Establishment Labs(US:ESTA)2023-05-08 23:44Financial Data and Key Metrics Changes - Revenue in Q1 2023 totaled $46.5 million, representing a 21% increase compared to Q1 2022, marking a new quarterly record for the company [45][66] - Excluding the negative impact of foreign currency changes, revenue growth would have been approximately 22.9% [45][92] - Gross profit for Q1 was $30.1 million, or 64.7% of revenue, compared to $24.9 million, or 64.8% of revenue, in the same period of 2022 [66] - SG&A expenses increased to $31.7 million from $26.9 million in Q1 2022, partly due to investments in new growth initiatives [52][66] - Cash position as of March 31 was $42.8 million, down from $66.4 million at the end of 2022, with cash used including investments in a new manufacturing facility and inventory increases [53][94] Business Line Data and Key Metrics Changes - The launch of Mia Femtech in Japan is ongoing, with marketing efforts focused on creating demand through partner clinics [48][62] - Direct sales accounted for approximately 36% of global Motiva implant sales, with distributor sales making up the balance [92] - The company is actively preparing for the launch of Motiva in China, with expectations for the market to recover to pre-COVID levels by 2025 [50][12] Market Data and Key Metrics Changes - Motiva sales in Europe, the Middle East, and Africa represented approximately 44% of global sales, while Asia Pacific accounted for 31% and Latin America made up the remainder [66] - Brazil is the largest market globally, accounting for approximately 13% of total quarterly Motiva sales [66] Company Strategy and Development Direction - The company is focused on launching Mia as a new category in breast aesthetics, targeting consumers who are not interested in traditional breast augmentation [99] - Establishment Labs aims to expand geographically, with plans for Mia in Japan and Europe, and is preparing for the launch of Motiva in China [49][50][96] - The company is also investing in R&D and commercialization programs, with expectations for operating expenses as a percentage of revenue to trend down as new initiatives are leveraged [68][94] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the outlook for 2023, despite some uncertainty regarding the timing of initiatives in China and the US [17][37] - The company is preparing for significant growth opportunities, particularly with the launch of Mia and the expansion into new markets [96][88] - Management highlighted the importance of maintaining a strong cash position to fund growth initiatives [94] Other Important Information - The company completed a follow-on share offering that raised gross proceeds of $90.4 million, which was oversubscribed and brought in new investors [88] - The new manufacturing facility is expected to double the number of implants produced annually, addressing over half of the current world demand [97] Q&A Session Summary Question: How is the launch of Mia in Japan progressing? - Management is pleased with the launch and is focused on creating a new category in breast aesthetics rather than competing for market share in traditional breast augmentation [99] Question: What is the expected contribution of Flora to growth in 2023? - Flora is expected to contribute positively as more surgeons adopt it, particularly in sophisticated markets like Japan [104] Question: What is the investment required for the partnership model with clinics? - The partnership model requires both the company and clinics to invest in bringing new consumers into breast aesthetics [105] Question: What is the status of the regulatory process for Motiva in China? - The company is in the final phase of preparation for the launch in China, pending approval from the NMPA [110] Question: How will SG&A expenses trend for the rest of the year? - SG&A expenses are expected to remain similar to 2022 as the company continues to invest in growth initiatives [111]