oncology treatment.
Flora is initially being made available to a limited number of centers of excellence in the United States. We are working through the back process, where the first list of 15 centers of excellence across the country as these premier cancer centers that dot flora the benefits of this unique expander are making clear that there is a new standard.
In breast reconstruction.
Florida includes our patented smooth silk surface technology as well as in RFID enabled non magnetic board and he is labeled as a mark conditional bite the F D a buy.
By being magnet free floor avoids the interference that Magnus cause doing MRI imaging and can improve the precision of radiation oncology treatments. This is a distinct advantage to flora as all other commercially available breast tissue expanders include magnets.
Juan Jose Chacon Quiros: This is a distinct advantage to Flora, as all other commercially available breast tissue expanders include Magnum. Flora defines a new era for breast reconstruction, and it will help further transform breast cancer into a treatable disease from which women can fully recover. For our Motiva implants, our PMA remains under review by the FDA. However, our interactions with the agency on Motiva remain very positive, and we continue to make progress. We do not yet have a date for the GMP inspection, but given our regular interactions with the agency, we expect to receive notification very soon. Our team is ready for the inspections, and we have over a decade of experience in audits from high-vigilance authorities. So far this year, we have had our MD-SAP surveillance audit, which includes compliance with medical device regulations from the United States, Canada, Europe, Brazil, Japan, and Australia for our three manufacturing sites in Costa Rica.
Florida defines a new era for breast reconstruction and they will help further transform breast cancer into a treatable disease from which women can fully recover.
For Motiva implants are PMA remains under review by the FDA our interactions with the agency on Mckee you I remain very positive and we continue to make progress we do not yet have a date for G. M. P inspection, but given our regular interactions with the agency, we expect to receive notification very soon.
Our team is ready for inspections, and we have over a decade of experience in audits from high vigilance authorities. So far this year, we have had our empty SAP surveillance audit, which includes compliance with medical device regulations from the United States, Canada, Europe, Brazil, Japan, and Australia for our three Manny.
Factoring sites in Costa Rica.
Juan Jose Chacon Quiros: We also had our quality management system surveillance audit for the latest MDR European medical device regulation. These audits resulted in the renewal of our certifications and the recommendation for inclusion of our latest manufacturing unit at the Sulayan. MIA Femtech is creating an entirely new true minimally invasive category within breast aesthetics, and the list of countries where MIA is available continues to grow.
We also had our quality management system surveillance audit for the latest MTR European medical device regulations. These audits resulted in the renewal of our certifications and the recommendation for inclusion of our latest manufacturing unit at the Sudan.
The F M. Tek is creating an entirely new true minimally invasive category within breast aesthetics and the list of countries where means available continues to grow.
Juan Jose Chacon Quiros: We have partner sites in Japan, Spain, France, Sweden, Switzerland, Germany, and Costa Rica. And we have partnered with distributors in the United Kingdom, Turkey, Poland, and the Middle East to begin opening sites in those regions in 2024. We now have 17 centers certified to offer the Mie experience across 15 cities in Japan, Switzerland, Spain, France, Germany, and Sweden, with 39 certified plastic surgeons performing Mie.
We have partner sites in Japan, Spain, France, Sweden, Switzerland, Germany, and Costa Rica, and we have partner with distributors in the United Kingdom, Turkey, Poland and the middle East to begin opening sites in those regions in 2024.
We now have 17 centers certified to offered to me experience across 15 cities in Japan, Switzerland, Spain, France, Germany and Sweden.
Thirty-ninth certified plastic surgeons performing media.
Juan Jose Chacon Quiros: We are in the process of onboarding an additional 15 new centers across Europe and the Middle East with 31 additional plastic surgeons. We have also signed 20 new centers, which will begin the process of onboarding in the first half of this year. On top of that, we have a lot of interest from the best plastic surgery clinics, who see the business opportunity with the expansion into minimally invasive breast aesthetics, and we are in advanced negotiations with 16 such clinics. MIA is gaining appeal with a new consumer. Of the women who have experienced MIA so far, 38% were not considering breast augmentation prior to MIA. The average consideration time among these women was less than two months versus three to seven years for traditional breast augmentation, and the average price paid for MIA was 70% or more higher than the traditional procedure. Moreover, the testimonials from women reinforced a value proposition based on convenience, quick recovery, and excellent aesthetic output.
We are in the process of Onboarding and additional 15, new centers across Europe, and the middle East with 31 additional plastic surgeons.
We have also signed 20, new centers, which will begin the process of on boarding in the first half of this year.
On top of that we have a lot of interest from the best plastic surgery clinics, who see the business opportunity with the expansion into minimally invasive breast aesthetics and we are in advanced negotiations with 16 such clinics.
He is gaining appeal with the new consumer of the women, who experience Mia so far 38% were not considering breast augmentation prior to me here.
The average consideration time among these women was less than two months versus three to seven years for traditional breast augmentation and the average price paid for meal with 70% or more higher than a traditional procedure.
Moreover, the testimonials from women reinforced the value proposition based on convenience weak recovery and excellent aesthetic outcomes.
Juan Jose Chacon Quiros: It is still early in the launch of MIA, but we are seeing proof points that we are creating and capturing new consumer demand in this new category of breast aesthetics. In China, we held a series of events during the first week of January to formally launch Motiva with our exclusive distribution partner. We held special events in Shanghai, Wenzhou, Shenzhen, and Hainan.
It is still early in the launch of me here, but we are seeing proof points that we are creating and capturing new consumer demand in this new category in breast aesthetics.
In China, we held a series of events during the first week of January to formally launched Motiva with our exclusive distribution partner.
We held special events in Shanghai, Wenzhou, Shenzhen, and Hainan supported by our partner additional medical education events have been taking place in different cities in China and will continue throughout the year.
Juan Jose Chacon Quiros: Supported by our partner, additional medical education events have been taking place in different cities in China and will continue throughout the year. China is the second largest market for breast augmentation and has among the highest ASPs in the world. Our research confirms that there is a large segment in the Chinese market willing to pay significantly higher prices for the perceived value of the highest quality product. We expect our share in the Chinese market will mirror the success we have seen in surrounding markets of Asia. In markets like South Korea, Japan, Thailand, Vietnam, Singapore, Hong Kong, and Taiwan, we hold the number one market share position, and China should match this success over time. I will now turn the call over to Rob.
China is the second largest market for breast augmentation and has among the highest isps in the world.
Our research confirms that there is a large segment of the Chinese market willing to pay significantly higher prices for the perceived value of the highest quality products. We expect our share in the Chinese market will mirror. The success, we have seen and surrounding markets of Asia in markets like South Korea, Japan, Thailand.
In Vietnam, Singapore, Hong Kong, and Taiwan, we hold the number one market share position in China should match. The success over time I will now turn the call over to Raj.
Rajbir Singh Denhoy: Thank you, Juan Jose. Total revenue for the fourth quarter was $31.6 million, a decline of 28% from the year-ago period. Currency had a positive impact of approximately 2% in the fourth quarter. Direct sales in the fourth quarter were approximately 49% of implant sales, while distributors made up the balance. From a regional perspective, sales in Europe, the Middle East, and Africa accounted for approximately 52% of the global total, Asia-Pacific 19%, and Latin America 27%.
Thank you Juan Jose.
Total revenue for the fourth quarter was $31.6 million a decline of 28% from the year ago period.
Currency had a positive impact of approximately 2% in the fourth quarter.
Direct sales in the fourth quarter were approximately 49% of implant sales, while distributors made up the balance.
A regional perspective sales in Europe, Middle East and Africa were approximately 52% of the global total.
Asia Pacific, 19% Latin America, 27%.
Rajbir Singh Denhoy: Brazil, which is our largest market globally, accounted for approximately 10% of total quarterly sales. Our gross profit for the fourth quarter was $20.6 million, or 65.2% of revenue, compared to $28.2 million, or 64.3% of revenue for the same period in 2022. Gross profit in the fourth quarter was negatively impacted by an obsolescence charge, without which gross margins would have been approximately 66%. Gross margin was also impacted by higher overhead and labor costs. Costs were higher, in part, due to changes in foreign exchange rates between the U.S. dollar and the Costa Rican colón.
Brazil, which is our largest market globally accounted for approximately 10% of total quarterly sales.
Gross profit for the fourth quarter was $26 million or 65, 2% of revenue compared to $28 $2 million or 64, 3% of revenue for the same period in 2022.
Our gross profit in the fourth quarter was negatively impacted by an obsolescence charge without which gross margins would've been approximately 66%.
Our gross margin was also impacted by higher overhead and labor costs cost were higher part from changes in foreign exchange rates between the U S dollar and the Costa Rican colon.
Rajbir Singh Denhoy: As we report in U.S. dollars, the strengthening of the cologne over the last year resulted in higher reported costs. Average selling prices in the fourth quarter were up from the third quarter of 2023 and year over year. SD&A expenses for the fourth quarter increased approximately $2 million to $36.9 million, compared to $34.9 million in the fourth quarter of 2022.
As we report in U S dollars the strengthening of the clone over the last year resulted in higher reported costs.
Average selling prices in the fourth quarter up from the third quarter of 2023.
And year over year.
SG&A expenses for the fourth quarter increased approximately $2 million to $36 $9 million compared to $34 $9 million in the fourth quarter of 2022.
Rajbir Singh Denhoy: The increase in SG&A in the fourth quarter results in part from our investment in new growth initiatives like MIA and preparations for our launch in the U.S. These were offset by the significant cost reduction initiatives we undertook in the quarter, which stated a decline of $3.1 million sequentially from the third quarter. R&D expenses for the fourth quarter declined approximately $700,000 from the same quarter a year ago to $5.8 million.
The increase in SG&A in the fourth quarter resulted in part from our investments in new growth initiatives like Mia and preparations for a launch in the U S.
These were offset by the significant cost reduction initiatives, we undertook in the quarter.
<unk> declined $3 $1 million sequentially from the third quarter.
R&D expenses for the fourth quarter declined approximately $700000 from the same quarter, a year ago to $5.8 million and were down $1.3 million sequentially.
Rajbir Singh Denhoy: And we're down $1.3 million sequentially. Total operating expenses for the fourth quarter were $42.7 million, an increase of approximately $1.4 million from the year-ago period. However, operating expenses declined approximately $4.4 million from the third quarter due primarily to cost reduction initiatives in the quarter.
Total operating expenses for the fourth quarter were $42 $7 million, an increase of approximately $1.4 million from the year ago period.
Operating expenses declined approximately $4.4 million from the third quarter due primarily to cost reduction initiatives in the quarter.
Net loss from operations for the fourth quarter was $22 $1 million compared to a net loss of $13 $2 million in the same period in 2022.
Rajbir Singh Denhoy: The net loss from operations for the fourth quarter was $22.1 million, compared to a net loss of $13.2 million in the same period last year. Our cash position as of December 31st was $40 million, compared to $66.4 million at the end of 2022. Our cash use in the fourth quarter was $12.2 million, which compared to $38 million in the previous quarter. With a $50 million private placement in January, our pro forma cash position increased to $90 million. Last week we also amended our credit facility with Oaktree; the milestones under which we can access the two remaining tranches on our debt facility, which total $50 million, were amended to allow us to access the first $25 million on U.S. FDA approval of Motiva implants and the second with the additional milestone of achieving $195 million in trailing 12-month sales. In 2024, our guidance excludes the contribution of Motiva Implant Approval in the United States. You are guiding to a revenue range of $174 to $184 million, representing growth of 5 to 11%. We expect currency to have a minimal impact on our sales results this year.
Our cash position as of December 31st was $40 million compared to $66 $4 million at the end of 2022 our.
Our cash used in the fourth quarter was $12 $2 million, which compared to $38 million in the previous quarter.
With $50 million private placement in January our pro forma cash position increased to $90 million.
Last week, we also amended our credit facility with Oaktree, the milestones under which we can access the two remaining tranches on our debt facility, which totaled $50 million were amended to allow us to access the first $25 million on U S. FDA approval of Motiva implants, and the second with the additional milestone of achieving $195 million and trailing 12 months sales.
Okay.
For 2024, our guidance excludes the contribution of Motiva implant approved in the United States.
You're guiding to a revenue range of $174 million to $184 million representing growth of 5% to 11%.
We expect currency to have a minimal impact on our sales results this year.
We expect gross margins in 'twenty 'twenty four to be approximately 100 basis points higher than 2023 to a range of $65, 5% to 66%.
We've taken a number of steps to lower cash use in 2020 for these efforts include the reduction of global personnel by approximately 28% targeted reductions in operating expenses and management of inventory levels.
As a result, we expect cashews before financing in 2024 to be less than $48 million with.
With these actions we expect to achieve positive adjusted EBITDA in 'twenty 'twenty, four and positive cash flow in 2025.
I'll now turn the call back to Juan Jose.
Thank you Raj establishment labs was founded on bringing differentiated technology to an industry that has seen literally innovation for decades. Unlike our competitors, we have grounded our products in true science and innovation and the clinical and scientific data clearly demonstrate our technologies have no parallel.
Rajbir Singh Denhoy: We expect gross margins in 2024 to be approximately 100 basis points higher than 2023, to a range of 65.5 to 66 percent. We have taken a number of steps to lower cash use in 2024. These efforts include the reduction of global personnel by approximately 28 percent, targeted reductions in operating expenses, and management of inventory levels.
In this industry.
We are now launching our technologies into China, and the United States. The two largest highest priced and highest gross margin markets in the world in our current markets Floris constructing a new standard in breast reconstruction in the ice, creating an entirely new and higher value category in breast aesthetics, we are acutely focused on creating.
Rajbir Singh Denhoy: As a result, we expect cash use before financing in 2024 to be less than $48 million. With these actions, we expect to achieve positive adjusted EBITDA in 2024 and positive cash flow in 2025. I will now turn the call back to Juan Jose. Thank you Raj. Establishment Labs was founded on bringing differentiated technology to an industry that has seen little innovation for decades. Unlike our competitors, we have grounded our products in true science and innovation, and the clinical and scientific data clearly demonstrate our technologies have no parallel in this industry.
Shareholder value and a significant piece of this is to get to cash flow positive as soon as possible. We are confident in our ability to do this early next year and have model our cash spend accordingly, with the cash we have on hand, and the amendment to our credit facility. We are in an excellent position to fund our growth initiatives will mean.
Our profitability targets 'twenty 'twenty four will be one of the most important in our 20 year history. We are entering this year with a solid foundation and with a clear path to become the leading global company in breast aesthetics and reconstruction.
Juan Jose Chacon Quiros: We are now launching our technologies into China and the United States, the two largest, highest-priced, and highest gross margin markets in the world. In our current markets, Flora is constructing a new standard in breast reconstruction, and Mia is creating an entirely new and higher-value category in breast aesthetics. We are acutely focused on creating shareholder value.
I'll now turn the call over to the operator for your questions.
Thank you if he would like to ask a question. Please press star one on your telephone keypad.
Confirmation tone will indicate your line is in the question queue. You May press star two if he would like to remove your question from the queue and for participants using speaker equipment. It may be necessary to pick up your handset before pressing the star T is our first question is from Allen Gong with J P. Morgan. Please proceed.
Juan Jose Chacon Quiros: And a significant piece of this is to get to cash flow positive as soon as possible. We are confident in our ability to do this early next year and have modelled our cash spend accordingly. With the cash we have on hand and the amendment to our credit facility, we are in an excellent position to fund our growth initiatives while meeting our profitability targets. 2024 will be one of the most important years in our 20-year history.
Thanks for the question.
I had a quick one to start off on China. The approval came a little bit later than expected, but you were previously expecting a contribution.
Operator: We are entering this year with a solid foundation and with a clear path to become the leading global company in breast aesthetics and reconstruction. I will now turn the call over to the operator for your questions. Thank you. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue.
And you know in the low teens in the fourth quarter now some of that stocking not all you know underlying quarterly demand, but how should we think about your assumptions for China contribution. This year in light of the fact that you're not assuming any contribution from the U S.
Yeah. Thanks, Alan I think you know.
When we lowered the guidance coming out of the third quarter for 2023, we talked about China being roughly $10 million of the reduction in 2023, as we think about the contribution in 2024, that's a good place to start right. We don't expect that it's all going to come in the first quarter it should be spread out over the you know the first two years.
Alan Gong: And for participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Our first question is from Alan Gong with J.P. Morgan. Please proceed. Thanks for the question. I had a quick one to start off on China.
Three quarters of the year, but I think as a starting point for what China will contribute for us This year I think that's.
Rajbir Singh Denhoy: The approval came a little bit later than expected, but you were previously expecting a contribution in the low teens in the fourth quarter. Now, some of that stockpile, not all underlying quarterly demand, but how should we think about your assumptions for China's contribution this year in light of the fact that you're not assuming any contribution from the U.S.? Yeah, thanks, Alan.
That's a good place to start.
Additionally, I think it's important to recognize that what we are doing now is you know.
Holding educational events in tier one and tier two cities and our shipments in the first half of this year will mirror stocking taking place in those cities across China and then the second half of the year you should think more about some of the reordering is starting to take place as you know demand for these procedure.
Juan Jose Chacon Quiros: I think, you know, when we lowered the guidance coming out of the third quarter for 2023, we talked about China being roughly $10 million of the reduction in 2023. As we think about the contribution in 2024, you know, that's a good place to start, right? We don't expect that it's all going to come in the first quarter; it should be spread out over the, you know, the first two or three quarters of the year. But I think as a starting point for what China will contribute to us this year, I think that's a good place to start. Yeah, additionally, I think it's important to recognize that what we are doing now is, you know, holding educational events in Tier 1 and Tier 2 cities, and our shipments in the first half of this year will mirror the stocking taking place in those cities across China. And in the second half of the year, you should think more about some of the reordering starting to take place as demand for these procedures increases. I got it.
Inquiries.
Okay.
Got it and then a question kind of on broader market dynamics, when we think about the <unk>.
Functions underpinning underpinning your guidance in early January talked about house.
<unk> havent necessarily recovered, but that previous weakness looks to have stabilized what assumption do you have for the underlying market to get to your range should we think that the bottom half of the range assumes minimal improvement in the top half assumes more improvement just help us level set your expectations. There. Thank you.
Yeah.
Yeah, No I think the way we think about it is I think you are right. I mean, we are seeing the market stabilizing we're seeing recovery in these markets things are not fully back to normal I think as we look out over the course of the year and even some of the feedback we're already getting from the market is that things are picking up things are improving and so we do expect to see that stabilization.
Take hold over the over the year.
In terms of the range the top to the bottom I mean for US. This year I think as you described it right. If we see a stronger recovery a quicker recovery it'll probably push us towards the upper end, alright, things take a little bit longer perhaps with the lower end.
Rajbir Singh Denhoy: And then, you know, a question kind of on broader market dynamics, when we think about the assumptions underpinning your guidance, in early January, you talked about how, you know, markets haven't necessarily recovered, but that previous weakness looks to have stabilized. What assumption do you have for the underlying market to get to your range? Should we think that, you know, the bottom half of the range assumes minimal improvement, and the top half assumes, you know, more improvement? Just help us level set your expectations there. Thank you. Yeah, no. I think the way we think about it is, I think you're right.
So we're starting this year I think from a kind of a conservative starting point.
And again, we're seeing things improve out there, but it's going to take some time.
Yeah.
Our next question is from Julien rents with Citi. Please proceed.
Good evening and thank you for taking the question one instead of mechanical I'm curious what you think your capex spend will be this year.
The majority of your new facility.
Thank you and then my second question is a little bit more interesting I hope, which is if you you're seeing stabilization in demand.
Rajbir Singh Denhoy: I mean, we are seeing the market stabilizing. We're seeing recovery in these markets, but things are not fully back to normal.
Is it pocketed is it in certain regions, how do we think about stabilization transitioning towards higher demand and our growth. Thank you.
Rajbir Singh Denhoy: I think as we look out over the course of the year, and even some of the feedback we're already getting from the market, is that things are picking up, things are improving. And so I do expect to see that stabilization take hold over the year. In terms of the range, the top to the bottom, I mean, for us this year, I think, as you described it, right, if we see a stronger recovery, a quicker recovery, it'll probably push us towards the upper end.
Yeah. Thank you for that.
What takes us due to this comments around you know market is recovering and are seeing some of desalinization taking place.
We see this happening at different speed in different regions.
For instance, Brazil, I think it's a it's still not in the right place but.
But we see you know Asia picking up again.
We also see in our direct markets in Europe, you know demand picking up as well. So I think it's not going to happen all at once.
Rajbir Singh Denhoy: If things take a little bit longer, perhaps for the lower end. So we're starting this year, I think, from a kind of a conservative starting point. And again, we're seeing things improve out there, but it's going to take some time. Our next question is from Joanne Wuench with Citi. Please proceed. Good evening, and thank you for taking the question.
But you know we're not the only company seeing that recovery in the statics and that includes of course breast aesthetics and reconstruction.
Yeah and on your question on Capex, you know, we did see stronger or heavier capex over the last couple of years as we were completing the new facility in Costa Rica, which you've been too as we look out in 2024, there's still has some work to be done on that facility. We also as we've noted we are investing in the United States and so I think capex for us will still be something in the order of about <unk>.
Joanne Karen Wuensch: I'm curious what your CapEx spend will be this year with the majority of your new facility behind you. And then my second question is a little bit more interesting, I hope, which is if you're seeing stabilization and demand, is it concentrated? Is it in certain regions?
<unk> million dollars.
That's captured in the guidance, we've given of the overall kashi as being less than $48 million. This year.
Thank you.
Our next question is from Anthony <unk> with Mizuho Group. Please proceed.
Juan Jose Chacon Quiros: How do we think about stabilization transitioning towards higher demand and or growth? Thank you. Yeah, thank you for that. I think, you know, what takes us to these comments around, you know, markets recovering and us seeing, you know, some of the civilization taking place. You know, we see this happening at different speeds in different regions. For instance, Brazil, I think it's still not in the right place.
Yeah.
Anthony Your line is live please check if you're muted.
Okay.
Okay, we will move on.
Our next question is from Josh Jennings with Cowen. Please proceed.
Hi.
Thanks for taking the questions I was hoping to just get some comments Juan Jose on your views on the state of the U S. Breast implant market you guys haven't launched yet, but a future competitor announced or filed for bankruptcy.
Juan Jose Chacon Quiros: But we see, you know, Asia picking up again. We also see, in our direct markets in Europe, demand picking up as well. So I think it's not going to happen all at once. But, you know, we're not the only company seeing the recovery in aesthetics. And that includes, of course, breast aesthetics and recovery.
It seems like an opportune time for Exelon.
Thanks, amongst motiva in the coming months, so maybe just to stay in the phase there and does this.
Change your strategy on the U S for launch next year.
Relatively strong recon franchise.
Yeah. Thanks, Josh.
So in the U S market would you see is about 95%.
Rajbir Singh Denhoy: Yeah, and on your question on CapEx, you know, we did see stronger or heavier CapEx over the last couple of years as we were completing the new facility in Costa Rica, which you've been to. As we look out in 2024, there still is some work to be done on that facility. We also, as we've noted, you know, we are investing in the United States. And so I think CapEx for us will still be something in the order of about $20 million. You know, that's captured in the guidance we've given of the overall cash use being less than $48 million this year. Thank you. Our next question is from Anthony Petrone with Mizuho Group. Please proceed. Anthony, your line is live. Please check if you're muted.
Procedures take place with round smooth implants that have very little difference between them.
And you know.
With nothing to separate the offerings in the market the basis of competition is not on the merits of the technology.
So it's not your pricing that in you know in that situation. The smallest company was not able to survive.
But I think that probably the slowdown in aesthetics overall, probably exacerbated.
The demise of that company, but but overall I think that you know.
Just like any other slowdown that we have seen in the past.
Eventually it it goes back.
In O eight or nine it was about around 10% of procedures affected for two years, but eventually it came back in and came back higher.
Operator: Okay, we will move on. Our next question is from Josh Jennings with TD Cowen. Please proceed. Hi, good afternoon. Thanks for taking the questions. I was hoping to just get some comments, Juan Jose, on your views on the state of the US breast implant market. You guys haven't launched yet, but a future competitor has announced or filed for bankruptcy, and it seems like an opportune time for Establishment Labs to launch Motiva in the coming months. But maybe just the state of affairs there and does this... um, change your strategy on the US4 launch? Accenture had a relatively strong recon franchise. Yeah, thanks, Josh. So, in the US market, what you see is that about 95% of procedures take place with round, smooth implants that have very little difference between them. And, you know, with nothing to separate the offerings in the market, the basis of competition is not the merits of the technology.
I think the U S market is starting to pick up again from what we hear from you.
No different indicators and yeah, you know of course as we as we look into the expansion of Flora. This provides for an opportunity for us to be able to bring our fully differentiated tissue expander.
Two U S centers of excellence.
Okay.
Great. Thanks, and then just I know you Havent detailed and it's a little premature to detail the U S commercial launch strategy, but just in terms of.
The initial spend the investments that have already been made versus the investments that are required as you move closer to launch and execute the launch.
And just considering the updated Tennessee your balance sheet any thing you can you can share just in terms of investments made versus investments to be made in the coming months in front of the launch thanks a lot.
Juan Jose Chacon Quiros: So it's not surprising that in that situation, the small stuff company was not able to survive. But I think that the slowdown in statics overall probably exacerbated the demise of that company. But overall, I think that, just like any other slowdown that we have seen in the past, eventually it goes back. In 2008, 2009, it was about, you know, around 10% of procedures affected for two years, but eventually it came back, and it came back higher. I think, you know, the U.S. market is, you know, starting to pick up again from what we hear from, you know, different indicators. And yeah, you know, of course, as we look into the expansion of flora, this provides for an opportunity for us to be able to bring our fully differentiated tissue expander to U.S. centers of excellence. Great, thanks.
Yes sure.
We have been investing in the U S. I think as we've been building the infrastructure here to be a commercial organization. You know when you think about finance logistics feed the things you need to be commercial so that spending has been taking place and we're actually leveraging that now as we've launched floor in the United States.
And they're starting to see traction with that product when we get closer to the approval of the implants in the United States, We will start to see a pickup in spending relative to the commercial activity, but given the higher asp's in the U S for higher margin here the ability we have to leverage the spending we've already done as well as the infrastructure, we have outside the United States for the period of <unk>.
Time, which were loss, making in the U S should be relatively short and I think as we noted in the prepared remarks.
The.
Amendment to the Oaktree facility also gives us additional capital should we need it.
Rajbir Singh Denhoy: And then just, I know you haven't detailed, and it's a little bit premature to detail, the US commercial launch strategy, but just in terms of the initial spend, the investments that have already been made versus the investments that are required as you move closer to launch and then execute the launch. And just considering the updated status of your balance sheet. Anything you can share just in terms of investments made versus investments to be made in the coming months in front of the launch? Yeah, sure.
To fully fund the U S launch strategy. So we're feeling pretty good about where we are in terms of getting ready for for being a commercial where their entire portfolio in the U S.
Thanks Raj.
Our next question is from George Sellers with Stephens incorporated please proceed.
Good afternoon.
And thanks for taking the question.
A two parter here on floor, just curious first of all what your guidance assumes if any for floor contribution in 2024, and then could you also just speak to the commercial process for floor and breast reconstruction in the hospital as compared to commercialization in the breast augmentation market.
Rajbir Singh Denhoy: You know, we have been investing in the US. I think, you know, as we've been building the infrastructure here to be a commercial organization, you know, if you think about finance, logistics, the things you need to be commercial, so that spending has been taking place. And we're actually leveraging that now as we've launched Flora in the United States, you know, and are starting to see traction with that product. As we get closer to the approval of the implants in the United States, we will start to see a pickup in spending relative to commercial activity. But given the higher ASPs in the US, the higher margin here, the ability we have to leverage the spending we've already done as well as the infrastructure we have outside the United States, you know, the period of time which we're losing in the US should be relatively short.
Yeah.
Yeah. Thanks George.
When you launch products, especially products that you now have such differentiation.
A lot of your focus at the beginning is on the qualitative parts.
Still you know you you heard our numbers you know we have 15 centers that are working through the vac process that process is you know it takes time, but you know you're already seeing us getting into into these hospitals in the first half of this year and will can.
Rajbir Singh Denhoy: And I think, as we noted in the prepared remarks, the amendment to the Oak Tree facility also gives us additional capital should we need it, you know, to fully fund the US launch strategy. So we're feeling pretty good about where we are in terms of getting ready to go commercial with our entire portfolio in the US. Thanks, Raj.
Adding to that but it's early on to be able to give you.
Precision on what do we expect for Flora now overall, you know it is $180 million market and we are selling our tissue expanded our premium.
Operator: Our next question is from George Sellers with Stevens Incorporated. Please proceed. Good afternoon and thanks for taking the question. A two-parter here on flora.
So we do expect this to eventually be an important contributor over the next few years to tour growth and definitely it's it.
It has the highest asp's in the world and the highest gross margins for any market for tissue Expanders.
George Stone Sellers: Just curious, first of all, what your guidance assumes, if any, for Flora's contribution in 2024? And then could you also just speak to the commercial process for Flora and breast reconstruction in the hospital as compared to commercialization in the breast augmentation market? Yeah, thanks, George.
Yeah.
Okay, that's really helpful.
And then maybe shifting to me could you give some additional color on what our media contributed in the quarter and then also your expectations I believe you've said, there's another 30 or so potential clinics that ebay.
Juan Jose Chacon Quiros: When you launch products, especially products that, you know, have such differentiation, you know, a lot of your focus at the beginning is on the qualitative part. Still, you heard our numbers. We have 15 centers that are working through the VAC process. That process takes time, but, you know, you're already seeing us getting into these hospitals in the first half of this year, and, you know, we'll continue adding to that. But it's early on to be able to give you precision on what we expect for FLORA. Now overall, you know, it is a $180 million market, and we are selling our tissue expanded or premium, so we do expect this to eventually be an important contributor over the next few years to our growth. And definitely it's the highest ASPs in the world and the highest gross margins for any market for tissue expanded. Okay, that's really helpful.
You may add.
Add to the EMEA clinics, but just curious your expectations for that progression in 2024 as well.
Look just like everyone. We are super excited with Mia, particularly because we see the amazing results and.
The differentiated experience. The fact that these women are just going back to their daily lives minus the exercise the same day, it's just an amazing thing to see and that's why we're so confident on the growth of <unk>, but just like I said before when you were launching these type of products you focus first on the qualitative.
What we did today, though is give you a lot of color on the number of centers. So just.
With the list we provided.
Juan Jose Chacon Quiros: And then maybe shifting to Mia, could you give some additional color on what Mia contributed in the quarter and then also your expectations? I believe you've said there are another 30 or so potential clinics that you may add to the Mia clinics, but just curious about your expectations for that progression in 2024 as well. Look, just like everyone, we are super excited about MIA, particularly because we see the amazing results and, you know, the differentiated experience. You know, the fact that these women are just going back to their daily lives minus the exercise the same day, it's just an amazing thing to see.
It seems that we should be in about 70 centers this year at least so.
The the network of <unk> certified centers is increasing and what we are seeing is in the first group of clinics that launched in the second half of last year. We are seeing increasing demand every month and you know as we get through the capillarity.
In D C DS.
With more centers getting there then we're going to see more demand so.
Eventually I think what we will try to do is on top of all the information. We gave today on the number of centers is also give you an idea in the future of how that ramps up in you know in terms of the number of procedures, but still it's still a little bit early to to go ahead in that and do that.
Juan Jose Chacon Quiros: And that's why we're so confident in the growth of MIA. But just like I said before, you know, when you're launching these types of products, you focus first on the qualitative. You know, what we did today, though, was give you a lot of color on the number of centers. So, you know, just, you know, with the list we provided, it seems that, you know, we should be in about 70 centers this year, at least. So, you know, the network of MIA-certified centers is increasing, and what we are seeing is that in the first group of clinics that launched in the second half of last year, we are seeing increasing demand every month. And, you know, as we get through the capillary in these cities with more centers getting there, then we're gonna see more demand. So, eventually, I think what we will try to do is, on top of all the information we gave today on the number of centers, also give you an idea in the future of how that ramps up in terms of the number of procedures. But it's still a little bit early to go ahead and do that.
Okay. Thank you all for the time.
Our next question is from Murray Tivo with P. P. I G. Please proceed.
Hey, good afternoon, everyone and are the semi Braun for Maria Thanks for taking the questions maybe I can start Raj.
The operating expense question and maybe your thoughts for 2024 and if any of these cuts that you made in the back half of last year. As you know is there anything left to be recognized in Q1 or is that all behind us at this point.
Yes, so I think there will be some additional spending in the first quarter relative to the fourth quarter in terms of cash use you know.
Again around severance cost and we do have hybrid costs, usually in the beginning of the year.
George Stone Sellers: Okay, thank you for your time. Our next question is from Marie Thibault with BPIG. Please proceed. Hey, good afternoon, everyone. This is Sam Eiber. I'm from Marie.
You know and I think it's also important to note that we're continuing to look for efficiencies across the business right. So in terms of getting to that stable position, we're not there yet.
Marie Yoko Thibault: Thanks for taking the questions. Maybe I can start, Raj, on just an operating expense question and maybe your thoughts for 2024. And if any of these cuts that you made in the back half of last year, you know, is there anything left to be recognized in Q1? Or is that all behind us at this point?
We will continue to look again at ways to make our business more efficient.
We did take a lot of cost out of out of the out of the base.
So if you look at operating expenses last year versus this year, it will be down something around 25% or $30 million from where we were in 2023.
Rajbir Singh Denhoy: Um, Yeah, so I think, you know, there will be some additional spending in the first quarter relative to the fourth quarter in terms of cash use, you know, again, around severance costs. And we do have heavier costs usually in the beginning of the year. You know, and I think it's also important to note that we're continuing to look for efficiencies across the business, right? So in terms of getting to a stable position, we're not there yet. And, you know, we will continue to look again at ways to make our business more efficient. We did take a lot of cost out of the base. You know, so if you look at operating expenses last year versus this year, they will be down something around $25 or $30 million from where we were in 2023. So I don't know if that answers your question.
So I hope that answers your question, but in terms of cash use we could see a little bit of a tick up in the first quarter again on some of the.
The severance costs and restructuring costs, we've undertaken but then over the course of the year. The overall expense base is going to be significantly lower than where it was last year.
Yeah, No. That's a that's super helpful. Thanks for that maybe I can just just my follow up here I know, we're getting close to maybe one we'd expect you guys to have maybe four year data from the pivotal trial.
I know considering a lot of the back and forth with the FDA right now I don't know if that's something you're looking at present or is that something maybe we should hold off on maybe you're saying you guys present until you get approval.
Rajbir Singh Denhoy: But, you know, in terms of cash use, we could see a little bit of a pickup in the first quarter again on some of the, you know, severance costs and the restructuring costs we've undertaken. But then, over the course of the year, the overall expense base is going to be significantly lower than where it was last year. Yeah, no, that's super helpful.
So it is important to remember that.
The F D a guidance document.
On breast implant requires three year data, which we have provided however, you know as a women's health company were always been super transparent with data we were.
The first company ever to provide data preapproval on on.
Juan Jose Chacon Quiros: Thanks for that. Maybe I can use just my follow-up here. I know we're getting close to maybe when we'd expect you guys to have maybe four years of data from the pivotal trial. But considering a lot of the back and forth with the FDA right now, I don't know if that's something you're looking to present, or is that something maybe we should hold off on maybe seeing you guys present until you get approval? So, it is important to remember that, you know, the FDA, in its guidance document on breast implants, requires three-year data, which we have provided.
On the trial and.
We will continue to do so so yes it does.
<unk> is to provide the four year data to the market. After the FDA has received.
That data for our prebiotic interactions and yes, and I think you know.
This data will show as it is shown in the past that we have an amazing technology with superior safety results.
Great. Thanks for taking the questions.
As a reminder, just star one on your telephone keypad, if he would like to ask a question. Our next question is from Anthony Petrone with Mizuho Group. Please proceed.
Juan Jose Chacon Quiros: However, you know, as a women's health company, we've always been super transparent with data. We were, you know, the first company ever to provide data pre-approval for the trial, and, you know, we will continue to do so. So, yes, you know, the idea is to provide the four-year data to the market after the FDA has received that data for our periodic interactions. And, yes, and I think, as it has shown in the past, that we have an amazing technology with superior safety results. Great. Thanks for taking the questions. As a reminder, just press 1 on your telephone keypad if you would like to ask a question. Our next question is from Anthony Petrone with Mizuho Group. Please proceed. Thanks. Apologies, I'm just hopping between calls here.
Thanks, and apologies just hopping between calls here, but maybe maybe first just on the geographic sort of split for.
For the aesthetics market are there any regions, where youre starting to see green shoots.
Perhaps distributors are seeing more activity on the ground and are re upping on inventory stocking. So that would be question. One just geographically how the market is playing out and then maybe any thoughts on where the estate the underlying aesthetic market is in the United States. Just ahead of a potential launch on on Motiva into.
In the second half and then I'll have one follow up for Raj on on the middle of the P&L.
Yeah.
Yeah. So you know if.
If you want to think about it by region I think that you know.
Probably Latin America, and most importantly, Brazil.
I have not.
Recovered as quickly as other markets like in Asia, we're starting to see that as a full distributor region for us by the way, but we're starting to see some.
Anthony Charles Petrone: So maybe first, just on the geographic sort of split for the aesthetics market, you know, are there any regions where you're starting to see green shoots? Where perhaps distributors are seeing more activity on the ground and are restocking inventory. So that would be question one, just geographically how the market is playing out. And then maybe any thoughts on where the underlying aesthetic market is in the United States just ahead of a potential launch for Motiva in the second half. And then I'll have one follow-up for Raj in the middle of the P&L. Yeah, so you know, if you want to think about it by region, I think that, you know, probably Latin America and, you know, most importantly, Brazil have not, you know, recovered as quickly as other markets like Asia, we're starting to see, you know, that's a full distributor region for us, by the way, but we're starting to see some, you know, some of the activity coming back.
Some of the activity coming back and we are also seeing that across Europe, and especially in our direct markets, where we see that in real time. So you know we expect this to continue taking place at different speeds in these regions, but.
We.
When we think about guidance for this year I think what you should think of is conditions improving throughout this year and the U S.
Was actually hit.
Quite strongly by this <unk>.
Global slowdown in aesthetics, but.
From different indicators, we now situation is improving and you know.
By the time, we go to market I think that will be in a good position to take over demand and the fact that we might go to market with one less competitor of course adds up to the opportunity.
Juan Jose Chacon Quiros: And we are also seeing that, you know, across Europe and especially in our direct markets, where we see it in real time. So, you know, we expect this to continue taking place at different speeds in these regions. But, you know, when we think about guidance for this year, I think what you should think about is, you know, conditions improving throughout this year. And the US, you know, was actually hit quite strongly by this global slowdown in aesthetics.
No absolutely and then Rajiv just on the expense outlook. When you think about the Motiva trial eventually rolling off I mean, what what is the cost burden on the trial itself.
And then when you think about reinvesting those dollars.
Is that happening now ahead of a launch or will it happen post FDA clearance. Thanks.
Yes, it's a fair question or we are still incurring cost relative to that trial as we're moving through the FDA process, we were getting close to the approval, but but theres still costs associated with it.
Juan Jose Chacon Quiros: But, you know, from different indicators, we know the situation is improving. And, you know, by the time we go to market, I think that we'll be in a good position to take over demand. And, you know, the fact that we might go to market with one less competitor, of course, adds up to the opportunity. Absolutely. And Raj, just on the expense outlook, when you think about the MOTIVA trial eventually rolling off, I mean, what is the cost burden of the trial itself? And then you think about reinvesting those dollars.
Once the approval happens Thats, we don't stop our clinical activity in the United States, we have products coming after that.
An important one that will come to the United States.
The ergonomics two platforms. So it will still continue to be cost associated with our regulatory activity in the United States.
But I think in general as we noted earlier, we've taken quite a bit of cost out of our out of our base here in 2024, and so again, we're operating at a much more efficient basis and it does give us some flexibility as we move through the year to take advantage of some of these opportunities if we can.
Anthony Charles Petrone: You know, is that happening now ahead of a launch, or will it happen post-FDA clearance? Thanks. Yeah, it's a fair question.
Rajbir Singh Denhoy: We are still incurring costs relative to that trial as we're moving through the FDA process. We're getting close to approval, but there are still costs associated with it. Once approval happens, we don't stop our clinical activity in the United States. We have products coming after that. MIA is an important one that will come to the United States, the Ergonomics II platform. However, there will still continue to be costs associated with our regulatory activity in the United States.
So I wouldn't expect that that event of the U S approval is really going to step down or are spending here too dramatically.
Helpful. Thank you.
Okay.
That is all the time that we have for questions. Today I will now turn the call back over to Juan Jose for closing remarks.
Thank you for joining us in today's call. We look forward to providing our next quarterly update in May and we wish everyone continued good health and happiness.
Rajbir Singh Denhoy: But I think, in general, as we noted earlier, we've taken quite a bit of cost out of our base here in 2024. And so, again, we're operating on a much more efficient basis. And it does give us some flexibility as we move through the year to take advantage of some of these opportunities if we can. So I wouldn't expect that the event of U.S. approval is really going to step down our spending here too dramatically.
Thank you that will conclude today's conference you may disconnect. Your lines at this time and thank you for your participation.
Yeah.
Yes.
Thank you.
Juan Jose Chacon Quiros: Thank you. That is all the time that we have for questions today. I will now turn the call back over to Juan Jose for closing remarks. www.establishmentlabs.com. 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 happiness. Thank you. That will conclude today's conference. You may disconnect your lines at this time, and thank you for your participation. Thank you. Thank you. Thank you. www.establishmentlabs.com
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