Summary of Establishment Labs Holdings Conference Call Company Overview - Establishment Labs is a global medtech company focused on women's health, specifically in breast aesthetics and reconstruction, operating in 90 countries [4][5] - The company has recently entered the U.S. market after receiving FDA approval and has seen significant success in its first year [4] Core Product Differentiation - Establishment Labs claims to have the best implants in the industry, emphasizing safety and performance, with a device-related complication rate of less than 1% [5] - The proprietary SmoothSilk surface technology enhances biocompatibility and reduces inflammation, contributing to a superior safety profile [5] U.S. Market Performance - The company has established 1,300 accounts in the U.S. with increasing utilization rates and daily orders, indicating strong market penetration [10][13] - The expected market share by the end of the year is approximately 20%, which is considered impressive for the first year [13] Product Launches and Innovations - Upcoming product launches include the minimally invasive portfolio with Preservae in Q1 next year and the Recon Indication submission by the end of this year [5][11][28] - The Mia product is projected to generate $8 million to $10 million this year, with expectations of at least $30 million next year from the minimally invasive portfolio [16] Market Expansion Potential - The minimally invasive products are expected to expand the market significantly, with 40% of women undergoing the Mia procedure indicating they were not considering breast augmentation prior [19] - The company is focusing on direct markets, particularly in Western Europe, where it has seen over 20% growth in the last quarter [26][38] Financial Performance and Projections - Establishment Labs is EBITDA positive and aims to achieve cash flow positivity next year [21] - Gross margins have improved, crossing 70% in Q3, with expectations for continued growth as the U.S. market share increases [22][23] International Market Challenges - The macro environment in China is challenging, but the company is optimistic about achieving similar market share levels as in other Asian markets [32][34] - The company has seen competitors retracting from markets, which may present opportunities for further growth [34][35] Future Growth Opportunities - The JEM program, focused on gluteal augmentation, is expected to launch in Latin America around late 2026 or 2027, representing a significant future opportunity [40][41] - The company is leveraging its marketing strategies, including partnerships with brand ambassadors, to enhance brand recognition and drive growth [46][48] Conclusion - Establishment Labs is positioned for strong growth in the U.S. and international markets, driven by innovative products and a focused strategy on women's health. The company is optimistic about its future prospects, particularly with upcoming product launches and market expansion initiatives.

Company Overview - Establishment Labs Holdings Inc. (NASDAQ:ESTA) is a medical technology company focused on women's health, specializing in silicone-filled breast and body shaping implants [5]. Financial Performance - For fiscal Q3 2025, Establishment Labs reported revenue of $53.78 million, reflecting a year-over-year growth of 33.7% and surpassing estimates by $1.5 million [2]. - The company reported an EPS of negative $0.38, which exceeded expectations by $0.15 [2]. Market Dynamics - The revenue growth was driven by $11.9 million in sales of Motiva in the United States and strong performance in direct markets [2]. - The US business is identified as a critical growth segment, with a 16% increase in this market during a seasonally slower quarter for breast procedures, where overall market activity can decline by 20% to 30% [3]. Future Outlook - The fourth quarter is anticipated to be the strongest for breast augmentation, with sales acceleration already being observed in the US [4]. - Management expects to capture approximately 20% of the US breast augmentation market by the end of 2025 and to exceed previous guidance of $40 million in US Motiva sales [4].

Financial Performance - Revenue for the nine months ended September 30, 2025, was $146.5 million, an increase of $25.0 million or 20.6% compared to $121.5 million in the same period of 2024[226]. - Net losses for the nine months ended September 30, 2025, were $48.4 million, a slight improvement from $50.1 million in the prior year[226]. - Revenue for the three months ended September 30, 2025, increased by $13.6 million, or 33.8%, to $53.8 million compared to $40.2 million for the same period in 2024[262]. - Net loss for the three months ended September 30, 2025, was $11.1 million, compared to a net loss of $16.7 million for the same period in 2024[260]. - Gross profit for the three months ended September 30, 2025, was $37.7 million, with a gross margin of 70.1%, up from 63.9% in the same period in 2024[261][264]. - Gross margin for the nine months ended September 30, 2025, improved to 68.8% from 65.0% in the same period in 2024[275]. - SG&A expenses for the nine months ended September 30, 2025, rose by $25.2 million, or 26.3%, to $121.0 million compared to $95.8 million in 2024[277]. - Interest expense for the nine months ended September 30, 2025, was $18.0 million, an increase from $14.9 million in the same period in 2024[280]. Cash and Liquidity - As of September 30, 2025, the company had an accumulated deficit of $493.1 million and a cash balance of $70.6 million[226]. - As of September 30, 2025, the company had cash of $70.6 million, down from $90.3 million as of December 31, 2024[283]. - The company expects available cash and cash from operations to meet liquidity requirements for at least the next 12 months, covering operating expenses and interest payments[286]. - Net cash used in operating activities for the nine months ended September 30, 2025, was $50.7 million, primarily due to a net loss of $48.4 million[290]. - The company reported a net cash increase of $(19.7) million for the nine months ended September 30, 2025, compared to $(0.3) million for the same period in 2024[289]. - Net cash used in operating activities for the nine months ended September 30, 2024, was $37.8 million, with a net loss of $50.1 million[291]. - Net cash provided by financing activities for the nine months ended September 30, 2025, was $34.4 million, mainly from $24.5 million in borrowings under the Tranche D Term Loan[295]. - As of September 30, 2025, $246.4 million was outstanding under the Credit Agreement, with interest rates ranging from 9% to 10% per annum[299]. Product Development and Launches - The company received FDA approval for Motiva Implants in the United States in September 2024 and began sales in October 2024[225][232]. - A clinical study of Mia Femtech showed a 1% reoperation rate at 3 years, with 87% of patients reporting increased breast satisfaction[227]. - The company launched Preservé, a minimally invasive breast tissue-preserving technology, in Brazil in February 2025, with plans for further international launches[228]. - The company anticipates future capital requirements will depend on market adoption rates of its products, particularly the Motiva Implants[287]. - The company expects R&D expenses to remain elevated as it advances products under development and prepares for additional clinical studies[250]. Operational Developments - The new manufacturing facility in Costa Rica, completed in June 2024, is expected to increase production capacity by approximately 730,000 units per year[233]. - The company incurred approximately $56.0 million in costs for the construction of the new facility[233]. - The company incurred $4.2 million in property and equipment purchases as part of its investing activities for the nine months ended September 30, 2025[292]. - The company expects overall operating expenses to increase compared to 2024, while focusing on managing these expenses[258].

Core Insights - Establishment Labs Holdings Inc. is a key player in the medical technology sector, focusing on women's health, particularly breast aesthetics and reconstruction, with a price target of $70 set by Needham on November 6, 2025, indicating a potential increase of 7.84% from the current stock price of $64.91 [1] Financial Performance - The Q3 2025 earnings call revealed a quarterly loss of $0.38 per share, which was better than the Zacks Consensus Estimate of a $0.54 loss, resulting in a positive surprise of 29.63% [2][6] - Revenue for Q3 2025 was reported at $53.78 million, exceeding the Zacks Consensus Estimate by 3.45% and showing significant growth from $40.23 million in the same period last year, driven by Motiva product sales contributing $11.9 million [3][6] Market Position - Despite only exceeding consensus revenue estimates once in the last four quarters, the company demonstrated a 33.8% increase in revenue year-over-year, indicating strong market position and growth potential [4] - The stock has shown volatility, with a 52-week high of $65.10 and a low of $26.56, and the current market capitalization is approximately $1.88 billion, with a trading volume of 1,341,361 shares [5]

Core Insights - Establishment Labs Holdings Inc. reported a quarterly loss of $0.38 per share, which was better than the Zacks Consensus Estimate of a loss of $0.54, marking an earnings surprise of +29.63% [1] - The company generated revenues of $53.78 million for the quarter ended September 2025, exceeding the Zacks Consensus Estimate by 3.45% and showing a year-over-year increase from $40.23 million [2] - The stock has underperformed the market with a gain of about 7.2% since the beginning of the year, compared to the S&P 500's gain of 15.1% [3] Financial Performance - Over the last four quarters, Establishment Labs has surpassed consensus EPS estimates two times [2] - The current consensus EPS estimate for the upcoming quarter is -$0.36 on revenues of $64.57 million, and for the current fiscal year, it is -$2.09 on revenues of $209.24 million [7] Industry Outlook - The Medical Services industry, to which Establishment Labs belongs, is currently ranked in the bottom 41% of over 250 Zacks industries, indicating potential challenges ahead [8] - The performance of Establishment Labs' stock may be influenced by the overall outlook of the industry [8]

Core Insights - Establishment Labs Holdings Inc. reported a significant Q3 2025, achieving a 34% increase in global revenue to $53.8 million, with U.S. revenue reaching $11.9 million, marking a 16% sequential growth [1][5][23] - The company achieved a gross profit margin of 70.1%, the first time exceeding 70%, and recorded positive EBITDA of $1.2 million, a milestone in its financial history [1][24][26] - The company anticipates reaching cash flow positive in 2026 and has raised its 2025 revenue guidance to exceed $210 million [6][30][31] Financial Performance - Total revenue for Q3 was $53.8 million, a 33.7% increase year-over-year, with U.S. sales contributing $11.9 million [23][24] - Gross profit for the quarter was $37.7 million, resulting in a gross margin of 70.1%, up from 63.9% a year ago [24][26] - Adjusted EBITDA was positive at $1.2 million, compared to losses in previous quarters, indicating improved operational efficiency [26][31] Market Growth and Strategy - The U.S. market is the primary growth segment, with expectations of capturing approximately 20% market share in the breast augmentation market by the end of 2025 [6][12][56] - The company is preparing for the launch of its breast reconstruction products, which are expected to mirror the market size of breast augmentation [7][18] - Direct markets outside the U.S. showed a 15% growth, with notable performances in Europe, particularly in the UK and Spain [19][20] Product Development and Innovation - Establishment Labs is focusing on its minimally invasive portfolio, with the PRESUVEY procedure showing promising early adoption among U.S. surgeons [15][21] - The company has trained over 1,300 surgeons on its Motiva implants, with a significant increase in procedures performed [8][10] - Surgeons report a 14.6% increase in procedures due to the introduction of Motiva, indicating strong market demand [12][14] Future Outlook - The company expects to maintain revenue growth of over 20% for several years, with profitability expected to expand at a faster rate [28][32] - Establishment Labs plans to continue expanding its commercial infrastructure in the U.S. while managing operating expenses effectively [27][30] - The anticipated launch of new products and the expansion of existing accounts are expected to drive further growth in 2026 [61][62]

Financial Data and Key Metrics Changes - In Q3 2025, Establishment Labs reported total revenue of $53.8 million, representing a 34% increase year-over-year [4] - The company achieved a gross profit margin of 70.1%, marking the first time it exceeded 70% [4][17] - Positive EBITDA of $1.2 million was recorded for the first time in the company's history, compared to losses of $8.5 million in Q2 and $12.1 million in Q1 [19][24] - Cash increased by $16 million to $70.6 million from $54.6 million at the end of Q2 2025 [22] Business Line Data and Key Metrics Changes - U.S. revenue for Q3 was $11.9 million, up 16% sequentially, with total U.S. revenue for the first three quarters reaching $28.3 million [5][16] - European direct market sales increased approximately 20% year-over-year, excluding currency effects and the acquisition of a distributor [6][14] - The minimally invasive portfolio, including NEO and PreserVe, is expected to exceed $30 million in revenue in 2026 [16] Market Data and Key Metrics Changes - The U.S. breast augmentation market share is projected to reach approximately 20% by the end of 2025, with significant growth expected in 2026 [6][21] - Direct markets outside the U.S. grew 15% year-over-year, with strong performances in Latin America and Europe [14][15] - Asia-Pacific sales rebounded sharply with a sequential growth of 46% in Q3 [17] Company Strategy and Development Direction - The company aims to achieve cash flow positive status in 2026 without further equity raises, focusing on expanding its commercial infrastructure in the U.S. [20][22] - Establishment Labs is preparing for the U.S. launch of breast reconstruction products, which are expected to have a market size similar to breast augmentation [6][14] - The company is committed to driving innovation and expanding its market share through surgeon training and product adoption [8][11] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in continued revenue growth exceeding 20% for several years, with expectations for meaningful earnings starting in 2027 [21][24] - The company noted strong momentum heading into Q4 2025, with a robust order book and positive trends in both U.S. and international markets [26][39] - Management highlighted the importance of surgeon adoption and patient demand for Motiva implants, which is expected to drive future growth [9][36] Other Important Information - The company is considering refinancing options for its credit facility to further reduce cash use [22] - Establishment Labs is working to make itself eligible for inclusion in various indices, including the Russell [22] Q&A Session Summary Question: Comments on 2025 outlook and Q4 expectations - Management noted strong momentum in the U.S. and expects to exceed $210 million in revenue for 2025, with a strong finish anticipated for Q4 [26] Question: Updates on international business, particularly China - Management indicated stabilization across international markets and good progress in China, with expectations for reordering to begin in Q1 2026 [28] Question: Market dynamics compared to peers - Management expressed confidence in their growth trajectory, stating they are not experiencing the same caution seen in some peers [30] Question: Contribution of minimally invasive platforms to revenue - Management reported strong progress with PreserVe and Mia, with significant demand expected to continue into 2026 [32] Question: Visibility into Q4 performance - Management confirmed strong visibility into daily orders and metrics, indicating a positive outlook for Q4 [38]

Revenue Performance - Total revenue for Q3 2025 was $53.8 million, a 33.8% increase from $40.2 million in Q3 2024[4] - US Motiva sales contributed $11.9 million to the total revenue in Q3 2025[5] - The company expects 2025 revenue to exceed $210 million, up from previous guidance of $208 million to $212 million[5] Profitability Metrics - Gross margin for Q3 2025 was 70.1%, compared to 63.9% in Q3 2024[6] - Adjusted EBITDA for Q3 2025 was positive $1.2 million, a significant improvement from a loss of $7.0 million in Q3 2024[5] - The net loss for Q3 2025 was $11.1 million, reduced from a net loss of $16.7 million in the same period last year[8] Cash Flow and Liquidity - Cash balance as of September 30, 2025, was $70.6 million, a decrease of $19.7 million from December 31, 2024[9] - The company aims to achieve cash flow positive status in 2026, with an expected 20% share of the US breast augmentation market[3] - Cash and cash equivalents decreased from $90,347 million as of December 31, 2024, to $70,624 million as of September 30, 2025, a decline of about 21.8%[23] Expenses - SG&A expenses increased to $37.2 million in Q3 2025, up from $34.1 million in Q3 2024, primarily due to increased investment in the US[7] - R&D expenses decreased slightly to $4.6 million in Q3 2025 from $4.8 million in Q3 2024[8] Balance Sheet Changes - Total assets decreased from $346,831 million as of December 31, 2024, to $338,895 million as of September 30, 2025, representing a decline of approximately 2.7%[23] - Total current liabilities increased from $68,278 million as of December 31, 2024, to $71,981 million as of September 30, 2025, reflecting a rise of approximately 5.0%[23] - Inventory increased from $78,766 million as of December 31, 2024, to $88,158 million as of September 30, 2025, representing a growth of approximately 11.0%[23] - Total shareholders' equity decreased significantly from $53,095 million as of December 31, 2024, to $16,363 million as of September 30, 2025, a decline of approximately 69.1%[23] - Long-term liabilities increased from $219,577 million as of December 31, 2024, to $246,458 million as of September 30, 2025, reflecting an increase of about 12.2%[23] Interest and EBITDA - Interest expense for the three months ended September 30, 2025, was $6,203 million, compared to $5,313 million for the same period in 2024, indicating an increase of about 16.7%[25] - EBITDA for the three months ended September 30, 2025, was a loss of $2,179 million, compared to a loss of $9,103 million for the same period in 2024, showing a significant improvement[25] - Adjusted EBITDA for the nine months ended September 30, 2025, was a loss of $19,454 million, compared to a loss of $15,116 million for the same period in 2024, indicating a worsening performance[25]

Part I. Financial Information [Item 1. Financial Statements - Unaudited](index=6&type=section&id=Item%201.%20Financial%20Statements%20-%20Unaudited) This section presents the unaudited condensed consolidated financial statements for Establishment Labs Holdings Inc. for the periods ended June 30, 2025, and 2024 [Condensed Consolidated Balance Sheets](index=6&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets decreased to $329.7 million by June 30, 2025, primarily due to reduced cash, while liabilities increased, significantly impacting shareholders' equity Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $54,639 | $90,347 | | Accounts receivable, net | $70,092 | $65,002 | | Inventory, net | $94,683 | $78,766 | | Total current assets | $229,168 | $243,037 | | Total assets | $329,668 | $346,831 | | **Liabilities & Shareholders' Equity** | | | | Accounts payable | $55,806 | $44,760 | | Total current liabilities | $80,742 | $68,278 | | Note payable, long-term | $221,133 | $219,577 | | Total liabilities | $306,905 | $293,736 | | Total shareholders' equity | $22,763 | $53,095 | [Condensed Consolidated Statements of Operations](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Revenue increased for Q2 2025 and the six-month period, but higher operating expenses led to increased operating and net losses Statement of Operations Summary (in thousands, except per share data) | Metric | Q2 2025 | Q2 2024 | Six Months 2025 | Six Months 2024 | | :--- | :--- | :--- | :--- | :--- | | Revenue | $51,300 | $44,117 | $92,677 | $81,284 | | Gross Profit | $35,272 | $28,936 | $63,080 | $53,316 | | Loss from Operations | $(14,107) | $(9,344) | $(31,053) | $(18,178) | | Net Loss | $(16,593) | $(17,181) | $(37,303) | $(33,383) | | Net Loss Per Share | $(0.57) | $(0.62) | $(1.29) | $(1.21) | [Condensed Consolidated Statements of Cash Flows](index=11&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash used in operations increased to $39.5 million, while financing cash flow decreased, resulting in a $35.7 million cash reduction Cash Flow Summary for Six Months Ended June 30 (in thousands) | Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(39,478) | $(25,306) | | Net cash used in investing activities | $(3,407) | $(11,027) | | Net cash provided by financing activities | $4,926 | $51,432 | | **Net (decrease) increase in cash** | **$(35,708)** | **$14,565** | [Notes to the Condensed Consolidated Financial Statements](index=13&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Financial%20Statements) Notes detail accounting policies, revenue by geography, significant debt, recent acquisitions, and key customer and supplier concentration risks - The company's primary business is the manufacturing and marketing of Motiva Implants, with products approved for sale in Europe, Latin America, Asia, and the United States, where sales began in October 2024 after FDA approval[41](index=41&type=chunk)[43](index=43&type=chunk) Revenue by Geographic Market for Six Months Ended June 30 (in thousands) | Region | 2025 | 2024 | | :--- | :--- | :--- | | EMEA | $45,371 | $41,558 | | Latin America | $16,621 | $17,491 | | Asia-Pacific | $14,338 | $22,048 | | North America | $16,347 | $187 | | **Total Revenue** | **$92,677** | **$81,284** | - The company has a credit agreement with Oaktree for term loans up to **$225 million** - As of June 30, 2025, **$221.4 million** was outstanding, including principal and accrued interest, with an effective interest rate of **10.4%**[143](index=143&type=chunk)[152](index=152&type=chunk)[153](index=153&type=chunk) - On October 1, 2024, the company acquired its distribution companies in Belgium and the Netherlands (Motiva Benelux BV and Motiva NL B.V.) for a total consideration of approximately **$7.8 million**, expanding its direct market presence in Europe[195](index=195&type=chunk)[197](index=197&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=41&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management analyzes the 14.0% revenue increase driven by the U.S. launch, rising operating expenses, liquidity, and macroeconomic outlook [Overview and Recent Developments](index=41&type=section&id=Overview%20and%20Recent%20Developments) The company provides a business overview, highlighting 14.0% revenue growth, widened net losses, and recent strategic developments Financial Highlights - Six Months Ended June 30 | Metric | 2025 | 2024 | | :--- | :--- | :--- | | Revenue | $92.7 million | $81.3 million | | Net Loss | $37.3 million | $33.4 million | | Cash Balance (as of June 30) | $54.6 million | N/A | - Key recent developments include: - Appointment of Peter Caldini as CEO (May 2025) - Partnership with singer Meghan Trainor (March 2025) - FDA approval for Motiva Implants in the U.S. (September 2024) and subsequent commercial launch - New Inventory Funding Agreement for up to **$10.0 million** to finance silicone purchases (May 2025)[229](index=229&type=chunk)[233](index=233&type=chunk)[236](index=236&type=chunk) [Results of Operations](index=45&type=section&id=Results%20of%20Operations) Revenue grew 14.0% to $92.7 million for the six-month period, gross margin improved, and SG&A expenses surged 36.0% Revenue Comparison - Six Months Ended June 30, 2025 vs 2024 | Metric | H1 2025 | H1 2024 | Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Revenue | $92.7M | $81.3M | +$11.4M | +14.0% | - Gross margin increased to **68.1%** for the first six months of 2025, up from **65.6%** in the prior year, primarily due to the favorable impact of higher selling prices in the United States[274](index=274&type=chunk) - SG&A expenses for the first six months of 2025 increased by **$22.2 million (36.0%)** to **$83.9 million**, driven by higher personnel costs (+$6.9M), shipping (+$3.7M), commissions (+$3.3M), and sales & marketing (+$3.0M) to support commercial expansion[276](index=276&type=chunk) [Liquidity and Capital Resources](index=49&type=section&id=Liquidity%20and%20Capital%20Resources) The company held $54.6 million in cash as of June 30, 2025, with management expecting sufficient liquidity for 12 months, supported by recent financing - The company had **$54.6 million** in cash as of June 30, 2025, down from **$90.3 million** at year-end 2024 - Management believes this is sufficient for at least the next 12 months[282](index=282&type=chunk)[285](index=285&type=chunk) Cash Flow Summary - Six Months Ended June 30 (in thousands) | Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net Cash Used in Operating Activities | $(39,478) | $(25,306) | | Net Cash Used in Investing Activities | $(3,407) | $(11,027) | | Net Cash Provided by Financing Activities | $4,926 | $51,432 | - The company has significant indebtedness under a Credit Agreement, with **$221.4 million** outstanding as of June 30, 2025 - This includes principal from three tranches and **$21.4 million** of accrued interest added to the principal balance[297](index=297&type=chunk)[298](index=298&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=52&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company states that its exposure to market risk has not materially changed from its Annual Report on Form 10-K for the fiscal year ended December 31, 2024 - There have been no material changes in the company's exposure to market risk during the six months ended June 30, 2025[304](index=304&type=chunk) [Controls and Procedures](index=52&type=section&id=Item%204.%20Controls%20and%20Procedures) Disclosure controls and procedures were effective as of June 30, 2025, with no material changes to internal control over financial reporting - Management concluded that disclosure controls and procedures were effective as of June 30, 2025[305](index=305&type=chunk) - No material changes to internal control over financial reporting occurred during the quarter[306](index=306&type=chunk) Part II. Other Information [Legal Proceedings](index=53&type=section&id=Item%201.%20Legal%20Proceedings) The company states that it is not currently a party to any material legal proceedings that would require disclosure under SEC regulations - The company is not a party to any material legal proceedings[309](index=309&type=chunk) [Risk Factors](index=53&type=section&id=Item%201A.%20Risk%20Factors) This section details significant risks across product commercialization, business operations, supply chain, intellectual property, and regulatory compliance [Risks Related to Development and Commercialization](index=53&type=section&id=Risks%20Related%20to%20Development%20and%20Commercialization) Risks include limited U.S. operating history, dependence on costly product innovation, and the need to effectively educate clinicians - The company has a limited operating history in the U.S., which may lead to difficulties in implementing its business strategy and forecasting results[312](index=312&type=chunk) - Future success depends on the ability to enhance existing products and develop new ones, which requires significant expense and faces competitive and regulatory hurdles[314](index=314&type=chunk)[315](index=315&type=chunk) - Failure to properly educate clinicians on the use of products like Motiva Implants could lead to unsatisfactory patient outcomes, negative publicity, and product liability claims[321](index=321&type=chunk) [Risks Related to Business, Industry and Operations](index=55&type=section&id=Risks%20Related%20to%20Business%2C%20Industry%20and%20Operations) Operational risks include expected future losses, macroeconomic vulnerability, intense competition, and negative product safety publicity - The company expects to incur losses for the foreseeable future, and its ability to achieve profitability depends on the commercial success of its Motiva Implants[326](index=326&type=chunk) - Unfavorable global economic conditions, such as inflation and recession, could reduce consumer demand for elective aesthetic procedures, adversely affecting sales[329](index=329&type=chunk) - The company faces significant competition from large, well-resourced companies (e.g., divisions of Johnson & Johnson and AbbVie), which could negatively affect market share and pricing[338](index=338&type=chunk)[339](index=339&type=chunk) - Negative publicity concerning breast implant safety, including reports of BIA-ALCL and other cancers linked to competitors' products, could reduce overall demand for all silicone breast implants[353](index=353&type=chunk)[356](index=356&type=chunk) [Risks Related to Manufacturing and Third-Party Relationships](index=66&type=section&id=Risks%20Related%20to%20Manufacturing%20and%20Third-Party%20Relationships) Manufacturing risks include reliance on a single silicone supplier, dependence on third-party distributors, and CRO control limitations - The company relies on Avantor as a single-source supplier for medical-grade silicone, creating significant risk of supply disruption, price increases, or quality issues that could halt production[388](index=388&type=chunk) - A substantial portion of sales are made through third-party distributors, and the company has limited control over their sales efforts, performance, and compliance with regulations[397](index=397&type=chunk) - Reliance on third parties like CROs for clinical studies means the company does not have full control over trial execution, which could lead to delays or issues with regulatory submissions[385](index=385&type=chunk) [Risks Related to Regulatory and Political Environment](index=75&type=section&id=Risks%20Related%20to%20Regulatory%20and%20Political%20Environment) Regulatory risks involve costly and uncertain approval processes, ongoing compliance, and exposure to healthcare fraud and abuse laws - The regulatory approval process for medical devices is expensive, lengthy, and uncertain, and there is no guarantee that new products will be approved[430](index=430&type=chunk) - Even after approval, the company is subject to ongoing regulatory obligations and review - Non-compliance can result in significant penalties, including fines, recalls, or withdrawal of approval[441](index=441&type=chunk)[444](index=444&type=chunk) - The company's relationships with customers and healthcare providers are subject to anti-kickback, fraud, and abuse laws, violations of which can lead to criminal sanctions and exclusion from government healthcare programs[457](index=457&type=chunk) [Other Risks (Intellectual Property, Taxation, Ownership)](index=70&type=section&id=Other%20Risks%20%28Intellectual%20Property%2C%20Taxation%2C%20Ownership%29) Other risks include intellectual property protection, cybersecurity, data privacy, tax uncertainties, and BVI company ownership implications - The company's competitive position depends on its ability to protect its intellectual property, including trade secrets and patents, from infringement or disclosure[402](index=402&type=chunk)[403](index=403&type=chunk) - Information systems are vulnerable to cybersecurity incidents, which could disrupt operations, lead to data loss, and result in significant liability and reputational harm[416](index=416&type=chunk) - Being a British Virgin Islands company means shareholder rights and legal remedies differ from those under U.S. law, potentially offering fewer protections to investors[486](index=486&type=chunk) - The company benefits from a tax holiday in Costa Rica through 2030; its expiration or a failure to maintain this treatment would significantly increase its tax rate[478](index=478&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=88&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company issued 19,256 common shares valued at $0.9 million on June 30, 2025, as consideration for a business acquisition - On June 30, 2025, the company issued **19,256 common shares** valued at **$0.9 million** as consideration for a business acquisition - This was an unregistered sale exempt under Regulation S or Section 4(a)(2) of the Securities Act[492](index=492&type=chunk)[493](index=493&type=chunk) [Other Information](index=88&type=section&id=Item%205.%20Other%20Information) The company entered into separation and consulting agreements with its former CEO, including annual cash and equity compensation - The company entered into separation and consulting agreements with former CEO Juan José Chacón-Quirós after his retirement on March 1, 2025[497](index=497&type=chunk) - The consulting agreement includes annual compensation of **$750,000** in cash and a target of **$750,000** in annual equity awards, for advisory and advocacy services[497](index=497&type=chunk) [Exhibits](index=88&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including former CEO agreements and required certifications - The exhibits list includes newly filed separation and consulting agreements with the company's former CEO[498](index=498&type=chunk)

Financial Data and Key Metrics Changes - Revenue for Q2 2025 totaled $51.3 million, representing a 16% increase year-over-year [5][30] - Adjusted EBITDA loss improved to $8.5 million from $12.1 million in Q1 2025 [7][35] - Cash usage decreased to $14.5 million from $21.2 million in the previous quarter [7][35] - Gross profit was $35.3 million, or 68.8% of revenue, up from 65.6% in the same period last year [31][32] - The company raised its revenue guidance for 2025 to a range of $208 million to $212 million, indicating a growth of 25% to 28% [6][37] Business Line Data and Key Metrics Changes - U.S. sales reached $10.3 million, exceeding previous guidance [5][30] - European direct market sales increased by approximately 27% this quarter, excluding currency effects [10][25] - Latin America saw mid-single-digit growth, with stabilization in Brazil and strong growth in Argentina [26] Market Data and Key Metrics Changes - U.S. accounted for 20% of global sales, while Europe, the Middle East, and Africa (EMEA) represented 40% [31] - Asia Pacific contributed 15% of sales, with year-over-year results down primarily due to challenges in China [31][32] Company Strategy and Development Direction - The company aims to achieve a leadership position in the U.S. market by leveraging superior product benefits and expanding its account base [8][12] - Focus on improving operational efficiency and profitability while advancing the innovation pipeline [40][41] - Plans to launch the Preservay procedure in 2026, which is expected to command a premium and expand the total addressable market (TAM) [23][41] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving cash flow breakeven by 2026 and expects the first positive EBITDA quarter later this year [12][38] - The U.S. market is showing strong momentum, with continued growth expected despite seasonal slowdowns [17][84] - Challenges in China are acknowledged, with management working closely with distribution partners to improve performance [11][50] Other Important Information - The Motiva Flora Smooth Silk tissue expander won innovation and safety awards, establishing it as a benchmark in breast reconstructive surgery [39] - The company is exploring refinancing options to reduce cash usage in the coming quarters [36] Q&A Session Summary Question: Can you provide more details on the assumptions behind the revenue guidance upgrade? - Management highlighted strong results in the U.S. and noted that China has been taken out of the guidance for the second half of the year due to challenges [46][49] Question: What is the growth trajectory for U.S. physician adds? - Management indicated that while they continue to add accounts, the focus will shift towards enhancing utilization rates in existing accounts [62][64] Question: How is the pricing trend in the U.S.? - The company maintains a premium pricing strategy and has not experienced significant pricing pressure [78] Question: What is the status of the investment from the distributor in China? - Management noted that the distributor is facing challenges in scaling operations, which has delayed expected progress [91][92] Question: How do Mia and Preserve compare in terms of future growth? - Management believes that Preserve will likely become larger than Mia due to its broader appeal to patients and surgeons [96][97]