Establishment Labs(ESTA) - 2024 Q2 - Quarterly Report

Revenue Performance - Revenue for the six months ended June 30, 2024, was $81.3 million, a decrease of $13.8 million or 14.5% compared to $95.1 million in the same period of 2023[116] - Revenue decreased by $4.5 million, or 9.3%, to $44.1 million for the three months ended June 30, 2024, compared to $48.6 million for the same period in 2023[132] - The second half of fiscal year 2023 showed a slowdown in revenue growth due to macroeconomic conditions, with a 19% quarter-over-quarter increase in revenue observed in the latest quarter[127] - Sales of Motiva Implants accounted for over 99% of total revenues for the six months ended June 30, 2024[119] - The company expects revenue to increase as it enters new markets and launches Motiva Implants in the U.S., pending FDA approval[120] Net Losses and Financial Position - Net losses for the six months ended June 30, 2024, were $33.4 million, compared to $28.7 million for the same period in 2023, resulting in an accumulated deficit of $393.5 million[116] - The net loss for the six months ended June 30, 2024, was $33.4 million, influenced by changes in operating assets and liabilities[153] - Other income (expense), net decreased to a loss of $5.8 million for the six months ended June 30, 2024, compared to an income of $2.1 million for the same period in 2023[149] Operating Expenses and Cost Management - Total operating expenses decreased by $10.7 million, or 13.0%, to $71.5 million for the six months ended June 30, 2024[144] - Operating expenses decreased by $5.7 million, or 12.9%, to $38.3 million for the three months ended June 30, 2024, compared to $44.0 million for the same period in 2023[134] - SG&A expense decreased by $4.2 million, or 11.4%, to $32.8 million for the three months ended June 30, 2024[135] - R&D expense decreased by $1.4 million, or 20.3%, to $5.5 million for the three months ended June 30, 2024[137] - The company has implemented measures to align its cost base with current demand, including workforce downsizing and operational expenditure reductions[127] Manufacturing and Product Development - The FDA granted 510(k) clearance for the Motiva Flora SmoothSilk Tissue Expander in October 2023, following the commercial launch of Motiva Implants in China in January 2024[115][117] - The company completed the construction of a new manufacturing facility in Costa Rica, increasing manufacturing capacity by approximately 730,000 units per year, with costs incurred of approximately $56.0 million[117] - The IDE clinical trial for Motiva Implants is expected to cost between $30.0 million and $40.0 million over ten years, with approximately $31.5 million spent to date[123] - The company is developing an enterprise resource planning system for the anticipated U.S. launch of Motiva Implants, incurring $4.8 million in costs for intangible assets[155] Interest and Financing Activities - Interest expense as of June 30, 2024, was $9.6 million, reflecting an increase from $7.4 million in the same period of 2023[129] - Interest expense increased to $9.6 million for the six months ended June 30, 2024, compared to $7.4 million for the same period in 2023[147] - Cash flows from financing activities provided $51.4 million in the first half of 2024, primarily from the issuance of common shares and pre-funded warrants, compared to $85.7 million in the same period of 2023[156] - As of June 30, 2024, the company had $196.4 million outstanding under the Credit Agreement, which includes $150 million for the Tranche A Term Loan and $25 million for the Tranche B Term Loan[158] Future Outlook and Capital Requirements - The company anticipates future capital requirements will depend on market adoption of its products, regulatory activities, and R&D costs[151] - The company filed a Shelf Registration Statement in April 2023, allowing it to raise additional capital through common shares and other securities until April 2026[151] - The company’s liquidity assumptions may prove incorrect, potentially requiring the use of available financial resources sooner than expected[151]