Establishment Labs Holdings Inc.

Good afternoon. Welcome to Establishment Labs' second quarter 2023 earnings call. At this time, all participants will be in listen-only mode. At the end of this call, we will open the line for the question and answer session, and instructions will follow at that time. If anyone should require operator assistance during the conference, please press star zero from your telephone keypad. As a reminder, today's call is being recorded. I will now turn the call over to Raj Dhanoy, Chief Financial Officer. Please go ahead.

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 that comments made by management during this call will include forward-looking statements in the meetings of federal securities laws. These include statements on Established 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 Establishalabs.com. Please also note that Establishalabs receives 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 regulatorily 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 day of this live broadcast, August 8th, 2023. Except as required by law, Establishment Labs undertakes no obligation to revise or otherwise update any statement to reflect or events or in 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 second quarter of 2023 totaled $48.6 million, an 18% increase over the second quarter of 2022, and a new quarterly record for our company. We are growing well in excess of our underlying markets, and there are a number of positive catalysts we expect over the coming months, all of which is providing a strong foundation on which to build for 2024 and beyond. Raj will provide additional details on our second quarter performance and our outlook in a moment. On July 19, the five-year anniversary of our listing as a public company, we held the grand opening of our Sulayum Innovation Campus. Over 400 people attended the event, including representatives of the Costa Rican government, plastic surgeons, distributors from around the world, suppliers, and other business partners. The new campus supports our strategic plans with additional capacity and capabilities in R&D, manufacturing, digital media, training, and medical education. This year, we will bring online approximately 35,000 square feet of new manufacturing and warehouse space that more than doubles our manufacturing capacity to over 1.5 million units a year, which is about half the current global demand. We also have the ability to add an additional 45,000 square feet of manufacturing as our growth requires. The new facilities include advanced R&D labs and a global learning center that allows us to produce content that we can stream around the world. The on-site surgical theater and procedure rooms allow for medical education and training that can scale to our global business and help us expand the market and create broad demand for our products. The state-of-the-art facility is designed to be carbon neutral and uses sustainable materials and other green design elements and standards throughout. Our goal was to build a center for creation and innovation where our employees, healthcare professionals, and partners from all over the world can usher new standards for the future of plastic surgery. And with the opening of the SULEOM, we are certain we have succeeded. We are better positioned than we have ever been to create and expand new markets and to make a meaningful change in the lives of women around the world. One of the most exciting near-term opportunities for us is Mia Femtech. With the recent approval in Europe of the tools needed, the global rollout of this new category in breast aesthetics is picking up pace. Our launch activities are centered on creating this new category with our growing list of certified partner clinics. We are strengthening our pipeline of partner clinics with new centers in Japan, Spain, Switzerland, Sweden, Germany, England, Costa Rica, and France, with more requests every week to join. We have created branding and marketing programs localized for each market that are directed at creating and capturing consumer demand. In Spain, where we launched our first campaign in July, the first week saw us generate over 175 leads, 30 of which resulted in patient-seeking appointments. Most importantly, 47% of these patients were not seeking a breast augmentation prior to learning about MEA. As a reminder, as part of the MEA experience, 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 one to two 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. It is still early in the launch of MIA, and we remain focused on bringing women into this new category of breast aesthetics as plastic surgeons see improved efficiency with our partner clinics benefiting from better economics. We are seeing early proof points that we can scale this new category with MIA into a multi-billion dollar opportunity. In our aesthetic breast recon franchise, the rollout of our Motiva Flora tissue expander continues. We developed Flora to provide surgeons and the women who receive these devices better options. Despite one in eight women developing breast cancer, tissue expanders before Flora have seen little meaningful innovation in decades. Among the improvements in Flora are a first-of-its-kind RFID-enabled port. which allows for MRI imaging with our artifacts during the time an expander is used after a mastectomy. By being non-magnetic, FLORA also opens new options for radiation oncology treatment. FLORA also features our patented cell-friendly smooth silk surface technology, which can offer improved patient comfort and healthy capsule formation. The market feedback is very positive, and we are seeing an increasing number of clinical publications confirming the benefits of FLORA. A recent publication out of Switzerland was the first in human study to confirm that FLORA does not affect the image quality of artifact-prone image sequences during MRI, a fundamental improvement in the standard of care for women undergoing breast reconstruction with tissue expanders. A recent publication out of South Korea demonstrated that in radiotherapy planning, the Motiva FLORA, with the non-metallic RFID-enabled port showed superior dosimetric results to the heart and lungs versus traditional metallic ports, potentially reducing side effects to these organs. The RFID port materials also reduced artifacts on CT imaging compared to the metals used in conventional expanders. In another recently published paper, scientists at the Medical University of Innsbruck in Austria were able to confirm in a head-to-head study that Flora provides much improved patient comfort and satisfaction in their breast reconstruction journeys compared to an FDA-approved expander. 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. We continue to make progress in the regulatory process and expect to launch Motiva in this market later this year. We have been in active communication with our partners in China to close the final questions remaining before regulatory approval. In the US, the 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. The pace of activity and our interactions with the agency remain positive. Clinical sites around the country have now undergone their BIMO inspections, bringing us closer in this process of approval. It is difficult to predict regulatory timelines, but nothing in the process thus far has diminished our confidence that Montiva implants will be available soon to women in the United States. I will now turn the call over to Raj.