Establishment Labs Holdings Inc.

Good afternoon, and welcome to Establishment Lab's first quarter 2023 earnings call. At this time, all participants are in listen-only mode. At the end of this call, we'll open the lineup for question and answer session, and instructions will follow at that time. As a reminder, today's call is being recorded. I will now turn the call over to Raj Dinhoy, Chief Financial Officer. Please go ahead, Raj.

Thank you, Operator, and thank you, everyone, for joining us. With me today is Juan Jose Chacon Quiroz, our Chief Executive Officer. Following our prepared remarks, we'll take your questions. Before we begin, I would like to remind you the comments made by management during this call will include forward-looking statements within the meaning of federal securities laws. These include statements on Establishment Labs' financial outlook and the company's plans and timing for product development and sales. These forward-looking statements are based on management's current expectations and involve risks and uncertainties. For discussion of the principal risk factors and certainties 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 will 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. Reconciliations to the most directly comparable GAAP financial measures can be found in today's press release, which is available on our website. Please also note that Establishal 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 authorities for specific product availability. The content of this conference call contains time-sensitive information, accurate only as of the date of this live broadcast, May 8th, 2023. Except as required by law, Established Labs undertakes no obligation to revise or otherwise update any statement to reflect events or circumstances after the date of this call. With that, it is my pleasure to turn the call over to our CEO, Juan Jose.

Thank you, Raj, and good afternoon, everyone. Revenue in the first quarter of 2023 totaled $46.5 million. a 21% increase over the first quarter of 2022 in the new quarterly record for our company. Excluding the negative impact of foreign currency changes, our growth in the first quarter would have been approximately 22.9%. Our revenue guidance for 2023 remains unchanged at $200 to $210 million, representing growth of 24% to 30% over 2022. Raj will provide additional details on our first quarter performance in our outlook in a moment. The last few weeks have seen a number of significant events at Establishment Labs. On March 29th, we announced that we have 3 million Motiva devices in market. This is an important event, not only because of the scale we have achieved in market since we began commercialization over 12 years ago, but also because of the exceedingly positive outcomes we have achieved with such a large number of devices. Just like we do every year, we recently released to the scientific community our post-market surveillance report, which includes data from independent national registries, all consistently showing less than 1% device-related complications. These excellent results were corroborated and expanded upon when the three-year data from our Motiva US IDE study was presented at the aesthetic meeting on April 20th. Dr. Caroline Glicksman, the principal investigator of the study, provided an update following the aesthetic cohort passing the three-year endpoint in the trial. What is particularly notable about the results is that the rates of the major device-related complications of capsular contracture rupture did not change from year two to year three. There continued to be only two patients with capsular contracture and only one patient with a suspected rupture at three years, which was the exact same number at two years. Beyond the rates themselves being quite low and much lower than has ever been seen in a major trial like this, The consistency of the results from year two to year three are very encouraging and starting to create a lot of positive buzz in our industry. US plastic surgeons are now asking the most important question. When will Motiva be available in the United States? And while we can't give them a definitive answer, we can tell them that our final module of our PMA was submitted to the FDA in the first quarter and the full PMA has now been accepted and is under review by the agency. Of course, with so many catalysts in the near future, how we are going to fund our growth is always an important question. We answered this to a large degree on April 27th when we completed a follow-on share offering that raised gross proceeds of $90.4 million. Our team did a wonderful job in just a one-day wall cross that was many times oversubscribed and that brought significant new investors in our shareholder base. Especially in this market, conducting an offering with such demand from a high-quality investor is a remarkable achievement. On April 10th, we announced the launch of Miya Femtech in Japan. The idea for Miya originated a decade ago when we recognized that breast augmentation was not meeting the needs of women in Japan. With the experience of Mia Femtech, we are providing a solution. With Mia, 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. 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. Our lunch activities are centered on creating this new category in Japan with our partner clinics. We have created marketing materials localized for the Japanese market, including a Japanese language Miya Femtech website, social media, and traditional media, all directed at creating demand and then directing interested women to our clinic partners. Mia Femtech is being launched initially at two clinic chains in Japan. Seishin Plastic and Aesthetic Surgery Clinic operates 10 premium clinics with Mia Femtech now available at their main Tokyo clinic in Roppongi and at their newest clinic in Ginza. Joel Clinic is a high-end medical aesthetics chain in Japan that will offer Mia Femtech initially at its Tokyo and Osaka locations. It is still early in the launch of MIA and we are focused on demonstrating that this is a new category, bringing new women into breast aesthetics and that surgeons are seeing improved efficiency and our partner clinics are benefiting from higher economics. These proof points will be important as we look to scale MIA into the multi-billion dollar opportunity that it has the potential to become. We look forward to providing updates on our progress in Japan for the coming months. We recently also announced our first European clinic partners for MIA. We have partner clinics in Spain, Switzerland, and Sweden, and I'm pleased to report that we have signed our first MIA partner in France. Clinique de Champs-Élysées is a prestigious center for medical and surgical aesthetics based in Paris, with a chain of 12 clinics throughout France. We continue to make good progress on finalizing European Union approval for the tools that are part of the minimally invasive system used for MIA Femtech. In our aesthetic breast reconstruction franchise, the rollout of our Motiva Flora tissue expander continues. The market feedback continues to be very positive, with more and more surgeons making it their expander of choice in post-mastectomy breast reconstruction. What continues to resonate with clinicians globally is that Flora is a much improved offering with many new advances in what is, unfortunately, a large and often neglected category in breast reconstructions. In a recently published paper, scientists at the Medical University of Innsbruck in Austria were able to confirm in a comparative study that Flora provides much improved patient comfort and satisfaction in their breast reconstruction journeys. As a global medical device company focused on women's health, Establishment Labs has the opportunity and the responsibility to improve breast reconstruction. Flora is only the first step in our aesthetic breast recon initiative. where establishment labs will offer tools and techniques that allow women to receive reconstructive surgeries that achieve the aesthetic ideals to which they aspire. On China, we are actively preparing for the launch of Motiva with our distribution partner. Over the last couple of months, we have conducted a significant amount of research in order to understand the opportunity in what is now the second largest market for breast devices globally. The market in China continues to recover. with procedures in 2025 expected to exceed pre-COVID levels. There continues to be a very healthy luxury segment in China where consumers are paying procedure prices similar to the upper end of market in places like the United States and Europe. Given the premium positioning of Motiva in other Asian markets, including South Korea and Japan, and the strong awareness of our devices in the Chinese market, We are very encouraged by what we are learning about this market and the opportunity. We continue to make progress in the regulatory process and expect to launch Motiva in this market in the second half of 2023. I will now turn over the call to Raj.