ESTA Establishment Labs Holdings Inc

Establishment Labs Holdings Inc. (NASDAQ: ESTA), a global medical technology company dedicated to improving women’s health and wellness, principally in breast aesthetics and reconstruction, today announced financial results for the third quarter ended September 30, 2024.

Third Quarter Highlights and Outlook

• Third quarter worldwide revenue of $40.2 million.
• 2024 revenue guidance updated to $165 million to $168 million from previous guidance of $174 million to $184 million.
• Third quarter loss from operations was $13.1 million compared to a loss of $21.0 million in the year-ago period.
• Adjusted EBITDA loss of $7.0 million compared to a loss of $16.3 million in the year-ago period.
• Third quarter cash use was $14.9 million compared to use of $38.0 million in the year ago period.
• Cash balance of $39.7 million as of September 30, 2024; approximately $114.0 million proforma cash balance including $25.0 million Tranche C of Oaktree credit facility drawn on October 8, 2024, and $50.0 million from sale of common stock on November 7, 2024.
• $50 million registered direct offering priced at a 5% discount to the close of trading on November 7, 2024.
• Oaktree credit facility amended to extend availability of $25 million Tranche D to December 31, 2025, subject to achieving revenue milestones.
• Agreement in principle by R-Bridge Fund, an affiliate of CBC Group, to invest up to $50 million in Chinese distributor; proceeds to be used to support the growth of Motiva in China.
• FDA approval of Motiva Implants on September 26, 2024.
• Expected U.S. revenue to exceed $35 million in 2025.

“The U.S. launch of Motiva has exceeded even our high expectations,” said Juan José Chacón-Quirós, Chief Executive Officer. “The amazing response from plastic surgeons and women in the United States to Motiva has validated what we have seen in many other countries: namely that a safer implant that offers new options can move markets. We have onboarded over 250 new accounts in just the first three weeks of our launch and right now, we are adding 15 new accounts a day. We have 32 sales reps in the field and expect to be at 40 by year end.”

“We have taken this opportunity to strengthen our balance sheet and with the tangible results of reductions in our expense base, we are well funded for the opportunities ahead. We continue to focus on efficiencies across our global organization and our EBITDA loss was less than half of what it was a year ago despite increased investment in the United States,” Mr. Chacón-Quirós continued. “With the delay in U.S. FDA approval relative to our earlier expectations and continued weakness in Brazil, we are adjusting our guidance for 2024. We are on a clear path for global market leadership and have many years of significant double-digit revenue growth and emerging profitability ahead of us.”

Third Quarter 2024 Financial Results

Total revenue for the quarter ended September 30, 2024 was $40.2 million compared to $38.5 million for the same period in 2023.

Gross profit for the third quarter was $25.7 million, or 63.9% of revenue, compared to $26.1 million, or 67.7% of revenue, for the same period in 2023. The decrease in gross profit margin was primarily driven by geographic mix and changes in foreign currency exchange rates.

Total operating expenses for the third quarter were $38.9 million, a decrease of $8.2 million compared to $47.1 million in the third quarter of 2023.

SG&A expenses for the third quarter decreased approximately $5.9 million to $34.1 million compared to $40.0 million in the third quarter of 2023. The decrease in SG&A was primarily the result of the cost reduction initiatives, including headcount reductions, offset by increased investment in the United States.

R&D expenses decreased approximately $2.3 million to $4.8 million in the third quarter compared to $7.1 million for the same quarter a year ago. The decrease was primarily due to reductions in personnel costs.

Net loss for the third quarter was $16.7 million compared to a net loss of $29.3 million in the year ago period.

The Company’s cash balance on September 30, 2024 was $39.7 million. Cash decreased $0.3 million from December 31, 2023, primarily as a result of the private placement offering completed on January 9, partially offset by operating losses and investments in the new manufacturing facility. Pro forma cash balance approximately $114.0 million including $25.0 million Tranche C of Oaktree credit facility drawn on October 8, 2024, and $50.0 million from sale of common stock on November 7, 2024.

Conference Call and Webcast Information

Establishment Labs will host a conference call and webcast today at 4:30 p.m. Eastern Time to discuss its financial results. The conference call can be accessed by dialing (877) 407-8037 (U.S. and Canada) or (201) 689-8037 (international) and using conference ID number 13749629. In addition, the live and archived webcast will be available in the Investor Relations section of the Company's website at www.establishmentlabs.com.

About Establishment Labs

Establishment Labs Holdings Inc. is a global medical technology company dedicated to improving women’s health and wellness through the power of science, engineering, and technology. The Company offers a portfolio of Femtech solutions for breast health, breast aesthetics and breast reconstruction. The nearly four million Motiva® devices Establishment Labs has delivered to plastic and reconstructive surgeons since 2010 have created a new standard for safety and patient satisfaction in the over 85 countries in which they are available. The Motiva Flora® tissue expander is used to improve outcomes in breast reconstruction following breast cancer and it is the only regulatory-approved expander in the world with an integrated port using radio-frequency technology that is MRI conditional. Mia Femtech™, Establishment Lab’s unique minimally invasive experience for breast harmony, is the Company’s most recent breakthrough innovation. These solutions are supported by over 200 patent applications in 20 separate patent families worldwide and over 100 scientific and clinical studies and publications in peer reviewed journals. Establishment Labs manufactures at two facilities in Costa Rica compliant with all applicable regulatory standards under ISO13485:2016 and FDA 21 CFR 820 under the MDSAP program. Please visit our website for additional information at www.establishmentlabs.com.

Non-GAAP Financial Measures

To supplement our financial results presented in accordance with GAAP, this release includes the following measures defined by the Securities and Exchange Commission as non-GAAP financial measures: EBITDA and Adjusted EBITDA. These non-GAAP measures are not based on any comprehensive set of accounting rules or principles and should not be considered a substitute for, or superior to, financial measures calculated in accordance with GAAP, and may be different from non-GAAP measures used by other companies, limiting the usefulness of the measures for comparison with other companies.

EBITDA is defined as net income or loss excluding: (1) interest income and expense; (2) provision for income taxes; and (3) depreciation and amortization. We consider EBITDA useful to an investor in evaluating and facilitating comparisons of our operating performance between periods by removing the impact of our capital structure (primarily interest expense) and asset base (primarily depreciation and amortization) from our operating results.

We also present Adjusted EBITDA which includes additional adjustments for items such as other non-cash charges, gains or losses on extinguishment of debt, share-based compensation and foreign currency gains and losses. We believe that Adjusted EBITDA provides useful supplemental information to investors regarding our ongoing operating performance that, when considered with net income and EBITDA, is beneficial to an investor's understanding of our performance.

We believe disclosure of this information is also useful to investors as it provides insight into the earnings that management uses to make strategic decisions. These non-GAAP financial measures should be considered along with, but not as alternatives to, net income or loss as prescribed by GAAP as a measure of our operating performance. EBITDA and Adjusted EBITDA do not represent cash generated from operating activities under GAAP and should not be considered as alternatives to cash flows from operations or any other operating performance measure prescribed by GAAP. These measures are not measures of our liquidity, nor are indicative of funds available to fund our cash needs. These measurements do not reflect cash expenditures for long-term assets and other items that have been and will be incurred. EBITDA and Adjusted EBITDA may include funds that may not be available for management’s discretionary use due to functional requirements to conserve funds for capital expenditures, property acquisitions, and other commitments and uncertainties.

Please see “Reconciliation of EBITDA and Adjusted EBITDA” for a reconciliation of these measures to net income (loss), the most directly comparable financial measure. This release also includes information about our expectations regarding Adjusted EBITDA on a forward-looking basis. We have not provided a reconciliation of such forward-looking Adjusted EBITDA information because a reconciliation of such measure to our expected GAAP net income (loss) on a forward-looking basis is not available without unreasonable efforts. The timing or amount of various reconciling items that would impact the forward-looking expectations for this non-GAAP financial measure are uncertain, depend on various factors and cannot be reasonably predicted. Such unavailable information could be material to our results computed in accordance with U.S. GAAP.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). You can find many (but not all) of these statements by looking for words such as “approximates,” “believes,” “expects,” “anticipates,” “estimates,” “intends,” “plans,” “intends to,” “would,” “will,” “may” or other similar expressions in this press release. Any statements that refer to projections of our future financial or operating performance, anticipated trends in our business, our goals, strategies, focus and plans, including related product development and commercialization and regulatory approvals, and other characterizations of future events or circumstances, including statements expressing general optimism about future operating results, related to the company’s performance are forward-looking statements. We claim the protection of the safe harbor contained in the Private Securities Litigation Reform Act of 1995. We caution investors that any forward-looking statements presented in this report, or that we may make orally or in writing from time to time, are expressions of our beliefs and expectations based on currently available information at the time such statements are made. Such statements are based on assumptions, and the actual outcome will be affected by known and unknown risks, trends, uncertainties, and factors that are beyond our control. Although we believe that our assumptions are reasonable, we cannot guarantee future performance, and some will inevitably prove to be incorrect. As a result, our actual future results and the timing of events may differ from our expectations, and those differences may be material. Factors, among others, that could cause actual results and events to differ materially from those described in any forward-looking statements include risks and uncertainties relating to: our ability to successfully, timely and cost-effectively develop, seek and obtain regulatory clearance for and commercialize our product offerings; the rate of adoption of our products by healthcare providers or other customers; the success of our marketing initiatives; the safe and effective use of our products; our ability to protect our intellectual property; our future expansion plans and capital allocation; our ability to expand upon and/or secure sources of credit or capital; our ability to develop and maintain relationships with qualified suppliers to avoid a significant interruption in our supply chains; our ability to attract and retain key personnel; our ability to scale our operations to meet market demands; the effect on our business of existing and new regulatory requirements; and other economic and competitive factors. These and other factors that could cause or contribute to actual results differing materially from our expectations include, among others, those risks and uncertainties discussed in the company’s annual report on Form 10-K filed on March 4, 2024 and will be discussed in the company's quarterly report on Form 10-Q that will be filed on November 12, 2024, which risks and uncertainties may be updated in the future in other filings made by the company with the Securities and Exchange Commission. The risks included in those documents are not exhaustive, and additional factors could adversely affect our business and financial performance. We operate in a very competitive and rapidly changing environment. New risk factors emerge from time to time, and it is not possible for us to predict all such risk factors, nor can we assess the impact of all such risk factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. We are not undertaking any obligation to update any forward-looking statements. Accordingly, investors should use caution in relying on past forward-looking statements, which are based on known results and trends at the time they are made, to anticipate future results or trends.

ESTABLISHMENT LABS HOLDINGS INC.

Consolidated Statements of Operations

(In thousands, except share and per share data)

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

September 30,

 

Nine Months Ended

September 30,

 

 

 

2024

 

 

 

2023

 

 

 

2024

 

 

 

2023

 

Revenue

 

$

40,227

 

 

$

38,506

 

 

$

121,511

 

 

$

133,591

 

Cost of revenue

 

 

14,510

 

 

 

12,454

 

 

 

42,478

 

 

 

47,199

 

Gross profit

 

 

25,717

 

 

 

26,052

 

 

 

79,033

 

 

 

86,392

 

Operating expenses:

 

 

 

 

 

 

 

 

Sales, general and administrative

 

 

34,055

 

 

 

39,962

 

 

 

95,788

 

 

 

108,695

 

Research and development

 

 

4,801

 

 

 

7,128

 

 

 

14,562

 

 

 

20,608

 

Total operating expenses

 

 

38,856

 

 

 

47,090

 

 

 

110,350

 

 

 

129,303

 

Loss from operations

 

 

(13,139

)

 

 

(21,038

)

 

 

(31,317

)

 

 

(42,911

)

Interest income

 

 

234

 

 

 

271

 

 

 

1,278

 

 

 

516

 

Interest expense

 

 

(5,313

)

 

 

(3,679

)

 

 

(14,880

)

 

 

(11,055

)

Other income (expense), net

 

 

2,046

 

 

 

(4,158

)

 

 

(3,770

)

 

 

(2,086

)

Loss before income taxes

 

 

(16,172

)

 

 

(28,604

)

 

 

(48,689

)

 

 

(55,536

)

Provision for income taxes

 

 

(510

)

 

 

(669

)

 

 

(1,376

)

 

 

(2,424

)

Net loss

 

$

(16,682

)

 

$

(29,273

)

 

$

(50,065

)

 

$

(57,960

)

 

 

 

 

 

 

 

 

 

Basic and diluted net loss per share

 

$

(0.59

)

 

$

(1.12

)

 

$

(1.80

)

 

$

(2.28

)

Weighted average outstanding shares used for basic and diluted net loss per share

 

 

28,248,256

 

 

 

26,034,185

 

 

 

27,885,255

 

 

 

25,444,155

 

 

 

 

 

 

 

 

 

 

ESTABLISHMENT LABS HOLDINGS INC.

Consolidated Balance Sheets

(In thousands)

 

 

 

 

 

 

September 30, 2024

 

December 31, 2023

 

(Unaudited)

 

 

Assets

 

 

 

Current assets:

 

 

 

Cash

$

39,697

 

$

40,035

Accounts receivable, net of allowance for credit losses of $2,715 and $1,841

 

67,251

 

 

46,918

Inventory, net

 

67,122

 

 

79,471

Prepaid expenses and other current assets

 

8,883

 

 

8,477

Total current assets

 

182,953

 

 

174,901

Long-term assets:

 

 

 

Property and equipment, net of accumulated depreciation

 

79,423

 

 

77,205

Goodwill

 

465

 

 

465

Intangible assets, net of accumulated amortization

 

9,783

 

 

7,987

Right-of-use operating lease assets, net

 

4,849

 

 

3,381

Other non-current assets

 

5,212

 

 

4,702

Total assets

$

282,685

 

$

268,641

Liabilities and shareholders’ equity

 

 

 

Current liabilities:

 

 

 

Accounts payable

$

34,397

 

$

41,624

Accrued liabilities

 

13,821

 

 

13,690

Other liabilities, short-term

 

2,280

 

 

1,836

Total current liabilities

 

50,498

 

 

57,150

Long-term liabilities:

 

 

 

Note payable, net of debt discount and issuance costs

 

194,360

 

 

188,739

Operating lease liabilities, non-current

 

3,825

 

 

2,712

Other liabilities, long-term

 

1,292

 

 

1,645

Total liabilities

 

249,975

 

 

250,246

Shareholders’ equity:

 

 

 

Total shareholders’ equity

 

32,710

 

 

18,395

Total liabilities and shareholders’ equity

$

282,685

 

$

268,641

 

 

 

 

ESTABLISHMENT LABS HOLDINGS INC.

Reconciliation of EBITDA and Adjusted EBITDA

(In thousands)

(Unaudited)

 

The following is a reconciliation of net loss to EBITDA and Adjusted EBITDA:

 

 

 

 

 

 

 

 

 

 

Three Months Ended

September 30,

 

Nine Months Ended

September 30,

 

 

2024

 

 

 

2023

 

 

 

2024

 

 

 

2023

 

Net loss

$

(16,682

)

 

$

(29,273

)

 

$

(50,065

)

 

$

(57,960

)

Interest expense

 

(5,313

)

 

 

(3,679

)

 

 

(14,880

)

 

 

(11,055

)

Interest income

 

234

 

 

 

271

 

 

 

1,278

 

 

 

516

 

Provision for income taxes

 

(510

)

 

 

(669

)

 

 

(1,376

)

 

 

(2,424

)

Depreciation and amortization

 

(1,990

)

 

 

(1,061

)

 

 

(4,680

)

 

 

(2,944

)

EBITDA

 

(9,103

)

 

 

(24,135

)

 

 

(30,407

)

 

 

(42,053

)

Stock compensation expense & compensation paid in stock

 

(4,290

)

 

 

(4,041

)

 

 

(11,712

)

 

 

(10,981

)

Foreign currency gain (loss)

 

2,204

 

 

 

(3,816

)

 

 

(3,579

)

 

 

(1,436

)

Adjusted EBITDA

$

(7,017

)

 

$

(16,278

)

 

$

(15,116

)

 

$

(29,636

)

 

 

 

 

 

 

 

 

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20241107390953/en/

Investor/Media Contact: Raj Denhoy 415 828-1044 rdenhoy@establishmentlabs.com