Establishment Labs Holdings Inc. Q2 FY2025 earnings call

• Revenue in Q2 was $51.3 million, up 16% y-o-y, with U.S. sales exceeding the range provided at Investor Day. U.S. revenue expected to exceed $40M. Raised 2025 revenue guidance to $208M-$212M (25%-28% growth).
• U.S. business doing well: Assembled best-in-class organization, Motiva adoption exceeding expectations, sales momentum continuing into Q3. Adjusted EBITDA loss improved to $8.5M from $12.1M in Q1, cash use fell to $14.5M from $21.2M.
• International: European direct markets up ~27% ex-currency and distributor acquisition. Latin American direct markets stabilizing in Brazil, strong growth in Argentina. Distributor markets generally doing well, though China faced challenges. EMEA on track for $8M-$10M revenue in 2025.
• Operational focus: Focusing resources on high-potential areas like U.S. and minimally invasive portfolio, reducing expenses. Motiva Flora Tissue Expander won Innovation and Safety Awards. Preservé training in U.S., expected to launch in H1 2026, commanding premium and expanding TAM.
• Motiva in reconstruction: Flora tissue expander in over 90 U.S. hospitals, close to completing 3-year follow-up, expect submission for reconstruction approval by end of 2025.

Revenue in the second quarter totaled $51.3 million, a 16% growth over the previous year. On a geographic basis, U.S. sales were $10.3 million, making up 20% of the global total. Sales in Europe, Middle East, and Africa (EMEA) were 40% of global sales, with double-digit y-o-y growth. Latin America accounted for 19% of sales with mid-single-digit growth, and Asia Pacific was 15% of sales, with sequential growth but down y-o-y due to China and distributor order timing. Gross profit for the second quarter was $35.3 million, or 68.8% of revenue, a 320 basis point increase from Q2 2024.

• Raised 2025 revenue guidance to $208M-$212M (25%-28% growth) from previous $205M-$210M. Includes at least $40M in U.S. Motiva sales and single-digit growth outside U.S.
• Expect first positive EBITDA quarter later in 2025 and cash flow breakeven in 2026 without further equity raises.
• Cash use expected to reduce by ~$5M per quarter, with expectation of ~$10M cash use in Q3.

• China faced challenges due to market environment, distributor scaling issues. Aesthetics market under pressure in premium segment.
• Shipping costs impacted results in APAC due to timing of orders and regulatory changes affecting distributors.
• Competitive response: No major coordinated reaction observed, but market-by-market responses from competitors.

Q: Could you fine-tune assumptions behind 2025 revenue guidance upgrade, especially regional details and China's impact?

A: Raj noted strong U.S. momentum led to raising U.S. outlook to at least $40M, driving global guidance up. Outside U.S., European direct markets up ~27%, but China market challenging, with growth expected to be slower and reflected in guidance.

Q: Sam Eiber asked about utilization trends in U.S. and timing of acceleration?

A: Peter said progress continues in U.S. market, adding accounts and seeing adoption curve with accounts moving up adoption, expecting gradual growth rather than hockey stick.

Q: Anthony Petrone asked about U.S. physician adds trajectory and APAC shipping delays?

A: Raj said focus moving to enhancing utilization in existing accounts while still adding new ones. Raj mentioned higher shipping costs due to air vs sea freight, with no major impact on results, and Fillipo said APAC delays due to timing and regulatory changes, marginal impact.

Q: Mike Matson asked about pricing trends in U.S. and competitive response?

A: Raj said Motiva has premium pricing with no pricing pressure, and no major coordinated competitive reaction observed.

Q: Allen Gong asked about cadence of growth and SG&A spend?

A: Raj said U.S. expected sequential growth into Q3 despite seasonality, with operating expenses expected to moderate in back half, leveraging higher gross margin U.S. revenues for EBITDA positive in back half and cash flow positive in 2026.

Q: Matt Taylor asked about China investment tracking and difference between Mia and Preservé?

A: Fillipo said China investment partner facing challenges in scaling commercial operations, Preservé broader than Mia, expected to be larger over time, not cannibalizing EMEA business.

Q: Mason Cariso asked about consignment inventory initiative and U.S. sales force expansion?

A: Fillipo said consignment inventory initiative going well with over 100 accounts, U.S. sales force at 43 reps, planning to add 10-15 more reps for Preservé launch and penetration.

Q: Josh Jennings asked about Preservé's inclusion in U.S. Motiva revenue guidance?

A: Fillipo said Preservé launch in U.S. in H1 2026, minimal impact on 2025 Motiva revenue guidance, intended for learning and strategy refinement.