Q3 2024 Establishment Labs Holdings Inc Earnings Call
Speaker Change: Good afternoon. Welcome to Establishment Labs third quarter 2024 earnings conference 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 a question and answer session and instructions will follow at that time.
Speaker Change: As a reminder, today's call is being recorded. I will now turn the call over to your host, Raj Denhoy, Chief Financial Officer. Please go ahead.
Raj Denhoy: Thank you, Operator, and thank you, Erwin, for joining us. With me today is Juan Jose Chacon Quiros, our Chief Executive Officer.
Following our prepared remarks, we'll take your questions.
Raj Denhoy: Before we begin, I would like to remind you that comments made by management during this call will include forward-looking statements within the Meetings and Federal Securities Laws.
Raj Denhoy: These include statements on Establishment Lab's 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 uncertainties.
Raj 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.
Raj Denhoy: I'd also like to remind you that our comments may include certain non-GAAP financial measures with respect to our performance.
Raj Denhoy: 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. 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.
Raj Denhoy: The content of this conference call contains time-sensitive information accurate only as of the date of this live broadcast, November 7, 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.
Speaker Change: With that, it is my pleasure to turn the call over to our CEO, Juan Jose.
Thank you, Raj, and good afternoon, everyone.
Juan Jose: The approval of Motiva Implants on September 26th was a watershed moment for our company and for the plastic surgery industry.
The launch has exceeded even our high expectations.
Juan Jose: The pace at which we are onboarding new accounts, and the orders we are seeing, validates what we have shown in many other countries around the world, that safer and better technology that offers new options can move markets. I'll provide some additional details in a moment.
Juan Jose: With the launch in the United States going so well, we have taken this opportunity to strengthen our balance sheet.
Juan Jose: This equity race was done in conjunction with an amendment to the Oak Tree Credit Facility, where we can now access the remaining $25 million until the end of 2025.
Juan Jose: With a capital infusion, our pro forma cash position at the end of the third quarter was $114 million. And with the amendment, we have access to an additional $25 million through the end of next year.
Juan Jose: This will allow us to fully invest in our U.S. growth initiatives, as well as fund other programs that support the long-term vision of our company.
Juan Jose: The third quarter, we again saw the tangible results of the efforts we've undertaken over the past year to reduce our operating expenses and cash use.
Juan Jose: Among the recent initiatives was the decommissioning of one of our three manufacturing facilities.
Juan Jose: On September 3rd, we closed B-15, our first facility we opened 15 years ago. Our operations team has been working to move capacity to our other two manufacturing facilities in Costa Rica, including our new Sulayam campus.
Juan Jose: and these efforts are expected to drive additional cost savings. As a reminder, Peter Calvini joined us in August as president and he is very focused on expanding our efforts to find efficiencies across the organization.
Juan Jose: It beat the loss improved to $7 million this quarter from over $16 million last year.
Juan Jose: Revenue in the third quarter of 2024 totaled $40.2 million dollars in line with our expectations and reflecting the normal seasonality we see in our markets.
Overall, global demand remains uneven, due primarily to macroeconomic pressures.
Juan Jose: The breast implant industry has seen periods where the market ebbs and flows, but it's much more about the ability of women to pay for these procedures, not their willingness to get them.
Juan Jose: Over time, these trends invariably normalize and we expect they will in this case as well. Once women make a decision to have a breast augmentation, they generally convert at some point.
Juan Jose: When there are microeconomic concerns pressuring demand, women that are considering augmentation, but that do not have the money to do so, will create demand in the future.
Juan Jose: Latin America, and Brazil in particular, continue to underperform right now. Demand for breast procedure is down as much as 50% in certain regions of Brazil.
Juan Jose: Despite the challenging macro conditions in some markets, we were able to successfully grow our OUS business behind the introduction of Motiva in China, continued growth in NIA procedures, and the market share gains afforded by our differentiated product portfolio.
Juan Jose: Most important to our company's future right now is the United States and plastic surgeons in the U.S. have welcomed a new entrant and new technology to the market with open arms.
Juan Jose: The community is incredibly active on social media, extolling the benefits of our technology to their patients.
There has been a similar response in the press.
Juan Jose: all of which creates inbound calls to plastic surgeons, some of which have been trained on Motiva, and some of which are now actively reaching out to us so they can offer Motiva as well.
Juan Jose: We began shipping to accounts two weeks after approval. And as of last Friday, three weeks into the launch, we already had over 250 accounts on board, and more than 70 had already placed orders.
Juan Jose: Right now, we are signing up to 50 new accounts every day, and several accounts have already exceeded 25 orders. We may do as much as $3 million in the last two months of the quarter alone, putting us on a strong trajectory for growth in 2025.
Juan Jose: We now have 32 sales reps in the field supporting our commercial activities, and we expect to be at 40 by the end of the year. We are attracting the most experienced and highly regarded sales people in our industry.
Juan Jose: The people closest to the markets are recognizing what a game-changer Motiva implants are going to be in the United States. And they are joining us at Establishment Labs.
Flora, our unique tissue expander, continues to gain traction.
Juan Jose: We have completed the VAC process at 29 of the premier cancer centers in the U.S. and more are pending. It is notable that many of these centers have expressed interest in Motiva implants and have inquired about the potential approval dates for the breast reconstruction indications.
Juan Jose: This strong, broad interest we are seeing for Motiva in the United States is not surprising. The market has seen no real innovation in decades.
Juan Jose: Surgeons have been forced to adapt their practices and their surgical techniques to legacy devices developed with technology from last century and U.S. surgeons and patients are recognizing the difference with Motiva.
Juan Jose: The success of the launch in the U.S. and the recent decommissioning of one of our manufacturing facilities have created some short-term supply challenges.
Juan Jose: Mia Femteck continues to build a new category in breast aesthetics. By providing a minimally invasive solution that overcomes many of the obstacles of traditional breast augmentation, we are opening up a new group of women to breast aesthetics.
Juan Jose: It has been important for us to roll out MIA in a way that establishes it as a new category that delivers on the significant potential it has for patients, clinics, and our company.
Juan Jose: We have collected a number of data points over the past few quarters showing that MIA is doing just that.
Juan Jose: The average consideration time for Mia Femtech is 2 months compared to 3 to 7 years for traditional breast aesthetics. The premium price point at these clinics for Mia is 30 to 50% higher than the traditional breast augmentation at the same center.
Juan Jose: Throughout this year, over 40% of women who chose MEA were not seeking a traditional breast augmentation.
Juan Jose: We now offer MIA Femtech in 29 cities across the world with 78 plastic surgeons fully certified to provide the MIA experience. 47 clinics are currently under negotiation to become MIA certified centers.
Juan Jose: This past week, at the 9th World Symposium on Ergonomic Implants in Barcelona, we shared the three-year data from the MIA FEMTEC study.
Juan Jose: This IRB-approved prospective study enrolled 100 MIA cases between December 2020 and April 2021. In the three-year analysis, there were no reports of capsular contracture and no ruptures.
Juan Jose: There continues to be no reports of infection, hematoma, or seroma. And more importantly, no reports of inferior implant malposition and no changes in nipple or breast sensation.
Juan Jose: Mia is ushering in a new era of minimally invasive breast aesthetics. The three-year data and the outcomes we are seeing in the real world have proven that maintaining breast tissue has advantages beyond the purely procedural benefits of a minimally invasive procedure.
Juan Jose: By not cutting the breast tissue, but rather preserving it as the tools used in MIA allow, the results can be much more predictable and stable.
Juan Jose: This concept of breast tissue preservation is starting to resonate with plastic surgeons, and you will hear us talking more about it in the coming months.
Speaker Change: In China, we remain on track to achieve our targets this year, as we are building a foundation for continued growth.
Speaker Change: Our exclusive Chinese partner, in coordination with our global team, is conducting medical education training.
and marketing events across Tier 1 and Tier 2 cities.
Speaker Change: Importantly, our Chinese partner has also signed an agreement, in principle, with our bridge fund, an affiliate of CBC Group, for a strategic financing of
Speaker Change: of up to $50 million in non-dilutive capital to fund commercial activities in support of the continuous growth of Motiva in China as well as development towards regulatory approvals for our innovation pipeline, including Ergonomics II and MiaFemtech.
Speaker Change: We are very confident that this investment will help us become the leading technology in China.
Speaker Change: Subject to customary conditions, we anticipate this financing to close within the current quarter. I will now turn the call over to Raj.
Thank you, Juan Jose.
Raj Denhoy: Total revenue for the third quarter was $40.2 million, an increase of 4.5% from the year-ago period. Foreign exchange had a negligible impact on sales results in the quarter.
Speaker Change: From a regional perspective, sales in Europe, Middle East, and Africa were approximately 49% of the global total, Asia Pacific 27%, Latin America 24%, and North America was 1%.
Speaker Change: Latin America, and in particular Brazil, remain challenging. 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.
Speaker Change: Our gross profit for the third quarter was $25.7 million, or 63.9% of revenue, compared to $26.1 million, or 67.7% of revenue for the same period in 2023.
Speaker Change: Our gross profit in the third quarter was impacted by the revaluation of our Euro Denominated Inventory at quarter end, which had a negative impact on our cost of goods. This lowered our reported gross margin by approximately 80 basis points.
Speaker Change: Average selling prices in the quarter were similar to last year.
Speaker Change: SG&A expenses for the third quarter declined approximately $5.9 million to $34.1 million compared to $40 million in the third quarter of 2023.
Speaker Change: R&D expenses for the third quarter declined to approximately $2.3 million from the same quarter a year ago to $4.8 million.
Speaker Change: Total operating expenses for the third quarter were $38.9 million, a decrease of approximately $8.2 million from the year-ago period.
Speaker Change: The decrease in operating expenses in the third quarter was primarily the result of cost reduction initiatives we undertook in the second half of 2023 in which we have continued into 2024 offset by increasing investments in a US commercial operation.
Speaker Change: Net loss from operations in the third quarter was $13.1 million compared to a net loss of $21 million in the same period in 2023.
Speaker Change: Adjusted EBITDA was a loss of $7 million in the quarter compared to a loss of $16.3 million in the third quarter of last year.
Speaker Change: We have taken tangible steps to reduce spending over the recent quarters, and we have reduced our operating loss meaningfully, even as we have increased spending on the launch of Motiv in the United States.
Speaker Change: Cash use in the quarter was $14.9 million. This compared to $38 million last year.
Speaker Change: In the third quarter, inventory increased in preparation for the U.S. introduction of Motiva, and accounts receivable were also higher as we saw higher sales to distributors.
Our cash position on September 30th was 39.7 million dollars.
Speaker Change: Following FDA approval of Motiva implants, we drew the next $25 million tranche of our credit facility on October 8th. The net proceeds put our pro forma cast position at approximately $64 million.
Speaker Change: After the market closed today, we announced completion of a registered direct offering. The offering was priced at a 5% discount to today's closing price, and before expenses, we raised $50 million.
Speaker Change: With the proceeds, our pro forma cash position at the end of 3Q was approximately $114 million.
Speaker Change: We also announce today that we have amended our existing credit facility, where we extended the time when we can draw the final $25 million tranche to December 31st, 2025.
Speaker Change: We are updating our revenue guidance for the year to $165 to $168 million.
Speaker Change: While we are seeing good performance in a number of regions and continue to take market share, underlying market demand remains uneven and is down in some markets.
Latin America, especially Brazil in particular, continued to underperform.
Speaker Change: We've also taken into consideration that while the U.S. is off to a great start, the approval came about six to eight weeks later than we had expected.
Juan Jose: We will give a more detailed view on 2025 when we report our 4Q results, however for budgeting purposes we are planning on our business outside the U.S. to grow in the mid-single digits next year and, as JJ noted, we expect the U.S. will exceed $35 million in revenue.
Juan Jose: Our outlook for next year is also built with the intent of having our first Ibiza-positive quarter in 2025.
Juan Jose: Thus our budgeting assumes a conservative first cut. We're not assuming a significant rebound in Brazil or other markets.
Juan Jose: Starting with a conservative view and setting our internal spending targets against them should allow us to confidently reach our profitability targets.
Juan Jose: Gross margins of 2024 should be approximately 100 basis points higher on an underlying basis. However, on a reported basis, we expect gross margins to be similar to 2023 levels.
Juan Jose: With the higher selling prices in the U.S. and with their other new products, we expect gross margins will be meaningfully higher in 2025.
Juan Jose: We remain very focused on managing operating expenses, which can be seen in the almost $19 million reduction in operating spending over the first nine months of this year compared to last year.
Juan Jose: With the FDA approval of Motiv implants and the strong demand we are seeing in the United States, we will see increased commercial and operational activity. As such, overall operating expenses will increase in the last couple of quarters.
Juan Jose: Achieving positive adjusted EBITDA and positive cash flow remain very important goals for us as a company and as I noted we're on track to turn EBITDA positive in 2025.
I will now turn the call back to Juan Jose.
Speaker Change: Thank you, Raj. The FDA approval of Motiva has opened the door to the next phase of growth for our company.
Juan Jose: Not only do we have access to the largest global market, but the U.S. commands among the highest gross margins in the world.
Juan Jose: As such, we expect to not only see growth accelerate meaningfully in 2025 and sustain at a high level, but with the spending discipline we have shown over the past year, and with the economics of our business in the United States, we are on a clear path to profitability.
Juan Jose: Our balance sheet has been strengthened to where we are fully funded to take advantage of our U.S. launch and to continue to launch innovations for years to come, all of which will create value for our shareholders.
Juan Jose: When we founded this company 20 years ago, we always knew that entering the U.S. market was the ultimate validation for our technology.
Juan Jose: We now have the entire global market open to us, and we look forward to many years of very strong growth ahead. I will now turn the call over to the operator for your questions.
Speaker Change: Thank you. At this time, we'll be conducting a question and answer session. If you'd 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'd like to remove your question from the queue.
Speaker Change: If our participants use the speaker equipment, it may be necessary to pick up your handset before pressing the star keys.
One moment, please, while we poll for questions.
Speaker Change: Our first question comes from Alan Gong with JPMorgan. Please proceed with your question.
Alan Gong: Hi, thanks for the question. I had, you know, the first question on the U.S. launch. It's great to hear that it's off to a stronger-than-expected start.
Alan Gong: When we think about the $30 million, $35 million plus expectations for next year, what does that really contemplate when it comes to the ramp this quarter and your ability to sustain momentum next year?
Thanks, Alan. And if I hear you correctly, I think...
Speaker Change: I think you want to get our view on how we ramp this business, and I think I will point out the fundamentals.
Speaker Change: number one the quality of our sales reps these are the best in the industry we have now 32 and we'll have 40 by the year end
Speaker Change: you know, the speed at which we are onboarding new accounts.
Basically an average
Speaker Change: between 15 and 20 per day, already on boarded up 250 accounts, 70 have ordered more than 20 five times, social media, PR, everything that is going on speaks of the shift.
Speaker Change: the paradigm shift that we are seeing in the U.S. market.
Speaker Change: So of course, you know the first few months you're building your base of accounts
Speaker Change: But these accounts are already ordering and reordering, and that tells you where this is going. So I think when we speak of our ability to bring at least $35 million next year, it shows our conviction that this is a market that we can take based on the quality of our technology and the differentiation.
Speaker Change: Got it. And then kind of my follow up is on the other 2025 commentary that you gave, the kind of 5% OUS growth.
Speaker Change: Should I basically be thinking about that as, you know, your current business minus the $3 million that you expect to generate from the U.S. in the fourth quarter and growing that mid-single digits?
Speaker Change: If so, I think that's, you know, kind of a good bit slower than us on, you know, on the street, we're thinking, especially with China.
Speaker Change: still in the early stages of launch, and it looks like the rest of APAC and EMEA are doing better, even if LATAM is going to continue to be weak. So, you know, one, is that the right way to think about it? And two, why would that be the case? Why wouldn't you be able to do better than the tabloid news?
Speaker Change: Yeah, Alan, thanks for the question. You know, as we noted in the commentary, this is really a first cut at 2025 for us, right?
Speaker Change: We're setting a conservative outlook to start the year, but importantly, we're also building our budget against that, our expense budget against that, because we've also commented about the...
Speaker Change: The goal we have to have an EBITDA positive quarter next year, right, to break into that profitability.
Speaker Change: Our next question comes from Matt Taylor with Jefferies. Please proceed with your question.
Matt Taylor: I was hoping to get a little bit more color on China.
Speaker Change: If you could talk about how you're progressing against your goals this year.
Speaker Change: and understand anything that you can give about China growth in 2025 and really want to dig into what this 50 million dollar investment does. What do you think it's going to do for the ramp of Motiva products in China?
Yeah, thanks Matt.
Speaker Change: So, you know, one of the important things is that, you know, China, you know, in general, when it comes to consumer spending, it's been a tough year in China in 2024. But as you well know, you know, the Chinese government is undertaking a series of measures to really prop up consuming consumers across all of China.
Speaker Change: And we think it's the right time for this type of investment into the Chinese market. So we are very happy to see Motiva China, our partner, joining our bridge fund, part of CBC.
Speaker Change: for this investment. And this investment is to, you know, basically advance the growth of Motiva in China, and also, more importantly,
Speaker Change: bring the Ergonomics 2 platform and MIA to China. When it comes to MIA, China was the number one market in our market studies.
Speaker Change: So, you know, as we look at what we have done this year, we're very happy with
Speaker Change: You know, the things that we have undertaken in terms of the deployment of inventories into Tier 1 and Tier 2 cities, medical education across the board, and continuous improvements that we are seeing in the pace of our marketing activities.
Speaker Change: So, you know, as we go into 2025 and beyond, we think that this level of investment shows the commitment of our partners into making China, just like the other countries in the periphery in Asia, you know, a leadership market for Motiva.
Speaker Change: And that's good. I guess just to help with the modeling, could you be any more specific on how China's done this year? You talked about a ten million dollar stocking over the course of the year. Are you going to go beyond that with reordering and can you give us any color on how China could contribute next year?
Speaker Change: I think it's a little bit early to talk about next year but clearly we're on track to do the 10 million net that
Speaker Change: that our distributor there has committed to doing. You know, as we move into next year, we'll start to see the pace of reordering, but as Juan Jose noted, this investment that they're receiving from CBC and the excitement we're seeing about the products there, we have, you know, we have high hopes for what they'll do next year. But I think it's a little bit early to talk about the contribution in 2025.
Speaker Change: Okay, alright, thanks Ralph.
Okay. All right. Thanks, Ross.
Speaker Change: Our next question comes from Marie Thibault with B T. I G. Please proceed with your question.
Speaker Change: Our next question comes from Marie Theobald with BTIG. Please proceed with your question.
Speaker Change: Hey, Good afternoon. This is Sam on for Murray, Thanks for taking the questions and formal congratulations on the U S approval maybe.
Speaker Change: Hey, good afternoon. This is Sam on for Marie. Thanks for taking the questions and formal congratulations on the u.s. Approval
Speaker Change: Maybe I can start on some of the non Latam markets want to better understand maybe what you're seeing in Europe, and maybe some of the non China APAC markets and then.
Speaker Change: Maybe I can start on some of the non-LATAM markets. I want to better understand maybe what you're seeing in Europe and maybe some of the non-China APAC markets. And then the other thing about direct versus distributor, are we at a point where maybe distributors are back to normalized inventory levels or do you think maybe there's still some more catch-up that needs to happen?
Speaker Change: Thinking about direct versus distributor you know or are we at a point, where maybe distributors or back to normalized inventory levels. What do you think maybe theres still some more catch up that needs to happen.
Speaker Change: Yes. Thank you so.
Speaker Change: Over the course of this year, we have been talking about market stabilizing at different speeds across the world, but we continue to see macroeconomic pressures, notably in Latam and especially in Brazil.
Speaker Change: Over the course of this year, we have been talking about markets stabilizing at different speeds across the world, but we continue to see macroeconomic pressures, notably in LATAM and especially in Brazil.
Speaker Change: And the environment is not true.
Speaker Change: Adding further in that region, but our hope for a rebound in the second half of this year has not really taken place now.
Speaker Change: and the environment is not deteriorating further in that region, but our hope for a rebound in the second half of this year has not really taken place.
Speaker Change: Now to your question.
Speaker Change: When you look at EMEA, that's a region, where you know where we have seen markets stabilizing we'd actually some markets, even growing and that's a region in which we have a combination of both direct markets and distributor markets.
Now, you know, to your question,
Speaker Change: When you look at EMEA, that's a region in where, you know, where we have seen markets stabilizing, with actually some markets even growing. And that's a region in which we have a combination of both direct markets and distributor markets.
Speaker Change: When you look at APAC APAC has also been stabilizing but we believe there's still room for improvement in certain markets in the region and that is a pure distributor region for us.
Speaker Change: Then when you look at APEC, APEC has also been stabilizing but we believe there's still room for improvement in certain markets in the region and that is a pure distributor region for us.
Speaker Change: I also want to point out that there was no structural change the demand for breast aesthetic procedures economic picture has made it harder for women to access it at this time and some regions in the world.
Speaker Change: But I really want to emphasize something make no mistake.
Speaker Change: We will grow this year in the EMEA region, and the APAC regions in our core business compared to 2023, and we continue to gain market share across the globe. So it is important that we say these things because we don't want the picture of our business to be one that is not based on growth as we have.
Speaker Change: We will grow this year in the EMEA region and the APAC regions in our core business compared to 2023. And we continue to gain market share across the globe.
Speaker Change: So it is important that we say these things because, you know, we don't want the picture of our business to be one that is not based on growth, as we have pointed out in the script and now.
Speaker Change: Pointed out in the script and now.
Speaker Change: Really helpful wanted to say thanks for the added color there maybe just a follow up question on some of the short term supply challenges.
Speaker Change: Really helpful, Juan Jose. Thanks for the added color there. Maybe just a follow-up question on some of the short-term supply challenges. I just want to clarify, is that going to have any impact on your ability to maybe meet near-term demand, or is that something that should be worked through without any impact?
Speaker Change: Just want to clarify is that going to have any impact on your ability to maybe meet near term demand or.
Speaker Change: Is that something that should be worked through without any impact.
Speaker Change: Okay.
Speaker Change: Yeah, I think that's an important point.
I've learned.
Speaker Change: You know we had planned for a long time, the decommissioning of our <unk> manufacturing facility that facility had been manufacturing for last 15 years and you know.
Yeah, I think that's an important point.
Speaker Change: You know we had planned for a long time the decommissioning of our B-15 manufacturing facility. That facility had been, you know, manufacturing for the last 15 years and, you know, it had a, you know, it had a date for decommissioning.
Speaker Change: It had it.
Speaker Change: You have a date for decommissioning.
Speaker Change: So we are moving capacity into our two other manufacturing units so.
Speaker Change: So we are moving capacity into our two other manufacturing units.
Speaker Change: In that process. There are some pressures so there will be an impact into into Q4, so hence.
So, you know
In that process...
There are some pressures, so there will be an impact.
into Q4.
Speaker Change: The change in the guidance for this year, but do we think that this will abate by by Q1, we are adding manufacturing capacity in both of these sites are in.
Speaker Change: So, hence the change in the guidance for this year, but we think that this will abate by Q1. We are adding manufacturing capacity in both of these sites, in one of them including a third shift, so we will be ready.
Speaker Change: And one of them, including a third shifts so we will be ready.
Speaker Change: Understood. Thanks for taking the questions.
Speaker Change: Our next question comes from Joanne Wuensch with Citi. Please proceed with your question.
Speaker Change: Our next question comes from Joanne Wench with Citi. Please proceed with your question.
Speaker Change: Oh, Hey, good afternoon. This is Anthony on for Joanne Thanks for taking our questions.
Speaker Change: Hey, good afternoon. This is Anthony out for Joanne. Thanks for taking our questions.
Speaker Change: See you in the U S.
Speaker Change: Target.
Speaker Change: S account number your hunting towards that we should be thinking about.
Speaker Change: Do you, in the U.S., do you have a target U.S. account number you're hunting towards that we should be thinking about? And then, on the 40 reps,
Speaker Change: On the 40 reps.
Do you think that's sufficient to serve.
Speaker Change: The U S market or how should we be thinking about.
Speaker Change: Do you think that's sufficient to serve the U.S. market or how should we be thinking about potentially the expansion of that sales force in 2025?
Speaker Change: Naturally the expansion of that sales force in 2025.
Speaker Change: Yes, Thank you well not long ago, we were talking about having 12 sales reps and you've seen how fast we've moved to 32.
Speaker Change: And these are not just any sales reps. These are the best in the industry as you can see by the speed and the quality of the accounts that we are on boarding the speed at which they are ordering for the first time and then reordering and then you know when we look at from now to the end of the year, we will be adding eight more sales reps and we will.
Speaker Change: Be adding more sales reps next year as you know our base of accounts.
Speaker Change: We will be having more sales reps and that is natural.
Speaker Change: On top of that I think that you know.
Speaker Change: Our entire infrastructure in the U S.
Speaker Change: To get strengthened.
Speaker Change: We are adding people in the back office, we will be adding in.
Speaker Change: Inventories necessary for the growth and that's what the company is focused on because if you look at next year. Our plan is to take significant market share in the U S market.
Speaker Change: It will be one of the key factors for growth next year.
Speaker Change: Okay.
Speaker Change: Hi, Thanks for taking the question.
Speaker Change: Our next question is from Josh Jennings with TD Cowen. Please proceed with your question.
Speaker Change: Okay.
Speaker Change: Question.
Speaker Change: Wanted to focus on the recently held ergonomic symposium that you guys announced me a three year data.
Speaker Change: Yeah.
Speaker Change: Could you just talk about whether or not that those data will be.
Speaker Change: To submit to the FDA for through a supplemental PMA pathway and have you had any discussions on the <unk> pathway.
Speaker Change: With the FDA and then the second question is just if you could maybe just give us some color on.
Speaker Change: What what occurred out over in Barcelona.
Speaker Change: The new pipes.
Speaker Change: Pipeline updates that you can relay or anything else.
Or even just the buzz that was out there for them from a clinical community. Thanks for taking the questions.
Speaker Change: Yes, Thank you, Josh and Barcelona was once again, a phenomenal opportunity for establishment labs to showcase its latest technological.
Speaker Change: Movements and.
Speaker Change: The three year data.
Speaker Change: As you know what we are about showing with data that not only we can improve device related complications, but now with <unk>, which is.
Speaker Change: Changing the way surgeons are doing breast augmentation and breast harmonization because of breast tissue preservation and <unk>.
Speaker Change: What it does in the results for this study study show. It is that basically you're also almost eliminating technique related complications and that is a very powerful combination.
Speaker Change: Our future is based on breast tissue preservation across the board you will see us talking more and more about it we haven't we had more than 500 people in attendance and.
Speaker Change: That included not only some of the best plastic surgeons around the world, but also our business partners. So I think everyone is powered up not only by the FDA approval, which of course has an effect on the image and the credibility of our entire platform across the world, but also.
Speaker Change: On the things that we are bringing to market because mir will continue to expand.
Speaker Change: Talked about 2009 cities now with just seven more cities than last quarter 15, more plastic surgeons 47 clinics in the pipeline and I think most importantly, I think that gets perhaps a little bit lost is it you know.
Speaker Change: This year, it's only been 12 months really since the first clinics launched in only six months and three months since a big chunk of those clinics have launched and yet what we see is that so far in this first 12 months more than 40% of patients.
Speaker Change: Getting Mia are new to the category, which means that we're not looking for a breast augmentation.
Speaker Change: Liam pricing, 30% to 50% over the same price in the same clinic for traditional breast augmentation two months versus three to seven years consideration time so.
Speaker Change: That's what we wanted to show that this is really a new category 2025 will be you know about expanding the known risk clinics, bringing the capillarity of me are across the board by adding cities and countries. So.
Speaker Change: We will be seeing engaging and giving more data about how we grow the number of clinics and the number of procedures for the clinic in 2025, because that will be the focus.
Speaker Change: Yeah.
Speaker Change: Great and thanks for all that and just maybe anything you can share just on the O U S.
Speaker Change: That's where you have and whether supplemental PMA is is a possibility in any discussions with the agency.
Speaker Change: Yes, I'm, sorry for not answering before.
Speaker Change: We are looking at having a conversation with the agency regarding not only me, but the ergonomics two platform and.
Speaker Change: EMEA has other components. In addition to the breast implant that is part of it. So you know we're working hard with our regulatory team to have this conversation soon enough. So you know we're not.
Speaker Change: Trying to rush things, but at the same time, we do want to get it done.
Speaker Change: And my apologies for multi layered question there. Thank you.
Speaker Change: No problem.
Speaker Change: Our next question comes from Anthony Petrone with Mizuho Group. Please proceed with your question.
Speaker Change: Okay.
Speaker Change: Anthony or are you there are muted.
Speaker Change: Anthony are you muted.
Speaker Change: I was muted I apologize for that.
Speaker Change: I appreciate that and thanks for fitting us here in here for a question I know a lot has been asked but just a couple maybe on.
Speaker Change: As we think about a sales force build in the United States and the cadence.
Speaker Change: If you could maybe just give us an update on where you sit in the U S for the sales force exiting the quarter and as you think about building that out through 2025, how should we be thinking about that from a head Count addition, and just layering that into the SG&A line.
Speaker Change: And then secondly, maybe just a little bit of an update on our next catalysts are.
Speaker Change: Our next catalysts for.
Speaker Change: Additional FDA clearances following ergonomics following round and ergonomics when could we expect ergonomics two and anything you can share on media in the U S. I know, it's a little bit further into calendar, but any other color there would be helpful. Thanks.
Speaker Change: Yes. Thank you Anthony I think it's it's important to realize that.
Speaker Change: So that's a lot of experience. So we really know how to do this and if you look at the team that we have in place with Jeff and and leading that team and all of their experience. They know exactly what they are doing.
Speaker Change: If you look at what's coming over the next few years, we're going to see a super cycle of innovation in the United States, we're going to get.
Speaker Change: Deep breast reconstruction approval.
Speaker Change: Indication for breast reconstruction on top of that you know, we will be working towards getting the ergonomics two platform and from there not only do you get.
Speaker Change: The program related to EMEA, but also the programs related to joy and breast tissue preservation and of course, we have other things coming that we've talked about before with <unk>, which is for ergonomic modeling of the Bluetooth area and also our sense sensor technology. So a lot of things will be coming.
Speaker Change: To plastic surgeons in the United States, but I'll also point out something else.
Speaker Change: That I think.
Speaker Change: People should not forget and Thats part of what we're talking about today is the road to profitability and if you look at you know improvements over the last 12 months.
Speaker Change: Not only we talked today about an increase in revenue, but also the improvement in EBITDA, 58% cash used 60% improvement opec's, 18% improvement and we've done this while reducing our entire employee base by 20% in adding.
Speaker Change: U S employees and investing in the U S market. So I think that's a pretty impressive way to describe what this company has been doing and now that we have the FDA approval.
Speaker Change: We'll be getting.
Speaker Change: Into the market with the highest gross margins and I think that that's what signals not only our first EBITDA positive quarter next year, but eventually how we get to cash flow positive as a company.
Speaker Change: Yeah.
Speaker Change: That's helpful and one follow up just on the O U S commentary.
Speaker Change: <unk>, two 5% O U S growth.
Maybe when we think about you know just.
Speaker Change: The inputs into that that forecast and you know potential areas of risk, but also on the flip side, where it potentially can be conservative and really where I'm going is you know trends on the ground in China versus trends on the ground in Brazil, what gives you some encouragement and in each of those regions and where is there potential risk.
Speaker Change: Again, congratulations on the U S motiva clearance.
Speaker Change: Yeah, I mean as I noted earlier, Anthony I mean, it's a conservative start to the year right. It's really a budgeted number for us and should I. Just described there's lots of puts and takes into next year right. We're not expecting anything heroic out of China, but certainly the size of that Mark.
Speaker Change: And the investment that our partner there is received.
Speaker Change: Shut set up for a nice potential run in that market.
Speaker Change: Certainly the U S right, which I guess you are asking me to all U S. But the U S is going to be the big driver for US next year overall for growth.
Speaker Change: And then outside you know, we continue to see pockets of macroeconomic softness but.
Speaker Change: Things came through which we expect they will.
Speaker Change: As Juan Jose mentioned, we are seeing decent growth in EMEA right now pockets of growth there APAC is stabilizing but theres still room for.
Speaker Change: Latam has been.
Speaker Change: The big weak spot for us this year and so theres a lot of room for that to start to step up and so for us I think the bit where we.
Speaker Change: We're setting up ourselves for 2025 is really just a conservative way to start the year and we absolutely expect to do better yeah, and Anthony to to give you more precision on.
Anthony: Path for EMEA and the U S.
Anthony: I just wanted to like reinforce it we are in discussions with the FDA on pursuing the quickbooks pathway for it and of course, we're going to leverage the already completed data globally like the one we showed at the world Ergonomic Symposium.
Anthony: We will target via a supplement of course.
Speaker Change: So much.
Speaker Change: That is all the time, we have for questions today I will now turn the call back over to Juan Jose Chacon Quiros for closing remarks.
Speaker Change: Thank you for joining us on today's call we will be at several conferences over the next couple of months, including the UBS Global Health Care Conference. The Jefferies London Healthcare Conference. This defense investment conference the Citi Global Healthcare conference and the Mizuho Health Care Conference.
Speaker Change: We look forward to seeing you at any of these events.
Speaker Change: Everyone continued good health and happiness.
Speaker Change: This concludes today's conference you may disconnect your lines at this time and we thank you for your participation.
Speaker Change: Great. Thank you.