Establishment Labs Holdings Inc.

Good afternoon. Welcome to Establishment Labs' first quarter 2024 earnings call. At this time, all participants will be in a listen-only mode. At the end of this call, we will open up the line 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 Dhanoy, Chief Financial Officer. Please go ahead.

Thank you, Operator, and thank you, Erwin, for joining us. With me today is Juan Jose Chacon-Quirós, our Chief Executive Officer. Following our prepared remarks, we'll take your questions. Before we begin, I would like to remind you that comments made by management during this call will include forward-looking statements within the meaning of federal securities laws. These include statements on Establishment Lab's 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 uncertainties that may affect our performance or cause actual results to differ materially from these statements, I encourage you to view 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. Reconciliations through 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. The content of this conference call contains time-sensitive information accurate only as the date of this live broadcast, May 8th, 2024. Except as required by law, Establishal 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 2024 totaled $37.2 million. Our markets continue to stabilize. we are seeing improving demand all of our global regions showed sequential improvement in the first quarter we saw this in both our direct and distributor markets and we expect to see continued improvement throughout 2024. our first quarter also showed the tangible results of the cost reduction and efficiency improvement activities we undertook in the second half of last year adjusted EBITDA improved to a loss of less than four million dollars This was a notable improvement from the loss of $17 million last quarter. We are off to a busy start in 2024. Over the past several months, we launched Motiva implants in China and our Flora Tissue Expander in the United States. We are also making significant progress to our approval of Motiva implants in the United States. The number of clinics offering me around the world is growing exponentially. and the feedback on this transformative press technology continues to surpass even our own expectations. We are well-positioned for multi-year growth, while steadily improving our margin structure and achieving the necessary scale to reach cash flow profitability in 2025. Raj will provide more on our financial results and outlook in a moment, but first I want to highlight several recent events. Last week, we announced two important developments on our path to U.S. approval. The four-year data from our Motiva U.S. ID study was presented at the aesthetic meeting on May 2nd by Dr. Caroline Glixman, the medical director and a principal investigator of the study. As Dr. Glixman highlighted, it is particularly notable that our rates of Baker grade 3 and 4 capsule contracture and rupture have not changed for the past two years. At year four, there continues to be only two patients with capsular contracture and only one patient with a suspected rupture, which were the exact same numbers at two years and at three years. These low complication rates are a confirmation of a new standard for breast implants, and we expect plastic surgeons will adopt our products given their technological superiority and performance. While these are not comparative studies, It is worth noting that at four years, the FDA data from the two largest competitors in the U.S. showed that between one in seven and one in 12 women developed a Baker grade three or four capsular contracture. In the Motiva study, it was one in 200 women. We also announced last week that Jeff Earhart will lead our North American business. Jeff most recently ran the plastic and reconstruction division of Allergan Aesthetics and was responsible for the breast products portfolio. Jeff is a strong commercial leader with over 25 years of experience in this industry. I cannot imagine anyone better suited to introduce Motiva to the U.S. market. Jeff is already building an experienced team with a successful track record in this industry, including Ann Pugh, who will head our U.S. sales team, and Ben Newcott, who is Director of Surgeon Engagement and Business Development, will lead our outreach to the plastic surgeon community. This is truly an all-star team. At the annual meeting of the Aesthetic Society in Vancouver this past weekend, establishment labs in Motiva were the talk of the conference. Plastic surgeons are overwhelmingly enthusiastic about our new hires, and the launch of Motiva in the United States might be the most anticipated launch of an aesthetic product in decades. Surgeons and investor alike want to know when Motiva will be available in the United States. And while the second quarter inspection of our facilities is a critical point in the process, we will continue not to predict an exact timeline for both competitor and regulatory reasons. That said, the conversations with the FDA are highly constructive, and we have high confidence that we will be on market in 2024. While we wait for the approval of Motiva, Flora, our unique tissue expander continues to gain traction in the U.S. market. Flora has many important and novel features, including our patented smooth silk surface technology, as well as an RFID-enabled non-magnetic port that is labeled as MR conditional by the FDA. This is a distinct advantage to Flora, as all other commercially available breast tissue expanders include magnets. We had many surgeons come by our booth in Vancouver to learn about the advantages of FLORA in reconstruction, and we expect adoption of this technology will continue throughout the course of 2024. We have completed the VAC process at a number of the premier cancer centers in the United States, and more are pending. As the benefits of this device in breast reconstruction are being demonstrated and shared in the clinical community, the number of hospitals providing FLORA to patients will grow in the U.S. Mia Femtech is creating an entirely new minimally invasive category within breast aesthetics, and the list of cities across the world where Mia is available continues to grow. In Q1, we added Mia centers in two new geographies, Middle East and Latin America. We now have centers certified to provide the Mia experience in Riyadh, Jeddah, Dubai, Abu Dhabi, Beirut, and our hometown of San Jose. In total, we have 55 clinics signed up for a MEA FEMTIC partnership, of which 33 are operating and 22 new clinics in the process of being onboarded for medical education and practice development. In addition, we have 37 clinics under negotiation. MEA consumers are sharing their experiences on social media, highlighting the convenience and aesthetic outcomes of their breath harmonization journey. confirming our conviction that word of mouth will ultimately be the biggest growth driver for Mia Femtech. It is still early in the launch of Mia, but we are seeing proof points that we are creating and capturing new consumer demand in this new category in breast aesthetics. In China, the reception of our recent launch has been strong. Chinese plastic surgeons and consumers have a strong appreciation for Motiva as the latest in innovation, science, and technology. and there is a willingness to pay a premium for such offerings in this market. Our exclusive distribution partner is pursuing an aggressive strategy of medical education and marketing events in Tier 1 and Tier 2 cities across China. The early results give us confidence that our market position in China over the next few years will match what we have seen in surrounding markets in Asia, where we are market leaders. I will now turn over the call to Raj.