Financial Performance - Net sales increased by $3.1 million, or 16.9%, to $21.4 million for the three months ended March 31, 2022, compared to $18.3 million for the same period in 2021[119]. - Gross margin improved to 60.0% for the three months ended March 31, 2022, up from 55.4% in the same period of 2021, primarily due to a decrease in unit costs of gel implants[122]. - Cost of goods sold increased by $0.4 million, or 4.8%, to $8.6 million for the three months ended March 31, 2022, compared to $8.2 million for the same period in 2021[121]. Operating Expenses - Sales and marketing expenses rose by $3.8 million, or 31.9%, to $15.6 million for the three months ended March 31, 2022, compared to $11.8 million for the same period in 2021[124]. - Research and development expenses increased by $0.9 million, or 43.2%, to $3.1 million for the three months ended March 31, 2022, compared to $2.2 million for the same period in 2021[125]. - General and administrative expenses increased by $2.3 million, or 29.0%, to $10.2 million for the three months ended March 31, 2022, compared to $7.9 million for the same period in 2021[126]. Cash Flow - Net cash used in operating activities was $17.9 million for the three months ended March 31, 2022, compared to $12.8 million for the same period in 2021, primarily due to increases in accounts receivable and inventory[135]. - Net cash used in investing activities was $0.2 million for the three months ended March 31, 2022, a decrease from $1.3 million in the same period in 2021, due to reduced property and equipment purchases[136]. - Net cash provided by financing activities was $5.3 million for the three months ended March 31, 2022, down from $39.4 million in the same period in 2021, primarily due to a decrease in proceeds from the issuance of common stock[138]. - As of March 31, 2022, the company had $38.9 million in cash and cash equivalents, with historical cash outflows primarily associated with research and development activities[131]. Business Operations - The company has one operating segment in continuing operations named Plastic Surgery, focusing on breast implants, tissue expanders, and scar management products[99]. - As of March 31, 2022, the sales organization consisted of 76 employees, an increase from 66 employees in the same period of 2021[120]. - The company received approval from Health Canada on March 23, 2022, to begin commercialization of its smooth round HSC and HSC+ silicone gel breast implants in Canada[102]. Challenges and Future Outlook - The ongoing impact of the COVID-19 pandemic continues to affect the company's revenues, with restrictions on non-emergency procedures leading to significant revenue harm since the second quarter of 2020[103]. - The company anticipates that operating expenses will remain consistent and will need to generate significant net sales to achieve profitability[130]. - The company may need to raise additional debt or equity capital to fund ongoing operations, as cash generated from operations may be insufficient[141]. - The company has incurred significant net operating losses since inception and expects these losses to continue in the near term[130]. - The liquidity position and capital requirements are subject to various factors, including the ability to meet customer requirements and costs associated with regulatory compliance[140]. Other Financial Information - Other income (expense), net decreased due to a change in the fair value of the derivative liability, which did not reoccur in the current period[127]. - Loss from discontinued operations increased by $2.0 million due to the sale of the miraDry business[129].

Business Focus - The company focuses on the Plastic Surgery segment, which includes silicone gel breast implants, tissue expanders, and scar management products, with a direct sales organization of 65 employees as of December 31, 2021[317]. - The company completed the sale of the miraDry business on June 10, 2021, to concentrate investments on its core Plastic Surgery segment[319]. - The company acquired assets from AuraGen Aesthetics, LLC on December 31, 2021, related to fat grafting technology, which is expected to expand its total addressable market[318]. - The company offers approximately 350 variations of breast implants, which are primarily used in elective procedures and are sold exclusively to board-certified plastic surgeons[326]. Regulatory Approvals - The company received Health Canada approval on March 23, 2022, to commercialize its smooth round HSC and HSC+ silicone gel breast implants in Canada, planning to start sales through a distribution partner[322]. - The company’s breast implants were approved by the FDA in 2012, based on a clinical trial involving 1,788 women, demonstrating competitive safety and effectiveness[327]. Financial Performance - Net sales increased by $25.7 million, or 46.7%, to $80.7 million for the year ended December 31, 2021, compared to $55.0 million for 2020[376]. - Cost of goods sold rose by $12.7 million, or 54.0%, to $36.3 million for the year ended December 31, 2021, compared to $23.6 million for 2020[378]. - Gross margin decreased to 54.9% in 2021 from 57.1% in 2020, primarily due to increased distribution and production costs[379]. - The net loss for the year ended December 31, 2021, was $62.5 million, an improvement from a net loss of $89.9 million in 2020[375]. Expenses - Sales and marketing expenses increased by $11.1 million, or 29.5%, to $48.5 million for the year ended December 31, 2021[380]. - Research and development expenses rose by $1.8 million, or 20.1%, to $10.5 million for the year ended December 31, 2021[381]. - General and administrative expenses decreased by $0.5 million, or 1.7%, to $31.8 million for the year ended December 31, 2021[382]. - Total non-cash stock-based compensation expense recorded was $10.4 million for the year ended December 31, 2021, compared to $8.2 million in 2020[363]. Cash and Financing - Cash and cash equivalents as of December 31, 2021, totaled $51.8 million[398]. - Net cash provided by financing activities increased by $4.4 million to $35.9 million for the year ended December 31, 2021[403]. - The company completed the sale of the miraDry business for an aggregate purchase price of $10.0 million, resulting in net cash proceeds of approximately $8.1 million[389]. - The company has $51.8 million in cash and cash equivalents as of December 31, 2021[408]. Liabilities and Provisions - As of December 31, 2021, the liability for unsatisfied performance obligations under the service warranty was $3.237 million, up from $1.945 million at the end of 2020[349]. - The sales return liability increased to $13.399 million as of December 31, 2021, compared to $9.192 million at the end of 2020, with actual returns of $152.773 million in 2021[351]. - The company held total warranty liabilities of $2.5 million and $1.9 million as of December 31, 2021, and 2020, respectively[358]. - The company recognized revenue from service warranties ratably over the term of the agreements, with performance obligations expected to be satisfied over 3 to 24 months for financial assistance and 20 years for product replacement[349]. Operational Insights - The company expects net sales to fluctuate quarterly due to factors such as seasonality and the ongoing impact of the COVID-19 pandemic[333]. - The company anticipates its overall gross margin to fluctuate due to unit sales volume, manufacturing costs, and product mix[337]. - Research and development expenses are expected to vary based on new product initiatives and improvements to existing products[339]. - The company is focused on maintaining unit costs to drive gross margin through its implant manufacturing facility in Franklin, Wisconsin[406]. - The company is expanding its sales force and marketing programs, which will incur associated costs[406]. - The company is investing in inventory to meet customer demands[406]. - The company is developing and commercializing proposed products or technologies, which will involve costs[406]. - The company is focused on new product acquisition and development efforts[406]. Tax and Valuation - The company maintains a full valuation allowance on its net deferred tax assets due to cumulative net losses and uncertainty regarding realization[342]. - The company evaluates acquisitions to determine if they should be accounted for as business combinations or asset acquisitions, with significant estimates involved in the valuation process[365]. - An immediate 100 basis point change in interest rates would not materially affect the fair market value of the company's cash equivalents[408]. Goodwill and Impairment - The company performed a qualitative analysis for goodwill impairment testing on October 1, 2021, concluding that the fair value of the reporting unit was likely greater than its carrying value, resulting in no impairment charges[357]. Warranty and Compensation - Stock-based compensation costs are recognized over the requisite service period, with unrecognized compensation costs related to unvested stock options totaling $1.5 million as of December 31, 2021[363].

Financial Performance - Net sales increased by $4.3 million, or 28.0%, to $19.6 million for the three months ended September 30, 2021, compared to $15.3 million for the same period in 2020, primarily due to increased domestic sales volume of gel implants and expanders [137]. - Gross profit for the three months ended September 30, 2021, was $10.6 million, compared to $8.2 million for the same period in 2020 [136]. - Net income for the three months ended September 30, 2021, was $28.4 million, compared to a net loss of $5.8 million for the same period in 2020 [136]. - Net sales for the nine months ended September 30, 2021, rose by $20.9 million, or 56.4%, to $58.0 million compared to $37.1 million in the same period of 2020, attributed to increased sales volume of gel implants and BioCorneum [150]. Costs and Expenses - Cost of goods sold rose by $1.9 million, or 27.1%, to $9.0 million for the three months ended September 30, 2021, compared to $7.1 million for the same period in 2020, driven by higher sales volume [139]. - Total operating expenses increased to $22.3 million for the three months ended September 30, 2021, from $17.8 million for the same period in 2020 [136]. - Loss from operations was $11.7 million for the three months ended September 30, 2021, compared to a loss of $9.5 million for the same period in 2020 [136]. - Cost of goods sold for the nine months ended September 30, 2021, increased by $10.1 million, or 63.8%, to $26.0 million, primarily due to higher sales volume and increased distribution and production costs [151]. - Research and development expenses for the nine months ended September 30, 2021, increased by $0.8 million, or 13.4%, to $7.0 million, mainly due to higher employee payroll and product development expenses [155]. - General and administrative expenses for the nine months ended September 30, 2021, rose by $2.1 million, or 10.1%, to $23.3 million, driven by increased payroll and IT system implementation costs [156]. Cash Flow and Liquidity - Net cash used in operating activities for the nine months ended September 30, 2021, was $28.6 million, a decrease from $38.4 million in the same period of 2020, reflecting improved cash management [168]. - Net cash provided by financing activities for the nine months ended September 30, 2021, was $34.3 million, compared to $31.8 million in 2020, due to increased proceeds from common stock issuance [170]. - As of September 30, 2021, the company had $66.1 million in cash and cash equivalents, indicating a stable liquidity position [165]. - The company anticipates needing to raise additional equity or debt capital to fund ongoing operating and capital needs [166]. - The company holds cash primarily in checking accounts and interest-bearing money market accounts [175]. - An immediate 100 basis point change in interest rates would not have a material effect on the fair market value of cash equivalents due to their short-term maturities [175]. - The company has established guidelines for approved investments and maturities to maintain safety and liquidity [175]. Business Operations - The company completed the sale of the miraDry business on June 10, 2021, for an aggregate purchase price of $10.0 million, resulting in net cash proceeds of approximately $8.1 million [115]. - The company has one operating segment in continuing operations named Plastic Surgery, focusing on breast implants, tissue expanders, and scar management products [112]. - The company expects future net sales to fluctuate due to seasonality of breast augmentation procedures and the ongoing impact of the COVID-19 pandemic [123]. - Facilities expansion needs are identified as a priority for future investment [175]. - Investment in inventory is required to meet customer demands [175]. Profitability Metrics - Gross margins for the three months ended September 30, 2021, increased to 54.0% from 53.6% in 2020, driven by lower unit costs of gel implants and reduced inventory reserves [140]. - Income from continuing operations before income taxes was $28.5 million for the three months ended September 30, 2021, compared to a loss of $1.5 million for the same period in 2020 [136]. - Income from discontinued operations for the nine months ended September 30, 2021, increased by $22.1 million, reflecting a strategic shift prior to the sale of the miraDry business [160].

Business Operations - The company completed the sale of the miraDry business on June 10, 2021, for an aggregate purchase price of $10.0 million, resulting in net cash proceeds of approximately $11.3 million after adjustments[127]. - The Plastic Surgery segment, formerly known as Breast Products, is the sole operating segment following the sale of miraDry[124]. - As of June 30, 2021, the direct sales organization for the Plastic Surgery segment consisted of 63 employees, including 8 sales managers[125]. - The company recognized a loss on the sale of the miraDry business amounting to $2.5 million for the three and six months ended June 30, 2021[127]. Financial Performance - Net sales increased by $10.8 million, or 116.0%, to $20.1 million for the three months ended June 30, 2021, compared to $9.3 million for the same period in 2020[151]. - Cost of goods sold rose by $4.8 million, or 118.4%, to $8.8 million for the three months ended June 30, 2021, compared to $4.0 million for the same period in 2020[153]. - Gross margin for the three months ended June 30, 2021, was 56.0%, down from 56.5% in 2020, primarily due to lower margins on international gel implant sales[154]. - Sales and marketing expenses increased by $5.0 million, or 92.5%, to $10.5 million for the three months ended June 30, 2021, compared to $5.4 million for the same period in 2020[155]. - Research and development expenses increased by $0.3 million, or 13.6%, to $2.4 million for the three months ended June 30, 2021, compared to $2.1 million for the same period in 2020[156]. - General and administrative expenses increased by $0.6 million, or 8.7%, to $7.5 million for the three months ended June 30, 2021, compared to $6.9 million for the same period in 2020[157]. - Net loss for the three months ended June 30, 2021, was $20.1 million, compared to a net loss of $34.3 million for the same period in 2020[150]. Cash Flow and Liquidity - As of June 30, 2021, the company had $82.4 million in cash and cash equivalents[181]. - The company anticipates needing to raise additional equity or debt capital to fund ongoing operating and capital needs[182]. - Net cash used in operating activities decreased to $14.8 million for the six months ended June 30, 2021, from $31.5 million in the same period of 2020, reflecting improved operational efficiency[184]. - Net cash used in investing activities increased to $3.2 million in the first half of 2021, compared to $2.1 million in the same period of 2020, primarily due to higher property and equipment purchases[185]. - Net cash provided by financing activities rose to $34.4 million for the six months ended June 30, 2021, up from $33.0 million in 2020, driven by increased proceeds from common stock issuance and borrowings[186]. - Cash provided by discontinued operations was $11.1 million in the first half of 2021, compared to a cash outflow of $15.2 million in the same period of 2020, due to changes in business strategy and proceeds from the sale of the miraDry business[187]. - The company’s liquidity position is influenced by factors such as manufacturing capacity, sales performance, and costs associated with product development and regulatory compliance[188]. - The company anticipates potential short-term capital needs for expenditures related to sales and marketing efforts, new product development, and facilities expansion[189]. - Future liquidity and capital funding requirements may be affected by operational cash generation and potential need for additional equity or debt financing[189]. Impact of COVID-19 - The company expects net sales to fluctuate quarterly due to factors such as seasonality of breast augmentation procedures and the ongoing impact of the COVID-19 pandemic[137]. - The COVID-19 pandemic has significantly impacted revenues since Q2 2020, with ongoing restrictions likely to continue affecting future revenues[132]. - The company continues to monitor the economic impact of COVID-19 on its operations and the aesthetics market[134].

Financial Performance - Net sales for the three months ended March 31, 2021, were $23,236,000, an increase of 37.5% compared to $16,932,000 for the same period in 2020[143] - Gross profit for the three months ended March 31, 2021, was $12,301,000, compared to $10,140,000 for the same period in 2020, reflecting a gross margin improvement[143] - The loss from operations for the three months ended March 31, 2021, was $9,820,000, significantly improved from a loss of $27,006,000 in the same period in 2020[143] - Net sales increased by $6.3 million, or 37.2%, to $23.2 million for the three months ended March 31, 2021, compared to $16.9 million for the same period in 2020[144] Operating Expenses - Total operating expenses decreased to $22,121,000 for the three months ended March 31, 2021, from $37,146,000 in the same period in 2020, primarily due to reduced sales and marketing expenses[143] - Sales and marketing expenses decreased by $4.4 million, or 26.2%, to $12.4 million for the three months ended March 31, 2021, compared to $16.8 million for the same period in 2020[148] - General and administrative expenses decreased by $2.0 million, or 21.0%, to $7.4 million for the three months ended March 31, 2021, compared to $9.3 million for the same period in 2020[150] - Research and development expenses for the three months ended March 31, 2021, were $2,392,000, compared to $2,908,000 for the same period in 2020[143] - Research and development expenses decreased by $0.5 million, or 17.7%, to $2.4 million for the three months ended March 31, 2021, compared to $2.9 million for the same period in 2020[149] Cash Flow - Net cash used in operating activities was $12.7 million during the three months ended March 31, 2021, a decrease from $27.2 million during the same period in 2020[164] - Net cash provided by financing activities was $39.4 million during the three months ended March 31, 2021, compared to $52.8 million during the same period in 2020[166] - As of March 31, 2021, the company had $80.4 million in cash and cash equivalents[161] - The company completed a follow-on public offering of 5,410,628 shares of common stock at $6.75 per share, resulting in net proceeds of approximately $39.2 million[160] Business Developments - The company expects to recognize a loss between $2.5 million and $3.5 million related to the sale of the miraDry business, which is anticipated to close in the second quarter of 2021[121] - The miraDry business was sold for a purchase price of $10,000,000 in cash, subject to certain adjustments[120] - The company has eliminated its separate miraDry U.S. salesforce and transitioned sales responsibility into the Breast Products Business Development team[122] Market Conditions - The company continues to monitor the impact of the COVID-19 pandemic on its operations, which has significantly affected revenues since the second quarter of 2020[124] - The company anticipates fluctuations in net sales due to seasonality and the ongoing impact of the pandemic on aesthetic procedures[130] - Gross margin decreased to 52.9% for the three months ended March 31, 2021, down from 59.9% in the same period of 2020, primarily due to higher period costs in the miraDry segment[147] Future Outlook - The company anticipates that operating expenses will continue to decrease following the completion of the organizational efficiency initiative in 2020[155]

Market Overview - The U.S. consumers spent approximately $17 billion on around 18 million cosmetic procedures in 2019, indicating a significant market for aesthetic procedures [33]. - The global breast market is estimated to be approximately $1.5 billion, with the addressable market for currently available breast products in the U.S. at around $600 million [36]. - The addressable consumables market for miraDry in the U.S. is estimated to be approximately $6 billion, with about 15 million people interested in the miraDry solution [40]. - The addressable equipment market for miraDry is estimated at approximately $1.4 billion globally, with the U.S. market estimated at around $700 million [42]. Product Performance and Innovation - The miraDry System is the only FDA-cleared device for reducing underarm sweat, odor, and hair, with clinical studies showing an average of 82% sweat reduction at 12 months [53]. - The company’s proprietary Allox2 tissue expander has shown a 100% surgeon satisfaction rate based on recent case studies [49]. - The miraDry procedure has received an 88% "worth it" rating from patients on RealSelf.com, indicating high patient satisfaction [54]. - The breast implant portfolio includes approximately 350 variations, utilizing High-Strength Cohesive silicone gel, which differentiates the products from competitors [65][74]. - The Allox2 tissue expander features a patented dual port and integral drain technology, improving clinical outcomes and reducing financial risks associated with breast reconstruction [80][88]. - The miraDry technology platform utilizes microwave energy for precise heating, effectively targeting sweat glands while protecting surrounding tissues [83][85]. - Clinical trials for breast implants demonstrated safety and effectiveness, with a 10-year follow-up showing comparable or better rupture and capsular contracture rates than competitors [86][87]. - The company emphasizes the importance of product innovation and enhanced customer service offerings, including a 20-year limited warranty for patients [67]. Strategic Plans and Market Expansion - The company plans to selectively pursue acquisitions and expand into new markets to leverage relationships with plastic surgeons and enhance market share [58]. - The company aims to increase its international presence, having received regulatory approval to market its breast implants in Japan and seeking further approvals in additional markets [63]. - The company plans to broaden its product portfolio by developing new breast implants and tissue expanders, aiming to address unmet needs in the market [59]. - The sales force has been optimized by integrating the miraDry sales team into the Breast Products ENHANCE Practice Development team, enhancing customer adoption and awareness [60]. - The company intends to invest in clinical studies and peer-reviewed articles to support the clinical benefits of its products, leveraging relationships with Plastic Surgeons [61]. Regulatory Compliance and Challenges - The company must comply with extensive post-market regulatory requirements, including conducting post-market surveillance studies and maintaining a tracking system for breast implants [139]. - The FDA classifies medical devices into three classes, with silicone gel breast implants requiring a full PMA application, which is generally more costly and time-consuming than the 510(k) process [134]. - The company’s miraDry System is regulated as a Class II device that requires 510(k) clearance, which typically takes three to 12 months but can be longer [133]. - Regulatory compliance failures can result in significant enforcement actions by the FDA, including product recalls and legal proceedings [141]. - The company faces significant competition from U.S. competitors with greater market share and resources, including Allergan and Cynosure, which may hinder the market acceptance of the miraDry System [121][124]. - The company faces more competition in international markets due to less stringent regulatory requirements compared to the U.S. [125]. Financial Overview - As of December 31, 2020, the company had $55.0 million in cash and cash equivalents [474]. - Research and development expenses totaled approximately $10.3 million in 2020, with additional costs attributed to the miraDry System [108]. - Third-party payors are increasingly limiting coverage and reducing reimbursements for medical products and services, impacting sales [167]. - The company expects net sales to fluctuate quarterly due to seasonality in breast augmentation and miraDry procedures [180]. Legal and Compliance Risks - The company is at risk of significant legal expenses and reputational damage due to potential investigations related to healthcare law compliance [148]. - The Federal Civil False Claims Act allows for penalties of three times the actual damages sustained by the government, plus mandatory civil penalties for each false claim [150]. - The company must report detailed payment data to comply with the Physician Payments Sunshine Act, with penalties of up to $150,000 per year for non-compliance [159]. - The company faces potential penalties for non-compliance with healthcare laws, including civil, criminal, and administrative penalties, which could adversely affect its operations and financial results [145]. - Violations of the Federal Anti-Kickback Statute can result in imprisonment for up to ten years and fines of up to $100,000 per violation [147]. Intellectual Property and Competitive Advantage - The company relies on a combination of intellectual property rights to maintain a competitive advantage in the marketplace [174]. - The company has 34 registered trademarks and 25 pending trademark applications for its Breast Products [175]. - The Breast Products patent portfolio includes 1 granted U.S. Patent and 7 pending U.S. patent applications [176]. - The miraDry patent portfolio consists of 21 granted or allowed U.S. patents and 101 granted or allowed foreign counterpart patents [176]. Workforce and Organizational Changes - The company has implemented an organizational efficiency initiative, reducing its workforce by approximately 60 employees as of December 31, 2020 [32]. - The company faces competition in attracting and retaining qualified employees, with 255 full-time employees as of December 31, 2020 [179].