Q2 2024 Establishment Labs Holdings Inc Earnings Call
Operator: Good afternoon, and welcome to the Establishment Labs report's second quarter 2024 financial results call. At this time, all participants will be in a listen-only mode. At the end of this call, we will open the line for question and answer, and instructions will follow at that time. As a reminder, this call is being recorded. I would now like to turn the call over to Raj Denhoy, Chief Financial Officer. Please go ahead.
Good afternoon, and welcome to the establishment Labs reports second quarter 2000, and has been for financial they're sold skull. At this time, all participants will be in a listen only mode. At the end of the skull, who will open the line for question and answer session and instructions will follow at that time as a reminder, this call is being recorded I would now.
Operator: 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, this call is being recorded.
Rajbir Denhoy: I would not like to turn the call over to Rajbir Denhoy, Chief Financial Officer. Please go ahead. Thank you, operator, and thank you, everyone, for joining us. With me today is Juan as H. Cone Quiros, our Chief Executive Officer. Following our prepared remarks, we will take your questions.
Like to turn the call over to Roger Hawley, Chief Financial Officer. Please go ahead.
Raj 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 as defined by the meeting of federal securities laws. These include statements on Establishment Labs' financial outlook and the company's plans and timing for product development and sales.
Speaker Change: Thank you operator, and thank you everyone for joining US with me today is <unk> <unk>, our Chief Executive Officer.
Speaker Change: Following our prepared remarks, we'll take your questions.
Rajbir Denhoy: Before we begin, I would like to remind you that comments made by management during this call will include four looking statements when the meeting and federal securities laws. These include statements on Establishment Labs' financial outlook and the company's plans in timing for product development and sales. These four looking statements are based on management's current expectations and involved risks and uncertainties. For discussions of principal risk factors and uncertainties, it may affect our performance or cause actual results of different materially from these statements.
Speaker Change: Let me 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.
Speaker Change: These include statements on establishment Labs' financial outlook, and the company's plans and timing for product development and sales.
Raj Denhoy: These forward-looking statements are based on management's current expectations and involve risks and uncertainty. 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 profitability of the company's business, which can be stated as EBITDA or adjusted EBITDA.
Speaker Change: These forward looking statements are based on management's current expectations and involve risks and uncertainties.
Speaker Change: For a discussion of the principal risk factors and uncertainties that may affect our performance will 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 establishment labs Dot com.
Rajbir Denhoy: 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 profitability of the company's business, which can be stated as EBITDA or just as EBITDA. Reconciliation is to comparable gap financial measures for non-gap measures, if available, maybe found in today's press release, which is available on our website.
Raj Denhoy: Reconciliations to comparable GAAP financial measures for non-GAAP measures, if available, may be found in today's press release, which is available on our website. 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 product availability.
Speaker Change: I 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 profitability of the company's business, which can be stated EBITDA or adjusted EBITDA.
Speaker Change: Reconciliations to comparable GAAP financial measures for non-GAAP measures is available maybe found in today's press release, which is available on our website.
Rajbir Denhoy: Please also note that Establishment Labs received an Investigational Device Exemption from the FDA for material 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 product availability.
Speaker Change: Please also note that establish allows received an investigational device exemption from the FDA from a TV implants and is undergoing clinical trials to support regulatory approval in the United States we.
Speaker Change: We continually seek to expand the geographies in which our products are regulatory approved please check with your local authority for product availability.
Rajbir Denhoy: The content of this conference call contains time-sensitive information, accurate only as the date of this live broadcast, August 6, 2024. Except it's 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.
Raj Denhoy: The content of this conference call contains time-sensitive information accurate only as of the date of this live broadcast, August 6, 2024. 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. With that, it is my pleasure to turn the call over to our CEO, Juan Jose. Thank you, Raj.
Speaker Change: The content of this conference call contains time sensitive information accurate only as of the date of this live broadcast August six 2024, except as required by law established labs undertakes no obligation to revise or otherwise update any statements to reflect events or circumstances. After the date of this call.
Juan Quiros: With that, it is my pleasure to turn the call over to our CEO, Juan Jose. Thank you, Raj, and good afternoon, everyone. Revenue in the second quarter of 2024 totalled $44.1 million. Global demand for our products continues to stabilize and was reflected in the strong sequential improvement we signed revenue this quarter. Quarter of a quarter are revenue improved by 18.7 percent, and this increases our confidence about a return to growth in current markets.
Speaker Change: Is that it is my pleasure to turn the call over to our CEO Juan Jose.
Juan Jose Chacon Quiros: Thank you, Raj, and good afternoon, everyone. Revenue in the second quarter of 2024 totaled $44.1 million. Global demand for our products continues to stabilize, and this was reflected in the strong sequential improvement we saw in revenue this quarter. Quarter over quarter, our revenue improved by 18.7%, and this increases our confidence about our return to growth in current markets. I am sure a recent FDA pre-approval inspection is top of mind for many of you on the call, and I am pleased to tell you that during the week of July 22nd, the FDA conducted and completed their PMA pre-approval inspection of our manufacturing facility in Costa Rica. The investigator had three observations listed in a single 483 report, each of which is unrelated and non-systemic in name.
Juan Jose: You Raj and good afternoon, everyone revenue in the second quarter of 2024 totaled $44 1 million global demand for our products continues to stabilize and was reflected in the strong sequential improvement we signed revenue this quarter.
Speaker Change: For over a quarter of revenue improved by 18, 7% and this increases our confidence about our return to growth in current markets I am sure. Our recent FDA Preapproval inspection is top of mind for many of you on the call and I am pleased to tell you that during the week of July 22nd the FDA conducted and completed the PMA.
Juan Jose Chacon Quiros: This is not unexpected for a PMA pre-approval inspection and should not meaningfully impact our timeline to launch in the United States. We have already submitted our responses to the FDA to address their observations. The process toward approval should now move forward to closure.
Juan Quiros: I am sure a recent FDA pre-approval inspection is top of mind for many of you on the call, and I am pleased to tell you that during the week of July 22nd, the FDA conducted and completed their PMA pre-approval inspection of our manufacturing facility in Costa Rica. The investigator had three observations listed in a single 483 report, each of which are unrelated and not systemic in nature. This is not unexpected for PMA pre-approval inspection and should not meaningfully impact our timeline to launch into the United States. We have already submitted our responses to the FDA to address their observations.
Speaker Change: Preapproval inspection of our manufacturing facility in Costa Rica invest.
Speaker Change: The investigator had three observations listed in a single 483 report each of which are unrelated and not systemic in nature. This is not unexpected for P. M. A preapproval inspection and should not meaningfully impact our timeline to launch in the United States we.
Speaker Change: We have already submitted our responses to the FDA to address their observations.
Juan Quiros: The process towards approval should now move forward to closure. As a reminder, we have already received an approval letter where the FDA stated that pending a satisfactory review of our facility, our PMA would be approved. We are confident that after the inspection and our timely response, we have satisfied that final step. And we believe that the final approval will be issued soon. All regions showed sequential improvement in the second quarter with the exception of Latin America. And in particular Brazil, as we noted in previous calls, the Brazilian market continues to suffer from softer underlying demand, and we do not expect to see improvement this year. We have a number of initiatives to strengthen our market position in Brazil while making sure that during this slowdown, we have a cost-based that reflects our current demand. The rest of Latin America is stabilizing at a slower pace than other regions, and we think the current environment in the region will continue to be challenging for aesthetics in general. And Mia, on the other hand, performed well, and the second quarter was notable as there are markets that have fully recovered from the slowdown last year. We are also seeing a good recovery in demand from our distributors in the APEC region. Our second quarter results showed the tangible results of the cost reduction in efficiency improvement activities we undertook in the second half of last year. Adjusted ended up, loss was approximately $4 million; this was similar to one queue, despite increasing investment in our U.S.
Speaker Change: Ross's towards approval should now move forward to closure as a reminder, we have already received an approvable letter with the FDA stated that pending a satisfactory review of our facility our PMA would be approved.
Juan Jose Chacon Quiros: As a reminder, we have already received an approvable letter where the FDA stated that pending a satisfactory review of our facility, our PMA would be approved. We are confident that after the inspection and our timely response, we have satisfied that final step, and we believe that the final approval will be issued soon. All regions showed sequential improvement in the second quarter, with the exception of Latin America, and in particular, Brazil.
Speaker Change: Confident that after the inspection and our timely response, we have satisfied that final step and we believe that the final approval will be issued soon.
Speaker Change: All regions showed sequential improvement in the second quarter with the exception of Latin America and in particular, Brazil. As we noted in previous calls the Brazilian market continues to suffer from softer underlying demand and we do not expect to see improvement this year.
Juan Jose Chacon Quiros: As we noted in previous calls, the Brazilian market continues to suffer from softer underlying demand, and we do not expect to see improvement this year. We have a number of initiatives to strengthen our market position in Brazil while making sure that during this slowdown, we have a cost base that reflects our current demand. The rest of Latin America is stabilizing at a slower pace than other regions, and we think the current environment in the region will continue to be challenging for aesthetics in general.
Speaker Change: We have a number of initiatives to strengthen our market position in Brazil, while making sure that during this slowdown we have a cost base that reflects our current demand.
Speaker Change: The rest of Latin America is stabilizing at a slower pace than other regions and we think the current environment in the region will continue to be challenging for statics in general.
Juan Jose Chacon Quiros: EMEA, on the other hand, performed well, and the second quarter was notable as there are markets that have fully recovered from the slowdown last week. We are also seeing a good recovery in demand from our distributors in the APAC region. Our second quarter results showed the tangible results of the cost reduction and efficiency improvement activities we undertook in the second half of last year. Adjusted EBITDA loss was approximately $4 million.
Speaker Change: EMEA on the other hand performed well in the second quarter was notable but there are markets that have fully recovered from the slowdown last year. We're also seeing good recovery in demand from our distributors in the APAC region. Our second quarter results showed the tangible result of the cost reduction and efficiency improvement activities, we undertook.
Speaker Change: In the second half of last year adjusted EBITDA loss was approximately $4 million. This was similar to one Q, despite increasing investments in our U S. Commercial organization in preparation for launch the loss this quarter was less than half of what we reported in the second quarter of <unk>.
Juan Jose Chacon Quiros: This was similar to 1Q, despite increasing investment in our U.S. commercial organization in preparation for a launch. However, the loss this quarter was less than half of what we reported in the second quarter of last year, and we remain on a good trajectory to reach positive EBITDA over the coming quarters. Before Raj provides more on our financial results and outlook, it is worth highlighting several recent events. As we expect FDA approval is very near, we are moving forward with our preparations for entry into the U.S.
Juan Quiros: commercial organization in preparation for a launch. The loss this quarter was less than half of what we reported in the second quarter of last year, and we remain on a good trajectory to reach positive EBITDA over the coming quarters. Before Raj provides more on our financial results and outlook, it is worth highlighting several recent events. As we expect, the approval is very near; we are moving forward with our preparations for entry into the U.S. While we are careful not to market Motiva implants in the U.S. until they are approved, the interest in our company and our technologies among U.S.
Speaker Change: Last year.
Speaker Change: And we remain on a good trajectory to reach positive EBITDA over the coming quarters before Raj provides more on our financial results and outlook. It is worth highlighting several recent events as.
Speaker Change: As we expect FDA approval is very near and we are moving forward with our preparations for entry into the U S.
Juan Jose Chacon Quiros: While we are careful not to market Motiva implants in the U.S. until they are approved, the interest in our company and our technologies among U.S. surgeons is reaching an inflection point. There are a good number of U.S. plastic surgeons in our FDA study, and they have obviously talked with many of their colleagues about their experience. Last month, we hosted a Medical Advisory Board of U.S. Plastic Surgeons at our headquarters, and the feedback from this group has been nothing short of amazing. That there is such strong interest for new breast implants in the U.S. is not surprising. The U.S. market has seen no real innovation in decades.
Raj: Well, we are careful not to market motiva implants in the U S until they are approved the interest in our company and our technologies among U S surgeon is reaching an inflection point.
Juan Quiros: Surgeon is reaching an inflection point. There are a good number of U.S. Plastic surgeons in our FDA study, and they have obviously talked with many of their colleagues about their experiences. Last month, we hosted a medical advisory board of U.S. plastic surgeons at our headquarters, and the feedback from this group has been nothing short of amazing. That there is such strong interest for new breast implant in the U.S. is not surprising the U.S. market has seen no real innovation in decades. Surgeons have had to adapt their practices to sell commodity devices developed decades ago. What we are bringing to the U.S.
Speaker Change: There are a good number of U S plastic surgeons in our FDA study and they have obviously talk with many of their colleagues about their experiences last month, we hosted a medical advisory board of U S plastic surgeons at our headquarters and the feedback from this group has been nothing short of amazing that there is such strong interest for new breast implant in the U S.
Speaker Change: It is not surprising the U S market has seen no real innovation in decades.
Juan Jose Chacon Quiros: Surgeons have had to adapt their practices to sell commodity devices developed decades ago. What we are bringing to the U.S. is not a commodity offering and is designed with the knowledge gained from years of scientific and clinical study. The four-year data from our Motiva US ID study presented earlier this year at the Aesthetic Society meeting showed less than 1% device-related complications with Motiva. These low complication rates are a confirmation of an entirely new standard for breast augmentation.
Speaker Change: <unk> have had to adapt their practices to sell commodity devices developed decades ago.
Speaker Change: What we are bringing to the U S is not a commodity offering is designed with the knowledge gained from years of scientific and clinical studies.
Juan Quiros: is not a commodity offering, and is designed with the knowledge gained from years of scientific and clinical studies. The four-year data from our Motiva U.S. ID study presented earlier this year at the Aesthetic Society meeting showed less than 1% device-related complications with Motiva implants. These low complication rates are a confirmation of an entirely new standard for breast implants. This worth noting that the FDA data from the two largest manufacturers in U.S. showed that between 1 in 7 and 1 in 12 women developed a grade 3 or grade 4 capsule contracture at 4-1. These divided related complications are serious and in many cases require re-operation.
Speaker Change: The four year data from our multi by U S. IDE study presented earlier this year at the aesthetic Society meeting showed less than 1% device related complications with Motiva implants. These low complication rates are a confirmation of an entirely new standard for breast implants as.
Juan Jose Chacon Quiros: It is worth noting that FDA data from the two largest manufacturers in the U.S. showed that between 1 in 7 and 1 in 12 women developed a grade 3 or grade 4 capsular contracture at 4 years. These device-related complications are serious and, in many cases, require re-operation.
Speaker Change: It is worth noting that the FDA data from the two largest manufacturers in the U S showed that between one seven and one in 12 women developed a grade three or grade four capsular contracture at four years. These device related complications are serious and in many cases require we operation.
Juan Quiros: In the Motiva study, it was only one in 200 women.
Juan Jose Chacon Quiros: The Motiva study, it was only 1 in 200 women. This month, we will complete the fifth year of follow-up in the FDA study for breast augmentation, and the buzz is palpable, and it is growing. Jeff Earhart, who leads our North America business, has been moving quickly to build out a team that will support our commercial efforts. We are receiving inbound calls daily from some of the most experienced and highly regarded people in our industry, which is another data point to suggest that the industry recognizes what a game changer the Motiva implant is going to be in the United States. With this kind of talent eager to come to Establishment Labs, Jeff continues to put together an absolutely all-star team.
Speaker Change: <unk> study it was only one in 200 women.
Juan Quiros: This month, we will complete the fifth year of follow-up in the FDA study for breast augmentation, and debuts is palpable, and it is growing. Jeff Erhart, who leads our North America business, has been moving quickly to build out the team that will support our commercial effort. We are receiving inbound calls daily from some of the most experienced and highly regarded people in our industry, which is another data point to suggest that the industry recognizes what a game changer the Motiva implant is going to be in the United States. With this kind of talent, eager to come to Establishment Labs, Jeff continues to put together an absolutely old start team.
Speaker Change: This month, we will complete the fifth year of follow up in the FDA study for breast augmentation and the Buzz is palpable and it is growing.
Jeff Erhardt: Jeff Erhardt, who leads our North America business has been moving quickly to build out the team that will support our commercial effort.
Speaker Change: We are receiving inbound calls daily from some of the most experienced and highly regarded people in our industry, which is another data point to suggest that the industry recognises what a game changer of the Motiva implant is going to be in the United States with.
Speaker Change: With this kind of talent eager to come to establishment labs, Jeff continues to put together an absolutely all star team. This tailwind we have our back office functions ready to go and we have a handful of reps already hired and trained with the Nex group already identified.
Juan Quiros: With this tailwind, we have our back office functions ready to go, and we have a handful of reps already hired and trained. With the next group already identified. We will be ready to put our devices into surgeon's hands very quickly after approval.
Juan Jose Chacon Quiros: With this tailwind, we have our back office functions ready to go, and we have a handful of reps already hired and trained, with the next group already identified. We will be ready to put our devices into surgeons' hands very quickly after approval. It is helpful as we prepare for the U.S. that FLORA, or Unique Tissue Expanders, continues to gain traction. Flores' RFID-enabled non-magnetic port is the first and only one of its kind in the industry.
Speaker Change: We'll be ready to put our devices into surgeon's hands very quickly after approval.
Juan Quiros: It is helpful as we prepare for the US that Flora, or unique tissue expanders, continues to gain traction. Flora's RFID-enabled non-magnetic port is the first and only one of its kind in the industry. This, combined with our patented smooth silk surface technology, puts Flora into an entirely new class of tissue expanders. We have completed the back process at a number of the premier cancer centers in the US, and more are pending. As the benefits of this device are demonstrated and shared in the clinical community, the number of hospitals offering Flora will grow.
Speaker Change: It is helpful. As we prepare for the U S that floor up a unique tissue expanders continues to gain traction.
Speaker Change: Flores RFID enabled non magnetic port is the first and only one of its kind in the industry.
Juan Jose Chacon Quiros: This, combined with our patented smooth silk surface technology, puts Flora into an entirely new class of tissue expanders. We have completed the VAC process at a number of the premier cancer centers in the U.S., and more are pending. As the benefits of this device are demonstrated and shared in the clinical community, the number of hospitals offering FLORA will grow. The momentum with MIA-FEMTA continues to build. MIA is creating an entirely new category within breast aesthetics, where a plastic surgeon can shape the breast in a 15-minute, minimally invasive procedure without the need for general anesthesia. The result is natural and discreet, with a 1 to 2 cup proportionate result. The procedure requires minimal downtime, with women returning to most activities the same day.
Speaker Change: This combined with our patented smooth silk surface technology, which flora into an entirely new class of tissue Expanders.
Speaker Change: We have completed the back process at a number of the premier cancer centers in the U S and more art pending as the benefits of this device are demonstrated in shares in the clinical community. The number of hospitals offering Florida will grow.
Juan Quiros: The momentum with Mia Femte continues to build. Mia is creating an entirely new category within breast aesthetics where a plastic surgeon can shape the breast in a 15-minute minimally invasive procedure without the need for general anesthesia. The result is natural and discrete, with a 1 to 2 cup proportionate result. The procedure requires minimal downtime, with women returning to most activities the same day. By providing a solution that overcomes many of the obstacles of traditional breast augmentation, we are opening up a whole new group of women to breast aesthetics. As the group of women who have experienced Mia grows, the level of activity on social media and in other channels is increasing.
Speaker Change: The momentum with me authentic continues to build EMEA is creating an entirely new category within breast aesthetics, where a plastic surgeon can shape. The breast in a 15 minute minimally invasive procedure without the need for Gerald just easier. The result is natural and discrete with a one to two cup proportionate result.
Speaker Change: <unk> requires minimal downtime with women returning to most activities the same day.
Speaker Change: By providing a solution that overcomes many of the obstacles of traditional breast augmentation. We are opening up a whole new group of women to breast aesthetics.
Juan Jose Chacon Quiros: By providing a solution that overcomes many of the obstacles of traditional breast augmentation, we are opening up a whole new group of women to breast aesthetics. As the number of women who have experienced MIA grows, the level of activity on social media and in other channels is increasing. Consumers are sharing their experiences and highlighting the positive outcomes of their journey with me. This word of mouth, supported by our marketing activities, brings more women into the category, who then also share their positive experiences. This flywheel is picking up speed, and we are seeing it in the number of cases increasing quarter over quarter.
Speaker Change: As the group of women, who have experienced <unk> growth the level of activity on social media and in other channels is increasing.
Juan Quiros: Consumers are sharing their experiences and highlighting the positive outcomes of their journey with Mia. This word of mouth, supported by your marketing activities, brings more women into the category, who could then also share their positive experiences. This flywheel is picking up speed, and we are seeing it in the number of cases increasing quarter to quarter. We now offer Mia Femtec in 22 cities across the world, with 63 plastic surgeons now fully certified to provide the Mia experience. Seven Mia experience centers in the Middle East are now fully live, offering a tailored end-to-end experience for consumers in five cities across that region.
Speaker Change: Tumors are sharing their experiences and highlighting the positive outcomes of this journey with me here.
Speaker Change: As word of mouth supported by your marketing activities brings more women into the category.
Speaker Change: We then also share their positive experiences. This flywheel is picking up speed and we are seeing it in the number of cases increasing quarter over quarter.
Raj Denhoy: We now offer MiaFemTech in 22 cities across the world, with 63 plastic surgeons now fully certified to provide the Mia experience. Seven ME Experience Centers in the Middle East are now fully operational, offering a tailored end-to-end experience for consumers in five cities across that region. We are in active negotiations with 41 clinics, and we'll be able to significantly increase the number of cities by the end of this year. In China, we remain on track to achieve our targets this year and are building a foundation for continued growth.
Speaker Change: We now offer me F M Tek in 22 cities across the World with 63 plastic surgeons now fully certified to provide them the experience seven.
Speaker Change: <unk> experienced centers in the Middle East are now fully live offering a tailored end to end experience for consumers in five cities across that region.
Juan Quiros: We are in active negotiations with 41 clinics and will be able to increase considerably the number of cities by the end of this year.
Speaker Change: We are in active negotiations with 41 clinics and we'll be able to increase considerably the number of cities by the end of this year.
Juan Quiros: In China, we remain on track to achieve our targets this year in the building of foundation for continued growth. Medical education, training, and marketing events are taking place in the regular cadence across Tier 1 and Tier 2 cities with the support of our exclusive Chinese distribution partner. And in collaboration with our globe. As a reminder, we have leading market share positions in surrounding countries across Asia, including South Korea, Taiwan, Singapore, Thailand, Vietnam, and Japan.
Speaker Change: In China, we remain on track to achieve our targets this year.
Speaker Change: Building a foundation for continued growth medical education training and marketing events are taking place on a regular cadence across tier one and tier two cities with the support of our exclusive Chinese distribution partner and in collaboration with our global team.
Raj Denhoy: Medical education, training, and marketing events are taking place on a regular basis across Tier 1 and Tier 2 cities with the support of our exclusive Chinese distribution partner and in collaboration with our global partners. As a reminder, we have leading market share positions in surrounding countries across Asia, including South Korea, Taiwan, Singapore, Thailand, Vietnam, and Japan. Our early experience in China suggests that we can achieve similar market share. And given the high ASPs and the fact that China is the second largest market for breast implants globally, our success will meaningfully add to our profitability. I will now turn the call over to Raj.
Speaker Change: As a reminder, we have leading market share positions and surrounding countries across Asia, including South Korea, Taiwan, Singapore, Thailand, Vietnam and Japan.
Speaker Change: Our early experience in China suggest that we can achieve similar market share.
Speaker Change: And given the high Asp's and the fact that China is the second largest market for breast implants globally, our success will meaningfully add to our profitability.
Rajbir Denhoy: I'll turn the call over to Raj. Thank you, Juan Jose. Total revenue for the second quarter was $44.1 million, a kind of 9.3% from the year-ago period, in 8.5% excluding the impact of foreign exchange. As Juan has mentioned, sequentially, this is 18.7% quarter-over-quarter growth.
Speaker Change: I will now turn the call over to Raj.
Raj: Thank you Juan Jose.
Raj Denhoy: Total revenue for the second quarter was $44.1 million, a decline of 9.3% from the year-ago period and 8.5% excluding the impact of foreign exchange. As Juan has mentioned, sequentially, this is 18.7% quarter-over-quarter growth. From a regional perspective, sales in Europe, the Middle East, and Africa were approximately 48% of the global total. Asia Pacific 32%, Latin America 20%, and North America was less than 1%. We saw improving demand in Asia-Pacific in the second quarter as our distributors in the region are reordering following a period of working down inventory. Europe is stable, and as Juan Jose noted earlier, several markets have fully rebounded from the softness we saw in the second half of last year.
Speaker Change: Total revenue for the second quarter was $44 1 million a.
Raj: A decline of nine 3% from the year ago period, an eight 5% excluding the impact of foreign exchange as well as I mentioned sequentially. This was 18, 7% quarter over quarter growth.
Rajbir Denhoy: From regional perspective, sales in Europe and Middle East and Africa were approximately 48% of the global total; Asian Pacific 32%; Latin America 20%; in North America was less than 1%. We saw improving demand in Asia Pacific in the second quarter as our distributors in the region are reordering, following a period of working down inventory. Europe is stable and as Juan as they noted earlier, several markets have fully rebounded from the softness we saw in the second half of last year. Results in Latin America in the second quarter reflected the ongoing softness in Brazil in other markets in the region.
Raj: From a regional perspective sales in Europe, Middle East and Africa, where approximately 48% of the global total.
Raj: Asia Pacific, 32% Latin America, 20% in North America was less than 1%.
Raj: We saw improving demand in Asia Pacific in the second quarter as our distributors in the region are reordering following a period of working down inventory euro.
Raj: Europe is stable and is one as I noted earlier several markets have fully rebounded from the softness we saw in the second half of last year.
Raj Denhoy: Results in Latin America in the second quarter reflected the ongoing softness in Brazil and other markets in the region. Our gross profit in the second quarter was $28.9 million, or 65.6% of revenue, compared to $30.3 million, or 62.3% of revenue from the same period in 2023. Our gross profit in the second quarter reflected an increase in average selling prices year over year. However, foreign exchange rates between the U.S. dollar and Costa Rica and Cologne continue to be a headwind.
Raj: Results in Latin America in the second quarter reflected the ongoing softness in Brazil, and other markets in the region.
Rajbir Denhoy: A growth profit in the second quarter was $28.9 million or 65.65% of revenue compared to $30.3 million or $62.3% of revenue from the same period in 2023. A growth profit in the second quarter reflected an increase in average selling prices year-to-year. Foreign exchange rates between the US dollar and cost rate in Cologne continue to be a headwind. As a report in US dollars, the strengthening of the Cologne results in higher reported costs. Estina expenses for the second quarter declined approximately $4.2 million to $32.8 million compared to $37 million in the second quarter of 2023. R&D expenses for the second quarter declined approximately $1.4 million in the same quarter a year ago to $5.5 million.
Raj: Our gross profit in the second quarter was $28 9 million or 65.
Raj: 65, 6% of revenue compared to $30 3 million or 62, 3% of revenue from the same period in 2023.
Raj: Our gross profit in the second quarter reflected an increase in average selling prices year over year.
Raj: Foreign exchange rates between the U S dollar and Costa Rican colon continued to be a headwind.
Raj Denhoy: As reported in U.S. dollars, the strengthening of the cologne results in higher reported costs. SG&A expenses for the second quarter declined approximately $4.2 million to $32.8 million, compared to $37 million in the second quarter of 2023. R&D expenses for the second quarter declined approximately $1.4 million from the same quarter a year ago to $5.5 million. Total operating expenses for the second quarter were $38.3 million. It decreased by approximately $5.7 million from the year-ago period.
Raj: As we report in U S dollars, the strengthening of the Clos results in higher reported costs.
Raj: SG&A expenses for the second quarter declined approximately $4 2 million to $32 8 million compared.
Raj: Compared to $37 million in the second quarter of 2023.
Raj: R&D expenses for the second quarter declined approximately $1 $4 million for the same quarter, a year ago to $5 $5 million.
Rajbir Denhoy: Total operating expenses for the second quarter were $38.3 million. A decrease for approximately $5.7 million from the year-ago period. The decrease in operating expenses in the second quarter were primarily the results of the cost reduction initiatives we undertook in the second half of 2023, offset by increasing investments in our US commercial operation. Net loss from operations for the second quarter was $9.3 million compared to a net loss of $13.7 million in the same period of 2023. Adjusted EBITDA was a loss of $4.3 million in the quarter compared to a loss of $9.3 million in the second quarter of last year and was flat compared to the first quarter.
Raj: Total operating expenses for the second quarter were $38 3 million a.
Raj: A decrease of approximately $5 $7 million from the year ago period the.
Raj Denhoy: The decrease in operating expenses in the second quarter was primarily the result of the cost reduction initiatives we undertook in the second half of 2023, offset by increasing investments in our U.S. commercial operation. Net loss from operations for the second quarter was $9.3 million compared to a net loss of $13.7 million in the same period of 2023. Majesity Vida had a loss of $4.3 million in the quarter, compared to a loss of $9.3 million in the second quarter of last year, and was flat compared to the first quarter.
Raj: The decrease in operating expenses in the second quarter were primarily a result of the cost reduction initiatives. We undertook in the second half of 2023 offset by increasing investments in our U S commercial operation.
Raj: Net loss from operations for the second quarter was $9 3 million compared to a net loss of $13 7 million in the same period of 2023.
Raj: Adjusted EBITDA was a loss of $4 3 billion in the quarter compared to a loss of $9 $3 million in the second quarter of last year and was flat compared to the first quarter.
Rajbir Denhoy: We are pleased with the reduction in our operating expense loss as we are increasing investments in preparation for the launch of Motiva implants in the United States. Cash used in the second quarter was $18.4 million. In the second quarter, our inventory days improved to more normalized level, and days payable also came down. The accounts receivable were higher in the second quarter versus the first as we saw improving sales results and a higher proportion of sales through our distributors. Our DSOs were flat compared to the first quarter. Our cash position on June 30 was $54.6 million.
Raj Denhoy: We are pleased with the reduction in our operating expense loss as we are increasing investments in preparation for the launch of Motiva implants in the United States. Cash use in the second quarter was $18.4 million. In the second quarter, our inventory days improved to a more normalized level, and days payable also came down. Accounts receivable were higher in the second quarter versus the first as we saw improving sales results and a higher proportion of sales through our distributors. Our DSOs were flat compared to the first quarter.
Raj: We are pleased with a reduction in our operating expense loss as we are increasing investments in preparation for the launch of Motiva implants in the United States.
Raj: Cash used in the second quarter was $18 $4 million.
Raj: In the second quarter, our inventory days improved to more normalized level and days payable also came down accounts receivable were higher in the second quarter versus the first as we saw improving sales results and a higher proportion of sales through our distributors.
Raj: Our dsos were flat compared to the first quarter.
Raj Denhoy: Our cash position on June 30th was $54.6 million. As a reminder, we have two remaining tranches on our debt facility, which total $50 million. We can access the first $25 million on USFDA approval of Motiva implants, and the second with the additional milestone of achieving $195 million in trailing 12-month sales. Our revenue guidance for this year remains $174 to $184 million, representing growth of 5 to 11 percent. We are seeing good performance in most regions. However, as Juan Jose noted earlier, Latin America has not recovered to previous levels.
Raj: Our cash position on June 30 was $54 $6 million.
Rajbir Denhoy: As a reminder, we have two remaining tranches on our debt facility, which totals $50 million. We can access the first $25 million on USFDA approval of Motivian plants and the second with the additional milestone of achieving $195 million in $12 month sales. Our revenue guidance this year remains $174 to $184 million, representing growth of 5 to 11%. We are seeing good performance in most regions; however, as Juan and I noted earlier, Latin America has not recovered to previous levels. Brazil remains our largest single market in terms of revenue, and revenue in 2Q was less than half of what it was a year ago, and we don't expect to recover meaningfully this year.
Raj: As a reminder, we have two remaining tranches on our debt facility, which totaled $50 million. We can 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.
Raj: Our revenue guidance this year remains $174 million to $184 million rep.
Raj: Representing growth of 5% to 11%.
Raj: We're seeing good performance in most regions. However is one as I noted earlier Latin America is not recover to previous levels.
Juan Jose Chacon Quiros: Brazil remains our largest single market in terms of revenue, and revenue in 2Q was less than half of what it was a year ago, and we don't expect it to recover meaningfully this year. Following the FDA inspection, our confidence in a U.S. approval for Motiva this year has increased, so we are comfortable including U.S. revenue in our outlook. The exact timing of approval is not certain, but we remain comfortable with the guidance range we've provided for 2024.
Speaker Change: Zero remains our largest single market in terms of revenue and revenue in <unk> was less than half of what it was a year ago and we don't expect to recover meaningfully this year.
Rajbir Denhoy: Following the FT inspection, our confidence in a US approval for Motiva this year has increased, where we are comfortable including a US revenue in our outlook. The exact timing of approval is not certain, but we remain comfortable with the guidance range we've provided for 2024. For 2025, we expect revenue growth to accelerate significantly as we expand in the United States. We continue to expect gross margins in 2024 to be approximately 100 basis points higher than 2023, to a range of 65.5 to 66%. We remain very focused on managing operating expenses, which can be seen in the more than $10 million reduction in operating expenses so far this year compared to last year.
Speaker Change: Following the FDA inspection of our competence in a U S approval for Motiva. This year has increased where we're comfortable including U S revenue in our outlook.
Speaker Change: The exact timing of approval is not certain but we remain comfortable with the guidance range. We provided for 2024 for.
Juan Jose Chacon Quiros: In 2025, we expect revenue growth to accelerate significantly as we expand in the United States. We continue to expect gross margins in 2024 to be approximately 100 basis points higher than 2023, to a range of 65.5 to 66%. We remain very focused on managing operating expenses, which can be seen in the more than $10 million reduction in operating expenses so far this year compared to last year. However, with the FDA approval of Motiva implants in the final stages, we will see increased commercial and operating activity in the United States.
Speaker Change: For 2025, we expect revenue growth to accelerate significantly as we expand in the United States.
Speaker Change: We continue to expect gross margin 2024 to be approximately 100 basis points higher than 2023 to a range of 65, 5% to 66%.
Speaker Change: We remain very focused on managing operating expenses, which can be seen in the more than $10 million reduction in operating expenses. So far this year compared to last year.
Rajbir Denhoy: However, with the FT approval of Motivian plants and the final stages, we will see increased commercial and operating activity in the United States. As such, overall operating expenses in the second half will increase modestly from first-half levels. Achieving positive adjusted EBITDA in positive cash will remain important goals for us as a company, and our targets are unchanged. With the favorable selling prices and overall economics that are generated in the US market, we expect our first positive EBITDA quarter soon after US launch, and expect to be cashful positive for the fiscal year of 2026. Importantly, the cash we currently have on hand, in which is accessible to us under a credit facility, can fund our business profitability without the need for additional capital.
Speaker Change: However, with the FDA approval of Motiva implants in the final stages, we will see increased commercial and operating activity in United States.
Juan Jose Chacon Quiros: As such, overall operating expenses in the second half will increase modestly from first half levels. Achieving positive adjusted EBITDA and positive cash flow remain important goals for us as a company, and our targets are unchanged. With the favorable selling prices and overall economics that are generated in the U.S. market, we expect to have our first positive EBITDA quarter soon after the U.S. launch, and we expect to be cash flow positive for the fiscal year of 2026.
Raj: As such overall operating expenses in the second half will increase modestly from first half levels.
Speaker Change: Achieving positive adjusted EBITDA and positive cash flow remain important goals for us as a company and our targets are unchanged with the favorable selling prices and overall economics that are generated in the U S market. We expect to have our first positive EBITDA quarter soon after U S launch.
Speaker Change: We expect to be cash flow positive for the fiscal year of 2026.
Juan Jose Chacon Quiros: Importantly, the cash we currently have on hand and which is accessible to us under our credit facility can fund our business profitability without the need for additional capital. I will now turn the call back to Juan Jose. Thank you, Raj.
Speaker Change: Importantly, the cash we currently have on hand, and which is accessible to us under our credit facility can fund our business profitability without the need for additional capital.
Juan Quiros: I will now turn the call back to Juan Jose.
Juan Jose: I will now turn the call back to Juan Jose Thank.
Juan Jose Chacon Quiros: Thank you, Raj. When we founded this company almost 20 years ago, we knew that entering the U.S. market was the ultimate validation of our technology, but it was also the highest mountain we had to climb. We now find ourselves on the cusp of that. The effect on our business will be transformative. The U.S. approval will be a catalyst for sales globally because the FDA remains the gold standard for regulatory clearances. Many surgeons in countries outside the U.S. will only use products with the FDA stamp of approval. In some markets, this opportunity is significant.
Juan Quiros: Thank you, Raj. When we founded this company almost 20 years ago, we knew that entering the US market was the ultimate validation of our technology, but it was also the highest mountain we had to climb. We now find ourselves on the cusp of that achievement. The effect on our business will be transformative. US has the highest ASDs in the world. In some cases, three to four times higher than we realize in other markets. As a stand-up of our commercial efforts, the profitability of sales in the US will quickly move us down the path to becoming EBITDA positive, and soon thereafter, cash will be positive.
Juan Jose: Thank you Raj when we founded this company almost 20 years ago, we knew that entering the U S market was the ultimate validation of our technology, but it was also the highest mountain we have decline.
Speaker Change: Now find ourselves on the cusp of that achievement the <unk>.
Juan Quiros: The US approval will be a catalyst for sales globally. The FDA remains the gold standard for regulatory clearances. Many surgeons in countries outside the US will only use products with the FDA stamp of approval. In some markets, this opportunity is significant. We cannot wait to introduce Motiva to women in surgeons in the US. As a company focused on women's health, access to the US market will strengthen our foundations in further precision establishment labs as a global leader in breast aesthetics and reconstruction.
Operator: I will now turn the call over to the operator for your questions. Thank you. Ladies and gentlemen, we will now begin our question-and-answer session. If you have dialed in and would like to ask a question, please press star followed by the number one on your touchstone phone. If you would like to withdraw your question, simply press star one again. If you are called upon to ask your question and are listening via loudspeaker on your device, please speak up your handset and ensure that your phone is not on mute when asking your question. As a reminder, please limit yourself to one question and one follow-up.
Speaker Change: In or listening via loud speaker on your device. Please speak up your handset and ensure that your phone is not on mute when asking your questions. As a reminder, please limit yourself to one question and one follow up. Thank you. Your first question comes from the line of Allen Gong from Jpmorgan. Please go ahead.
Operator: Thank you.
Allen Gong: Your first question comes from the line of Allen Gong from G.P. Morgan. Please go ahead. Thanks for the question. Definitely great to hear that the US approval looks like it's finally cleared; that final hurdle. But I have a question on that. But first, I just want to touch on the guidance. You talked about how your guide now includes the incremental benefit from US, you know, pretty marginal given the time of approval, but you've now had two quarters where you beat by a little bit and chosen to reiterate the guide and now you're adding on US revenues on top of that.
Speaker Change: Yes.
Speaker Change: Thanks for the question.
Allen Gong: Definitely great to hear that the newest approval it looks like its finally cleared that final hurdle, but have a question on that but first I just wanted to touch on the guidance.
Allen Gong: You talked about how your guide now includes the incremental benefit from U S pretty marginal given the time of approval, but you've now had two quarters, where you beat by a little bit and chosen to reiterate the guide and now you are adding on U S revenues on top of that so what are you seeing so far in third quarter that makes you confident that this is still.
Rajbir Denhoy: So what are you seeing so far in third quarter that makes you confident that this is, you know, still the right range to be using for the full year? And, you know, I guess like how much US is really in there right now.
Allen Gong: The right range to be using for the full year.
Allen Gong: And.
Speaker Change: I guess, how much U S is really in there right now.
Rajbir Denhoy: Hi, Ellen. Thanks for the question. You know, generally when we give guidance, we try to provide an outlook that reflects the current dynamics in the market. As we noted on the call, Brazil is still weak. However, we are very confident now in US approval, and so we've had to bake those things into the guidance and hence the range that we're still comfortable with for the year. You know, we do expect to be back towards sort of a more normalized seasonal pattern here in the third quarter. You know, but overall, I think the outlook in the back half of the year is sort of tracking with where we had thought.
Allen Gong: Hi, Alan Thanks for the question.
Juan Jose Chacon Quiros: Generally, when we give guidance, we try to provide an outlook that reflects the current dynamics in the market. As we noted on the call, Brazil is still weak.
Speaker Change: Generally when we give guidance we try to provide an outlook that reflects the current dynamics in the market and as we noted on the call Brazil is still weak.
Raj Denhoy: However, we are very confident now in the U.S. approval, and so we've baked those things into the guidance and hence the range that we're still comfortable with for the year. We do expect to be back to a more normalized seasonal pattern here in the third quarter. But overall, I think the outlook for the back half of the year is tracking with where we had thought. Again, with the caveat that Brazil is tracking a bit lower, but now we're extremely confident in U.S. approval.
Speaker Change: However, we are very confident now in the U S approval and so we've kind of baked those things into the guidance and hence the range that we're still comfortable with for the year, we do expect to be back towards sort of a more normalized seasonal pattern here in the third quarter.
Allen Gong: But overall I think the outlook in the back half of the year is sort of tracking with where we had thought.
Rajbir Denhoy: Again, with the caveat that Brazil is tracking a bit lower, but now we're extremely confident in the US approval. Got it.
Allen Gong: Again with the caveat that Brazil is tracking a bit lower but now we're extremely confident in the U S approval.
Rajbir Denhoy: And then, you know, when it comes to the 483s, it's great to hear that you already have the responses in, but what gives you the confidence that, you know, you'll kind of be able to get this through the FDA in a first pass and this won't become a more drawn-out process? Are there any more specifics you can kind of provide? You know, I know Juan Jose described them as being non-systemic, but you know, any other colleague of the right there will be really helpful. Thank you very much. Yeah, thanks, Alan. And no, I think it's the nature of those observations, which gives us confidence that, you know, our quick response already, you know, tells you, you know, how we feel about them.
Operator: Is there any more specifics you can kind of provide? You know, I know Juan Jose described them as being non-systemic, but, you know, any other color you could provide there would be really helpful. Thank you very much.
Rajbir Denhoy: One of them was the timing of the submission of 10 medical device reports from the Flora tissue expander that we sell outside of the United States. That's a different tissue expander than the one we sell in the United States. And of course, it has, you know, no relevance to the safety of MoTUIM plans in our PMA. The second one was the tracking of the training of a production employee that was performing at validation. And the last one was the job description and role of an internal auditor. So, as you can see, those are really isolated; they're minor, and we don't believe that's going to affect, you know, our timing for approval.
Anthony Petrone: Your next question comes from the line of Anthony Petroni from Mizzouho Group.
Juan Quiros: Police, go ahead. Thanks, and good afternoon, everyone. Maybe to stay on US Motiva, you know, with the description now that that FDA clearance potentially looks imminent, you know, maybe walk us through what an early launch phase looks like. Well, that happened, you know, but, you know, some time in the third quarter is that a reasonable expectation. And then you mentioned, Juan Jose, that you know there has been build out of the team in the United States. So, just maybe an update there. How many sales reps are already hired? And how many will have to be hired going forward?
Operator: Thanks and good afternoon, everyone. Maybe to stay on U.S. Motiva, you know, with the description now that FDA clearance potentially looks imminent, maybe walk us through what an early launch phase looks like. Will that happen, you know, sometime in the third quarter? Is that a reasonable expectation?
Speaker Change: Walk us through what an early launch phase looks like.
Speaker Change: Will that happen.
Speaker Change: Sometime in the third quarter or is that a reasonable expectation and then you mentioned one Jose that there has been build out of the team in the United States. So just maybe an update there how many sales reps are already hired and how many will have to be higher going forward and I'll have one quick follow up thanks.
Operator: And then you mentioned, Juan Jose, that there has been a buildout of the team in the United States. So just maybe an update there. How many sales reps are already hired, and how many will have to be hired going forward?
Juan Quiros: And I'll have one quick follow-up. Thanks. Yeah, I think most importantly is the quality of people that Jeff is bringing on board to lead our North America business. And I think when you put people like Anne and Ben and that team and some of the sales reps that are coming in and some will come in the next few weeks, we will have really an all-star team for the US. The back office, as we've said before, is ready. We've been already shipping and invoicing to Florida Tissue Expander, so all of that is ready to go. In addition to that, I think it's important to say that we already began manufacturing the first batch of Motiva implants that are planned to be sent into the US after approval.
Jeff Erhardt: Yes, I think most importantly is the quality of the people that Jeff is bringing on board.
Speaker Change: To lead our North America business, and I think when you put.
Speaker Change: People like and <unk> been in that team and some of the sales reps that are coming in and some will come.
Speaker Change: And the next few weeks, we will have a really an all star team for the U S.
Speaker Change: The back office as we've said before is ready we've been already shipping and invoicing to Florida tissue Expanders. So all of that is ready to go. In addition to that I think it's a it's important to say that we already began manufacturing. The first batch of Motiva implants that are planned to be sent in to the U S. After approval.
Juan Quiros: That's helpful, maybe to flip over to just me looking at some of the existing centers that are out there, mentioned 63 surgeons or active with me, a FEMTEC. Maybe just a little bit about the dynamics at those centers. How is their surgical capacity expanded? It's the surgeries are being done in much less time. And when you think about those FEMTEC centers, I mean, how much share is establishment able to sort of command once FEMTEC goes live at those centers? Thanks again. Yeah, thanks, Anthony.
Speaker Change: That's helpful and maybe to two.
Speaker Change: To flip over to me.
Juan Quiros: I think it's really important to backtrack to what we are trying to do in this first phase of the launch of Mia, which is to establish a list of clinics so that we are present with it in the most important cities around the world. So one of the important things that I think it's looking well is the fact that we are now in 22 cities across Europe, the Middle East, and Japan. So as we add more centers, the capillarity will get us to be more efficient with the awareness and then that leading to more Mia treatments taking place.
Juan Quiros: One of the really important things I think from Q2 is the fact that 47% of women who received Mia in Q2 were not considering a breast augmentation. And that's real market expansion. And I think in the category like breast aesthetics that has been pretty much flat over the last two decades, those are really good news for plastic surgeons. Those are really good news. I think for aesthetics in general, because we can get this category to be vibrant again. And when you see the number of centers that we have under negotiation, 41, that tells you also that there's a lot of interest.
Speaker Change: To be boyfriend again and.
Speaker Change: When you see the number of centers that we have under negotiation 40 41.
Speaker Change: That tells you also that there is a lot of interest and the more they talk to their peers DCC. Three surgeons. You know of course are are talking about what this is doing to their practices. So definitely I think that as we go into 2026, we will be able to give more specifics on the number of cases.
Juan Quiros: And the more they talk to their peers, these 63 surgeons, of course, are talking about what this is doing to their practices. So definitely, I think that as we go into 2026, we will be able to give more specifics on the number of cases, market share, and things like that related to the traditional category of breast augmentation.
Speaker Change: <unk> market share and things like that.
Speaker Change: <unk> to the traditional category of restaurant Mentation.
Josh Jennings: Thank you. Your next question comes from the line of Josh Jennings from TD Cobbins. Please go ahead. Good afternoon, thanks for taking the questions, and congratulations on getting that inspection completed. I wanted to just ask about your comments, Juan Jose, on the medical advisory board you hosted and the buzz that I think you suggested was kind of burculating in the plastic surgeon community. Any incremental color you can add to those prepared comments, and maybe just to ask from your team's checks. And what do you think awareness stands within the US plastic surgeon community? I think there's 25, 50, 75 percent of plastic surgeons are aware of Motiva, aware of the four-year data and the premier safety profile.
Speaker Change: Thank you.
Operator: Your next question comes from the line of Josh Jennings from PD Commons. Please go ahead.
Speaker Change: Your next question comes from the line of Josh Jennings from TD carbon. Please go ahead.
Josh Jennings: Hi, good afternoon, thanks for taking the questions and congratulations on getting that inspection completed.
Josh Jennings: Wanted to just ask you about your comments Juan Jose on the Medical Advisory Board you hosted in the Buzz that I think you suggested was kind of percolating in the plastic surgeon community.
Speaker Change: Any incremental color you can add to this prepared comments.
Speaker Change: And maybe just to ask from your teams checks now what do you think awareness stands within the U S. Plastic surgeon community. We think there is $25, 50% to 75% of plastic surgeons are aware motiva wherever the four year data and the Premier safety profile.
Juan Quiros: Yeah, I think, you know, the fact that we hosted this, you know, this first group of American surgeons for an advisory board was very telling to us because what we wanted to do in this advisory board is to expose them to the technology and get their views on the potential adoption. Motiva implants, and it really went beyond our expectations. You know, the way they understand that this is going to open up, you know, new ways of doing surgery. You know, the fact that you can save the pectoralis muscle of so many active women who currently have no option because they would eventually have a capture contracture in that anatomical placement.
Juan Quiros: So, while we are being super careful not to promote Motiva implants ahead of the approval, I think, you know, this type of advisory boards really gives us a confidence that we are on track with our strategy.
Juan Quiros: Thanks for that, and just the follow-up you mentioned that at the approval could spark increased adoption internationally. You mentioned that there's some countries that rely on the FDA approval regulatory process for their own regulatory hurdle to clear for setting the regulatory bar. But do you think in those CMAR countries, I mean, are there surgeons out there waiting for FDA approval? Anything you can share there just in terms of is there this pent-up demand surgeons out in CMAR countries where FDA approval will kind of get them over the hump and drive a little wave of adoption in countries where Motiva is already approved?
Juan Quiros: Thanks a lot. Yes, of course, there's a group of more traditional, more conservative surgeons outside of the United States that have always seen FDA approval as a gold standard that, you know, they should aspire to. And because of that, after, you know, Allergan pulled out of most markets around the world, all of these surgeons went to the only other option that they had. So this is going to basically give us the ability to start calling on these surgeons who before said, you know, until you have FDA approval, please don't, you know, don't come in. But that, that's a, you know, a really strong statement also to the rest of the, you know, of the industry because it is not only the fact that we are going to get FDA approval.
Operator: Yes, of course.
Josh Jennings: So the.
Speaker Change: Of the of the industry because it is not only the fact that we are going to get FDA approval. It's the numbers of our clinical trial for the U S approval that telecommuting the different story and that combined I think is going to have eventually a lot of.
Juan Quiros: It's the numbers of, you know, our clinical trial for the US approval, that tell a completely different story. And that combined, I think, is going to have eventually a lot of traction for our sales in many markets around the world. Not just Europe; it's also true in Latin America, and it's also true in several areas of Asia.
Josh Jennings: Traction for our sales in many markets around the world not just Europe. Its also true in Latin America, and it's also true in <unk>.
Josh Jennings: Several areas of Asia.
Joanne Wuensch: Okay, appreciate that. Next question comes from the line of Joanne Wuensch from CP. Please go ahead. Good afternoon, and thank you for taking the question. And congratulations on the FDA inspection. Two quick questions.
Speaker Change: Great I appreciate that.
Speaker Change: Next question comes from the line of Joel One wench from CPE. Please go ahead.
Speaker Change: Good afternoon, and thank you for taking my question and congratulations on the FTE inspection.
Rajbir Denhoy: The first is you've put some US revenue and guidance as you pulled some Brazilian revenue out or revenue from Brazil out. Is there a way to quantify how much US revenue is now in your guidance?
Speaker Change: Two quick questions. The first is you've put some U S revenue guidance as you pulled some Brazilian revenue out of revenue from Mizuho out is there a way to quantify how much U S. Revenue is now in your guidance and then the second question is on gross margins really improve nicely year over year, how do we think about the trajectory of those not.
Rajbir Denhoy: And then the second question is, gross margins really improved nicely year over year. How do we think about the trajectory of those, not just this year, but next year as Motiva and the US Games traction. Thank you. Well, Joanne, thanks for the question. Yeah, you know, in terms of the US, there's still some uncertainty around the exact timing. You know, we're extremely confident is coming and coming soon, but the exact timing is still not known. And so, you know, we still left the range, you know, fairly wide for the balance of the year, which reflects that.
Speaker Change: Just this year, but next year as much either in the U S gains traction.
Speaker Change: You.
Rajbir Denhoy: You know, we do expect to be revenue this year. You know, and as you noted, you know, we did take Brazil or some of Brazil out, given the softness we're continuing to see there. You know, but overall, we're still very confident in the outlook in the back half of this year and, in particular, as a movement to 2025 and the significant growth we expect to see as we start to expand in the United States. And on your second question relative to margins, we did see a nice step up in the third quarter. Average selling prices were up, as we mentioned. We're still dealing with a little bit ahead when from the coast, we can cologne, but that's also starting to turn as well.
Rajbir Denhoy: You know, as you look out over the next, you know, couple of years, really even not just next year, really everything we're doing as a company to launch in the US, Mia, our expansion to China, even Florida, the tissue expanded, all of these are gross margin-accretive endeavors for us. And so I think that margin will continue to go higher over time.
Rajbir Denhoy: It's not going to be linear, but, you know, we should see nice improvement over that over the next couple of years.
Rajbir Denhoy: Thank you.
George Sellers: Your next question comes from the line of George Sothers from Stephens; you go ahead. Hey, good afternoon, and thanks for taking the question. Maybe going back to Mia, and apologies if I missed this, but I was just curious if you could give us some color on the growth there driven by procedure volume versus any revenue. You've received in the second quarter from licensing fees, and then also with the clinics that you're speaking with and maybe that have recently signed on the partnerships. Could you give us any additional color on licensing fee revenue that you're expecting to see in the back half of this year and in early 2025.
Juan Quiros: Yeah, thank you, George. I think it's really important to note that, you know, as we are putting together the onboarding of these centers, you know, we provide, in exchange for that license revenue, you know, the medical education, the practice development. And it takes time to, you know, to get those two together. So it's one of the bottlenecks that we have right now: getting, you know, clinics onboarded quick enough. And as you saw, you know, we have 41 clinics in negotiation. And, you know, we're working to be able to onboard these clinics more quickly so they get to be doing cases more quickly.
Juan Quiros: Because what we see is that, you know, some of the clinics that were launched last fall are already tracking to that aspirational goal of, you know, 24 cases per month. Because if we get to that goal and we can do that, you know, in a consecutive 12-month period, we will be basically recognizing a million dollars of revenue approximately in a center. And that's really how Mia grows. So at this point, you know, it's about creating the capitalarity; the number of clinics in each city continues to grow. And also what we see is that every month we are doing more cases of Mia, you know, in those different cities.
Speaker Change: Because what we see is that some of the of the clinics that were launched last fall are already tracking to that aspirational goal of 24 cases per month, because if we get to that goal and we can do that in a consecutive 12 months period, we will be based.
Speaker Change: We recognized a $1 million of revenue approximately in a center and that's really helped me a growth. So at this point, it's about creating the capillarity and the number of clinics in each city continues to grow and also what we see is that every month, we're doing more cases of me.
Speaker Change: Those different cities.
Rajbir Denhoy: I'm not going to be, you know, giving any guidance on how, you know, that revenue looks for the back half of the year. But I think for 2026, as this grows, we will be able to be a lot more precise in terms of revenue as it becomes more material. Okay, that's helpful color.
Speaker Change: I'm not going to be giving any guidance on how that revenue looks for the back half of the year, but I think for 2026 as this grows we will be able to be a lot more precise in terms of revenue as it as it becomes more material.
Operator: Okay, that's helpful, Culler. And then maybe just one clarifying point on the accounts receivable line that you touched on in the opening remarks. There was a fairly significant step up sequentially this quarter. I'm just curious if there's anything you need to read into there.
Speaker Change: Okay. That's helpful color and then maybe just one clarifying point on the accounts receivable line that you touched on in the in the opening remarks, there was a fairly significant step up sequentially. This quarter I'm just curious if there's anything you need to read into there.
Rajbir Denhoy: And then maybe just one clarifying point on the accounts receivable line that you touched on in the opening remarks. There was a fairly significant step up sequentially this quarter. I'm just curious if there's anything you need to read into there. There is not. I mean, if you look at the days, it's flat on the first quarter. We did see a nice rebound, as we noted in the commentary, and Asia Pacific, which is all distributors, right? So we're seeing strong orders from that channel, which typically have longer terms. You know, so generally, I think it's just the recovery in the business is what you're seeing.
Speaker Change: Yeah.
Speaker Change: There is not I mean, if you look at the days, it's flat on the first quarter.
Rajbir Denhoy: Okay, got it.
Matthew Taylor: Thank you all again for the time. Your next question comes from the line of Matthew Taylor from Jeffries. Please go ahead.
Michael Toomey: Hi, it's Michael Toomey here covering from Matt. Thanks for taking my question, and congrats on the quarter. You mentioned China remains on track. I just wondered what you have baked in for China in 2024, whether anything's changed there. Nothing has changed. You know, we've been talking about $10 million of revenue this year. We're still tracking to that. You know, it's still OK, great.
Rajbir Denhoy: And can you give us any idea how we should think about 2025? Is this the ramp in other markets in Asia? Good way to think about the sales growth in China? In terms of the way I would put it is that, yeah, the way I would put it is that, you know, China is a much bigger market. And although in many of these markets, you know, with significant Chinese population like Singapore and Taiwan, you know, we have become market leaders after, you know, three to four years, you know, China is different. So, you know, our aspiration is to get there in the next few years to that market leadership.
Operator: The way I would put it is that...
Rajbir Denhoy: But, you know, how it grows, I think it's part of the question at this point. We are happy the way we are tracking. You know, for this year, it's been already, you know, two quarters of information that we have, but it's a little bit early to say that it's going to be the same. I think, you know, potentially, it could be even quicker, but we're just beginning.
Rajbir Denhoy: At this point, I think, you know, we'll just leave it at that.
Michael Toomey: OK, that's great. Congrats again.
Marie Thibault: Your next question comes from the line of Marie Tibault from BTIT. Please go ahead. Hi, good evening. Thanks for taking the questions in nice quarter.
Rajbir Denhoy: My first question really just has to do with seasonality and helping us think about how to model Q3. As I look at it, you know, maybe Latin America remains weak. We think about US contribution maybe coming a little later in the year. I don't know if that's the right way to think about things, but if you can help us just think about getting a little more granular with the back half of this year. Yeah, Marie, I think, you know, in a normal seasonal year, we could see the third quarter down about 10% from the second quarter.
Raj Denhoy: Yeah, Marie, I think, in a normal seasonal year, we could see the third quarter down about 10% from the second quarter. And I think that's not a bad way to think about it.
Raj Denhoy: You know, we saw a good recovery, probably a little faster in the first half of the year, and now we're moving more towards sort of normal trends in the business, right? So I think, you know, down 10% in the third quarter is probably the right way to think about it. And then in the fourth quarter, you know, again, it's a lot dependent on the timing of US approval, but we do expect a nice step up in the fourth quarter to finish the year.
Rajbir Denhoy: And I think that's not a bad way to think about it. You know, we saw a good recovery, you know, probably a little faster in the first half of the year. Now we're moving more towards sort of normal trends in the business, right? So I think, you know, down 10%. in the third quarter is probably the right way to think about it.
Rajbir Denhoy: And then in the fourth quarter, again, it's a lot dependent on the timing of the U.S. Approval, but we do expect a nice step up in the fourth quarter to finish the year.
Raj Denhoy: Okay, that's perfect, Raj. Thank you. And then just to get a little bit more in the weeds on distributors reordering, glad to hear that things are coming back. Are these distributors, to your understanding, are they back to full stock? Are they still adding bit by bit? I guess I'm sort of asking, you know, did they reorder a lot in the first half, and we wouldn't expect to see as much in the second half? Or how should we think about those trends from the reordering standpoint?
Rajbir Denhoy: Okay, that's perfect, Raj. Thank you.
Rajbir Denhoy: And then just to get a little bit more in the weeds on distributors, reordering. Glad to hear that things are coming back. Are these distributors, to your understanding? Are they back to full stock? Are they still adding bit by bit? I guess I'm sort of asking. Do they reorder a lot in the first half, and we wouldn't expect to see as much in the second half, or how to think about those trends from the reordering standpoint? I think it's important to understand that for distributors, it's always this balance between having the right product and the right place at the right time, because you don't want to lose an account, because you didn't have that.
Rajbir Denhoy: On the other hand, they're careful with their cash. But I think what we've been trying to comment today is basically that we are seeing, for instance, in Asia, a very healthy reordering cadence. And that tells you what is happening in those markets and how the recovery is going.
Rajbir Denhoy: I think Latin America is different. Latin America is having a lot of challenges in terms of the political cycle and what have you, Brazil especially. But I think it's good to see that our distributors feel the confidence to begin adding to those inventories again. That's very helpful. Thanks so much, and good luck with things.
Speaker Change: But but I think you know it is good to see that our distributors feel the confidence to begin adding to those inventories again.
Operator: All right, that's very helpful. Thanks so much, and good luck with things.
Speaker Change: Alright, that's very helpful. Thanks, so much and good luck with things.
Juan Quiros: And that, that concludes the question and answer session.
Speaker Change: And that does conclude the question and answer session I would like to turn the floor back over to Juan Jose Acuras for closing remarks.
Operator: I would like to turn the floor back over to Juan Jose Curus for closing remarks. Thank you for joining us in today's call. We look forward to providing our next quarterly update in November, and we wish everyone continued good health and happiness.
Operator: Thank you for joining us on today's call. We look forward to providing our next quarterly update in November, and we wish everyone continued good health and happiness.
Speaker Change: Thank you for joining us on today's call. We look forward to providing our next quarterly update in November and we wish everyone continued good health and happiness.
Speaker Change: Okay.
This goes to today's conference call. Thank you for your participation. You may now disconnect.
Speaker Change: This concludes today's conference call. Thank you for your participation you may now disconnect.
Speaker Change: [music].