[PART I](index=7&type=section&id=PART%20I) [Business](index=7&type=section&id=Item%201.%20Business) Establishment Labs is a medical technology company specializing in breast aesthetics and reconstruction with its Motiva Implants®, focusing on international sales and U.S. market entry [Overview and Recent Developments](index=7&type=section&id=Overview%20and%20Recent%20Developments) The company, centered on Motiva Implants®, has achieved regulatory milestones, expanded manufacturing, secured new financing, and launched innovative products - The company's Motiva Implants® are sold in 85 countries outside the U.S., with approximately **40% of 2022 revenue generated through its direct sales force**[30](index=30&type=chunk) - In April 2022, the company secured a new credit agreement for up to **$225 million from Oaktree**, using part of the initial **$150 million tranche to repay a previous $65 million credit facility**[32](index=32&type=chunk) - The company is expanding its manufacturing capacity in Costa Rica with a new facility, expected to initially add approximately **730,000 units per year**; the land and building shell were purchased in 2022[33](index=33&type=chunk)[34](index=34&type=chunk) - The U.S. IDE clinical trial for Motiva Implants® completed all **827 patient enrollment surgeries by June 2022**, with the final PMA submission module sent to the FDA in February 2023[31](index=31&type=chunk)[40](index=40&type=chunk) [Market and Competitive Landscape](index=9&type=section&id=Market%20and%20Competitive%20Landscape) The global breast augmentation market, led by the U.S. and Brazil, is competitive, with the company positioning its Motiva Implants® as superior due to lower adverse event rates Top 5 Markets for Breast Augmentation Procedures (2021) | Rank | Country | Procedures | Percentage of World-Wide Total | | :--- | :--- | :--- | :--- | | 1 | United States | 387,700 | 23.0% | | 2 | Brazil | 177,960 | 10.6% | | 3 | Mexico | 77,700 | 4.6% | | 4 | Argentina | 67,480 | 4.0% | | 5 | Germany | 66,945 | 4.0% | Competitor 10-Year Primary Augmentation Adverse Event Rates (Kaplan-Meier) | Adverse Event | Sientra (N=1,116) | Allergan (N=455) | Mentor (N=552) | | :--- | :--- | :--- | :--- | | Rupture (MRI Cohort) | 8.5% | 9.3% | 24.2% | | Capsular Contracture | 12.9% | 18.9% | 12.1% | | Reoperation | 24.0% | 36.1% | 25.5% | [Products and Technologies](index=12&type=section&id=Products%20and%20Technologies) The company's product portfolio, centered on Motiva Implants®, features proprietary safety and aesthetic technologies, including the SmoothSilk® surface, Qid® RFID, and the Mia Femtech® minimally invasive system - The SmoothSilk®/SilkSurface® is a biocompatible smooth surface designed to reduce capsular contracture and categorized as smooth under ISO 14607:2018 standards[57](index=57&type=chunk)[62](index=62&type=chunk) - The Qid® RFID microtransponder provides a unique electronic serial number for traceability, enhancing patient safety, and is currently the only breast implant on the international market with this technology[68](index=68&type=chunk)[70](index=70&type=chunk) - The Motiva Flora® Tissue Expander is the first expander labeled as **"MRI Conditional"** due to its integrated RFID port with no magnets, allowing safe use alongside MRI scanning[75](index=75&type=chunk) - The Mia Femtech® system is designed for minimally invasive breast enhancement with faster recovery, and its Ergonomix2® Diamond implant received CE mark in December 2020[77](index=77&type=chunk) [Clinical Data and Regulatory Strategy](index=19&type=section&id=Clinical%20Data%20and%20Regulatory%20Strategy) The company reports consistently low complication rates from extensive post-market data and is pursuing U.S. market entry through a prospective IDE clinical trial and rolling PMA submission to the FDA 12-Year Post-Market Surveillance Data (Oct 2010 - Dec 2022) | Metric | Rate | Number of Implants Sold | | :--- | :--- | :--- | | Rupture | < 0.1% | ~2.7 million | | Capsular Contracture | < 0.1% | ~2.7 million | | Reoperation for Adverse Events | < 0.1% | ~2.7 million | - The company is pursuing U.S. market entry via a PMA submission supported by an IDE clinical trial, with a rolling submission initiated in Q4 2021 and the final module submitted to the FDA in February 2023[86](index=86&type=chunk) [Operations and Human Capital](index=20&type=section&id=Operations%20and%20Human%20Capital) The company operates ISO-certified manufacturing in Costa Rica, relies on a sole-source silicone supplier, holds a significant patent portfolio, and employs 958 individuals as of December 2022 - The company manufactures products in two ISO-13485-certified facilities in Costa Rica and is expanding with a new Sulàyöm Innovation Campus to increase capacity[100](index=100&type=chunk)[106](index=106&type=chunk) - Establishment Labs relies on **Avantor as a single-source supplier** for medical-grade silicone, with a master supply agreement extending through December 2026[108](index=108&type=chunk) - As of December 31, 2022, the company's intellectual property portfolio included **19 issued U.S. patents and 87 issued foreign patents**, with expirations between 2025 and 2039[91](index=91&type=chunk) - As of December 31, 2022, the company had **958 employees**, with none represented by a labor union except for those in Brazil[145](index=145&type=chunk) [Risk Factors](index=30&type=section&id=Item%201A.%20Risk%20Factors) The company faces significant risks including global health crises, economic downturns, reliance on Motiva Implants® for profitability, uncertain regulatory approvals, intense competition, single-source supplier dependency, and potential negative publicity - The COVID-19 pandemic has adversely affected business through procedure deferrals and operational disruptions, and future health crises or economic downturns could further impact demand for elective aesthetic procedures[154](index=154&type=chunk)[240](index=240&type=chunk) - The company has a history of losses and expects to incur more, with profitability dependent on the commercial success of Motiva Implants® and navigating a lengthy, expensive, and uncertain FDA approval process for the U.S. market[167](index=167&type=chunk)[170](index=170&type=chunk)[194](index=194&type=chunk) - The company relies on a **single-source supplier, Avantor**, for its primary raw material (medical-grade silicone), creating significant risk related to supply interruptions, price increases, or compliance issues[254](index=254&type=chunk) - Negative publicity concerning breast implant safety, particularly regarding links to BIA-ALCL and other cancers in competitors' products, could reduce overall demand for silicone breast implants, despite no such cases reported for Motiva Implants®[224](index=224&type=chunk)[232](index=232&type=chunk) [Properties](index=70&type=section&id=Item%202.%20Properties) The company's main executive offices and manufacturing facilities are in Alajuela, Costa Rica, with significant expansion underway in the Coyol Free Zone, complemented by leased spaces globally - The main executive offices and manufacturing facilities are in Alajuela, Costa Rica, occupying approximately **36,000 square feet**, with a new **28,000 square foot facility** added in 2017[345](index=345&type=chunk) - A major expansion is underway in the Coyol Free Zone, including approximately **170,000 square feet of new facility space**; the land and building shell were purchased in 2022[346](index=346&type=chunk) [PART II](index=70&type=section&id=PART%20II) [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=70&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company's common shares trade on Nasdaq under 'ESTA', with no cash dividends paid or planned, and no share repurchases in Q4 2022 - Common shares are traded on the Nasdaq Capital Market under the symbol **"ESTA"**[351](index=351&type=chunk) - The company has never paid cash dividends and does not anticipate doing so in the foreseeable future[354](index=354&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=71&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) In FY2022, revenue grew to **$161.7 million**, but net loss widened to **$75.2 million** due to debt extinguishment and higher operating expenses, despite securing a new **$225 million** credit facility [Results of Operations](index=75&type=section&id=Results%20of%20Operations) In 2022, revenue increased **27.6%** to **$161.7 million**, but gross margin declined, and SG&A expenses rose **36.6%**, leading to a **$19.0 million** loss on debt extinguishment Consolidated Results of Operations (in thousands) | | 2022 | 2021 | | :--- | :--- | :--- | | Revenue | $161,700 | $126,682 | | Gross profit | $106,595 | $85,404 | | Loss from operations | ($39,658) | ($25,140) | | Net loss | ($75,209) | ($41,139) | - Revenue increased by **$35.0 million (27.6%)** in 2022, driven by market share gains, particularly in Latin America and Asia-Pacific, and recovery from the COVID-19 pandemic[389](index=389&type=chunk) - SG&A expenses increased by **$33.8 million (36.6%)** in 2022, primarily due to an **$18.6 million** increase in personnel costs from higher headcount and increased sales, marketing, and compliance-related consulting fees[393](index=393&type=chunk) - A loss on extinguishment of debt of **$19.0 million** was recognized in 2022 due to the termination of the Madryn Credit Agreement, which included a **$6.5 million** early repayment penalty[399](index=399&type=chunk) [Liquidity and Capital Resources](index=77&type=section&id=Liquidity%20and%20Capital%20Resources) As of December 31, 2022, cash increased to **$66.4 million**, driven by **$100.3 million** from financing activities, offsetting **$52.2 million** used in operations and **$34.8 million** in investing activities, with sufficient liquidity for the next 12 months Summary of Cash Flows (in thousands) | | 2022 | 2021 | | :--- | :--- | :--- | | Net cash used in operating activities | ($52,166) | ($27,532) | | Net cash used in investing activities | ($34,791) | ($7,163) | | Net cash provided by financing activities | $100,255 | $4,052 | | Net increase (decrease) in cash | $12,940 | ($31,108) | - Net cash from financing activities was **$100.3 million** in 2022, primarily from **$168.1 million** in borrowings under the new Oaktree Credit Agreement, offset by a **$71.7 million** repayment of the previous Madryn facility[412](index=412&type=chunk) - Net cash used in investing activities was **$34.8 million** in 2022, with **$29.9 million** used for capital expenditures on the new manufacturing facility in Costa Rica[409](index=409&type=chunk) [Critical Accounting Policies](index=80&type=section&id=Critical%20Accounting%20Policies) The company's critical accounting policies involve significant estimates for revenue recognition, R&D expenses, accounts receivable and inventory valuation, and share-based compensation using the Black-Scholes model - Revenue from distributors is recognized at the time of shipment, while for consigned inventory, it is recognized upon notification of product implantation[422](index=422&type=chunk)[424](index=424&type=chunk) - The company estimates IDE clinical trial expenses based on services performed by research organizations, accruing fees based on estimated time, patient enrollment, and activity level[429](index=429&type=chunk) - Share-based compensation for stock options is valued using the Black-Scholes model, requiring subjective assumptions for expected term, volatility (based on industry peers), and risk-free interest rate[440](index=440&type=chunk)[652](index=652&type=chunk)[654](index=654&type=chunk) [Controls and Procedures](index=83&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded disclosure controls were ineffective as of December 31, 2022, due to a material weakness in IT user access controls and segregation of duties, leading to an adverse auditor opinion, with full remediation expected in 2023 - Management concluded that disclosure controls and procedures were **not effective** as of December 31, 2022[449](index=449&type=chunk) - A **material weakness** in internal control over financial reporting exists related to ineffective primary user access controls for IT systems, leading to a lack of segregation of duties[451](index=451&type=chunk)[461](index=461&type=chunk) - The company has made progress on remediation but needs more time to test the operational effectiveness of manual controls, with full remediation expected during 2023[452](index=452&type=chunk)[453](index=453&type=chunk) - The independent registered public accounting firm, Marcum LLP, issued an **adverse opinion** on the company's internal control over financial reporting as of December 31, 2022, due to the identified material weakness[460](index=460&type=chunk) [PART III](index=87&type=section&id=PART%20III) [Directors, Executive Officers, Corporate Governance, Compensation, and Principal Accountant Fees](index=87&type=section&id=Items%2010%2C%2011%2C%2012%2C%2013%2C%20and%2014) Information for Items 10 through 14, covering directors, executive officers, corporate governance, compensation, and principal accountant fees, is incorporated by reference from the forthcoming 2023 Proxy Statement - The information for Items 10, 11, 12, 13, and 14 is incorporated by reference from the forthcoming 2023 Proxy Statement[474](index=474&type=chunk)[475](index=475&type=chunk)[476](index=476&type=chunk)[477](index=477&type=chunk)[478](index=478&type=chunk) [PART IV](index=88&type=section&id=PART%20IV) [Exhibit and Financial Statement Schedules](index=88&type=section&id=Item%2015.%20Exhibit%20and%20Financial%20Statement%20Schedules) This section provides an index of the consolidated financial statements and all exhibits filed with the 10-K report, with financial statement schedules omitted as not applicable or included elsewhere - This item provides an index of the consolidated financial statements and all exhibits filed with the 10-K report[480](index=480&type=chunk)[482](index=482&type=chunk) [Financial Statements and Supplementary Data](index=91&type=section&id=Financial%20Statements%20and%20Supplementary%20Data) [Consolidated Financial Statements](index=93&type=section&id=Consolidated%20Financial%20Statements) The consolidated financial statements present the company's financial position, operations, and cash flows, reporting **$211.1 million** in total assets, **$219.2 million** in liabilities, and a **$8.2 million** shareholders' deficit as of December 31, 2022 Consolidated Balance Sheet Data (in thousands) | | Dec 31, 2022 | Dec 31, 2021 | | :--- | :--- | :--- | | Total Current Assets | $149,904 | $113,271 | | Total Assets | $211,061 | $139,529 | | Total Current Liabilities | $38,959 | $31,889 | | Total Liabilities | $219,246 | $88,790 | | Total Shareholders' (Deficit) Equity | ($8,185) | $50,739 | Consolidated Statement of Operations Data (in thousands) | | 2022 | 2021 | 2020 | | :--- | :--- | :--- | :--- | | Revenue | $161,700 | $126,682 | $84,676 | | Gross Profit | $106,595 | $85,404 | $52,502 | | Loss from Operations | ($39,658) | ($25,140) | ($27,916) | | Net Loss | ($75,209) | ($41,139) | ($38,121) | | Basic and Diluted Net Loss per Share | ($3.08) | ($1.72) | ($1.63) | [Notes to Consolidated Financial Statements](index=99&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) The notes detail accounting policies, including single operating segment and revenue recognition, and provide specifics on the Oaktree credit facility, Madryn debt extinguishment, share-based compensation, and deferred tax assets with full valuation allowances - The company operates as a single reportable segment, with Brazil being the only country to exceed **10% of consolidated revenue** in 2022, at **16.6%**[521](index=521&type=chunk)[522](index=522&type=chunk) - In April 2022, the company entered a new credit agreement with Oaktree for up to **$225 million**, maturing in 5 years with a **9% interest rate**, with **$181.3 million** outstanding as of Dec 31, 2022, replacing the Madryn facility and resulting in a **$19.0 million loss on extinguishment**[613](index=613&type=chunk)[614](index=614&type=chunk)[621](index=621&type=chunk)[628](index=628&type=chunk) - Share-based compensation expense was **$13.4 million** in 2022, up from **$10.4 million** in 2021, with **$20.9 million** of unrecognized compensation expense related to stock options as of Dec 31, 2022[647](index=647&type=chunk)[650](index=650&type=chunk) - The company maintains a **full valuation allowance** against its deferred tax assets in the U.S. and Brazil due to a history of operating losses, with U.S. federal and state net operating loss carryforwards of approximately **$76.1 million** and **$8.9 million**, respectively, as of Dec 31, 2022[665](index=665&type=chunk)[668](index=668&type=chunk)

Financial Data and Key Metrics Changes - Record revenue in Q4 2022 totaled $43.8 million, a 24% increase over Q4 2021, with growth of approximately 28% excluding foreign currency impacts [15][24] - For the full year 2022, revenue totaled $161.7 million, a 28% increase over 2021, with a 32% growth rate when excluding currency changes [15] - The company provided revenue guidance for 2023 in the range of $200 million to $210 million, representing estimated growth of 24% to 30% over 2022 [16][37] Business Line Data and Key Metrics Changes - Direct sales accounted for approximately 37% of sales in Q4 2022, with distributor sales making up the remainder [24] - The rollout of the Motiva Flora tissue expander continues to receive positive market feedback, with increasing adoption among surgeons [18] Market Data and Key Metrics Changes - Sales distribution in Q4 2022: Europe approximately 28%, Asia Pacific and Middle East 40%, and Latin America the balance, with Brazil accounting for about 14.6% of total quarterly sales [25] - The company expects regulatory approval for Motiva in China in the first half of 2023, following the lifting of COVID restrictions [21] Company Strategy and Development Direction - Establishment Labs aims to create a new category in breast aesthetics with Mia, targeting women who prefer minimally invasive procedures [12] - The company is focused on improving breast reconstruction and democratizing access to these services globally, with a long-term revenue goal of $500 million by 2026 [22][50] - The new manufacturing facility is expected to more than double production capacity, allowing the company to meet over half of the current global demand [47] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving growth targets, citing strong momentum in the business and expected contributions from new initiatives like Mia in China [39][50] - The company is preparing for a busy 2023, with significant events including the commercial launch of Mia and the Motiva launch in China [41] Other Important Information - R&D expenses for Q4 2022 increased to $6.5 million, while total operating expenses rose to $41.3 million, reflecting investments in growth initiatives [26][32] - The gross profit for Q4 2022 was $28.2 million, or 64.3% of revenue, impacted by foreign currency fluctuations [33] Q&A Session Summary Question: Infrastructure for U.S. and Mia launch in Europe - Management discussed the unique business model for Mia, emphasizing partnerships with selected clinics rather than traditional sales reps [42][43] Question: 2023 guidance and contributions from Mia and China - Management clarified that the 2023 guidance does not include U.S. revenue, but expects contributions from Mia and China to build throughout the year [55][56] Question: Launch progress of Mia in Japan - Management confirmed the first clinic partner in Japan and highlighted the importance of demonstrating the new consumer base for Mia [70][71] Question: Gross margin expectations - Management indicated that while initial launches may be margin dilutive, overall gross margins are expected to improve over time due to new products and geographic expansions [76][80] Question: Regulatory environment and potential for faster approval - Management stated it is too early to predict the timeline for U.S. approval but remains focused on the regulatory process [97]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ___________ to ___________ Commission File Number: 001-38593 Establishment Labs Holdings Inc. (Exact name of Registrant as specified in its charter) Briti ...

Establishment Labs Holdings Inc. (NASDAQ:ESTA) Q3 2022 Earnings Conference Call November 7, 2022 4:30 PM ET Company Participants Raj Denhoy – Chief Financial Officer Juan Jose Chacon-Quiros – Chief Executive Officer Conference Call Participants Anthony Petrone – Mizuho Group Josh Jennings – Cowen George Sellers – Stephens Marie Thibault – BTIG Neil Chatterji – B. Riley Securities Operator Good afternoon. Welcome to Establishment Labs' Third Quarter 2022 Earnings Conference Call. [Operator Instructions] I wi ...

Establishment Labs Holdings, Inc. (NASDAQ:ESTA) Q2 2022 Earnings Conference Call August 8, 2022 4:30 PM ET Company Participants Juan Jose Chacon Quiros - Founder and CEO Rajbir Denhoy - CFO Conference Call Participants Chris Cooley - Stephens Zach Weiner - Jefferies Josh Jennings - Cowen Marie Thibault - BTIG Philip Coover - Goldman Sachs Anthony Petrone - Mizuho Group Operator Good afternoon. Welcome to Establishment Labs' Second Quarter 2022 Earnings Call. At this time, all participants will be in a liste ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ___________ to ___________ Commission File Number: 001-38593 Establishment Labs Holdings Inc. (Exact name of Registrant as specified in its charter) British Vi ...

Establishment Labs Holdings, Inc. (NASDAQ:ESTA) Q1 2022 Earnings Conference Call May 9, 2022 4:30 PM ET Company Participants Juan Jose Chacon Quiros - Founder, Chief Executive Officer & Executive Director Rajbir Denhoy - Chief Financial Officer Conference Call Participants Josh Jennings - Cowen Philip Coover - Goldman Sachs Marie Thibault - BTIG Chris Cooley - Stephens Zach Weiner - Jefferies Operator Good afternoon. Welcome to Establishment Labs First Quarter 2022 Earnings Call. [Operator Instructions] As ...

Part I [Financial Statements (Unaudited)](index=5&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements for Q1 2022, including balance sheets, operations, and cash flows, reporting **$38.5 million** revenue and a **$5.9 million** net loss [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of March 31, 2022, total assets were **$141.6 million**, total liabilities **$93.7 million**, and cash decreased to **$44.7 million** Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2022 | December 31, 2021 | | :--- | :--- | :--- | | **Assets** | | | | Cash | $44,656 | $53,415 | | Total Current Assets | $110,016 | $113,271 | | Total Assets | $141,556 | $139,529 | | **Liabilities & Equity** | | | | Total Current Liabilities | $36,510 | $31,889 | | Total Liabilities | $93,721 | $88,790 | | Total Shareholders' Equity | $47,835 | $50,739 | | Total Liabilities & Equity | $141,556 | $139,529 | [Condensed Consolidated Statements of Operations](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) For Q1 2022, revenue increased **26.8%** to **$38.5 million**, gross profit rose to **$24.9 million**, but a higher operating loss of **$5.6 million** resulted in a net loss of **$5.9 million** Statement of Operations Summary (in thousands, except per share data) | Metric | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :--- | :--- | :--- | | Revenue | $38,452 | $30,336 | | Gross Profit | $24,936 | $20,090 | | Total Operating Expenses | $30,511 | $22,186 | | Loss from Operations | $(5,575) | $(2,096) | | Net Loss | $(5,933) | $(6,948) | | Basic and Diluted Net Loss per Share | $(0.24) | $(0.29) | [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For Q1 2022, net cash used in operating activities was **$4.8 million**, investing activities **$5.7 million**, leading to a net decrease in cash of **$8.8 million**, with the balance at **$44.7 million** Cash Flow Summary (in thousands) | Activity | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :--- | :--- | :--- | | Net cash used in operating activities | $(4,840) | $(6,554) | | Net cash used in investing activities | $(5,739) | $(1,532) | | Net cash provided by financing activities | $1,695 | $1,786 | | **Net decrease in cash** | **$(8,759)** | **$(6,573)** | | **Cash at end of period** | **$44,656** | **$77,950** | [Notes to Condensed Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) The notes detail accounting policies, revenue by geography, debt agreements, and a significant subsequent debt refinancing event in April 2022, while pursuing U.S. FDA approval Revenue by Geographic Market (in thousands) | Region | Q1 2022 | Q1 2021 | | :--- | :--- | :--- | | Europe | $14,339 | $12,693 | | Latin America | $12,186 | $8,001 | | Asia-Pacific/Middle East | $11,620 | $9,495 | | Other | $307 | $147 | | **Total** | **$38,452** | **$30,336** | - The company relies on NuSil Technology, LLC as the sole supplier of medical-grade silicone, with purchases from NuSil amounting to **$7.3 million** in Q1 2022, representing **31.4%** of total purchases[49](index=49&type=chunk) - Subsequent Event: On April 26, 2022, the company entered into a new Credit Agreement for up to **$225 million**, with an initial tranche of **$150 million** used to repay the outstanding **$65.0 million** Madryn Credit Agreement in full[109](index=109&type=chunk)[137](index=137&type=chunk)[140](index=140&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A)](index=37&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses a **26.8% revenue increase** to **$38.5 million** for Q1 2022, rising operating expenses, and a new **$225 million** credit facility to support operations and U.S. market entry [Results of Operations](index=41&type=section&id=Results%20of%20Operations) This sub-section compares Q1 2022 and 2021 financial results, showing **26.8% revenue growth** to **$38.5 million**, a slight gross margin decrease, and significant increases in SG&A expenses Key Operational Metrics Comparison (in thousands) | Metric | Q1 2022 | Q1 2021 | Change (%) | | :--- | :--- | :--- | :--- | | Revenue | $38,452 | $30,336 | +26.8% | | Gross Profit | $24,936 | $20,090 | +24.1% | | SG&A Expense | $26,913 | $18,138 | +48.4% | | R&D Expense | $3,598 | $4,048 | -11.1% | | Net Loss | $(5,933) | $(6,948) | -14.6% | - The increase in SG&A was primarily due to a **$5.6 million** increase in personnel costs, a **$1.7 million** increase in consulting fees (partly for Sarbanes-Oxley compliance), and a **$0.6 million** increase in sales commissions[167](index=167&type=chunk) - Gross margin decreased to **64.8%** from **66.2%** year-over-year, primarily due to geographic mix shifting to Latin American markets and a **3.1%** negative impact from inventory obsolescence[166](index=166&type=chunk) [Liquidity and Capital Resources](index=44&type=section&id=Liquidity%20and%20Capital%20Resources) As of March 31, 2022, the company had **$44.7 million** in cash and an accumulated deficit of **$212.3 million**, with a new **$225 million** credit facility secured in April 2022 to strengthen liquidity - Cash balance was **$44.7 million** as of March 31, 2022, compared to **$53.4 million** at December 31, 2021[175](index=175&type=chunk) - In April 2022, the company entered a new credit agreement for up to **$225 million** and repaid its existing **$65.0 million** Madryn debt, including a **$6.5 million** early repayment penalty[180](index=180&type=chunk) - Net cash used in operating activities for Q1 2022 was **$4.8 million**, an improvement from **$6.6 million** in Q1 2021[176](index=176&type=chunk)[177](index=177&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=46&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company reported no material changes to its market risk during Q1 2022, referring to the detailed disclosure in its Annual Report on Form 10-K - No material changes to market risk were reported for the quarter ended March 31, 2022[184](index=184&type=chunk) [Controls and Procedures](index=46&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were ineffective as of March 31, 2022, due to a material weakness in internal control over financial reporting, with remediation underway - Disclosure controls and procedures were concluded to be ineffective as of March 31, 2022[185](index=185&type=chunk) - A material weakness related to user access control deficiencies and lack of segregation of duties, first reported for year-end 2021, persists[186](index=186&type=chunk) - A remediation plan is underway and is expected to be implemented prior to the end of fiscal 2022[187](index=187&type=chunk) Part II [Legal Proceedings](index=48&type=section&id=Item%201.%20Legal%20Proceedings) The company reports no material legal proceedings requiring disclosure under Regulation S-K - The company is not a party to any material legal proceedings[193](index=193&type=chunk) [Risk Factors](index=48&type=section&id=Item%201A.%20Risk%20Factors) This section details numerous risks, including the costly and uncertain FDA approval process, reliance on a single-source supplier, intense competition, and a material weakness in internal controls [Risks Related to Development and Commercialization](index=51&type=section&id=Risks%20Related%20to%20Development%20and%20Commercialization) This sub-section highlights risks in product development and market entry, including costly and uncertain U.S. FDA approval for Motiva Implants and the need for accurate demand forecasting - The company's Motiva Implants are not currently approved for sale in the U.S., and obtaining FDA approval is a costly, time-consuming, and uncertain process that is critical for future growth[202](index=202&type=chunk) - The ability to accurately forecast customer demand and manage inventory is critical, as both shortages and oversupply could adversely impact financial results[210](index=210&type=chunk) [Risks Related to Business, Industry and Operations](index=57&type=section&id=Risks%20Related%20to%20Business%2C%20Industry%20and%20Operations) This sub-section outlines broad business risks, including a history of net losses, intense competition, potential negative publicity regarding breast implant safety, and global economic conditions - The company has a history of net operating losses, with an accumulated deficit of **$212.3 million** as of March 31, 2022, and expects to incur losses for the foreseeable future[214](index=214&type=chunk) - Negative publicity and regulatory actions regarding breast implant-associated anaplastic large cell lymphoma (BIA-ALCL), linked to competitors' textured products, could reduce overall demand for breast implants[223](index=223&type=chunk) - The military conflict between Russia and Ukraine may adversely affect business in Europe; Russia and Ukraine accounted for **1.7%** of net revenue in Q1 2022[268](index=268&type=chunk) [Risks Related to Manufacturing and Third-Party Relationships](index=69&type=section&id=Risks%20Related%20to%20Manufacturing%20and%20Other%20Third-Party%20Relationships) Key risks include reliance on a single-source supplier (NuSil) for medical-grade silicone and other single-source suppliers for components, creating manufacturing and operational dependencies - The company relies on NuSil as the sole supplier for medical-grade long-term implantable silicone, and an interruption from this supplier could adversely affect the business[240](index=240&type=chunk) - A substantial portion of sales are through exclusive distributors, and the company does not have direct control over their sales efforts or compliance with regulations[244](index=244&type=chunk) [Risks Related to Intellectual Property and Data Security](index=73&type=section&id=Risks%20Related%20to%20Intellectual%20Property%20and%20Data%20Security) The company faces risks related to protecting its intellectual property, potential infringement litigation, and vulnerabilities in internal computer systems that could lead to data security breaches and penalties - The company relies on trade secrets and patents, and the inability to protect this intellectual property could harm its competitive position[246](index=246&type=chunk)[247](index=247&type=chunk) - Internal computer systems are vulnerable to security breaches, and failure to protect sensitive personal data in compliance with laws like GDPR and HIPAA could result in significant penalties and harm the business[253](index=253&type=chunk)[254](index=254&type=chunk) [Risks Related to Ownership of Our Securities and Corporate Structure](index=84&type=section&id=Risks%20Related%20to%20Ownership%20of%20Our%20Securities) This section covers investor risks, including share price volatility, a material weakness in internal controls, and differing shareholder rights as a British Virgin Islands company - A material weakness in internal control over financial reporting was identified as of December 31, 2021, related to user access controls and segregation of duties[279](index=279&type=chunk)[281](index=281&type=chunk) - As a British Virgin Islands company, shareholder rights differ from U.S. law, potentially offering fewer protections and making it difficult to enforce civil liabilities against the company or its directors[282](index=282&type=chunk)[283](index=283&type=chunk)[284](index=284&type=chunk) [Other Information (Items 2, 3, 4, 5, 6)](index=89&type=section&id=Other%20Items) The company reports no unregistered sales of equity, no defaults, no mine safety disclosures, and lists exhibits filed with the report - No transactions or events were reported under Item 2 (Unregistered Sales of Equity Securities), Item 3 (Defaults Upon Senior Securities), Item 4 (Mine Safety Disclosures), or Item 5 (Other Information)[291](index=291&type=chunk)

Establishment Labs Holdings, Inc. (NASDAQ:ESTA) Q4 2021 Earnings Conference Call March 1, 2022 8:30 AM ET Company Participants Rajbir Denhoy - CFO and Head, Strategy & IR Juan Jose Chacon Quiros - Founder, CEO & Executive Director Conference Call Participants Christopher Cooley - Stephens Inc. Joshua Jennings - Cowen and Company Marie Thibault - BTIG Matthew Taylor - UBS Philip Coover - Goldman Sachs Group Operator Good morning. Welcome to Establishment Labs Fourth Quarter 2021 Earnings Call. [Operator Ins ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2021 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ___________ to ___________ Commission File Number: 001-38593 | --- | --- | --- | --- | --- | --- | --- | |-------------------------------------------------------------------- ...